Trade off could jeopardize shipbuilding industry, says Minister Tulk

Federal negotiations under the Canada-European Free Trade Association could see the removal of Canada's 25 per cent tariff on ships, including marine offshore structures, which would have a significant negative impact on Newfoundland and Labrador, and all of Atlantic Canada, says Beaton Tulk, Minister of Industry, Trade and Rural Development.

"The elimination of the 25 per cent tariff will have a devastating impact on the shipbuilding and marine fabrication industry, especially at a time when our own shipbuilding industry is just starting to recover from many difficult years and our offshore oil and gas industry is just starting to emerge in its own right," Minister Tulk said. 

Minister Tulk has written the federal Minister for International Trade, Pierre Pettigrew, asking him to intervene on an urgent basis to ensure that Canada does not compromise, in its negotiations regarding the Canada-European Free Trade Association, the significant economic opportunity these industries offer the province and the country.

Mr. Tulk said he is "alarmed and perplexed" by Canada's apparent intention to trade off the 25 per cent tariff in return for the elimination of Norway's direct nine per cent export subsidy so as to conclude an overall free trade agreement with the European Free Trade Association.

He said this flies in the face of earlier assurances the federal government gave the province that no measures would be taken in these negotiations that would compromise Canadian interests in the shipbuilding industry.

Mr. Tulk pointed out that in contrast to the situation that exists in Canada today, Norway has a very strong and internationally mature industry, built up over 30 years through large infusions of public money and its own protectionist policies.

"Norway is a substantial and serious competitor to Canada, both in the shipbuilding industry and the offshore marine fabrication industry," he said. 

"Even if we could be assured that a level playing field between our two countries could be achieved on a go forward basis, it must also be acknowledged that Norway has already developed an extensive fleet over many years with the benefit of significant subsidies. Elimination of the tariff would allow these subsidized vessels to gain unfettered access to the Canadian market and put our own industry at an unfair disadvantage. Given that there are limited business opportunities available to the Canadian industry in Norway, even if all Norwegian subsidies were eliminated, and given the risk to our own industry, we fail to understand the basis of the federal government's current position on this issue."

Mr. Tulk said that in addition to its impact on the shipbuilding industry, the elimination of the 25 per cent tariff would also likely offset any potential benefits from the new national shipbuilding and industrial marine policy that was announced by the federal government in June 2001 in recognition that stronger federal policies and initiatives are critical to securing and developing the full economic potential of the shipbuilding and marine fabrication industry in Canada.

"In fact," Mr. Tulk wrote, " it could spell the very demise of this new policy, which would be most regrettable given the extensive efforts made by the Government of Canada, the provinces and industry over the past two years to secure the future of the industry through this critically important initiative."

"The Government of Newfoundland and Labrador's position is that the Canadian tariff on ships and related offshore work should be maintained, and we intend to continue to press the federal government very strongly on this issue," Mr. Tulk said.

Media contact: Josephine Cheeseman, Communications (709) 729-4570.

2002 01 17                         11:00 a.m.