Information for Vessels Seeking to Obtain a Duty Reduction on a 1/120th Basis Where No Coasting Trade Licence is Required
Customs Notice 17-31

1. Under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), Canada agreed to allow two categories of European Union (EU) entities to provide certain marine coasting trade, or cabotage services in Canada without a coasting trade licence. They are:

• (a) Entities incorporated in an EU Member State and where substantial business operations occur.
• (b) Entities located outside an EU Member State if they are owned or controlled by nationals of the EU or Canada. In this category, entities must use vessels on an EU Member State registry.

2. Under CETA, an EU entity may provide the following services without a coasting trade licence:

• (a) Feeder services between the Port of Halifax and Montreal
  • i) Continuous services – onboard vessels registered on an EU Member State first registry carrying international cargo. For example, an EU registered vessel could provide a weekly scheduled service between the Ports of Halifax and Montreal to move international cargo.
  • ii) Single voyage – onboard vessels registered on an EU Member State first or second registry, applies to international containerized cargo only. For example, an EU vessel conducting an international trip could pick up loaded containers in Montreal and drop those off in Halifax on its way overseas.

• (b) Repositioning Empty Containers is allowed between locations in Canada, only if the containers are empty, owned or leased by the vessel owner/operator; as a non-revenue service. This means no financial gain or in-kind transactions.

• Notes:

• Cargo containers are subject to requirements of published Customs Tariff legislation.
• There is no restriction on the registry of the vessel used for this type of service for EU entities located in an EU Member State.
• EU entities located outside an EU Member State, but owned or controlled by nationals of the EU, must always use EU registered vessels.

• (c) Dredging Services - Canadian companies will have the flexibility of being able to hire dredging services from EU entities.

• Notes:

• EU entities located in an EU Member State may use vessels of any registry.
• EU entities located outside an EU Member State, but owned or controlled by nationals of the EU or Canada, must use EU registered vessels.

• (d) Federal Procurement – Dredging - Canada has aligned the federal government policy that governs how it procures dredging services or dredging services included in construction services contracts, with the negotiated outcome of CETA. This means that:
  • i) Below the Government Procurement threshold of $8.5 million Canadian for construction services in the agreement, there is no change in procurement practices. Only Canadian registered and manufactured vessels may provide dredging services.
    • a) Vessels not built in Canada, must obtain a certification to demonstrate they:
      • Were substantially modified in Canada to the point it has predominantly Canadian add-on value; and
      • Canadian owned for at least one year.
  • ii) At or above the Government Procurement threshold of $8.5 million Canadian for construction services in CETA, the vessel used:
    • is of Canadian or EU make or manufacture; or
    • was predominantly modified in Canada or the EU and has been owned by a person located in Canada or the EU for at least a year before the bidder submitted the tender; and
    • the vessel must be registered in Canada or an EU Member State and have been granted a temporary licence under the Coasting Trade Act. This temporary authorization will not be subject to the condition that no suitable Canadian duty or non-duty paid vessel is available.
    • You will find the most recent information on the Canadian dollar value of the Government Procurement threshold for construction services at: http://www.tbs-sct.gc.ca/hgw-cgf/business-affaire/gcp-agc/notices-avis/2015/15-03-eng.asp

3. Changes to the coasting trade rules as a result of CETA have been incorporated in the Coasting Trade Act, which sets out the laws governing the use of foreign vessels and non-duty paid vessels in Canada’s coasting trade. Further information on the Coasting Trade Act can be found at https://www.tc.gc.ca/eng/policy/acf-acfs-menu-2215.htm

4. Vessel Duties and Taxes

All vessels being imported into Canada, temporarily or otherwise, must be properly accounted for in accordance with the Custom Act, upon its arrival in Canada.

Canada’s rates of duty on imported goods are set out in the Customs Tariff. For vessels providing services permitted under the CETA, duty reductions are calculated under the Vessel Duties Reduction or Removal Regulations.

For certainty regarding the tariff classification or origin of a vessel, importers may request a binding advance ruling.  Details on how to make such a request are found in CBSA Memoranda D11-11-3, Advance Rulings for Tariff Classification and D11-4-16, Advance Rulings for Origin Under Free Trade Agreements.  The CBSA also offers binding rulings on non-FTA origin and the valuation of goods; please see Memorandum D11-11-1 - National Customs Rulings.

CETA vessels not requiring a coasting trade licence who wish to receive a reduction on a 1/120^th basis of duties are required to apply via email to the CBSA at coastingtrade-cabotage@cbsa-asfc.gc.ca at least 10 days prior to undertaking the activity. For empty container repositioning, please submit your application as soon as possible prior to the proposed commencement of the activity (at least three business days before the arrival of the vessel). (Please take note that the CBSA will require some time to process these applications.)

Application Form C47-1, Application for Duty Remission on a 1/120 Basis for Vessel Temporary Admission to the Coasting Trade Of Canada where a Coasting Trade Licence is Not Required, must be completed and signed and sent to the CBSA’s Commercial Registration Unit at coastingtrade-cabotate@cbsa-asfc.gc.ca.

Documentary evidence such as a copy of a contract or letter of engagement that substantiates the vessel is contracted for the authorized activity must accompany the application.

The CBSA’s Commercial Registration Unit will issue a letter of opinion to either approve or deny the request for duty reduction and to also authorize the applicant to proceed to the CBSA office of importation to complete the process. Duty reduction is conditional on the vessel undertaking the coasting trade activity referred to in subsections 3(2.1) to (2.4) of the Coasting Trade Act. It is incumbent on the vessel owner to provide the CBSA with sufficient evidence to this effect, including any correspondence received from Transport Canada.

The CBSA office of importation will issue a Form C48-1, Authorization for Vessel Temporary Admission to the Coasting Trade of Canada without a Coasting Trade Licence, upon provision of a copy of the letter of authorization and proof of payment of any applicable duties and taxes.

5. Marine Safety and Pollution Prevention Regulations - The CETA does not affect existing regulatory requirements that apply to foreign vessels operating in Canadian waters. Contact the Transport Canada marine transportation office in your region for more information.

6. Foreign Workers and Work Permits - Canada regulates the use of temporary foreign workers. This means that for immigration purposes, most foreign nationals entering Canada on a vessel as crew members engaging in the coasting trade need:

• (a) a Labour Market Impact Assessment from Employment and Social Development Canada; and,
• (b) a work permit from Immigration, Refugees and Citizenship Canada.

7. Questions about CETA should be referred to Global Affairs Canada. More information about the CETA may be found on the Global Affairs Canada website at www.international.gc.ca.

8. To determine whether a Coasting Trade Licence is required for the proposed activity, please contact Transport Canada at TC.CoastingTrade-Cabotage.TC@tc.gc.ca.

9. Questions on the status of your application may be directed to the CBSA at coastingtrade-cabotage@cbsa-asfc.gc.ca.

10. For other questions regarding CBSA programs please contact the CBSA's computerized, 24-hour telephone service (Border Information Service) at 1-800-461-9999, available free of charge throughout Canada; press "0" to speak directly with an agent during regular business hours, Monday to Friday (08:00 to 16:00 local time except holidays). From outside Canada call 204-983-3500 or 506-636-5064, long distance charges will apply. TTY is also available within Canada: 1-866-335-3237.

Date modified:

2017-09-21