Mr. Speaker, there was a suggestion by the Bloc that Canada has neglected its marine industry for years. Today our shipbuilding sector has fallen so far behind that it will be necessary to work in double quick time to make it up to date, productive and financially healthy when the market opens up to complete competition.
The Bloc was concerned that the government must immediately develop an aggressive marine sector policy to allow our industry to adjust. This policy must facilitate the industry's access to capital, stimulate investment, give preference to local suppliers in government procurements and encourage ship owners to buy vessels here. The policy must ensure that our shipyards can count on a prosperous marine transport sector, both by stimulating coastal shipping and by putting some order into international marine transport.
I would like to make reference to the Canadian Shipowners Association, which unfortunately did not appear before committee but made some submissions subsequently. It is interesting from my perspective because I come from the Great Lakes area and the inland shipping domestic fleet is very important.
The core of the CSA fleet, however, the bulkers and self-unloaders are averaging 35 to 40 years old and must be replaced. A 50 year old vessel, even in fresh water, is at its maximum life expectancy. Typically, these vessels are 730 to 750 feet in length and carry 22,000 to 25,000 tonnes of cargo with a crew of approximately 20 to 22. The problem is that the replacement cost of these vessels is roughly in the $40 million to $50 million range.
Historically, many of these vessels were built in Canadian shipyards that existed in the 1960s and 1970s, but today it is suggested that the Canadian yards are not able to build these vessels required to upgrade the CSA fleet. It is significant to note that the last Canadian-built bulker was completed in 1985. These companies are faced with the challenge of purchasing new vessels offshore either in Europe or Asia.
When these new vessels are imported into Canada for use in the coasting trading, within domestic waters, they are subject to a 25% duty as we have referenced resulting in a duty of $10 million or more per vessel. This is not only a tax on the Canadian ship owners but also the end users of marine transportation. These costs are obviously passed on. Canadian industries and consumers will bear the burden.
In a highly competitive commercial environment, where a few additional cents per tonne are very significant, the 25% duty creates a competitive disadvantage for those companies. As a consequence, they would like to see the 25% duty reduced as soon as possible. I would certainly like to reference that because of their inability to appear before committee at the time.
Perhaps I could conclude with a brief summary. CEFTA is a basic free trade agreement covering trade in goods. It includes no significant provisions on matters such as services, investment and intellectual property, but does leave the door open for these issues to be revisited. In terms of market access, the benefits of this agreement to Canada will largely be in the agriculture and agri-foods sectors. Some industrial sectors will benefit as well, although in most cases tariffs on non-agricultural products are not significant.
Shipbuilding was the most contentious issue of the trade negotiations and it would appear from the debate here this evening that it continues to be. It appears that Canada was able to successfully obtain generous phase-out terms giving the Canadian industry considerable time to adjust to increased competition from EFTA shipbuilders. However, concerns were raised about the long term viability of the Canadian shipbuilding sector in the absence of additional government support.
Therefore, the Canadian government must without delay implement an aggressive marine policy to support the industry while ensuring that any such strategy is in conformity with Canada's commitment at the WTO. That is subsidization specifically.
This agreement promises modest gains in trade and could pave the way for an expanded agreement that includes subjects like services and investment. Moreover, the point of several witnesses is that the very presence of a free trade agreement could create interest within the business community to explore economic opportunities in Canada and the EFTA countries.
In addition to reducing the tariffs, CEFTA would also act as a catalyst for increased trade investment and economic cooperation between Canada and the EFTA countries.
We are certainly in support of the agreement, but we want to make sure that the agreement reflects what we heard. That is why we would like to send it back to the international trade committee for further consideration.