CFOA in the News: Ferry Operators, including BC Ferries, urge Ottawa to drop tariff on foreign-built boats

Vancouver Province - Sept 14, 2015

The cost is $45 million for three new vessels for B.C. fleet

Canada’s ferry operators, including B.C. Ferries, are calling on the federal government to scrap a 25-per-cent import tariff on certain passenger ferries built overseas that they say is driving up fares.

The Canadian Ferry Association CFA) said it pays millions to Ottawa for the tariff, including $45 million on three B.C. ferries being built in Poland for $185 million.

“The cost of the tariff is going back to taxpayers and to passengers,” said the association’s CEO, Serge Buy. “It’s a bit of an issue for us.”

Ferries under 129 metres long are subject to the import tax when they’re built in countries with which Canada hasn’t entered yet formalized free trade deals, Buy said.

The federal government did drop a wider tariff on all imported ships, but left the tax on smaller ferries as a way to protect the Canadian shipbuilding industry.

But Buy and others said that while they try to source their vessels from Canadian shipyards, those manufacturers are too busy working on Ottawa’s National Shipbuilding Procurement Strategy — building navy vessels — to bid for their ferry contracts.

“It’s OK for the federal government to try to protect shipyards, but right now, they are busy,” said Buy.

He said B.C.-based Seaspan, for instance, is so booked up with work on the NSPS that it had to contract out the construction of ferries for its own use to Turkey.

A Seaspan spokesman said he couldn’t provide a comment for the story on Monday.

David Brazil, Newfoundland’s transportation minister, who’s in town to speak at the CFA conference, said he supports in principle the idea of protecting Canadian shipbuilders, but he said they’re working to 95 per cent of their capacity right now and don’t need the protection.

Brazil said a better way to help Canadian companies is to pair them with international giants in the industry to keep jobs in Canada, a strategy he said his government employed with world ferry leader Damen, based in the Netherlands.

“It’s a lucrative deal for Canada,” he said. “We’d love to get as much of the work to stay at home as possible.”

He said he is travelling to Ottawa this week to question government officials and all-party candidates to make this a federal election issue.

Brazil said his goal is to get Ottawa to drop the tariff, but he will at least try to have it paid only on the foreign-built part of the ships, with exemptions for the Canadian portions.

Two-thirds of B.C. Ferries’ fleet is under 129 metres and therefore subject to the tariff when they need replacing, said B.C. Ferries’ vice-president of engineering, Mark Wilson.

“Forty-five million dollars is a significant amount of money,” Wilson said about the tariff on the three new ships being built in Poland. “It’s keeping the fares inflationary.”

Canada is negotiating new trade agreements that would see the tariffs dropped in seven to nine years, said Buy.

But ferry operators want the government to drop the tariff now or waive it when the domestic shipyards aren’t able to build their ferries.

There are 267 ferries operating in Canada and they carry 55 million people and 19 million vehicles a year, the majority of which — 32 million passengers and 10 million cars and trucks — are in B.C., said Buy.

A Transport Canada spokeswoman referred a question about the tariff to the federal finance department.

Transport Canada’s director general Tim Meisner was scheduled to address the conference on Monday but cancelled because high-level bureaucrats are forbidden to speak about policy during an election, organizers said.

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