Meeting with the Economic Section
of the Embassy of the
United States of America
Ottawa, October 20, 2011
PREPARATORY NOTES
300 St. Sacrement Street, Suite 326, Montreal QC, H2Y 1X4
Tel: 514-849-2325; Fax: 514-849-8774; E-mail: info@shipfed.ca
www.shipfed.ca
CONTENTS
EXECUTIVE SUMMARY ..............................................................................................2
I.
The Perimeter Initiative ...............................................................................3
•
•
•
II.
Background
Federation’s position
Discussion points:
o Nurturing the “perimeter philosophy”
o Getting the FMC’s record right
The Great Lakes region as a bi-national trade corridor.....................4
•
•
•
Background
Federation’s position
Discussion points:
o New York State ballast water legislation
o The development of the Great Lakes as an economic (binational) region
o The development of the Great Lakes as a trade route
APPENDICES:
A.
B.
C.
D.
About the Shipping Federation of Canada ................................................................................................. 6
List of issues and initiatives of common interest.................................................................................... 7
SFC May 31, 2011 Submission to the Regulatory Cooperation Council ....................................... 8
FMC’s October 5, 2011 release on its Inquiry into Disparities that Drive U.S.-Bound
Cargo to Canadian and Mexican Ports .......................................................................................................15
E. Quality International Shipping – Quality Coastal State Pager ...........................................................16
1
EXECUTIVE SUMMARY
The Shipping Federation of Canada (the Federation) represents shipowners, operators and agents
who handle over 200 international steamship lines trading to Canadian ports (see Appendix A).
We intend to raise the following issues during the October 20th meeting between the Federation
and the Embassy of the United States of America:
The Perimeter Initiative
-
This initiative provides welcome and much-needed continuity with the Canada –U.S. Smart
Border Declaration and Action Plan.
The shipping industry is concerned that the upcoming Federal Maritime Commission (FMC)
Inquiry may end in a counterproductive result from a border management perspective.
The Federation is a strong supporter of Canada’s gateway strategies.
International shipping will do what is possible at its level in support of a border
management process that remains in line with the Perimeter Initiative philosophy.
The Great Lakes region as a bi-national trade corridor
-
-
The Great Lakes region is underdeveloped as a trade corridor.
Apart from the Seaway system, this marine route is not managed in a coordinated or
streamlined manner, with New York State’s ballast water legislation providing the most
extreme illustration of this dysfunctional model.
An integrated and streamlined bi-national management of this route would allow shipping
to fulfill its role as a key element in the economic revival of the Great Lakes region, while
fitting perfectly into the “vision” perspective that is currently being developed across that
region.
2
I THE PERIMETER INITIATIVE
Background:
•
•
•
As carriers of word trade, our members understand that security is a key ingredient in the
development of trade. Therefore, we have always been supportive of security initiatives,
including the 96-hour pre-notification rule, Customs’ pre-notification procedures, the
worldwide implementation of the International Ship & Port Security (ISPS) Code (adopted
under the auspices of the International Maritime Organization), the implementation of
Seafarers’ Identification Documents with biometric features (adopted under the auspices of
the International Labour Organization), etc.
However, we also believe that security must be managed through intelligence gathering and
risk assessment in a manner that does not unnecessarily impede the efficient flow of
legitimate trade. Towards that end, the Federation has been a member of the Coalition for
Safe and Trade Efficient Borders led by the Manufacturers and Exporters Association, and
was a strong supporter of the Canada-US Smart Border Declaration and Action Plan when it
was released.
The FMC’s upcoming Inquiry into Disparities that Drive U.S.-Bound Cargo to Canadian and
Mexican Ports (Appendix D) has created a great deal of uncertainty for trade and shipping
industry stakeholders, who are concerned that this inquiry may end in a result that runs
counter to the philosophy that underlies the Perimeter initiative, the Smart Border
Declaration and Action Plan, and even NAFTA.
Federation Position:
•
•
•
•
The Federation believes that now is the time for Canada and the US to take the next step in
the smart management of their common border within a perimeter approach.
