Another Canadian Official Slams Proposed US Cargo Tax

Mark Szakonyi, April 24, 2014, Journal of Commerce

The Canadian ambassador to the U.S. yesterday said the United States should use all of its harbor maintenance taxes for U.S. port work and shouldn’t impose a fee on U.S.-bound container coming through Mexican and Canadian ports.


Ambassador Gary Doer said the proposal to impose a fee on cargo bound for the U.S. through the ports of its North American Free Trade Agreement partners would “create massive congestion” at the borders and dislocate supply chains. If implemented, the cargo fee would also hurt U.S. ports, as he hinted Canada could implement a reciprocal tax on Canadian-bound cargo that comes through U.S. ports.


“Thankfully, the proposal hasn’t gone anywhere,” Doer said at the NAFTANEXT conference in Chicago.


But that the proposal is still being kicked around frustrates Canadian authorities. Lisa Raitt, the country’s transport minister, in March pledged to “vigorously defend” the country’s trade interests and rights under trade agreements if the proposal became a reality.


The cargo fee proposal would charge shippers a fee equal to the 0.125 percent levy on the value of cargo they current pay when moving cargo through U.S. ports. The legislation has been introduced by U.S. Rep. Jim McDermott and U.S. Sens. Patty Murray and Maria Cantwell, Democrats from Washington state, in response to the ports of Seattle and Tacoma steadily losing cargo traffic to Canadian ports and other U.S. West Coast ports.


According to port-published data collected by the JOC, Seattle-Tacoma’s share of the North American West Coast containerized shipping market dropped to 11.7 percent in 2013 from 12.6 percent in 2011, while the market share of the Canadian ports of Vancouver and Prince Rupert increased to 14.8 percent last year from 13.5 percent in 2011. The market share of Los Angeles-Long Beach dropped to 62.7 percent in 2012 from 63.7 percent in 2011, but rebounded in 2013 to 63.7 percent.


Doer recommended that Washington give all Harbor Maintenance Trust Fund funding back to the ports. Roughly half of the $1.6 billion annually collected for the HMT is used to plug holes in the federal budget.


Congress is poised to give more money back to the ports via new water resources development legislation. Under the House’s bill, known as the Water Resources Reform Development Act, ports would receive at least 80 percent of collected taxes by fiscal 2020. The Senate version, known as the Water Resources Development Act, would require all the collected taxes to go toward the ports.


Both chambers passed their respective bills last year, but Senate and House leaders have yet to agree on a final bill to send to President Obama. There is, however, increasing hope that Congress will send a final bill to the president this spring.

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