RESTRICTED
WORLD TRADE S/NGMTS/W/2/Add.5
25January 1995
ORGANIZATION
(95-0129)
Negotiating Group onMaritime Transport Services Original: English
COMMUNICATION FROM CANADA
Response toQuestionnaire onMaritime Transport Services
Thefollowing communication iscirculated attherequest ofCanada toMembers ofthe
Negotiating Group onMaritime Transport Services.
I. Market structure
Vessels
1. Canadian registered fleet, asof31December 1993
Vessels 1000 GRT andover
(Excluding Ferries andPassenger)
Type ofVessel Number ofVessels GRT DWT %DWT
Drybulkcarriers 78 1,372,158 2,087,344 83.0
Tankers 30 199,050 307,754 12.2
General cargo 13 77,394 86,917 3.5
Combined
passenger/cargo4 9,178 5,313 0.2
Ore/oil carrier 1 20,118 26,440 1.1
TOTAL 126 1,677,898 2,513,768 100.0
Source: National Transportation Agency (NTA).
Twenty-five Canadian companies control 98vessels registered in18different countries.S/NGMTS/W/2/Add.5
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Description ofvessels
These 98vessels aredistributed bytypeasfollows: 60bulk carriers, 9general-cargo
vessels, 8RoRo ships, 6container ships, 5tankers, 5offshore supply vessels, 2barges, 2tugsand
1OBO.
Thetablebelow liststhisdistribution withcorresponding tonnages (GRT andDWT).
Canadian Controlled Foreign-Flag Fleet Types ofVessels withGRT andDWT
Type ofVessel Number GRT DWT
Bulkcarriers 60 1,760,800 3,089,604
General cargo 9 69,431 91,426
RoRo ships 8 71,858 83,707
Container ships 6 109,851 115,463
Tankers 5 66,378 132,212
Offshore supply vessels 5 10,836 9,453
Barges 2 18,090 15,494
Tugs 2 861 837
OBO 1 50,489 113,706
TOTAL 98 2,158,594 3,651,902
2. Quantity -Year: 1993
Mode: Marine
Sector Unloadings
(000) tonnesLoadings
(000) tonnesTotal Freight
Carried*
(000) tonnes
International:
United States 28,026 41,683 69,709 31.1%
RestofWorld: 43,983 110,469 154,452 68.9%
TOTAL 72,009 152,152 224,161
*Includes pipeline, mail, parcel, couriers etc.
Source: NTA Annual Review (1993).S/NGMTS/W/2/Add.5
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Value -Year: 1993
Canada 'sInternational Trade (United States, Mexico andRestofWorld)
Mode Total International Trade
$Billions %Trade
Marine 60.9 17.1%
Truck 197.9 55.6%
Rail 48.9 13.7%
Air 30.9 8.7%
Other* 17.6 4.9%
TOTAL 356.2
*Includes pipeline, mail, parcel, couriers etc.
Source: NTA Annual Review (1993).
3. Value -Year: 1993
Mode Imports Exports
$Billions %Share $Billions %Share
Marine 30.4 17.9% 30.5 16.3%
Truck 107.7 63.5% 90.2 48.3%
Rail 11.8 7.0% 37.1 19.9%
Air 17.9 10.6% 13.0 7.0%
Other* 1.7 1.0% 15.9 8.5%
TOTAL 169.5 186.7
*Includes pipeline, mail, parcel, couriers etc.
Source: NTA Annual Review (1993).S/NGMTS/W/2/Add.5
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4. Quantity -Year: 1993
1993 International Tonnage byCanadian Flag
Vessels Flag Tonnage
('000,000)%Share
Canada 39.6 17.7%
Foreign 184.6 82.3%
TOTAL 224.2
5. Thisinformation isnotavailable.
Organization ofcargo
6.
Canadian international shipping tonnages -1993
(inmetric tonnes)
Imports Exports Total
Liner Shipping 7,180,021 10,500,946 17,680,967
DryBulk 34,550,416 110,866,747 145,417,163
Liquid Bulk 28,358,390 14,490,184 42,848,574
Other 1,920,246 16,293,963 18,214,209
TOTAL 72,009,073 152,151,840 224,160,913S/NGMTS/W/2/Add.5
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7.