The Federation contributed to the Regulatory Cooperation Council by submitting
recommendations that could be attainable within the two-year window established by the
Council (Appendix C).
The Federation has been a strong supporter of Canada’s Gateway and Trade Corridors
Strategy from the outset, and believes that it fits perfectly into the Quality International
Shipping for a Quality Coastal State (Appendix E) approach that the Federation has
advocated for over the past half decade.
The Federation has always advised the Canadian government that in addition to involving
bricks and mortar, a Gateway and Trade Corridor strategy must serve as an organizing and
mobilizing concept that obtain the maximum amount of efficiency from Canada’s trade
routes and supply chains. The Federation believes that Canada is taking appropriate steps
towards this strategy’s fruition by methodically integrating the various ingredients that are
necessary for success (infrastructure, Gateways performance tables, rail freight service
review, new rules on temporary import of containers, etc…).
3
•
Once the FMC’s Notice of Inquiry has been posted, the Federation will be in a position to
assess the kind of contribution it could provide for the inquiry.
Discussion Points:
•
•
The importance of nurturing the “perimeter philosophy” and international shipping’s role in
this respect.
The importance that the FMC gets the record right and international shipping’s role in this
respect.
II. THE DEVELOPMENT OF THE ST. LAWRENCE –GREAT LAKES REGION AS
A TRADE CORRIDOR
Background:
•
•
•
•
Although Canada has not yet released its strategy for the Continental Gateway and Trade
Corridor, it is obvious that this strategy will focus on the marine leg of the corridor up to
Montreal. What is much less obvious at the present time is the role to be played by the
marine segment upstream from Montreal, including the Great Lakes region.
Although the U.S. and Canadian Seaway administrations work closely together to ensure that
ships move through the system as part of a continuum (irrespective of which side of the
border the ship is actually transiting), the other administrations that also have authority
along this trade route have not replicated this streamlined operational model.
The most extreme example of the foregoing is New York State’s ballast water legislation,
which continues to threaten a total shutdown of the entire trade route as of August 2013.
Although the Great Lakes region has been North America’s industrial and economic heart for
generations, it has been undergoing a downward spiral for some time (especially south of
the border) due to a variety of causes, including de-industrialization, demographic decline
and urban problems. However, as demonstrated during the Great Lakes Summit that took
place in Windsor in June 2011 (www.greatlakessummit.org), a number of organizations are
working to reverse this decline by developing a new “vision” for the region, encompassing
the entire coastal area around the Lakes and St. Lawrence River both north and south of the
border. The central element in all these discussions is the role played by the waters of the St.
Lawrence and Great Lakes, which both divide and unify the region while also providing
access to world markets. Although shipping has not warranted much attention in this
discussion (notwithstanding references to the New York ballast water regulations as an
irritant that will have to be addressed), it could certainly play a major role in the revival of
this region.
4
Federation Position:
•
•
The Federation believes that shipping could be a key enabler for the Great Lakes region, as it
would fit perfectly into the “vision” of the region as a green, low-carbon, export-oriented,
and re-industrialized regional economy (encompassing both sides of the border).
In order to get there, there should be an integrated and streamlined binational management
of this marine route, to encompass environmental standards applicable to ships, security
and marine safety (including pilotage).
Discussion Points:
•
•
•
Is there any possibility that the New York ballast water issue will be resolved before 2013?
What are the U.S. Embassy’s views on developing the Great Lakes as a region (encompassing
both sides of the border)?
Is there any appetite on the U.S. side to develop the Great Lakes as a trade route and to take
steps both with the Canadian and State governments towards that end?
5
APPENDIX A
ABOUT THE SHIPPING FEDERATION OF CANADA
The Shipping Federation of Canada, incorporated by an Act of Parliament in 1903, is the association
that represents and promotes the interests of shipowners, operators and agents involved in
Canada's world trade. The Federation’s key activities are to provide advocacy for the ocean
shipping industry; offer operational support to its membership; disseminate information to
members, governments and the general public; and provide training to members and other industry
stakeholders. Its overall objective is to work towards a safe, efficient, competitive, environmentally
sustainable and quality-oriented marine transportation system.
