Earlier this year, U.S. President Joe Biden and Prime Minister Justin Trudeau announced the U.S.-Canada Partnership Roadmap, an initiative that aptly recognizes that cooperation between Canada and the United States to strengthen supply chain resilience and create clean growth will be paramount to “Build Back Better” following the pandemic.
Given the strategic importance of the shipping sector for sustainable, economic well-being in the region and beyond, a coordinated approach to regulating our sector is crucial. And that raises the very thorny issue of the complete misalignment between proposed ballast water regulations for ships operating in the bi-national Great Lakes-St. Lawrence region, which threatens a conflict between Canada and the U.S. on an equal trading environment for its respective domestic-flag fleets.
This misalignment has already led to a U.S. Federal Marine Commission study to investigate whether Canada’s proposed rules discriminate against U.S.-flag vessels.
With this new Roadmap, we now have an opportunity for Canadian and U.S. government officials to go back to the drawing board and work towards a bilateral arrangement that treats both of their domestic fleets in a similar fashion, with a timeline that is feasible, fair and equal.
What Are the Proposed Regulations?
When not fully loaded, cargo ships must take on water (ballast) to maintain stability. Currently both countries are updating their rules on how ships should install ballast water management systems (BWMS) to prevent the introduction or spread of invasive species during ballast water discharges – and with little regard for coordination, unlike with other marine regulatory matters, they have come up with completely different approaches for domestic ships operating in the Great Lakes-St. Lawrence region.
Notably, the U.S. Environmental Protection Agency (EPA), the chief regulator on BWMS performance standards in the United States, is proposing not to impose any deadline for the installation of BWMS for any vessels – whether they are Canadian or U.S. – that operate exclusively in the Great Lakes-St. Lawrence region.
The EPA’s rationale, with which the Chamber of Marine Commerce agrees, is that due to vessel design, operating conditions such as salinity content in the water, water temperature and turbidity, trade patterns, voyage length and other issues, there are no current BWMS that are practical or suitable for the domestic Great Lakes –St. Lawrence fleets. The EPA has instead suggested that more research be done before any alternative approach is developed for those vessels.
This is a prudent approach, as these vessels do not travel to global markets overseas and pose zero risk of introducing new invasive species.
Conversely, Transport Canada’s proposed regulations would require all large Canadian and foreign vessels operating in Canadian waters to meet a certain ballast water management standard in the International Ballast Water Management Convention by installing a BWMS before September 8, 2024. The rules do not make any considerations for the unique role or challenges of vessels operating exclusively in the Great Lakes-St. Lawrence region.
Transport Canada has erroneously based its benefit analysis to justify the new proposed rules solely on the risk of invasive species introductions from international ships, and its cost analysis on the lowest denominator technology cost, despite those systems not being suitable or viable for domestic vessels in the Great Lakes. It also doesn’t account for any economic loss from the decrease in competitiveness of its domestic fleet, which competes against land-based modes and the American domestic fleet for trades on inland and coastal waterways.
Proposed Rules Will Cost More than $560m
A recent study by Research and Traffic Group, calculated that Canada’s rules as currently proposed would cost CMC members’ Canadian-flag vessels that operate in the Great Lakes St. Lawrence region $564 million to install and operate BWMS.
The likely scenario is that those costs will be passed on to their customers, impacting the competitiveness and trade opportunities of our grain farmers, manufacturers and miners, for example, trying to get their products to market. This could also lead to additional losses for the marine sector in Ontario and Quebec, if customers switch to other modes of transportation or other trade routes.
In contrast, RTG estimated that the incremental benefit (if extending the government’s own analysis to the Great Lakes-St. Lawrence fleet only), would be just $31.3 million.
Both countries have regulated ballast water from arriving ocean-going ships since 2006, and there have been no major invasions into this fully-connected, inland waterway system for 15 years. With our history of cooperation, a bilateral arrangement would offer a level playing field and environmental protection, allowing both Canadian and American domestic fleets to continue delivering cargoes that support over $41 billion in economic activity for the region each year.
With all that in mind, there’s little downside to the Canadian government pressing the “pause” button by providing a “limited time” exemption for vessels that operate exclusively in the Great Lakes-St. Lawrence until government leaders can work together to get the regulatory framework right.