1993 International waterborne shipments
Preliminary -Metric Tonnes
Summary
EXPORTS
Liner Shipping
Conference
Non-conference4,559,213
5,941,7323.0%
3.9%
Non-liner 141,650,894 93.1%
TOTAL EXPORTS 152,151,839
IMPORTS
Liner Shipping
Conference
Non-conference3,709,484
3,470,5375.2%
4.8%
Non-liner 64,829,052 90.0%
TOTAL IMPORTS 72,009,073
Information withregard totrade carried byconsortia isnotavailable.
8. Nil.
9. Nil.
10.
Liner cargo
EXPORTS
Total Liner 10,500,945
Containerized Liner 7,085,862 67.5%
IMPORTS
Total Liner 7,180,021
Containerized Liner 6,024,332 83.9%
11. Canada does notmaintain records ontheproportion ofcargo moving onthrough rates.
However, based onresponses froma1993 survey ofshipping conferences itisestimated thataround
40percent-50percentoflinercargo ismoving onthrough rates.S/NGMTS/W/2/Add.5
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Ports andauxiliary services
12.
Canadian international shipping tonnages -1993
BYSERVICE AND COMMODITY TYPE
MAJOR CANADIAN LINER PORTS
(metric tonnes)
Total national/international porttraffic
inmajor national ports =224,160,912
Estimated share ofthistraffic which is
Containerized =5.9%
Bulk =91.0%
General cargo =3.1%
13. With regard tomaintenance andrepair ofvessels, foreign suppliers arenotcurrently present
inthismarket butarepresent inallother sub-sectors.
14. Yes,"foreign suppliers" arepresent inthemarket ofoperating intheinland movements of
international waterborne trade cargoes bytruck, railandwater.
II. Regulatory structure
General
1. Marine transportation regulation inCanada istheresponsibility ofTransport Canada which
isamulti-modal department withspecific Groups dedicated toAir,Surface, andMarine transport.
Theregulatory structure forMarine isdivided intotwoprimary aspects:
(a)Economic regulation, and
(b)Safety andPollution Prevention regulation
(a) Economic regulation which isvested inthedepartmental policy groups haslittleor
noimpact onindividual foreign-flag vessels operating intoCanadian Ports.
(b) Safety andPollution regulation isvested intheMarine Group andtobemore specific
intheShipSafety Branch oftheCanadian Coast Guard.
Itshould benoted thatCanadian regulations applicable toforeign-flag vessels arebased almost
exclusively onthevarious Conventions suchasSOLAS andMARPOL agreed toattheInternational
Maritime Organization. Accordingly, anyforeign-flag vessel which complies withthese conventions
willforthemost partcomply withCanadian regulations.S/NGMTS/W/2/Add.5
Page7
Toensure thatforeign-flag vessels doinfactcomply withthevarious convention requirements,
Canada, assignatory totwoseparate PortState control memoranda, conducts arigorous PortState
Control programme.
Other Departments/Agencies include:
Health Canada (general application)
Industry Canada (investment reviews) (general application)
Department ofCitizenship andImmigration (general application)
Department ofConsumer andCorporate Affairs (general application)
Department ofAgriculture (general application)
Canadian Coast Guard (sectoral application)
National Transport Agency (sectoral application)
2. None, laissez-faire.
3. Liner services areunregulated, there arenorequirements forlinercompanies tobelicensed
ortofiledocumentswiththeGovernmentofCanada.ShippingconferencesarepermittedunderCanada's
Shipping Conferences Exemption Act,1987 andconferences andtheirmember linesarerequired to
filewiththeNational Transportation Agency ofCanada (theAgency) -seesections onCompetition
LawandShipping Conferences.
4. InCanada, anyparty (multi-modal transport operator, general orbulkshipping line,shippers
orintermediaries) isabletorentorlease trucks, railway carriages, orbarges andrelated equipment
forthepurpose ofinland forwarding ofcargoes. Ifthese resources areapurchased service from a
qualified carrier, thatistheendofthematter. Iftheacquiring party wishes tofunction directly as
a"forhire" carrier, andnotasapurchaser ofthese services, thenseparate entry conditions mustbe
satisfied foreachmode.
General legislation forrailservices iscomprised inthree Acts:
Railway Act,1985:
Provides aframework fortheinternal management ofrailway companies, regulates various
transactions between railways, e.g.traffic agreements, andsetsvarious other duties, powers
andprivileges ofrailways companies.
