Order Fixing December 10, 2018 as the day on which sections 70 to 72 of that Act come into force: SI/2018-110
Canada Gazette, Part II, Volume 152, Number 25
SI/2018-110 December 12, 2018
TRANSPORTATION MODERNIZATION ACT
Order Fixing December 10, 2018 as the day on which sections 70 to 72 of that Act come into force
P.C. 2018-1487 November 29, 2018
Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 98(5) of the Transportation Modernization Act, chapter 10 of the Statutes of Canada, 2018, fixes December 10, 2018 as the day on which sections 70 to 72 of that Act come into force.
(This note is not part of the Order.)
This Order in Council (Order) fixes December 10, 2018, as the day on which sections 70, 71, and 72 of the Transportation Modernization Act come into force.
The primary purpose of this Order is to bring into force sections 70, 71 and 72 of the Transportation Modernization Act, which amends the Coasting Trade Act to allow ship owners to use vessels of any registry to reposition their owned and/or leased empty containers between locations in Canada (on a non-revenue basis) without a coasting trade licence. It is expected that these changes will address the current shortage of containers available for export while increasing logistical flexibility for vessel owners and operators.
The Coasting Trade Act (the Act) protects the domestic marine sector by reserving coasting trade (or “cabotage”) to Canadian registered and duty paid vessels. Coasting trade includes the transportation of goods and passengers, as well as any other marine activity of a commercial nature. The Act also provides for a licencing process that allows for temporary importation of Canadian non-duty paid or foreign vessels to undertake coasting trade activities when a suitable Canadian vessel is not available. If a suitable Canadian vessel is found available, a foreign vessel cannot be used and a licence is not issued.
In 2012, foreign vessel owners submitted a formal proposal to Transport Canada advocating for an exemption under the Act to reposition empty containers without a licence to address an ongoing shortage in empty containers available for export. Every licence application made to date to use a non-duty paid or foreign vessel to conduct empty container repositioning has been denied due to the availability of a Canadian vessel; however, Canadian shippers have been unable to provide the service at a competitive rate.
Without a coasting trade licence, foreign or non-duty paid vessels must pay another service provider (e.g. rail service, trucking service) to have their empty containers repositioned between locations in Canada or even imported from overseas, which creates a costly, inefficient method of operating in Canada. In addition, since Canadian shippers rely mainly on foreign-based carriers for the majority of international marine movements, this means that there can be logistical challenges for shippers who may not have access to empty containers for export purposes.
Sections 70, 71 and 72 build upon the amendments to the Act made as a result of the Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA) which provides targeted access for the EU to Canada’s domestic maritime sector. As of September 2017, eligible EU entities can undertake the following coasting trade activities in Canada without a licence:
- repositioning of owned and/or leased empty containers between locations in Canada on a non-revenue basis;
- feeder services between Halifax and Montreal; and
- private dredging.
Specifically, section 70 of Bill C-49 amends the repositioning section of the Act that currently limits the service to eligible EU entities using a vessel of any registry to now enable any vessel owner to reposition their owned/leased empty containers. It also moves the registry requirements from the repositioning section to the dredging section in order to maintain the concessions provided under CETA for dredging activities and feeder services. Sections 71 and 72 are administrative in nature to make reference to the updates made to the repositioning and dredging provisions.
The amendments to the Coasting Trade Act will help address the shortage in empty containers for export purposes and support something that industry has been seeking — greater logistical flexibility. This amendment will also help alleviate some of the strains on the surface transportation system as containers are currently repositioned by rail or truck within Canada. Allowing the repositioning of empty containers by foreign vessels will also bring Canada in line with other countries, including the U.S., Mexico, and other important trading partners.
By enhancing logistics at ports, the amendments are expected to increase the competitiveness of Canadian ports as gateways to the North American market. Improving the efficiency and competitiveness of Canada’s supply chain is expected to better position Canada to take advantage of increases in trade volumes and changes in global trade routes while also strengthening direct investment in the transportation sector for the benefit of Canadian companies and consumers alike.
As noted above, marine industry stakeholders submitted a formal proposal to Transport Canada in 2012 requesting amendments to the Coasting Trade Act to allow for the repositioning of empty containers between locations in Canada without a coasting trade licence. Transport Canada consulted stakeholders in the marine, rail and trucking sectors on the proposal and received broad support for the changes. As a result, the amendments were included in the bill formerly known as Bill C-49 (Transportation Modernization Act), which received royal assent on May 23, 2018.
In January 2018, Transport Canada conducted targeted stakeholder sessions to discuss the amendments prior to the Senate Committee hearings. During these consultations and Senate Committee hearings, stakeholders were generally supportive of the amendments and did not request any changes to the proposed amendments.
Domestic Shipping Policy
Marine Policy Group
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