The so-called “Cargo Diversion” issue has again become an issue between US and Canada, as two Washington state senators have asked the Federal Maritime Commission (FMC) to mount an inquiry into the matter. - Leo Ryan, AJOTCanadian port and railway circles have reacted in chilly fashion to a proposed inquiry by the Federal Maritime Commission (FMC) into “container cargo diversion” from U.S. West Coast ports to Canada’s ports of Vancouver and Prince Rupert in British Columbia. While two Washington State senators have urged the FMC to focus mainly on the impact that the federal Harbor Maintenance Tax (HMT) may have on cargo diversion to Mexican as well as Canadian ports, they also ask the FMC to look into unspecified “other factors” and to consider legislative and regulatory changes. Senators Patty Murray and Maria Cantwell sent a request on August 29 to FMC chairman Richard Lidinsky for the FMC “to conduct an analysis of the impacts and extent to which the HMT and other factors impact container cargo diversion from U.S. West Coast ports to west coast Canadian and Mexican ports, as well as offer legislative and regulatory recommendations to address this concern.” The senators pointed out that a growing number of containerized U.S. imports from Asia have been moving through the ports of Vancouver and Prince Rupert en route to the U.S. Midwest through cross-border rail. They affirm that the HMT, a levy imposed since 1986 on shippers based on value of goods to help finance maintenance dredging, “may be a key factor causing U.S. ports to lose a growing share of imported container cargo from Asia.” They further argue that “non-U.S. ports are able to claim a substantial per-container cost advantage over U.S. seaports based on the HMT alone” and that this amounts to “unfair disparity” provoking lost U.S. jobs. Over the past five years, the share of Port Metro Vancouver and Prince Rupert in total North American West Coast box cargo has risen from 9% to about 13%, and both ports have announced capacity expansion plans. Vancouver’s box throughput, last year, rose 17% to 2.5 million TEUs while Prince Rupert saw its box cargo surge by 30% to 344,000 TEUs. Lowry Crook, Chief of Staff in the office of the Commission, indicated that the FMC has not yet formally decided on how to proceed. “There could be a range of responses, from studying the issue to a notice of inquiry and a fact-finding investigation.” Earlier this summer, Lidinsky, commenting on the pending inquiry request, reportedly candidly referred, among other things, to the “possible subsidy of cargo rail moves through Canada” and to “weaker container inspections.” In February of last year, in a statement before the Congressional Subcommittee on Coast Guard and Maritime Transportation, Lidinsky said that Prince Rupert was being promoted “as the most cost-effective gateway for cargo destined to the U.S. Midwest and beyond. West Coast ports in the United States are already feeling the impact of this diversion.” “United States-destined cargo moving through Canadian ports avoids both the U.S. Harbor Maintenance Tax and parts of the U.S. container security regime,” Lidinsky asserted, adding: “We are consulting regularly with U.S. ports and examining the issue of potential unfair practices that would shift U.S. cargo from U.S. ports to Canada. We have also reached out to U.S. Customs and Border Protection (CBP) to discuss and address any potential security impacts.” Blunt Canadian Responses Responding to the latest developments, Gary LeRoux, Executive Director of the Association of Canadian Port Authorities, bluntly remarked: “I challenge the fundamental question of why one even gets into such a debate when free trade is the very foundation of the Canada-U.S. commercial relationship.” He pointed out that in 2010, U.S. exports to Canada approached $250 billion. “This exceeded total U.S. exports to China, Japan, South Korea and Singapore combined!” LeRoux recalled, in an interview, that U.S. ports ben