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Overview of the Coasting Trade Act – by Bernard LLP
Coasting Trade Act overview
By Jeffrey Wu, Associate Lawyer at Bernard LLP
The Canadian Coasting Trade Act (the “Act”) regulates the operation of vessels in Canada’s coasting trade and is similar to the Jones Act in the United States. The legislation prohibits any foreign ship or non-duty paid ship from engaging in “coasting trade” in Canadian waters. The Act defines “coasting trade” as either (a) the carriage of goods by ship alone, or by ship and another mode of transport; (b) the carriage of passengers by ship; or (c) engaging in any commercial marine activity by ship. An application for a coasting trade license must therefore be submitted where the foreign ship or non-duty paid ship will be carrying out any commercial marine activity in Canadian waters. A coasting trade license, once issued, is valid for a maximum period of 12 months which can be extended for a period of up to an additional 12 months upon subsequent re-application.
Under the Act, the Minister of Public Safety cannot issue a coasting trade licence authorizing a foreign ship or a non-duty paid ship to conduct a commercial activity in Canadian waters unless the Canadian Transportation Agency has determined that no suitable Canadian ship is available to perform the activity described in the application. In addition, the Minister must be satisfied that arrangements have been made for the payment of the duties and taxes under the Customs Tariff and the Excise Tax Act in relation to the foreign ship or non-duty paid ship’s temporary use in Canada, the certificates relating to the foreign ship or non-duty paid ship are valid and in force and the foreign ship or non-duty paid ship meets all applicable safety and pollution prevention requirements of Canada.
There are a few specific exceptions where a foreign ship or a non-duty paid ship is not required to carry a coasting trade licence, including when the ship is used as a fishing vessel (as defined by the Coastal Fisheries Protection Act) in any activity governed by the Coastal Fisheries Protection Act, when the ship is engaged in ocean research activity commissioned by the Department of Fisheries and Oceans, when the ship is operated by a foreign government that has received the consent of the Minister of Foreign Affairs to conduct marine scientific research, when the ship is engaged in salvage operations, except where such operations are performed in Canadian waters, and when the ship is responding to a marine pollution emergency. Recent amendments to the Act in 2017 also provide exceptions to the carriage of empty containers and private dredging activities if certain narrow conditions are met.
Applicants should submit their application as far in advance as possible to account for potential delays as a result of complicated or contested applications. It is necessary for applicants to comply with the application process and carefully address each criteria under the Act to be successful in their application for a coasting trade licence. Ü
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