By Tom Peters

The Canadian government continues to show insensitivity to Canadian shipping, says the Executive Chairman of St. John’s based Oceanex, Inc. Capt. Sid Hynes made the comment at a recent symposium in Halifax hosted by the Company of Master Mariners, on the potential impact on the marine industry of the Comprehensive Economic Trade Agreement (CETA) between the European Union (EU) and Canada.

The agreement, which will eliminate 98 per cent of tariffs on trade between the two regions and over 99 per cent after seven years, is expected to be ratified by late 2016 or early 2017. CETA will include goods and services, investment, intellectual property and government procurement. Approximately 47 per cent of trade between the two partners is carried by ship. CETA is expected to increase trade between Canada and the EU by more than 20 per cent.

Capt. Hynes pointed to potential negative impacts of CETA, the North American Free Trade Agreement (NAFTA) and federal subsidies supporting Oceanex’s competition.

Oceanex, a multimodal transportation company, operates a shipping service with three vessels between Halifax and St. John’s and St. John’s and Montreal. Under CETA, EU shipping lines will be allowed to operate feeder services between the ports of Halifax and Montreal. Canadian companies, however, will not be allowed to operate feeder services in the EU.

Foreign feeder services established under CETA will not only compete against Oceanex but also against CN Rail moving cargo inland and moving empty shipping containers back to Halifax. Repositioning these empties is important income to both CN and Oceanex, Capt. Hynes said in an interview. “Those empty containers are moving right now and at no cost to the international guys,” Hynes said. “They are basically being moved on CN who fills them up with something in central Canada and brings them to Nova Scotia and then hands them off to international guys free of charge and we do the same by way of Newfoundland. So there are benefits to Atlantic Canada residents coming out of that which will go away. So there is potential for negative impacts there,” he said. “We have opened the door for foreign companies to move those containers.”

Capt. Hynes said it is difficult to speculate what the overall impact of foreign feeder services on the Halifax to Montreal corridor will be on his business. Although Oceanex is not interested in establishing a feeder service within the EU, he said it was disappointing the opportunity would not be there for any other Canadian company wanting that opportunity. CETA is not balanced “by any means,” he said.

Capt. Hynes is not only concerned about the CETA impact but also about potential issues arising from the long standing NAFTA agreement. Approximately 35 per cent of Oceanex’s business is moving new vehicles from CN’s Autoport in Halifax to Newfoundland and Labrador. With a number of automakers moving out of Canada to establish manufacturing plants in Mexico, Capt. Hynes foresees a change in how those new vehicles, transported to Halifax by rail and then by Oceanex to Newfoundland, could change. “Obviously it would be very expensive to rail to Halifax (from Mexico) for Newfoundland so it would make more sense to ship them directly to Newfoundland from Mexico by ship and that is a potential consequence,” he said. Losing a large percentage of that automobile business could result in Oceanex ending service to Halifax, he added.

Capt. Hynes took a further poke at the federal government for its 72 per cent subsidy of Marine Atlantic which also hauls cargo to Newfoundland.

Several speakers representing such bodies as the CETA Secretariat and its marine policy section, the Canadian Shipowners Association, the Shipping Federation of Canada and academia, presented explanations, views and concerns about CETA. Hani Nasser, Deputy Director, CETA Secretariat, anticipates trade by ship will increase significantly and ports like Montreal are investing heavily in infrastructure to prepare for the increase.

Louise Laflamme, Chief of marine Policy and Regulatory Affairs for the Seaway and domestic shipping policy, told the seminar that the EU had requested the Halifax to Montreal corridor to operate feeder services. She said the anticipated increase in two-way trade will make east coast ports more attractive, and position Canada to take advantage of global trade making goods available more cheaply and faster.

There were comments raised during that seminar that foreign feeder ships would mean using cheap foreign crews which in turn raised the issue of security. Robert Lewis-Manning, President of the Canadian Shipowners Association, told the seminar that his association sees CETA as “government policy decision already made and we weren’t involved. A lot happened in isolation.” He said that “on the face of it, we don’t see it as a huge risk in the short term” but there is concern for what the industry will look like in the future.

Anne Legars, Vice President, Shipping Federation of Canada, which represents the foreign flagged lines in this country, said the federation welcomed CETA and the opportunities it will bring, however, she said she did not know how those opportunities will materialize. Ms.Legars told the seminar she believes there are “misconceptions” about safety and security. “We have international traffic in Canada (now) and we have the ISPS system (International Ship and Port Security Code), so I don’t see CETA work will change on that front,” she said.