The Federation's membership consists of the Canadian companies that own, operate or act as agents
for ocean vessels trading to and from ports in Newfoundland & Labrador, Atlantic Canada, the St.
Lawrence River and Great Lakes, and Canada’s Pacific Coast. These vessels carry the vast majority
of Canada’s imports and exports, thus highlighting the international shipping industry’s role as a key
contributor to Canada’s economy and prosperity.
Day to day activities are carried out by a permanent staff of eight, headquartered in Montreal.
Strategic directions and policy decisions are made by the Board of Directors, which comprises
senior level executives from member companies. The Federation has a number of issue-driven
Standing Committees that address specific and ongoing subjects of interest, as well as four District
Committees (in Ontario, Nova Scotia, Newfoundland-Labrador and on the West Coast) that address
local issues and provide the Board with a regional perspective.
6
APPENDIX B
ISSUES & INITIATIVES OF COMMON INTEREST
Issues:
•
•
•
•
•
•
•
•
•
Ratification of international conventions (with TC, DFAIT)
Enforcement against foreign crews and ships in environmental matters (C-15 and C-16) in
the respect of international conventions (especially UNCLOS and MARPOL)(with TC and EC)
IJC review of the Lake Ontario – St. Lawrence River Order of Approval for the management
of water levels and flows (with DFAIT)
Renegotiation of the Great Lakes Water Quality Agreement (the Federation is on the
Advisory panel)(with EC, DFAIT)
US EPA Vessel General Permit and ballast water States legislations (with TC, DFAIT)
International approach to piracy (especially in the Gulf of Aden)(with National Defence,
DFAIT)
The framework of binational agreements regarding the management/operation of the
Seaway system (with TC, DFAIT, CBSA)
Renewal of the CCG icebreaking fleet (DFO, CCG, TC, DFAIT, TB, IC)
Federal presence in Canada’s Arctic (TC, CCG, CanNor, CBSA)
Initiatives:
Government-led:
•
Gulf of Maine Council
Industry-led:
•
•
Réseau des Usagers du Saint-Laurent (St. Lawrence user network – water level issues)
Green Marine (www.green-marine.org ): a bi-national St. Lawrence/Great Lkes industry
environmental initiative that is expanding across North America.
7
APPENDIX C
______________________________________
Consultations on
Trans-Border Security and Trade Cooperation:
Submission to the
Regulatory Cooperation Council
_____________________________________
May 31, 2011
SHIPPING FEDERATION OF CANADA
300 St. Sacrement suite 326, Montreal QC H2Y 1X4
Tel: (514) 849-2325 / Fax: (514) 849-8774
www.shipfed.ca
8
Introduction of the Shipping Federation of Canada
The Shipping Federation of Canada (The Federation), incorporated by an Act of
Parliament in 1903, acts as the pre-eminent voice of shipowners, operators and agents
involved in Canada’s world trade. Its overall objective is to work towards a safe,
competitive and environmentally sustainable marine transportation system.
A complete list of the Federation’s membership can be found in Appendix 1.
Our interest in trans-border security and trade cooperation
As carriers of word trade, our members know that security is a key ingredient in the
development of trade. Therefore, we have always been supportive of security initiatives,
including the 96-hour pre-notification rule, Customs’ pre-notification procedures, the
worldwide implementation of the International Ship & Port Security (ISPS) Code
(adopted under the auspices of the International Maritime Organization), the
implementation of Seafarers’ Identification Documents with biometric features (adopted
under the auspices of the International Labour Organization), etc.
However, we also believe that security must be managed through intelligence gathering
and risk assessment in a manner that does not unnecessarily impede the efficient flow
of legitimate trade. Towards that end, the Federation has been a member of the
Coalition for Safe and Trade Efficient Borders led by the Manufacturers and Exporters
Association, and was a strong supporter of the Canada-US Smart Border Declaration
and Action Plan when it was released.
We believe that now is the time for Canada and the US to take the next step in the smart
management of their common border within a perimeter approach.
