Suggestions that the Canadian government is improperly subsidizing expansion of western Canadian ports and related freight infrastructure are unfounded and will harm two-way trade if a U.S. investigation into the matter results in sanctions of some kind, Ed Fast, Canada’s minister of international trade, told reporters during a visit to Washington Monday.
Fast, who is also in charge of the nation’s Asia-Pacific Gateway initiative, stressed that America’s largest trading partner has not engaged in unfair competition to siphon cargo from U.S. ports such as Seattle and Tacoma, Wash., Oakland, Los Angeles and Long Beach.
“What Canada has done is invested in its ports. We operate on a level playing field. We have competitive advantages that we utilize to attract freight to our ports. We believe there is no case to be made that this is unfair in any way,” Fast said during a briefing at the Canadian Embassy.
The minister, who was appointed in May, was in town to discuss a host of trade issues with U.S. Trade Representative Ron Kirk and other officials. He declined to say if the matter came up in the talks.
Earlier this month the U.S. Federal Maritime Commission, at the behest of 10 senators and congressmen from western states, announced it would launch a notice of inquiry into factors that may be causing diversion of some U.S.-bound cargo to ports in Canada and Mexico.
Canada has invested about $4 billion to build a container terminal at the Port of Prince Rupert, more capacity at the Port of Vancouver, feeder roads to port facilities, additional lanes for the Trans Canada Highway and enhanced rail infrastructure to attract shippers interested in efficient delivery of import containers to Chicago for distribution to U.S. consumers. The rail corridor is also being used to move cargo to eastern Canada and for exports.
The federal share of the effort is $1.4 billion, with the rest of the cost being born by municipalities, provinces and the private sector.
Canada’s value proposition is that can shave two to 2.5 days off the transit time for a vessel from North Asia compared to U.S. destinations, with competitive intermodal rail service. Prince Rupert was exclusively designed to transfer all containers at the dock to Canadian National trains, which can reach Chicago in 100 hours.
Another difference, which will be part of the FMC investigation, is the fact that goods entering U.S. ports are subject to a harbor maintenance tax based on their value. The tax averages about $80 per 40-foot container, according to the FMC. Canada has no similar levy on imported cargo.
There are also disparities between U.S. and Canadian rail costs from the West Coast to the Midwest.
Prince Rupert’s container terminal opened in 2007 and handled 343,366 TEUs in 2010. Through the first nine months of this year Prince Rupert has processed 287,056 TEUs, up 10 percent from the same period last year. Loaded container volume has increased 23 percent to 235,372 TEUs.
The Canadian government and Maher Terminals, the private operator, plan to vastly expand the port’s capacity to 5 million TEUs in the near future. A similar initiative to support an Atlantic gateway is also on the drawing board.
American transportation experts and shippers have expressed admiration of Canada for having a national infrastructure strategy to make freight transport more efficient while lamenting the fact that the U.S. government has not established any national infrastructure plan, or priorities, of its own. Investment in harbor deepening, land-side facilities, roads and rail infrastructure so that cargo easily flows from one mode to another will help U.S. companies sell products overseas by keeping transit times and costs low, they say.
“Our government will vigorously defend against and refute any allegations that actions on the part of Canadian ports or businesses are in any way inappropriate. The fact is, our government has focused on the issue of competitiveness and has made significant investments in improving port infrastructure,” Fast said in an Oct. 5 letter to FMC Chairman Richard Lidinsky and obtained by American Shipper through unofficial channels.
Canadian officials and business groups have expressed concern that the inquiry could lead to legislation to impose a border tax on goods arriving from Canada.
In the letter and his remarks to reporters, Fast said any tariffs could jeopardize some of the 8 million jobs in the United States that depend on trade with Canada and raise costs for Americans during difficult economic times.
At the embassy, Fast suggested that Canada was being unfairly singled out for having the foresight to make freight infrastructure a cornerstone of its economic growth.
“Keep in mind that the United States also had a stimulus” that included billions of dollars for transportation infrastructure, he said.
The U.S. program was focused on getting Americans back to work and ultimately was spent on road resurfacing and other projects that would be implemented quickly.
“They made certain choices as to where they would invest in their infrastructure. We did as well. We felt our ports were important,” Fast said. — Eric Kulisch
Canadian minister defends port investments
