Thank you very much, Mr. Chair and honourable members, for the opportunity to provide the perspective of the Canadian Shipowners Association on Bill C-7.
The Canadian Shipowners Association represents the interests of the Canadian companies that own and operate Canadian-flag vessels on the Great Lakes-St. Lawrence waterway. We also operate in the Arctic and on the eastern seaboard of the United States and Canada. As such, we are one of the key stakeholder groups impacted by this legislation.
In 2008, the 67-vessel fleet handled about 62 million tonnes of bulk commodities, essentially coal, grain, iron ore, aggregates, salt, petroleum products, and general cargo. We provide Canadian primary industries and communities with reliable economical and environmentally sustainable transportation services.
The CSA fleet is dedicated to operating mainly in Canadian waters, providing uninterrupted service to customers through long-term commitment to shippers in the steel, agriculture, mining, construction, power, and petroleum industries.
The current Marine Liability Act, which has been in force since August 2001, is the principal legislation that deals with the liability of shipowners and ship operators in relation to passengers, cargo, pollution, and property damage. The intent of the legislation is to set limits of liability and to establish uniformity by balancing the interests of shipowners and other parties.
The proposed amendments to the Marine Liability Act contained in Bill C-7 result largely from the maritime law reform discussion paper released by Transport Canada in May 2005 and the subsequent consultations that took place with many stakeholders in all sectors of the marine community. CSA participated fully in this consultation process. Bill C-7 is largely the legislative response to the discussion and debate surrounding the Transport Canada paper.
CSA has worked closely with government officials and other stakeholders in the Canadian maritime industry. As I said, we have met on several occasions with Transport Canada regarding Bill C-7. I would like at this point to commend the Government of Canada, and in particular Transport Canada, for their excellent work in developing this important policy and legislative initiative leading to amendments to the Marine Liability Act. CSA is in agreement with most of the provisions in Bill C-7. Although the bill imposes significant obligations on domestic marine carriers, there is nothing that we, as responsible carriers in the domestic regime, cannot live with.
The bunkers convention is one of the international conventions that are brought into Canada through this bill. It deals with oil pollution from the bunkers of all ships other than tankers. Departmental officials, in presentations earlier this week, pointed out that ratification of this convention will enable Canada to rely on the compulsory insurance provisions introduced in the convention as a means of ensuring that the shipowner has the necessary coverage in the event of a bunker oil spill. CSA does not object to this new provision, and members will comply with the new requirement.
Bill C-7 also creates a maritime lien against foreign vessels for Canadian ship suppliers as security for unpaid invoices. CSA again supports this provision and wishes to go on the record as not being in support of any changes to Bill C-7 that would extend the maritime lien to Canadian vessels. The purpose of the lien provision is to protect Canadian suppliers against foreign-flag vessels that do not meet their obligations.
This has been a problem, because foreign vessels and their owners do not have ties to Canada and can thus ignore their obligations to suppliers. This is not the case for Canadian-flag vessels. With corporate offices in Canada, suppliers have no difficulty getting paid by Canadian vessel owners. There is no evidence of a failure on the part of Canadian shipowners to pay ship suppliers such that a lien in their favour against shipowners and operators should be created. When claims have been asserted against Canadian shipowners by ship suppliers, either the threat of vessel arrest or a simple action in rem has been sufficient to ensure prompt settlement of any outstanding claim.
So a proposal to include a lien for Canadian ships would have significant adverse impact on the financing of our fleet. There's no question that financing costs would increase if the lenders were rendered subordinate to liens in favour of ship suppliers and CSA could not support a proposal that would increase costs with no discernible benefit for taxpayers, particularly in the current economic climate.
On the topic of the current economic climate, I would like to add that the core of the CSA fleet, which is the bulkers and self-unloaders that operate in the St. Lawrence and the Great Lakes, are currently averaging in age about 35 to 40 years old and they must be replaced. There's a pressing need to renew these vessels with modern, efficient, and environmentally green ship solutions. However, when new vessels are imported into Canada for use in the coasting trade--coasting trade is within domestic waters--they are subjected to a 25% duty under the customs tariff, resulting easily in a duty of $10 million or more per vessel when they come in. This is not only a tax on Canadian shipowners but also on the end users of marine transportation.
So the duty needs to be removed immediately for the health of the nation's manufacturing and resource-producing sectors that depend upon marine transportation and to facilitate the renewal of Canada's domestic flag fleet. The addition of a ship supplier lien on Canadian vessels would be an unnecessary action that would create undue hardship on the ship financing problem that we already have in Canada in terms of renewing our fleet.
That's our submission. Thank you very much for your attention.