CFOA in the News: Ferry Tariff Faceoff

St. John's Telegram - Sept 28, 2015

Minister says province won’t pay when vessel arrives

Even before it is elected, the next Government of Canada is set to fight with the Government of Newfoundland and Labrador over ferry tariffs.

Provincial Transportation Minister David Brazil told The Telegram he has not had much luck in his recent efforts to have the federal government waive a $25-million import tax due on two ferries being built for the province in Romania.

“I had some meetings with some policy advisers and I had a discussion with the deputy minister of transportation and, where they’re into a writ now, the policy part of it — around the decisions that are being made there — (they) wouldn’t be able to be made until after the election,” he said, when asked Monday.

“I have no intentions of paying any tariffs until after we have a full-fledged review and discussion with everybody relevant to the tariffs.”

The trouble is, the taxes are due when the boats show up.

As reported in August, the ferries will have to pass through customs in St. John’s upon their arrival in Canada. And import tax is to be paid before the product is released from federal Customs.

“There’s discussions we’re having around how we will deal with that,” Brazil said.

The first of the new ferries, the MV Veteran, was on the way here in August, but was forced to turn back after encountering engine trouble.

Having received a new engine, it left the Damen Shipyards dockyard once again in mid-September.

The ferry left Gibraltar on Sept. 23 and was passing by the Azores, just off São Miguel Island, as Brazil spoke with The Telegram.

It is scheduled to arrive in the province the middle of next week, docking in St. John’s on Oct. 8, subject to weather and sea conditions.

The second ferry, the MV Legionnaire, is expected in the spring, under previously announced timelines.

Crew for both vessels will undergo up to six weeks of training upon arrival, before entering into daily service.

The Veteran will serve the Fogo-Change Islands ferry run, while the Legionnaire will work the Portugal Cove-Bell Island run.

The tariff on the ferry is actually a 25 per cent charge to be levied on all vessels under 129 metres in length coming into Canada, with some exemptions for industry-specific ships.

Damen Shipyards in Romania was awarded the tender for the province’s new ferries in November 2013 and, in November 2014, Brazil told the CBC he was confident the entire tariff cost would be waived.

This week, he highlighted a recent speech that he made to the Canadian Ferry Operators Association in Vancouver on the topic.

On Sept. 14, the tariff on ferry imports for vessels under 129 metres was subsequently announced as one of the association’s two key issues for the ongoing federal election period.

“Keeping the tariffs in place limits competition, innovation and ends up driving costs for Canadian fare payers and taxpayers,” Serge Buy, the association’s CEO, said in a news release.

Trade agreements have the power to kill tariffs. In the province’s case, finalization of the Comprehensive Economic and Trade Agreement (CETA) would eliminate the tariff in question.

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