Nfld. & Labrador

Federal finance minister rebuffs N.L. ferry tariff request

Attempts by the Newfoundland and Labrador government to have a $25-million trade tariff waived on the purchase of two new ferries have been dealt a blow.

David Brazil wants meeting with federal counterpart to discuss 'unfair tax'

The $50-million MV Veteran is pictured being launched earlier this year at a shipyard in Romania. A sister ship, the MV Legionnaire, is currently under construction. (Damen Shipyards)

Attempts by the Newfoundland and Labrador government to have a $25-million trade tariff waived on the purchase of two new ferries have been dealt a blow.

In a May 4 letter to provincial Transportation and Works Minister David Brazil, federal Finance Minister Joe Oliver said he "cannot recommend" the removal of the tariff, which is applied to vessels under 129 metres purchased from countries that do not have a free trade agreement with Canada.

The letter, obtained Friday by CBC News, went on to say that such a move would "undermine the duty remission framework."

That decision appears to close the door on any hopes the costly duty will be waived on new ferries for the Bell Island and Fogo Island/Change Island routes.

Yet, the provincial transport minister is not ready to let the matter go.

Brazil believes the tariffs are an unfair tax on the province, and has said as much in follow-up letters to Oliver.

He now plans to travel to Ottawa in the coming days to make that argument to Oliver and other government officials.

Canadian bids 'not in the realm'

He said the province awarded the $100-million contract for the MV Veteran and the MV Legionnaire to Damen Shipyards because its bid was superior in all respects, even when factoring in the tariff.

Damen is based in the Netherlands, but the work is being done at the company's yard in Romania.

Brazil said bids from Canadian companies were "not in the realm of being discussed," and that removing the tariff would not harm the Canadian shipbuilding industry, the rationale given by Ottawa for implementing the policy.

Bids from companies in countries with trade agreements with Canada also fell well short in the tendering process, he added.

He said the federal government did approve exemptions for ferries purchased in British Columbia, and the argument in those cases were very similar.

David Brazil is the Newfoundland and Labrador Minister of Transportation and Works. (CBC)

Brazil said exemptions can be made for economic and safety reasons, and he believes that can be argued in this case.

"I'll be on the steps of the proper officials and I'll be knocking on doors. I expect meetings. I expect to be given that opportunity and, you know I'm open-minded. If they can give me a rational reason why it doesn't fit, well then fair enough. At this point I don't see that rational reason. I don't accept it," he said.

Despite the added tariff, Brazil still believes the province is getting good value for its money with the new ferries.

Meanwhile, Canada recently concluded a free trade agreement with the 28 member nations of the European Union, which includes the Netherlands and Romania.

That agreement, once ratified, will do away with such tariffs.

The duties must be paid upon delivery of the new ferries, and those dates are not far off.

The Veteranis expected arrive in Newfoundland and Labrador in late October. The vessel had recently set sail for the province, but returned to Romania with engine trouble.

The Legionnaire, meanwhile, is set to arrive this winter.

Brazil said the two 80-metre ships will dramatically improve the inter-provincial ferry service.

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