National transportation Act,1987:
Inrelation torailways, establishes aregime ofeconomic regulation, e.g.entryandexitcontrols,
specific regulated prices, etc.provides forregulatory supervision and"public interest" hearings
onavariety ofmatters, andprovides ownership concentration thresholds forthereview of
acquisitions.S/NGMTS/W/2/Add.5
Page8
Western Grain Transportation Act:
Regulates railway prices andsubstantial elements oftheiroperations andinvestments inthe
transportation ofgrain produced inthePrairie region ofCanada.
Under thisregulatory regime, railway companies havea"common carrier" obligation which
requires thattheymake provision intheiroperations andinvestments tofurnish "adequate and
suitable" accommodation toallofthetraffic thatisoffered tothem, andtocarry equivalent
traffic under essentially thesame prices andconditions ofcarriage. They alsoarerequired
toactreasonably tofacilitate every form ofthrough movement, which mayinvolve other
railways, other modes, andother facilities suchasports, andtooffer noparticular barriers
orhinderance toanyregion, commodity orperson.
Inparallel, andsubject totheirlegislative obligations, theyhavediscretion toconstruct their
prices andservices according tomarket demands, andmayenterintoalliances andother forms
ofcontracts orbusiness arrangements.
Surface transportation services inCanada aresubject totherequirement thatthecarrier obtain
theappropriate operating licences andbeincompliance withprovincial orfederal highway
safety requirements.
Atruck carrier canprovide doortodoorinterprovincial orinternational intermodal service.
Alocaloperating licence isrequired ifthetruck movement iswholly within asingle province,
oranextra-provincial licence ifthemovement crosses aprovincial ornational border.
Adrayage movement wholly within Canada isconsidered ascabotage, andthedriver must
beCanadian andthetractor must beCanadian registered.
General legislation fortruck operations inCanada iscomprised in:
TheMotor Vehicle Transport Act,1987
- Federal legislation which authorizes thefederal government toregulate entry
tothecommercial truck andbusindustry forextra-provincial andinternational
carriers.
- Entrytothetruckingindustryisbasedsolelyonsafetyfitnessandpossessionofadequate
insurance.
- TheActprovides forsafety regulation ofcommercial vehicles anddrivers.
- TheActalsodelegates theadministration offederal regulations totheprovincial
jurisdiction whoenforce theregulations onbehalf ofthefederal government.
Provincial regulation
- Commercial truck operators mustalsocomply withcertain highway safety regulations
intheprovinces inwhich theyoperate.S/NGMTS/W/2/Add.5
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Coasting Trade Act
Withregard tothemarine mode inCanada, theCoasting Trade Act(federal legislation) reserves
thecoasting trade toCanadian ships andextends thejurisdiction ofthecoasting trade lawstoinclude
offshoredevelopmentontheCanadianContinentalShelf.Italsoincludesallcommercialmarineactivities
inaddition tothecarriage ofpassengers orgoods. Foreign ornon-duty paidvessels maytemporarily
enterthecoasting tradeonpayment ofduty, where itcanbeestablished thatnosuitable Canadian ship
isavailable foraparticular movement orservice.
5. Thecurrent ports system iscomprised ofthree federal regimes, alarge residual grouping of
private, oneprovincial andtwomunicipal regimes. There arenostatutory requirements forthefederal
government toownports. Thefollowing sections describe thecurrent system.
FEDERAL REGIMES
Ports Canada
ThePorts Canada system (comprised oflocalportcorporations (LPCs) anddivisional ports)
isgoverned federally bytheCanada Ports Corporation ActandFinancial Administration Act.Port
operations arealsoregulated bycorporate by-laws. Ports Canada portshaveeither national orregional
importance.
LPCs havethefollowing characteristics:
- international traffic;
- national orregional significance;
- arefinancially selfsufficient.
Ports which donotmeettheabove criteria areadministrated bytheCanada Ports Corporation
(CPC) inOttawa. These non-corporate ordivisional portsmay,however, shiftwithin thePorts Canada
system tobecome LPCs.
ThePorts Canada system hasevolved since itsformation in1983 withtheincorporation of
seven largely autonomous LPCs.
