Canadian Pacific Railway is urging the federal government to be more cautious when amending legislation to put imported American grain under the railway revenue cap, fearing that the changes could pull too much American grain north.
Legislation aimed at bringing Canada’s treatment of imported American grain into compliance with World Trade Organization rules goes too far, said Janet Weiss, CPR’s general manager for grain, bulk commodities and government affairs.
The government intends to allow transport of imported American grain to be covered by the revenue cap featured in the Canada Transportation Act, as ordered by the WTO.
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But Weiss told the House of Commons agriculture committee that the way it is written, it appears that the railway revenue cap also could cover American grain simply moving through Canada to export position.
And that could attract so much grain north that it would clog the Canadian system. Weiss urged the committee to accept an amendment that would make it clear that grain in transit through Canada would not be subject to lower freight rates because of the revenue cap.
“If grain starts moving across the border either to take advantage of the revenue cap or as a means of accessing additional capacity, this would consume badly needed capacity in the Canadian grain handling and transportation system,” she told MPs. “This could not happen at a worse time, given we’re already capacity constrained, especially on our quarter to the West Coast.”
Weiss said part of the attraction for American grain moving to Canada is that freight rates are substantially lower here.
While CPR wants Canada to change the rules to comply with a WTO report demanding “national” treatment for American grain imported into Canada, she said Canada must be careful not to do more than is necessary to comply.
“In this case, we seem to be offering a remedy that unnecessarily compromises our own interests, particularly with regard to the efficiency and effectiveness of the Canadian system and the stakeholders who rely on it,” she said.
The government has said it is not the intention of the bill to cover grain solely in transit and MPs said they would look at an amendment proposed by the railway.
Elevator company representatives appearing at the committee said they thought the CPR concern was exaggerated because high trucking costs and higher grain handling costs in Canada will more than wipe out the advantage of the lower rail freight rates.
