Canada's 25 per cent duty preventing shipping industry from investing in further environmental improvements

    Urgent call from industry to help improve infrastructure through fleet

    OTTAWA, June 2 /CNW Telbec/ - The Canadian Shipowners Association today
called on the Government of Canada to eliminate the punitive and unnecessary
25 per cent duty on new ships purchased abroad, stating the tax is impacting
environmental improvements and the competitiveness of the Canadian industry.
    "The Canadian shipping fleet is aging, and as we approach the need for
increased renewal, it has become clear that Canadian shipyards cannot build
the new vessels required in a cost-competitive and timely manner" said Don
Morrison, President and CEO of the Canadian Shipowners Association. "The new
vessels will improve the Canadian industry's environmental performance and
will reduce the environmental footprint of what is already the most
ecologically-sound transportation mode."
    "The 25 per cent import duty is a failed policy. If it was meant to
offset offshore subsidies, those have long been removed. If it was meant to
promote building new ships in Canada, we are now 23 years and counting without
a new Great lakes cargo ship built in this country. The time for action is now
- with the elimination of this regressive duty, the industry can renew the
fleet in a more timely way, and bring more environmental benefits to the
transportation sector faster."
    The Canadian Shipowners Association has proposed its three-point plan
with respect to the 25 per cent duty:

    - An immediate elimination of the duty on new builds;
    - Status quo on duty on second-hand vessels for the next ten years, and
      then an elimination of the duty entirely, and
    - The maintenance indefinitely of the duty on any vessel repairs to
      protect Canadian industry's ability to service vessels.

    "CSA members have noted that government revenues, from all levels of
corporate and personal taxes, generated throughout the lifespan of a vessel,
would be greater than the revenue received from the import duty on the same
ship," said Mr. Morrison. "With the duty preventing the kind of fleet renewal
required, governments are foregoing these ongoing revenues."
    Thanks to increased government procurement activity, and a planned
shipbuilding policy to stabilize government requirements for Canadian
shipyards, the Canadian shipbuilding industry is now focused on work
supporting government clients. That plan, coupled with the lack of facilities,
lack of capacity and cost disadvantages, leaves no Canadian shipyard in a
position to build the renewed fleet CSA member organizations require. Because
association members will be buying their vessels offshore, the 25 per cent
duty is merely adding costs to Canadian consumers and delaying the renewal of
the Canadian fleet.
    "The last Canadian-built bulk carrier was finished in 1985. As a result,
there are in excess of $1 billion in new builds required by CSA members over
the next ten years. Unfortunately, there simply is no longer a Canadian
industry capable of building these ships in a way that is cost-competitive,"
said Mr. Morrison. "We propose a solution that will ensure Canadian shipyards
can maintain and service new-build ships without requiring the ongoing
imposition of a penalty that only harms Canadian consumers by driving up their
final costs."
    In 2006, there were no Canadian bidders in response to a request from a
CSA member company for new vessel construction. With subsidies eliminated in
foreign jurisdictions, the original role of the duty no longer applies.
    "Marine transportation remains a vital link in the transportation system,
and our members remain committed to undertaking any effort to improve
environmental performance as well," said Mr. Morrison. "Unfortunately, adding
an additional 25 per cent to the cost of every new ship only costs Canadians
more in shipping costs and in lost competitiveness. For the Government of
Canada and the citizens it represents, it really is a case of short-term gain
leading to long-term pain.
    "The time is now for the government to remove this punitive tax from
shipowners who wish to provide new and efficient green ship solutions for the
Great Lakes."

    About the Canadian Shipowners Association

    The Canadian Shipowners Association (CSA) represents the interests of the
Canadian companies that own and operate Canadian-flagged commercial marine
vessels. Member companies include: Algoma Central Corporation; Canada
Steamship Lines; Groupe Desgagnés Inc.; Rigel Shipping Canada Inc.; Seaway
Marine Transport and Upper Lakes Group Inc. The Association advocates in the
development of marine policy, regulations and operational matters for
shipowners with vessels on the Great Lakes, St. Lawrence Waterway, the Arctic
and the eastern seaboard of the United States and Canada.

For further information:

For further information: Bruce Bowie, Vice President, Canadian
Shipowners Association, (613) 232-3539

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Canadian Shipowners Association

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