Local portcorporations Divisional ports
St.John's(1985) Belledune
Halifax (1984) Sept-Iles
Saint John(1986) PortSaguenay
Quebec (1984) Trois-Rivieres
Montreal (1983) Prescott
Vancouver (1983) PortColborne
Prince Rupert (1984) Churchill
TheCPCsubmits annual reports, corporate plans, capital budgets, andindividual submissions
foreachLPC, forreview bytheMinister ofTransport. TheMinister submits thecapital budget to
Treasury Board andthecorporate plantotheGovernor inCouncil forapproval. Alllandtransactions
must alsobeapproved bytheGovernor inCouncil. Inaddition, theCPC andeachLPCprovide
quarterly andannual financial statements totheReceiver General.S/NGMTS/W/2/Add.5
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Public harbours andports
Theprimary objective ofthepublic ports system istoassist commercial navigation. Access
toremote communities andsocio-economic development attheregional andlocal levels arealso
objectives consistent withtheNational Ports Policy.
TheHarbours andPorts Directorate ofTransport Canada isresponsible forthemanagement,
control anddevelopment ofpublic portfacilities at524sitesacross Canada.
ThePublic Harbours andPortFacilities Actsetsouttheresponsibilities andpowers ofthe
Governor inCouncil andMinister regarding public harbours andports. Anyareaofwater within the
federal jurisdiction maybedeclared, byOrder inCouncil, tobeapublic harbour. Anyportfacility,
regardless oflocation, mayalsobedeclared tobeapublic portfacility.
TheMinister ofTransport mayappoint aharbour master foranypublic harbour orawharfinger
foranypublic portfacility tocollect userfees.
TheHarbours andPorts Directorate enforces thesameOrder inCouncil regulations atallpublic
harbours andports. Tariffs areuniformly applied forharbour dues, wharfage, berthage, storage and
utilities (power, water). Lease charges forupland areas andwaterlots varybyharbour andport, as
these charges arebased onappraised market values ateachlocation.
TheMinister reports toParliament onthefinancial operations oftheHarbours andPorts
Directorate within ninemonths oftheendofeachfiscal year. Theannual capital budget isapproved
aspartoftheCoast Guard 'scapital programme. While financial self-sufficiency isnotanoperational
requirement, theapproval ofcapital projects involving dedicated users requires fullcostrecovery.
Harbour commissions
Harbour Commissions arelocated intwoprovinces: Ontario (Oshawa, Toronto, Hamilton
andWindsor); andBritish Columbia (Fraser River, North Fraser, Nanaimo andPortAlberni).
Harbour Commissions arelargely autonomous corporate entities forwhom, withtheexception
ofToronto, themajority ofCommissioners arefederal appointees. Therestareappointees from
surrounding municipalities. They operate onacommercial basisandcanholdlandintheirownright.
They areneither crown corporations noragents ofHerMajesty.
AllCommissions report directly totheMinister ofTransport ortotheGovernor inCouncil
asisthecaseforToronto andHamilton. TheHarbour Commissions Actsetsoutcertain powers for
theMinister andGovernor inCouncil:
- Tariffs require approval bytheGovernor inCouncil
- TheMinister mayfixlimits forlandpurchases andcapital expenditures uptoacertain
limit
- Direct payment ofreserve funds totheReceiver General.
Theprimary federal control oftheHarbour Commissions isintheappointment ofthemajority
oftheCommissioners. Theother Commissioners areappointed bylocalmunicipalities.S/NGMTS/W/2/Add.5
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Residual portgrouping: private/provincial/municipal ports
Inaddition toports under theregimes described inearlier sections, there are87ports with
avariety offorms ofadministration andtraffic flows. Most ofthese ports areprivate ports operated
byasingle industrial user. Tenofthese ports arelocated indeclared public harbours thathaveno
public portfacilities. Thefederal government receives revenues fromharbour duesandwaterlot leases
atthese ports butplays noroleinportdevelopment.
Private ports maypermit access tofacilities onafeeorcontract basis. Private ports, unlike
federal ports, aresubject tomunicipal zoning by-laws andpaymunicipal taxes. Navigation within
theportlimits isfederally regulated; company officials may,however, perform theduties ofaharbour
master. Afederal official isappointed inthecaseofadeclared public harbour.
Private services
Most portsregardless ofwhatregime theyoperate under haveprivate terminal facilities. They
arefound moreexclusively atthelocalportcorporations andharbour commissions which operate under
thelandlord model. There arealsopublic terminal facilities atthese ports.
