In Canada, as is the case in many other countries,
"cabotage" laws exist which means that foreign registered
vessels cannot perform commercial marine operations solely within
domestic waters unless there are no Canadian registered vessels
available to perform the task.
The Canadian government has recently concluded negotiations of
the Canada-European Union Comprehensive Economic and Trade
Agreement ("CETA"). The specific wording of the agreement
has not yet been released, but based on information provided by the
government, the proposed terms appear to change Canadian cabotage
laws as they currently exist under the Coasting Trade Act
and in certain circumstances open up Canadian waterways to EU
companies and EU and other foreign vessels.
Canadian labour organizations and ship owning groups have
expressed concerns about these changes.
CETA is intended to be a comprehensive trade agreement
encompassing all elements of modern trade. The desired objective on
the Canadian side is to lift Canadian trade restrictions in
exchange for preferential access to the EU, Canada's
second-most important trade and investment partner. The EU is
considered world's largest economy, with more than 500 million
consumers and a GDP of $18 trillion.
With respect to maritime services, CETA would allow:
EU entities to use non-Canadian vessels to reposition their
empty containers between ports in Canada, on a non-revenue
EU registered vessels to be used to provide feeder services for
cargo between the Ports of Halifax and Montreal: both bulk
and containerized cargo for continuous service using vessels on EU
first registries; and, containerized on a single voyage where it is
part of an international leg using vessels on EU first or second
EU entities to use vessels of any registry for commercial
dredging services contracted by private entities; and
For federally-procured dredging contracts, EU entities will be
permitted to bid on contracts exceeding the procurement thresholds
for construction services using EU-registered (and built/modified)
vessels. The procurement thresholds are the same as those currently
found in the World Trade Organization's Agreement on Government
Procurement (C$7.8 million).
None of the foregoing activities would be permitted under the
A number of unions have joined forces under the name of the
Canadian Maritime & Supply Chain Coalition for the purpose of
studying the possible effects of CETA and defending Canadian jobs.
Other organizations such as the Canadian Shipowners Association
have expressed the concern that there was a "the lack of
transparency in the CETA negotiations and the fact that access to
trades between Canadian ports may be given to EU carriers, who
employ international labour at much lower rates, do not pay
Canadian taxes or employ Canadian workers and are not regulated to
the rigorous Transport Canada safety and operating standards
imposed on Canadian flagged vessels."
The Canadian dredging industry provides services to harbours and
navigable waters as well as providing environmental remediation
services for inland tailing ponds at places such as the oil sands
projects in Alberta. The size and age of Canada's
dredging fleet may create significant business opportunities in
Canada for EU entities.
In our view, it is doubtful that the US will push for similar
changes to NAFTA as traditionally it has fiercely protected its own
cabotage laws. However, American companies may pursue joint venture
opportunities with European entities in order to enter this door
into the Canadian commercial marine market and to take advantage of
these changes to Canadian cabotage laws.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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