Canada-U.S. West Coast Port Tension

Even the world’s largest bilateral trading partnership has tensions.  680 News and the Puget Sound Business Journal report on efforts of two U.S. Senators, Patty Murray and Maria Cantwell, to repeal the Harbor Maintenance Tax.  The purported reason: to “remed[y] the competitive disadvantage of a number of American ports” to Canadian and Mexican ports. (PDF pages 4, 12)

From 680 News:

Two U.S. senators plan to introduce legislation soon aimed at shippers who favour Canadian ports over American ones due to supposed lower costs north of the border, measures that could have a significant impact on Canada’s lucrative West Coast ports.

At a time when trade between the U.S. and Canada is supposed to be easing under the much ballyhooed Beyond The Border initiatives, Washington state lawmakers Maria Cantwell and Patty Murray, longtime foes of the U.S. Harbor Maintenance Tax, are once again targeting the levy with a proposal that would penalize Canadian ports.

The senators want to replace the Harbor Maintenance Tax on shippers with a levy that would apply to all cargo containers coming into the United States via Canadian and Mexican ports. That means when a shipping company unloads its containers in Prince Rupert, B.C, for example, and they’re loaded onto a U.S.-bound train or transport truck, the cargo will be taxed at the border.

The American tax is levied, in part, to cover the cost of dredging port channels on the American West Coast.

Dredging isn’t necessary in Prince Rupert’s deep channels, while Vancouver requires only minimal dredging. Instead of a tax, Canada charges importers a user fee that goes toward port maintenance.

[Executive Director of the Association of Canadian Port Authorities Wendy] Zatylny pointed out that another piece of legislation already working its way through Congress — the Water Resources Development Act — addresses the biggest concerns raised by Cantwell and Murray. That bill has bipartisan support and essentially authorizes the Army Corps of Engineers to study and construct water infrastructure projects, including at critical U.S. ports.

“It’s actually meant to address some of the issues they’re trying to get at regarding funding to ports,” she said. “It enables the full spending of the Harbor Maintenance fund, tops it up, and broadens the terms so that money can be used for infrastructure at ports, and for improving efficiencies that go beyond just dredging. And it does so without imposing any fees on Canada or Mexico.”

From the Puget Sound Business Journal:

The current tax is imposed on all inbound cargo containers arriving at U.S. ports, and is supposed to be used for dredging. But it has been a handicap for Puget Sound’s deepwater ports, because they don’t need that kind of dredging. Moreover, the extra cost from the tax has been one of several factors diverting U.S.-bound cargo to Canadian ports to the north.

Under the Cantwell-Murray proposal, funds collected could be used by ports nationwide for a wider variety of maritime infrastructure projects than just dredging, and all of the money collected would be used for ports — instead of just half, as is now the case.

“We can’t make the investments in our infrastructure our ports need to make to be competitive,” said Murray. “It’s hurting our ports and holding the economy back.”

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