Key border issues for the marine mode
The Seaway-Great Lakes system is the main area in which the management of the
marine border between Canada and the US raises issues. Given that a ship
proceeding up or down this common water route may have to cross the marine border
up to twenty-six times, the streamlining of regulations and processes between the two
countries would help each benefit from a more efficient use of this under-utilized route.
The management of the land border is also of interest to the marine mode,
particularly as this relates to the management of connecting modes. In order to reap the
full benefits of marine transportation, we believe that the treatment of connecting modes
at the border should be mode-neutral. We also believe that there should be mutual
recognition of cargo scanning processes, in order to avoid the duplication of such
processes.
9
1. Streamlining of regulations and processes in the Seaway-Great Lakes region
The Seaway-Great Lakes region is a closed system with only point of entry/exit, which
provides access to the economic and industrial heart of the continent. Indeed, fully a
quarter of North America’s population and fifty-five percent of its manufacturing and
service industries are located in this region1. Any ship calling an Ontario port via the St.
Lawrence River must transit US waters, and any marine route that crosses the whole
system must necessarily cross continuously the marine border between Canada and the
U.S.
From on international shipping perspective, the priorities related to the shared
management of this trade route are as follows:
-
-
-
As regards customs & immigration, vessel, crew and cargo reporting should be
harmonized throughout the entire system, with vessel’s point of entry into /exit out
of the Seaway being the main common checkpoint for all foreign vessels calling
at ports in the system.
As regards environmental requirements for ships, these should (at the very least)
be harmonized across the region. Most urgently, the state of New York’s
requirements for onboard ballast water treatment systems, which are currently
impossible to meet, should be lifted or revised, at least for ships in transit.
As regards marine pilotage, the service that is offered in the Great Lakes region
should be further harmonized and streamlined.
As candidates for the two-year mandate of the Regulatory Cooperation Council, we
propose to focus on the following deliverables:
-
-
Targeting and inspection procedures for customs and immigration purposes
should be done in Montreal by both US and Canadian authorities for all upbound
ships. Such ships would not be required to make any further report or be subject
to any further inspection while transiting the system, other than:
o at the port of call,
o when the authorities decide to specifically control a subject ship.
The New York State requirements for onboard ballast water treatment should be
lifted or revised for ships in transit.
A binational review panel should be struck to look at ways to streamline the
pilotage process in the Great Lakes region.
1
Great Lakes St. Lawrence Study, 2007, p. 2 (available at:
http://www.marad.dot.gov/documents/GLSLs_finalreport_Fall_2007.pdf )
10
2. Improving border management of connecting carriage
Three current practices regarding the management of the land border can be targeted
for consideration by the Regulatory Cooperation Council:
-
-
-
Double scanning or no scanning of ocean containers. The current situation is
somewhat odd. Ocean containers arriving in a Canadian port and then transiting
to the US across the land border are (100%) scanned in the port of arrival, and
then (100%) scanned again when crossing the border. However, when the
direction is reversed, ocean containers crossing the land border on their way to a
Canadian port are not scanned at either the border or the port. Under a perimeter
approach, all containers would be scanned when they are landed in the continent
(i.e. in the Canadian or US port of unloading), and would then be able to proceed
to their end destination without being scanned again.
The “flying truck” approach. For the past twenty-five years or so, CBSA has been
using the airline carrier code for the connecting truck carrying the cargo under the
same waybill, thereby minimizing the number of reports and possible errors. It
would be more than timely to extend this practice (more commonly known as the
“flying truck”) to the marine mode, thereby enabling the connecting truck to use
the marine carrier code with the waybill or the bill of lading when the cargo is
transhipped from marine to truck.
Removal of CBSA’s In Bond Cargo Control Document form (Form A8A). CBSA
currently requires the completion of two forms for rail and truck transit (A8A and
A8B2), while the US CPB only requires one form (A8B) for such transits. Form
A8A is far less descriptive than Form A8B and is not conducive to automation,
resulting in the duplication of reporting and in the continuing use of paper rather
than electronic formats. Given that this creates an irritant that fulfills no useful
purpose, we recommend that it be removed. By keeping only the A8B form,
Canada and the US would have a harmonized reporting requirement for land
transit cargo, which could be fully automated.