Privateterminalsareoperatedunderaleaseagreementbetweentheportandtheterminaloperator
andthegovernment doesnothaveanyinvolvement inthenegotiation ofthese leases. Similarly,
stevedoring services areprovided byprivate stevedoring companies.
6. There isnoofficial national definition of"international maritime transport"; however, the
general interpretation ofthistermwould include allmarine movements between Canada andanyother
country.
7. Canada doesnotusetheterm"national shipping enterprise".
Market access
8.(a) Norestrictions.
8.(b) Norestrictions.
8.(c) Norestrictions.
8.(d) CanadianpracticeislargelyreflectedinthecommitmentsmadeinPartIoftheCanadianschedule
withrespect tothefourth mode. Temporary entrants, including inthemaritime transport sector, may
enter as:
Business Visitors ("Anatural person whostaysinCanada without acquiring remuneration from
within Canada andwithout engaging inmaking direct salestothegeneral public orsupplying services,
forthepurposes ofparticipating inbusiness meetings, business contacts including negotiations for
thesaleofservicesand/orothersimilaractivitiesincludingthosetoprepareforestablishingacommercial
presence inCanada: Entry andstayshallbeforaperiod ofnomore than90days".)
Intra-Corporate Transferees ("Natural persons ofanother Member whohavebeenemployed
byjuridical persons ofanother Member foraperiod ofnotlessthanoneyearandwhoseektemporary
entryinordertorenderservicesto(i)thesamejuridicalpersonswhichisengagedinsubstantivebusiness
operations inCanada or(ii)ajuridical person constituted inCanada andengaged insubstantive businessS/NGMTS/W/2/Add.5
Page12
operations inCanada which isowned byorcontrolled byoraffiliated withtheaforementioned juridical
person"). Intra-corporate transferees include:
"Executives arenatural persons employed byajuridical person whoprimarily direct the
management ofthejuridical persons orestablish goals andpolicies forthejuridical person
oramajor component orfunction ofthejuridical person, exercise widelatitude indecision-
making, andreceive onlygeneral supervision ordirection from higher-level executives, the
board ofdirectors, orstockholders ofthejuridical person."
"Managers arenatural persons employed byajuridical persons whodirect thejuridical person,
ordepartment orsubdivision ofthejuridical person, supervise andcontrol thework ofother
supervisory, professional ormanagerial employees, havetheauthority tohireandfireor
recommend hiring, firing, orother personnel actions andexercise discretionary authority over
day-to-day operations atasenior level."
"Specialists arepersons intheemploy ofajuridical person whopossess knowledge atan
advanced levelofexpertise andwhopossess proprietary knowledge ofthejuridical person 's
product, service, research equipment, techniques, ormanagement."
Asindicated initsdraftschedules immediately priorto15December 1993, Canada alsopermits
temporaryentryof"crewmembersremainingonboardavessel","replacementcrewmembers","marine
surveyors" and"port captains".
9.(a) Toregister avessel inCanada, theowner ofthatvessel must beacitizen ofCanada ora
corporation incorporated under thelawsofandhaving itsprincipal place ofbusiness inCanada.
9.(b) There isnospecific requirement withrespect tothelegalform ofanyother service supplier
inthemaritime sector except forlicensed customs brokers whomust taketheform ofapartnership
composed ofpersons whoareCanadian citizens orpermanent residents.
10. Theacquisition ofcontrol ofaCanadian business withrespect toanytransportation service
byanon-Canadian issubject toapproval for:
(1) alldirect acquisitions ofCanadian businesses withassets of$C5million ormore
(2) allindirect acquisitions ofCanadian businesses withassets of$C50 million ormore,
or
(3) indirect acquisitions ofCanadian businesses withassets ofbetween $C5million and
$C50 million thatrepresent more than50percentofthevalue ofthetotalinternational
transaction.
