Proposed increase to quarantine fees | Group says increased fees at the border conflict with trade agreements
A proposal to raise agricultural quarantine inspection fees at the U.S. border has transporters crying foul.
The U.S. Department of Agriculture has proposed a rule that would increase fees to cover the full cost of inspections to keep pests, food borne pathogens and disease out of the country.
The increase affects trucks, railways, maritime vessels and airlines.
Those opposed say it is too high and goes against the spirit of the North American Free Trade Agreement. Canada was exempt from inspection fees until 2007.
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“We think it behooves the United States to adhere to its international obligations,” said David Bradley, president of the 4,500 member Canadian Trucking Alliance.
“That is why we have treaties, and if there is a net benefit to the U.S. agricultural industry and to the American public, then either the importers should be paying, or more appropriately, these things should be paid for through the tax system, not through a user fee that is really a thinly disguised tax on trade,” he said.
Critics say the fee also goes against the spirit of the Beyond the Borders agreement between Canada and the U.S. to expedite trade while still protecting the two trading partners.
The federal government could launch a NAFTA challenge once the rule is in place at the end of this year.
The public comment period closed at the end of June.
More than 130 comments were received from American companies as well as the Canadian government, trucking companies, the Chamber of Marine Commerce, the Canadian Meat Council and exporters and importers of seeds, flowers and produce.
The Canadian government said it supports a cost recovery program for inspections but argued that the proposed increases are too high and could negatively affect trade.
Canada-U.S. trade was about $734 billion last year, which worked out to $2 billion a day. Agriculture trade was worth $21 billion, and a large share of it arrived by truck.
“This disproportionately affects U.S.-Canada trade as commercial trucking is the most commonly used conveyance mode,” said a government statement.
“In fact, nearly 60 percent of U.S.-Canada trade is shipped via commercial truck.”
The trucking industry could end up paying $15.5 million in annual fees compared to maritime vessels carrying containers, which would pay $9 million. Many of the maritime vessels travel on the Great Lakes and St. Lawrence.
The Canadian Meat Council said its industry is already paying other fees that drive up costs.
Canadian trucks carrying meat shipments must report to privately owned inspection houses when they enter the U.S., where the USDA selects a portion of the shipment for secondary inspection.
The owners of the inspection houses set the fees and collected $3.5 million in 2012.
“In our view, the impact of the proposed AQI fee increases will exacerbate the production costs and burdens on cross-border trade for both Canadian suppliers and their U.S. customers,” said the council.
The USDA said its agriculture industry is worth $1 trillion a year and must be protected.
AQI activities include inspections by the Department of Homeland Security, U.S. Customs and Border Protections and the USDA’s Animal and Plant Health Inspection Service.
The rule proposes lowering fees for international air passengers to $4 from $5 and fees for rail cars to $2 from $7.75.
It further proposes raising user fees for inspections of commercial aircraft to $225 from $70.75 and commercial maritime cargo vessels from to $825 from $496.
Charges for commercial trucks with a transponder that contains electronic information about the vehicle’s user fee payment status would increase to $320 a year from $105 while fees for commercial trucks without a sticker would increase to $8 per crossing from $5.25.
“We have determined that revised user fee categories and revised user fees are necessary to recover the costs of the current level of activity, to account for actual and projected increases in the cost of doing business, and to more accurately align fees with the costs associated with each fee service,” the department said.