We believe that these three recommendations are attainable within the two-year window
of the Regulatory Cooperation Council.
****
2
See Appendix 2 for samples of these forms.
11
The Shipping Federation of Canada greatly appreciates this opportunity to comment on
potential priority initiatives that will increase regulatory transparency and coordination
between Canada and the U.S. We believe that the points we have raised in the
preceding pages will lead to meaningful progress in the short term in the effort to
streamline the management of our shared border in a way that promotes trade efficiency
without jeopardizing security. We trust that you will find our recommendations to be
useful and would be pleased to provide any additional information you may require.
Sincerely
Michael H. Broad
President
SHIPPING FEDERATION OF CANADA
12
LIST OF FEDERATION MEMBERS
ACRO Navigation Inc.
F. K. Warren Ltd.
Admiral Marine Inc.
Fednav Ltd.
Aegean Maritime Inc.
Fundy Shipping Ltd.
Agence maritime de Sorel Inc.
Furncan Marine Ltd.
Alcan Shipping Services Ltd.
Gibson Canadian Global Agency Inc.
American President Lines Ltd.
Goodfellow Shipping Agency Ltd.
Anglo-Eastern Ship Management Ltd.
Gresco Ltd.
Atlantic Container Line
H. E. Kane Agencies
Atlantic Maritime Agency Inc.
Hampton Ship Agency
Atship Services Ltd.
Hapag-Lloyd (Canada) Inc.
Bay Shipping Inc.
Holmes Maritime Inc.
CSL Group Inc. / Groupe CSL Inc.
Inchcape Shipping Services
Canadian Maritime Agency Limited
K D Marine Inc.
Canmer Navigation Inc.
K Line Canada Ltd.
Celtic Maritime
Laden Maritime Inc.
China Ocean Shipping Co. (COSCO)
Lakehead Shipping/Cdn. Grain
China Shipping (Canada) Agency Ltd.
Lower St. Lawrence Ocean Agencies Ltd.
CMA-CGM Canada
Maersk Line
CMC – Currie Maritime Corp.
Mathers Marine Agency Ltd.
Colley Motorships Ltd.
MCA Marine & Cargo Agencies Ltd.
Cross Marine Inc.
McAsphalt Industries Ltd.
Eastern Canada Towing Ltd.
McKeil Marine Limited
Echo Freight Inc.
McLean Kennedy Inc.
Evergreen America Corp.
Merada Transportation Ltd.
13
Montreal Marine Services Inc.
Montship Inc.
Montship Maritime Inc.
MSC (Mediterranean Shipping Co.)
Navitrans Shipping Agencies Inc.
North Atlantic Refining Ltd.
Norton Lilly International
NYK Line (Canada) Inc.
Ocean Remorquage Montreal Inc.
Oceanic Tankers Agency Limited
OOCL (Canada) Inc.
Poros Shipping Agencies Inc.
Project Transport & Trading Ltd.
Protos Shipping Limited
Ramsey Greig & Co. Limited
Robert Reford
Scandia Shipping (Canada) Inc.
Seabridge International Shipping Inc.
Senator Lines
SMK Tanker Agency Inc.
Trillium Shipbrokers Ltd.
Wagenborg Shipping North America Inc.
Wallenius Wilhelmsen Lines Americas
Zim Integrated Shipping Services (Canada)
Co. Ltd.
14
APPENDIX D
The Commission will be seeking voluntary and
full input on the issue from government, industry,
and the public — both in the United States and
Canada.
News
Proposed Rule for Service Contracts Linked
to Freight-Rate Indices: The Commission also
voted unanimously today to issue a proposed
rule that would give more flexibility for ocean
carriers and shippers to use service contracts
with rates linked to freight rate indices. To date,
the Commission has received more than fifty
service contracts that reference freight indices.