Approval isrequired from theNational Transportation Agency prior theacquisition ofany
federally regulated transportation undertaking withassets orannual gross salesinCanada inexcess
of$C10 million. Forthese purposes, atransportation undertaking means anybusiness principally
engaged inanytransportation activity under federal jurisdiction within Canada, excluding (a)those
operated byaperson whose principal place ofresidence isoutside Canada, and(b)those engaged in
thetransport ofgoods and/or passengers solely between Canada andanyother country.S/NGMTS/W/2/Add.5
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11. Ships registered inCanada havetheright, andindeed anobligation incertain circumstances,
toflytheCanadian flag. Through registration, theshipacquires aninternational identity asaCanadian
ship. Rules fortheregistration ofships varyfrom country tocountry, andarelinked totestssuch
asqualification ofowners, financing arrangements, beneficial ownership orcontrol.
Section 6oftheCanada Shipping ActsetsoutthetestinCanada, which isbased upon
qualification toownaBritish ship. Anowner mustbeaBritish subject within themeaning oftheBritish
North America Act1948, orabodycorporate incorporated under thelawsofaCommonwealth country
which hasitsprincipal place ofbusiness within thatcountry.
11.(a) No.
11.(b) No.
11.(c) No.
National treatment
12.(a) Direct preferential treatment granted exclusively toCanadian operators asfollows:
Marine Atlantic
Inorder toprovide asafeandefficient ferrytransportation service between BarHarbour, Maine,
theUnited States andYarmouth, Nova Scotia, Canada, agrant isprovided bytheFederal Department
ofTransport toMarine Atlantic Inc.(acrown corporation). Total funding available toMarine Atlantic
Inc.isdetermined bytheGovernment ofCanada. Thisfunding wasenacted under theMarine Atlantic
Acquisition Authorization Actin1986.
Victoria LineLimited
TheVictoria LineLimited, which isaprovincial crown corporation, operates aferryservice
between Victoria, British Columbia, Canada andSeattle, Washington, United States; Itsfirstyear
ofoperation was-1993-94.
- Received capital infusion fromBritish Columbia Government of$4.7million. This
wasaonetimeinfusion ofcapital.
- TheBritish Columbia Government covered the1994 deficit ofoperating costs which
amounted to$717,000
- Itisexpected thatwithin 2-3years thisservice willbeself-sufficient.
12.(b) There arenodiscriminatory taxmeasures inplace withtheexception ofanexemption from
taxes onincome andcapital ofanon-resident person earned inCanada from theoperation ofaship
ininternational traffic onthebasis ofreciprocity withthecountry inwhich theperson resides.
Access toanduseofportfacilities
13. Allofthese services areavailable atmajor international ports.S/NGMTS/W/2/Add.5
Page14
14. Pilotage forthemostpartiscompulsory inCanadian waters however, there arespecific areas
where pilotage isnon-compulsory. Navigational aids/communication facilities suchasvessel traffic
services intheharbour aremandatory depending ontheconditions. Towing andtugassistance may
beordered bythepilotandsome portsrequire tugsfortheuseofcertain berths. Alsoanenvironmental
officer mayorder theuseofatugforpollution prevention.
15. Alloftheservices listed above under question 13areavailable onanon-discriminatory basis
tovessels engaged inmaritime transport.
16. No.There arenodiscriminatory measures which restrict access tosea-ports onthesameterms
asnational services suppliers. Ports donotdiscriminate regarding theentrance ofmaritime transport
vessels owned oroperated byforeign nationals.
17. No.There arenomeasures which discriminate between foreign andnational vessels engaged
inmaritime transport withrespect totheaccess anduseofportandharbour facilities.
18. No. There arenomeasures which mandate theuseofterminal facilities andthere isno
discrimination inthisrespect between foreign andnational maritime transport services suppliers.
19. No.
Most-favoured-nation treatment
20. No,therearenomeasures which provide forsomeformofcargo-sharing withpartner countries.
21. Notapplicable.
22. No.
23. There arenodiscriminatory measures inplace withtheexception ofanexemption fromtaxes
onincome andcapital ofanon-resident person earned inCanada from theoperation ofashipin
international traffic onthebasis ofreciprocity withthecountry inwhich theperson resides.
24. No.
25. Section 11oftheCoasting Trade Actwhich reads asfollows:
"11. (1)Where theMinister ofTransport isoftheopinion thatagovernment ofanycountry
hasengaged inunfair, discriminatory orrestrictive practices withrespect totheuseofCanadian
ships incommercial activities inwaters ofthatcountry, theMinister ofTransport andthe
Secretary ofState forExternal Affairs shall seekelimination ofthose practices through
consultations withthegovernment ofthatcountry.
