Emerging ports dispute a new strain on Canada-U.S. trade

Canadian officials are trying to head off a looming cargo levy on Canadian ports, as the U.S. Federal Maritime Commission considers complaints that Canada is unfairly subsidizing the diversion of cargo ships away from U.S. ports.

Canada's trade minister in Washington for discussions with U.S. Trade Representative Kirk

International Trade Minister Edward Fast, shown here in a file photo from question period on September 21, is in Washington meeting with U.S. trade officials. (Adrian Wyld/Canadian Press)

Canada's new international trade minister had his first meeting Monday with his American counterpart, but Ed Fast provided few details about what was discussed despite new trade hostilities percolating between the world's two biggest trading partners.

Fast said he had an "excellent" discussion with U.S. Trade Representative Ron Kirk and planned to meet with additional American officials on Tuesday. He wouldn't say who.

"We discussed a broad range of issues," Fast said several times when asked what he and Kirk discussed, "all of which impact upon our trading relationship."

He wouldn't say whether TransCanada's Keystone XL pipeline was among the topics of discussion. The $7-billion pipeline has become a political hot potato for the Obama administration as environmental groups pitch a heated, high-profile battle to convince the U.S. State Department to block the project.

The tight-lipped Fast opened the vault slightly when it came to a recently announced U.S. inquiry into allegations that the Canadian ports of Vancouver and Prince Rupert are unfairly swiping lucrative cargo traffic from American West Coast ports.

The five-member Federal Maritime Commission is holding the inquiry following complaints from American ports that Canada is unfairly subsidizing the diversion of cargo ships away from its U.S. competitors.

The agency will deliver its findings to U.S. Congress after it completes the inquiry amid concerns that American lawmakers are mulling over a US$143-per-container levy on cargo entering the United States from B.C. ports as a retaliatory measure.

"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," Richard Lidinsky, chairman of the commission, said recently.

Fast said he wasn't meeting with Lidinsky during his D.C. visit, but added he'd been in recent contact with him, including sending a letter that expressed Canadian concerns.

He suggested the U.S. might rethink the harbour tax it charges that makes Canadian West Coast ports a cheaper destination than American ports.

"We do not charge a harbour tax as Americans do; they will obviously have to look at that carefully as they do their inquiry," he said.

"But we will be standing up for Canadians, we will be standing up for Canadian businesses, and we will certainly be standing up for our ports."

Prospects of a cargo levy is just the latest bit of alarming news on the Canada-U.S. trade front.

Protectionist Buy American provisions have been resurrected in U.S. President Barack Obama's $447 billion jobs legislation even as Canada and the U.S. prepare to officially announce a sweeping agreement on border co-operation that will see Canada spend $1 billion for new border facilities and programs.

Senate Democrats are currently attempting to advance the bill piece-by-piece in order to get around congressional Republicans who have vowed to block the legislation.

"It's disappointing to see when new trade barriers are erected," Fast said Monday. "At the same time, we need to place those in perspective and understand that it's absolutely critical for us as a federal government ... to focus on removing trade barriers."

Upcoming meetings with Kirk, Fast said, will be used to "impress upon him time and time again, that these measures that they're trying to implement are not helpful in our trade relationship. In fact they'll hurt both economies."

Fast wouldn't say whether Kirk agreed with him, but suggested signs were positive.

"We generally agreed that removal of trade barriers is a good thing for Canada and the U.S.," he said.

"We may from time to time disagree about what's the best way of achieving that, but as long as we are still talking, we still have discussions and dialogue on these issues, I'm confident that in a year, five years or 10 years from now, the U.S. is still going to be our best trading partner."