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Canadian port authorities respond to U.S. questions over practices

Canadian port authorities are calling on the U.S. government not to impose penalties on this country's container ports. The Federal Maritime Commission in the U.S.

Canadian port authorities are calling on the U.S. government not to impose penalties on this country's container ports.

The Federal Maritime Commission in the U.S. decided late last year to launch a study into possible unfair practices by Ottawa for its container ports, raising fears of a damaging trade war.

Richard Lidinsky, the chairman of the Federal Maritime Commission (FMC), said he would be proposing a study on whether Canadian and Mexican ports are benefiting from unfair subsidization, following a request for an investigation by two U.S. senators from Washington state. They wanted an investigation of "diversions" of U.S.-bound, Asia-origin cargo through Canada, brought into United States via Canadian rail services.

Some of the issues to be investigated include the Harbor Maintenance Tax, which isn't in place in Canada, as well as rail service rates and infrastructure funding.

The report will be referred to the U.S. Congress, which could launch retaliatory trade actions against Canada. The Port of Prince Rupert was specifically singled out by the commission, but the consequences of new fees imposed on containers from overseas could also be huge for the Deltaport terminal at Roberts Bank.

Major rail and road projects are planned or already underway to meet anticipated growth in container business at Deltaport, while an entirely new adjoining three-berth terminal is also proposed.

In an FMC news release, Lidinsky stated: "Canadian and Mexican ports are free to compete with U.S. ports for U.S. cargo. But they should do so on a playing field that is not artificially tilted by governments' policies. So the primary question is: Are we handicapping our own ports in international competition?"

Ed Fast, Canada's minister of international trade and minister for the Asia-Pacific gateway, told the Optimist in December that his government would "vigorously defend" its trade policies and infrastructure investments.

He noted a response would be submitted to the FMC.

Now available to the public, a joint submission by the ports of Vancouver, Halifax, Montreal and Prince Rupert address several of the questions raised by the FMC.

The submission makes a number of assertions, including there being no statistical evidence to support the claim that U.S. cargo is being diverted through Canadian ports.

"It should be recognized that Canadian ports provide a vital link in the U.S. supply chain which is critical to the U.S. economy. Therefore, any effort to apply the HMT or other measures against Canadian ports would hurt U.S. economic growth, especially when the U.S. is trying to recover from its recession woes," the submission states.

Noting that Canada's port authorities, port terminal operators and railways continually seek to find new efficiencies in the supply chain, the document also states Canadian ports have natural geographic advantages, including being the closest deepwater container ports to Asia and Europe.

The Canadian ports also contend shipping firms do not choose Canadian ports to avoid the HMT, instead making routing choices, and managing risk, based on many factors such as cost, reliability, efficiency and proximity to markets.

"Trade between the two countries is essential to creating economic growth and jobs on both sides of the borders. Competition between North American ports can help spur that growth by providing options for shippers and exports and encouraging reliability and efficiency," the submission states.

The document states Canadian ports are especially significant to U.S. economic competitiveness because they provide shippers and manufacturers options in running their businesses.