(2)Where theconsultations referred toinsubsection (1)failtoresult intheelimination
ofthepractices referred tointhatsubsection, theGovernor inCouncil may, onthe
recommendation oftheMinister ofTransport andtheSecretary ofStateforExternal Affairs,
takesuchaction astheGovernor inCouncil considers appropriate."
26. Asnoted inCanada 'slistofMFN exemptions, Canada maintains thefollowing measures:S/NGMTS/W/2/Add.5
Page15
- Toregister avessel inCanada toprovide international maritime shipping services the
owner mustbeacitizen ofCanada orofaCommonwealth country, oracorporation
incorporated inCanada andhaving itsprincipal place ofbusiness inCanada ora
Commonwealth country.
- There isanexemption fromtaxesonincome andcapital ofanon-resident person earned
inCanada fromtheoperation ofashiporaircraft ininternational traffic onthebasis
ofreciprocity withthecountry inwhich theperson resides.
Moreover, inaccordance withGATS Article XIV, Canada maintains legislation permitting
ittoimplement thedecisions oftheUnited Nations Security Council insofarasthesearetaken pursuant
toChapter VIIoftheUnited Nations Charter ortaken intimes ofwarorotheremergency ininternational
relations (theSpecial Economic Measures Act).
Government procurement
27. CanadahasmadenocommitmentsundertheWTOCodeonGovernmentProcurementorNAFTA
withrespecttoservices,withreferencetothosegoodspurchasedbytheDepartmentofNationalDefence,
theRoyal Canadian Mounted Police andtheCanadian Coast Guard which arenotidentified assubject
totheAgreement (i.e., there arenocommitments withrespect tostrategic materiel) orprocurement
oftransportation services thatformapartof,orareincidental to,aprocurement contract. Nevertheless,
Canada doesnotinpractice reserve thetransportation ofnon-commercial cargoes toCanadian bottoms.
28. There arenospecial measures inplace.
Competition Law
29. Canada doesnotapply extensive regulation tointernational marine transportation. Bulk, tramp
andnon-conference lineroperations arenotregulated. Conferences fallunder theShipping Conferences
Exemption Act,1987, (SCEA) which exempts certain conference practices from theprovisions of
Canada 'santitrust legislation, theCompetition Act. Exempted practices include:
(a) useofacommon tariff;
(b) useofloyalty contracts (subject tofurther conditions asexplained inthesection on
Shipping Conferences);
(c) establishment ofterms andconditions respecting theuseofservice contracts;
(d) portallocation among members;
(e) regulation ofsailing times andtypes ofservice;
(f) cargo andrevenue sharing, and
(g) regulation ofconference admission andexpulsion ofmembers.
TheCompetition Actremains applicable topractices thatarenotcovered bytheSCEA
exemption. These include certain practices suchaspredatory pricing thatarethesubject ofspecific
exceptions intheSCEA legislation (seetheanswer toquestion 31below).S/NGMTS/W/2/Add.5
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(a) Asnoted, theapplication oftheCompetition Acttothemarine transport sector islimited
totheSCEA, 1987. Thisexemption forliner conferences issubject tovarious
conditions which arediscussed inquestions 30-34. Only consortia thataremembers
ofconferences arecovered under thisexemption. There arenospecific regulations
applying tomaritime consortia operating outside ofaconference.
(b) Under theSCEA, 1987, conferences arepermitted toestablish door-to-door rates,
however, theyarenotallowed tonegotiate jointly with carriers fortheinland
transportation ofthegoods.
(c) TheCompetition Actcontains specific provisions thatdealwithabuses ofadominant
position. Generally, these aredefined assituations inwhich aperson orpersons:
(i) Substantially orcompletely control, throughout Canada oranareathereof,
aclassorspecies ofbusiness; and
(ii) Engage inapractice ofanti-competitive acts;withtheresult that
(iii) Competition islessened substantially inamarket.
Thisprovision isapplicable toshipping conference practices thatarenotspecifically
exempted under theSCEA, 1987.
(d) TheCompetition Actdoesnotcontain specific provisions relating totheregulation
ofshippers councils. Such councils arefreetooperate solongastheydonotoffend
thegeneral provisions oftheActrelating toconspiracies, abuse ofadominant position
andother matters. These provisions could beapplicable, forexample, ifmembers
ofashippers council whoproduce orsellthesame goods andservices entered into
agreements regarding theprices tobecharged forsuchgoods orservices.
