The US Federal Maritime Commission has made public the first batch of documents in its two-month-old inquiry into whether American policies are causing an erosion of container traffic at ports on the US West Coast.
The documents include responses from various business and trade groups that, depending which side of the border they’re on, say that a claim that Canadian and Mexican ports have an unfair competitive advantage over those in the US is either accurate or erroneous.
For example, the Seattle Metropolitan Chamber of Commerce and Washington Ports Association, among others, say US policies have resulted in a diversion of cargo to Canadian and Mexican ports and that the situation could deteriorate even more in coming years.
“This diversion compounds the competitive pressures that our ports will face when the Panama Canal completes its expansion in 2014, enabling larger vessels to bypass the West Coast entirely,” the Chamber of Commerce wrote in its response to the inquiry.
The Canadian government among others, however, rejects the diversion theory, saying the growth at non-US ports is due to other factors.
“The unprecedented expansion and diversification of the Asian marketplace continues to significantly alter global trade patterns and supply chains,” the government wrote in its official comments to the FMC inquiry. “This phenomenon presents considerable business opportunities for North American firms and has yielded steady growth in sea-borne trade, specifically containerized trade, between North America and Asia.”
The Canadian government says that it and the Mexican government have responded to this increase in container traffic volume by beefing up port, rail and road infrastructure improvements throughout the transportation system, the Canadian government said in its response to the inquiry.
The FMC’s investigation, which was launched last November, is studying the impacts and the extent to which US policies, particularly the US Harbor Maintenance Tax, incentivizes container cargo to shift from US West Coast ports to those in Canada and Mexico.
The maintenance tax is a US-only per-container federal fee, collected by American ports on behalf of the federal government, based on a percentage of the cargo’s value. The money collected is distributed to ports for dredging work and other improvements.
The fee is not charged in Canada or Mexico, which has given rise to the belief by some officials that the fee could be causing diversion of cargo to non-US ports. In recent years, there’s been a steady increase in the amount of US-destined cargo moving through Canadian port Prince Rupert and the Port of Lázaro Cárdenas in Mexico.
The FMC launched its investigation after receiving requests from elected officials in Washington and California regarding the issue, with some suggesting that the Canadian and Mexican governments should explore a tax similar to the US’s HMT, in order to level the playing field.
The officials requesting the investigation were US senators Maria Cantwell and Patty Murray, both of Washington state, and Congress members Jaime Herrera Beutler, Norm Dicks, Jay Inslee, Rick Larsen, Jim McDermott, Dave Reichert and Adam Smith, all of Washington, as well as Congresswoman Laura Richardson of California.
