Four ways the federal government could potentially block the deal.
At a moment when more and more Canadians are pushing for a ‘Buy Canadian’ approach, B.C. Ferries has chosen to buy four ships from a Chinese state-owned shipyard.
B.C. Ferries chose China Merchants Industry Weihai Shipyards (CMI Weihai) to build the ships, a decision B.C. Ferries CEO Nicolas Jimenez referred to as “the clear choice”:
“It was the clear choice based on the overall strength of its bid, including its technical capabilities, high-quality and safety standards, ferry-building experience, proven ability to deliver safe, reliable vessels on dependable timelines, and the overall cost and value it delivers for our customers – all essential as we continue to experience growing demand and the urgent need to renew our aging fleet.”
B.C. Ferries operates independently of the B.C. provincial government. For its part, the B.C. government has expressed concern over the planned purchase:
“British Columbia’s transport minister says he has raised concerns with B.C. Ferries about its decision to have a Chinese shipyard build four new ferries for its passenger fleet, amid an ongoing trade conflict between Canada and China.
Mike Farnworth said he’s worried about procuring services from “any country that is actively harming Canada’s economy” with tariffs and protectionism.”
While much of the focus in recent months, for good reason, has been on U.S. tariffs on Canada, China is also imposing tariffs on Canadian goods. China has 100% tariffs on some Canadian canola products, and tariffs on Canadian pork, fish and seafood. China has framed the tariffs as retaliation for Canadian tariffs on Chinese electric vehicles.
Beyond tariffs, China’s increasingly authoritarian governance, treatment of the Uyghurs, destruction of Hong Kong’s democracy, threats against Taiwan, economic and technical support for Russia’s invasion of Ukraine, and intimidation of its neighbours all indicate significant values differences between Canada and China, differences that should not simply be wished away.
Thus, buying ships from China sends the wrong message and is out of step with the Team Canada approach that is essential to strengthening Canada’s domestic capacity.
Of course, the challenge in this case is that, according to B.C. Ferries, no Canadian company sought the contract, and it operates as an arms-length organization.
However, the federal government is not without options here.
First, the federal government could use the Special Import Measures Act (SIMA) to investigate whether Chinese state-owned ferries receive unfair state subsidies. If so, the government could impose countervailing duties that would make the purchase financially untenable.
Second, the government could utilize Marine Transport Safety Regulations to conduct a cyber-investigation, citing the Canadian Centre for Cyber Security’s national cyber threat assessment, which stated “The People’s Republic of China’s (PRC) expansive and aggressive cyber program presents the most sophisticated and active state cyber threat to Canada today.” Certification of the vessels could be put on hold pending the outcome of the investigation, which would delay delivery and push B.C. Ferries to look elsewhere.
Third, the government could, with the support of Parliament, amend the Coasting Trade Act to bar ships made by countries designated a national security risk – and then provide exceptions for vessels outside the category of ferries and military vessels, effectively preserving current trade openness while barring B.C. Ferries from purchasing Chinese-built ships.
Fourth, the government could expand the purview of the Investment Canada Act to designate Chinese state-owned shipyards as entities subject to import approval, and then refuse to approve the import of Chinese ferries.
In addition to these more punitive-focused measures, the federal government could offer tax incentives to encourage the purchase of Canadian-made ships.
None of this is ideal. But these measures can be utilized in a precise way to send a clear message that ships should be purchased from Canadian shipbuilders or allied shipbuilders, rather than from China. At a time when threats to Canada are escalating, the government must get creative in defending our national interests.
Spencer Fernando
Image – YouTube
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