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Port Metro Vancouver in Vancouver, British Columbia, Wednesday, February 20, 2013. (Rafal Gerszak For The Globe and Mail)
Port Metro Vancouver in Vancouver, British Columbia, Wednesday, February 20, 2013. (Rafal Gerszak For The Globe and Mail)

Tax proposal threatens Canadian ports Add to ...

As Canadian port executives meet in Nanaimo, B.C., for their annual conference, they are keeping an eye on two U.S. senators who are proposing new legislation to cut down on the container traffic choosing Canadian ports over American ones.

The target of the proposed legislation is the Harbor Maintenance Tax, a fee on each container that comes in through U.S. ports. The new bill would scrap the tax in favour of one that applies to all containers entering the United States, whether shipped through the U.S., Canada or Mexico.

“It is of great concern, no doubt about it,” said Wendy Zatylny, executive director of the Association of Canadian Port Authorities. “It would have a big impact on the container ports here in Canada, and it’ll have an impact as well on consumers.”

Senators Patty Murray and Maria Cantwell announced the legislation last week at the Port of Seattle, which has been facing fierce competition from B.C. ports – particularly from Prince Rupert, which opened a container terminal in 2007 and has large expansion plans for near future. “The threat is real. The Federal Maritime Commission found that up to 27 per cent of container volume moving through West Coast ports is at risk of diverting to Prince Rupert,” Ms. Cantwell said during the announcement.

The senators plan to introduce the legislation in September, with the goal of removing a financial incentive for shippers to avoid U.S. ports, and to double the amount of funds available for port operation and maintenance.

Ms. Zatylny said she disagreed with how the senators presented the issue.

“I don’t think that what shippers are doing is purposefully routing through Canada to avoid the tax,” she said. “Shippers have decided to route through Canadian ports more as a result of improved efficiency, reduced dwell times, and faster time to market.”

A U.S. Federal Maritime Commission report last summer noted the recent increase in Canada’s share of U.S.-bound container traffic coincided exactly with the opening of the Prince Rupert terminal in 2007.

Prince Rupert is closer geographically to China, Japan and Korea, the report noted, and has benefited from huge investments in infrastructure spending by the Canadian government since 2006. It is also a pilot project in the perimeter security program that allows for quick passage by rail over the U.S.-Canadian border once a container has been screened at the port of entry.

Michael Gurney, a spokesman for the Prince Rupert Port Authority, said about 60 per cent of the port’s current container traffic is bound for the U.S. border.

The busier Port Metro Vancouver, by comparison, only sends about 10 per cent of its containers to the United States.

Ms. Zatylny said her organization will consider what course of action to take once the bill has been tabled.

“It's a little bit difficult right now because we haven’t seen the legislation,” she said.

“But there’s going to be a pretty big effort on the part of Canadian ports and Canadian stakeholders to make their concerns known.”

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