Projected free trade pact with EU seen boon for Canadian East Coast ports
Leo Ryan, AJOT
Canadian shippers and port circles on the East Coast consider they stand to reap considerable benefits from a proposed Canada-European Union free trade agreement currently at an advanced stage of negotiations. Such an accord could come into effect in late 2013 following the completion of a ratification process on both sides of the Atlantic.
A double-decker bus drives off an ACL ro/ro vessel at the Port of Halifax.
(photo by Steve Farmer)
Traditionally strong North Atlantic, general cargo trading partners like Montreal and Halifax are well positioned, but so could other ports on the Great Lakes/St. Lawrence maritime corridor benefit from increased cargo shipments. Falling under the latter category would be such mainstream commodity ports as Quebec, Sept Iles, Port Cartier, and Hamilton.
Observers see Canada’s North Atlantic trade on the East Coast remaining dominant in the years ahead, albeit by a lesser extent than in the past due to the ongoing expansion of trade with China-led Asia.
The free-trade strategy of the Canadian government is taking place in the context of greater diversification to lessen reliance on the United States. Though the United States will remain Canada’s largest trading partner, the percentage of Canadian trade with the U.S. has dropped to 74 per cent from nearly 90 per cent in the past decade, and is expected to decline another 10 per cent by the end of this decade.
The first round of negotiations between Canada and the 27-member EU for a Comprehensive Economic and Trade Agreement (CETA) began in 2009. Among other highlights, it would give Canadian exporters privileged access to a market of more than 500 million people.
According to a federal report, CETA could boost the Canadian economy by at least C$12 billion annually and increase Canada’s trade with Europe by 20 per cent a year. The EU is Canada’s second-biggest trading partner, with goods and services exports totaling C$40 billion and imports totaling C$52 billion in 2011.
Tony Boemi, vice-president, growth and development, of the Montreal Port Authority, points out that more than 47% of the total number of containers handled at the Port of Montreal are coming from or going to Northern European ports located within the European Union and 18.6% from or to Mediterranean ports also within the European bloc.
“This means that 65.8% of our container traffic could benefit to some degree from a free trade agreement between the EU and Canada,” he told AJOT. In total, Montreal handled 1.35 million TEU in 2011.
“The Port of Montreal,” Boemi added, “will not be the sole beneficiary. The expected benefits will translate into job creation, economic growth and long-term prosperity for Montreal, Quebec and Canada.”
In the first 10 months of 2012, the five leading European ports in the two-way box trade with Montreal were Antwerp (23.3%), Valencia (11.8%), Hamburg (10.7%), Bremerhaven (9%) and Liverpool (6.5%).
Boemi disclosed that one project presently under discussion with the Antwerp Port Authority is the staging of joint economic missions alternatively in Europe and North America.
At the Port of Halifax, George Malec, vice-president, business development and operations, says he has been following the CETA negotiations very closely.
“Europe has long been an important region for trade with Halifax, and in 2011 represented 38% of the Port of Halifax business.” Total container throughput at Halifax amounted to 410,650 TEU in 2011.
Malec stressed that CETA would especially benefit local exporters in the seafood industry.
“The removal of double-digit tariffs on seafood and better market access has the potential to increase the export of seafood to Europe,” Malec said before underlining the Port of Halifax’s stature as “one of the leading ports in North America with multiple cold storage facilities and 1,000 reefer plugs. The combination of infrastructure and our natural geographic location of being the closest port on the East Coast of North America to Europe will certainly help us to take full advantage of tis potential agreement.”
Positive outlook for Canadian seafood and commodity exports
Bob Armstrong, President of the Chartered Institute of Logistics & Transport North America and of ATLAS Trade & Logistics Advisory Services Inc states “there is no doubt “ in his mind that imports and exports between Canada and the EU will grow, as has been experienced under the North American Free Trade Agreement (Nafta) for more than two decades.
“The marine industry,” he says, “should be excited about the growth prospects of two-way trade as tariffs are reduced to zero and other barriers to trade are eliminated in the final drafting of this free trade agreement. Commodities from Canada such as iron ore and coal will have new markets in the EU and be a boon to marine operators.”
Armstrong agrees with Malec that CETA will offer an opportunity to increase Canadian exports of fish and seafood products via the marine mode. “And likewise, certain imports of agrifood products from the EU should increase as tariffs are reduced to zero.”
Another sector identified by Armstrong for increased business with Canada (and through Canada to USA) is production machinery, advanced equipment, project cargoes, and the like - especially from Germany. “And we may see certain equipment such as windmills and components no longer manufactured in North America as EU factories advance their own technology and manufacturing processes to ensure their factories have much better utilization.”
Armstrong also asserts: “The EU will see Canada as a key stepping stone to the U.S. and Mexico markets to complement our own market – thereby boosting cargo movements on the St. Lawrence-Great Lakes waterway.”
“As a prime gateway to Europe for Canadian importers and exporters, the Seaway stands to benefit from any increase in cargo flows that may result from a new free trade pact with the European Union,” said Bruce Hodgson, director of market development of the St. Lawrence Seaway Management Corporation. “Given the marine mode’s strong competitive advantage in breakbulk and project cargo, we are optimistic that a free trade agreement with Europe will translate into increased utilization of the Seaway.”