Asnoted below, theSCEA, 1987 contains specific authorization forthedesignation
oforganizations orassociations ofshippers bytheMinister ofTransport, torepresent
theinterests ofshippers under theAct.Ingeneral, groups designated inthiswaywould
stillbesubject totheCompetition Act,insofarastheiractivities arenotactively
supervised bytheMinister under theSCEA.
Shipping conferences
30. Regulation ofconference admission andexclusion ofmembers isanexempted practice under
theCompetition Act.
31. ConferenceagreementsarerequiredtobefiledwiththeNationalTransportationAgencypursuant
totheShipping Conferences Exemption Act,1987. Complaints orobjections ofaconference agreement
based ontheapplicability ofcompetition andantitrust lawswould havetobeaddressed bytheBureau
ofCompetition Policy.
32. Tariffs applied byconferences arerequired tobefiledwiththeNational Transportation Agency,
however, theAgency doesnothavethepower toenforce compliance.S/NGMTS/W/2/Add.5
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33. Yes,Section 4(3)oftheSCEA requires thattheconference agreement mustgivemember lines
therighttotakeanIndependent RateAction. Theconference mayrequire amaximum offifteen days
notice ofanyindependent action.
34.(a) TheShipping Conferences Act,1987 requires thatacopy ofeachstandard form ofloyalty
contracts befiledwiththeAgency. Loyalty contracts, subject tothefollowing conditions, arepermitted
under thelegislation:
(i) theagreement maybeterminated byeither party afterninety dayswritten notice,
(ii) thenon-contract ratecannot exceed thecontract ratebymore than15percent,
(iii) thecontract doesnotpermit rebating, and
(iv) thestandardconferenceloyaltycontractformcannotdemanda100percentcommitment
bytheshipper.
34.(b) Agreements between conferences andoutsiders arenotspecifically addressed inthelegislation.
34.(c) Service contracts arepermitted, butmustbefiledwiththeAgency. Thecontracts arecompletely
confidential andtheterms andconditions respecting theuseofservice contracts byitsmembers are
controlled under theconference agreement.
Shipper/carrier relations
35. TheMinister ofTransport maydesignate anyorganization orassociation ofshippers, as
representing, intheopinion oftheMinister ofTransport, forthepurpose oftheShipping Conferences
Exemption Act(SCEA), 1987, theinterests ofthose shippers. Asoftoday, onlytheCanadian Shippers '
Council hassought designation.
36. Pursuant toSection 20oftheSCEA, members ofexport conferences shall, uponwritten request,
meetwithanydesignatedshippergroupand"shallprovidethedesignatedshippergroupwithinformation
sufficient forthesatisfactory conduct ofthemeeting".
Intheevent thattheparties areunable toresolve theirdifferences, therearedispute settlement
mechanisms under theShipping Conferences Exemption Act,1987, theNational Transportation Act,
1987 (NTA), andtheCompetition Act.
1. TheAgency offers informal mediation services when requested bybothparties. It
canbeusedwhen there isadispute between ashipper andaconference respecting
ratesorconditions associated withthemovement ofgoods. Unless theparties agree
otherwise, themediation ofthedispute must becompleted within 30days.
2. Section 13oftheSCEA, provides amechanism whereby anyperson mayfilea
complaint withtheAgency ifitisfeltthatanyconference agreement orinterconference
agreement oranypractice ofaconference oranymember thereof islikely tohave,
bywayofreduction incompetition, theeffect ofproducing anunreasonable reduction
intransportation service oranunreasonable increase intransportation costs.S/NGMTS/W/2/Add.5
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TheAgency 'sprocess insuchacaseisguided byitsGeneral Rules. TheAgency would
investigate thecomplaint andrender adecision thatwould bebinding ontheparties
involved.
3. Section 59oftheNTA provides amechanism whereby anyperson maycomplain to
theAgency ifitisfeltthatarate,actoromission byacarrier, oranytwocarriers,
isprejudicial tothepublic interest.
TheAgency 'sprocess would bethesame asthatofSection 13oftheSCEA. Theonly
difference being thatanAgency decision would havetoberendered within 120days
from receipt ofthecomplaint, unless otherwise agreed upon bytheother parties
involved.