Two Actions Approved: Inquiry into
Disparities that Drive U.S.-Bound
Cargo to Canadian and Mexican Ports,
and Proposed Rule for Service
Contracts that Link Rates to Freight
Indices
October 5, 2011
Contact: Karen V. Gregory, Secretary (202-5235725)
Under the Commission’s current rules, service
contracts can only reference outside terms, such
as a rate in a freight index, that are "contained in
a publication widely available to the public and
well-known within the industry." The proposed
rule would make clear that contracts can
reference freight indices or other outside terms,
so long as they are "readily available to the
parties and the Commission."
During its meeting today, the Federal Maritime
Commission voted unanimously to begin a Notice
of Inquiry into disparities that may be causing
U.S.-bound cargo to be driven to Canadian and
Mexican ports. In a separate action, the
Commission also voted unanimously to approve
a proposed rule to provide flexibility and certainty
to ocean carriers and customers who use service
contracts with rates linked to freight-rate indices.
Chairman Lidinsky stated: "This proposed rule is
another example of the Commission
implementing President Obama’s guidance to
revisit regulations to reduce burdens and
promote flexibility. To the maritime industry, my
message is: go forth and innovate. The FMC will
try to give you the certainty and flexibility you
need, while continuing to protect the shipping
public."
Inquiry into Disparities Driving U.S. Cargo
from U.S. Ports to Canada or Mexico: In
response to written requests from U.S. Senators
and a bipartisan group of eight U.S.
Representatives from Washington State and
California, the Commission voted to commence a
Notice of Inquiry, which will seek public comment
and information to inform the Commission’s study
of the U.S. Harbor Maintenance Tax and other
disparities that may be driving U.S.-bound cargo
from U.S. ports.
The Federal Maritime Commission is the federal
agency responsible for regulating the nation’s
international ocean transportation for the benefit
of exporters, importers, and the American
consumer. The FMC’s mission is to foster a fair,
efficient, and reliable international ocean
transportation system while protecting the public
from unfair and deceptive practices.
NR 11-17
Chairman Richard A. Lidinsky, Jr. stated:
"Canadian and Mexican ports are free to
compete with U.S. ports for U.S. cargo. But they
should do so on a playing field that is not
artificially tilted by governments’ policies. So the
primary question is: are we handicapping our
own ports in international competition?"
15
APPENDIX E
QUALITY COASTAL SHIPPING FOR A QUALITY COASTAL STATE
Actions by the Shipping Federation of Canada to Promote and Support
Quality Shipping in Canada:
•
•
•
•
Ensuring regulatory compliance by shipowners and operators through the development of
information tools and compliance checklists.
Promoting the implementation of best practices, especially in environmental matters,
through such means as the “Green Marine’ environmental program developed for the St.
Lawrence and Great Lakes (and now spreading across North America).
Facilitating the trial and onboard implementation of advanced technologies for issues such
as ballast water management, oily water waste management, and ships’ air emission
reductions.
Positioning Canadian ships’ agents as “ambassadors” for the quality shipping / quality
coastal state concept by ensuring agents have access to relevant and up-to-date information
for transmission to foreign shipping lines, and encouraging agents to provide feedback on
the needs of international ships calling Canadian ports.
Actions by the Canadian Government to Ensure Canada is Recognized as
a Quality Coastal State:
•
•
•
•
•
Ensuring Canada fulfills its international duties and obligations by ratifying and
implementing internationally agreed conventions and adhering to international guidelines:
o Ensuring Canada follows IMO Guidelines such as the IMO/ILO Guidelines on the
fair treatment of seafarers
o Ensuring the provision of adequate waste reception facilities and arrangements
to protect the marine environment and resources
o Ensuring the provision of navigational aids and vessel traffic services, where
appropriate.
Providing ships in distress with a place of refuge (rather than risking environmental
disaster by denying such refuge).
Ensuring the safe passage of ships through Canadian waters through all means possible,
including the provision of efficient pilotage services.
Giving incentives to quality ships calling at Canadian ports and ⁄or navigating within
Canadian waters.
Ensuring a flexible and efficient trade route by creating a “cargo friendly route” (by
facilitating border crossings and intermodal movements) and a “guaranteed route” (by
implementing processes to avoid traffic disruptions and assure quick responses or fluid rerouting).
16