Planned cargo levy worries ports

A proposed US$143-per-container levy on cargo entering the United States from British Columbia ports is raising some eyebrows in the industry across Canada.

"It has the potential to affect all Canadian ports and also the Canadian supply chain," Michele Peveril, senior manager of strategic relations with the Halifax Port Authority, said Friday.

The proposal comes from the Federal Maritime Commission, an independent American regulatory agency responsible for regulating foreign, ocean-borne transportation entering the U.S.

Its proposal gets its first serious review in the United States beginning in November.

Some operators of big ports on the U.S. West Coast are looking with disdain at the rapid increase of cargo flowing into their country through the port in Prince Rupert, B.C. They have complained about subsidies — about C$60 million worth — their new competitor received from the provincial and federal governments.

Peveril said ports in Canada and the U.S. operate on different economic models and it would be difficult for critics south of the border to determine what constitutes a subsidy for the industry north of the border.

"Canadian ports are mostly funded by their own revenues and are required to be financially self sustaining," she said.

There are some exceptions, such as some renovations currently underway at the Port of Halifax that were co-funded with the federal government, but these usually involve other funding sources that would possibly have counterparts in the U.S.

Although the container levy is just a proposal, officials in Nova Scotia are watching the situation closely, as are industry observers across Canada.

The five-member American commission is suggesting Canadian ports — at least those on the West Coast — subsidize operating expenses for their American counterparts, Gary LeRoux, executive director with the Association of Canadian Port Authorities, said from Ottawa.

He said the issue relates to the U.S. Harbour Dredging Tax that is paid on all imported containers passing through American ports.

It currently ranges from US$80 to about US$140 per container, depending on the containers length.

LeRoux said a review of the facts and of the differences in the way ports are managed in the two countries will likely cause the Federal Maritime Commission to drop the proposal but his organization is not taking any chances and is monitoring the debate on the proposal.

"If a container levy was implemented, it would just be passed on to American consumers in the form of prices increases, and that scenario would likely be very unpopular," said LeRoux.

LeRoux said it is his understanding that the Federal Maritime Commission can only recommend but not implement a cargo levy against B.C. ports shipping into the U.S.

The Canadian Chamber of Commerce has also been speaking out against the proposal.