Archived - Backgrounder: New Tariff Measures for Ships

Archived information

Archived information is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

Ferry-Boats, Tankers and Cargo Vessels Remission Order, 2010

Imported vessels are generally subject to a Most-Favoured-Nation customs duty of 25 per cent. Historically, the Government of Canada has considered requests for remission of customs duties paid on imported vessels on a case-by-case basis, examining each request on its own merits. Given the need for greater certainty and predictability for all stakeholders as shipowners undertake major fleet renewal, the Government is putting in place a new duty remission framework for all imported cargo vessels and tankers, as well as ferries of a length of 129 metres or more, imported as of January 1, 2010.

This initiative follows consultations that the Government held in late 2009 through a notice published in the Canada Gazette, Part I. Interested parties were invited to submit comments on a proposal for a new duty remission framework for certain ships that would be effective January 1, 2010. There was significant support for the proposal, with responses received from all areas of the marine transportation sector, certain provincial governments as well as corporations in the manufacturing, agriculture and energy sectors.

The new framework will:

  • facilitate the replacement of aging vessels and promote the modernization of critical shipping services;
  • create certainty and predictability for shipowners regarding costing of these vessels;
  • increase the competitiveness of both the marine transportation sector and its users (agriculture, steel, energy, mining, and manufacturing sectors); and
  • lower costs to users of shipping and ferry services.

With this framework in place, and by making decisions on all outstanding duty remission requests, the Government will no longer entertain retroactive duty remission requests (e.g., with respect to vessels imported before January 1, 2010) for the type of vessels covered by the framework.

Certain Ships Remission Order, 2010

To complement the new duty remission framework, decisions have been made on all outstanding duty remission requests before the Government. As part of those decisions, the Government is remitting the $15.3 million in customs duties paid on two tankers, the Algonova and the AlgoCanada, imported from Turkey by Algoma Central Corporation in 2008 and 2009. It is also remitting $119.4 million in customs duties paid on four large-sized ferries, the Coastal Renaissance, the Coastal Inspiration, the Coastal Celebration and the Northern Adventure, imported by the British Columbia Ferry Services Inc. (BC Ferries) between 2007 and 2009 from Germany

Duty remission will support the competitiveness of Algoma Central Corporation’s downstream users, primarily producers and users of energy products, who should benefit from lower shipping rates as a result of this measure. Duty remission will also be of benefit to BC Ferries and to its users, both commercial and non-commercial, in the form of a 2-per-cent ferry rate reduction effective October 18, 2010.