A United States agency is considering a major new levy on cargo entering the Unites States from British Columbia ports, which could harm cross-border trade and impair Canadian efforts to capture more business from Asia.
Richard Lidinsky, the chairman of the U.S. Federal Maritime Commission, is looking at whether to “level the playing field” on the West Coast, where modern Canadian ports are taking container-cargo business away from their run-down American counterparts.
But the real intent “is not to level the playing field but to level the competition” Canadian Chamber of Commerce president Perrin Beatty warned in a letter sent Friday to International Trade Minister Ed Fast.
Word of the potential tariff is another blow to Beyond the Border, the major new border-cooperation agreement soon to be released by the American and Canadian governments, and comes on the heels of Buy American provisions contained in proposed new American stimulus legislation.
Mr. Lidinsky wants to investigate whether shippers are diverting cargo to Vancouver and Prince Rupert to avoid paying a Harbour Maintenance Tax that the Americans impose on containers offloaded at U.S. ports. The tax has been estimated to cost shippers an average $143 a container.
He also wonders whether containers entering Canada are subject to the same level of security screening, and whether Canadian railroads receive government subsidies not available to their American counterparts.
If the investigation leads “to improvements to U.S. ports and policies, the commerce and the economies of both our great nations will benefit,” Mr. Lidinsky said in a speech in Montreal last week.
He is not alone in his concerns. Washington senators Patty Murray and Maria Cantwell, both Democrats, are pushing for the review. The West Coast Collaborative – which represents U.S. West-Coast ports and rail lines – is calling for an end to the “loophole that unfairly creates a competitive advantage for Canadian and Mexican ports.”
The association wants containers entering the United States by land from Canadian ports to be charged the equivalent of the Harbour Maintenance Tax, with the revenues used to upgrade American ports.
Canada disagrees. “In this fragile economic recovery, we think the consideration of any new taxes or restrictions is a bad idea,” Adam Taylor, spokesman for International Trade Minister Ed Fast, said in a statement Sunday. Mr. Fast is in Indonesia.
The Canadian government is “monitoring developments closely,” Mr. Taylor said.
Robin Silvester, president of Port Metro Vancouver, said in an interview that “provided the debate remains rational and objective, there fundamentally is no issue” of unfair subsidies.
At root is the success of the Asia-Pacific Gateway and Corridor Initiative. Canadian governments at all levels have invested $3.5-billion in modernizing the ports at Prince Rupert and Vancouver, and in related road, rail and border infrastructure.
But although B.C.’s share of West-Coast container traffic bound for the U.S. has doubled over the past five years, said Mr. Silvester, that figure has gone from 1 per cent to 2 per cent.
“If you double a very small number you still have a very small number,” he observed.
As for the proposition that Canadian railways are unfairly subsidized, Canadian National “rejects as unfounded any suggestion that it is subsidizing rates for ocean carriers,” the company said in a statement.
Both the threat of a tariff and the Buy America plan are badly timed, as the Beyond the Border action plan seeks to more closely integrate continental security and cross-border trade.
The Federal Maritime Commission will discuss the matter in Washington, D.C. Wednesday.