The Consul at Vancouver (Tewell) to the Secretary of State
[Received September 9.]
Sir: I have the honor to submit herein for the Department’s consideration and any action that may be deemed advisable certain [Page 106] observations concerning the application of the coastwise shipping regulations of Canada and the application of similar laws and regulations in the United States.
Although this matter has come to the attention of the Consulate General not infrequently during the past few years this despatch is prompted by the recent efforts of a large operator of American tow boats to procure relief from existing Canadian regulations in special cases. The concern in question is Foss Company, Inc., Sixth Avenue and Nickerson Street, Seattle, Washington. Mr. W. Foss, President of the company which bears his name, recently called at the Consulate General for assistance in obtaining from the Canadian customs authorities permission to take in tow booms of logs at ports in British Columbia not designated as customs ports. Negotiations, which failed to procure such permission, made it quite clear that Collectors of customs and minor customs officials are without authority to make exceptions in the application of Canadian coastwise shipping regulations; and that such matters as the application of the Foss Company appropriately might be dealt with only by the Department of Customs and Excise, at Ottawa.
Although the Foss Company has endeavored for some time to procure permission to take tows at non-customs ports in Canada the case in point is covered by a letter from the above firm to the Collector of National Revenue at Nanaimo, British Columbia, dated July 30, 1930, a copy of which is enclosed herewith.43 In this application the Foss Company sought permission to take in tow a boom of logs at Deep Bay, which is a non-customs port within the jurisdiction of the customs port of Union Bay, on Vancouver Island. On August 1, the Collector of National Revenue at Nanaimo informed the applicant:
“This cannot under any circumstances be done. Your Tugs may only take in tow a boom in a Port of Entry—Nanaimo or Union Bay or any other Port of Entry.”
In discussing with the supervisory customs officials the refusal of the Collector at Nanaimo, it appears that such refusal is based in part upon Section 12 of the “Coasting Regulations”, made by Order in Council on May 31, 1901, the second paragraph of which reads as follows:
“No vessel or boat arriving in Canada from a place beyond the limits of Canada shall proceed further coastwise or take or unlade cargo without a special permit from the Collector, and the lading, unlading and conveyance of goods under this section shall be subject to such rules and conditions as the Minister of Customs may from time to time prescribe.”
An extract from the “Coasting Regulations in Respect of Foreign
Vessels” (contained in Memorandum No. 1155–B of the Customs
Department, Canada, August 1, 1901) reads as below:
Section 936 of the “Merchants Shipping Act of Canada” reads as follows:
“The master of any steam vessel, not being a British ship, engaged or having been engaged in towing any ship, vessel or raft, from one port or place in Canada to another, except in case of distress, shall incur a penalty of four hundred dollars and such steam vessel may be detained by the Collector of Customs at any port or place to or in which such ship, vessel or raft is towed, until such penalty is paid.”
The above-quoted provisions are construed to mean (1) that foreign vessels may not take imported cargo to a non-customs port (and clear inward and outward at a customs port) when Canadian vessels are available, and (2) foreign vessels may not take at a non-customs port cargo for export via a customs port, but that Canadian vessels only may engage in that service. The effect of this procedure in instances has raised the towage charge to such an extent that little if any profit remained for the American vessels concerned, or, the entire contract has gone to Canadian tug boat operators.
In addition to other grounds mentioned in the enclosed letter, the application of the Foss Company is said to be based upon the fact that Canadian vessels are granted in American waters the facilities now requested of the Canadian authorities. In this connection the applicant has submitted a letter from the Assistant Collector of Customs at Seattle, Washington, dated November 16, 1928, which reads in part as follows:
“Foreign vessels (including barges and scows) arriving in ballast after report and entry at an established port of entry are permitted to proceed to a place not a port of entry for the purpose of lading cargo for export; in such cases the vessel is required to return to any port of entry for clearance before final departure.”
Not only may foreign vessels take cargo in non-customs ports in the United States, but they also may deliver or discharge cargo at non-customs ports. In a letter from the Collector of Customs at Seattle, dated March 23, 1929, addressed to the Foss Company, it is stated:
“… Concerning vessels laden with merchandise in bulk proceeding to places within this district which are not ports of entry, you are advised that such permits are issued by this office without regard to the nationality of the vessel. This practice has been in effect for many years, and as stated in previous correspondence, I am not aware of any instance in this district where a permit has been refused.
“With special reference to your inquiry as to whether this practice is a privilege or may be claimed as a matter of right, you are advised that in a certain sense the issuance of such permits is discretionary with the Collector, but the nationality of the vessel concerned is not a determining factor; i. e. American and foreign vessels are accorded equal treatment.”
Again, in a letter dated July 3, 1929, the Collector of Customs at Seattle advised the Foss Company:
“… in the case of barges and scows proceeding under tow to places in this district not ports of entry, Canadian tugs arriving in this district with logs in tow may proceed to a port of entry and after entry of the vessel and logs, may then proceed to a point of delivery outside of a port of entry, provided the tow lines remain fast to the tow until final destination is reached. This practice has been in effect for many years in this district.”
In a letter dated September 17, 1929 the Collector of Customs at Seattle further explained the practice at that port and ports in his jurisdiction:
“Replying to your letter of the 16th instant, you are advised that a Canadian tug boat may tow a raft of logs from a place in this district, not a port of entry, to a foreign destination, subject to the following procedure and provided the tow lines remain fast to the tow in American waters:
“Upon arrival in this district from foreign, the tug boat will be required to report and enter at an established port of entry before proceeding to pick up the logs intended for export and to return to a port of entry before departure from this district to a foreign destination.
“A similar practice will apply in the case of a Canadian tug boat arriving in this district with a tow, as indicated in office letter of July 3, 1929, which, on the outward voyage, may tow logs from a place not a port of entry.
“Under the provisions of Section 455 of the Tariff Act of 1922,44 the compensation and expense of Customs inspectors which may be [Page 109] assigned to tug boats proceeding to places not ports of entry are reimbursable to the government by the master or owner of such vessel. Customs officers are not assigned to such vessels in all cases, but the Collector reserves the right to make such assignments where they are deemed necessary.”
From the foregoing it is apparent that in American waters Canadian tug boats are afforded special facilities both as to the lading and discharge of cargo at non-customs ports, whereas American tug boats are denied such facilities in Canadian waters. The situation appears to be the result only of a difference in interpretation of very similar laws in the United States and Canada, the laws of the latter being strictly interpreted and enforced in the interest of Canadian tug boats, whereas corresponding laws of the United States are interpreted without distinguishing between American and foreign vessels. As the Collector at Seattle states, “American and foreign vessels are accorded equal treatment.”
Section 12 of the Canadian “Coasting Regulations” provides that foreign vessels arriving at a port of Canada may not “proceed further coastwise or take or unlade cargo without a special permit from the Collector” under such rules as the Minister of Customs may prescribe.
“It shall be unlawful to make entry of any vessel or to unlade the cargo of [or] any part thereof of any vessel elsewhere than at a port of entry: Provided, That upon good cause therefor being shown, the Secretary of Commerce may permit entry of any vessel being made at a place other than a port of entry designated by him, under such conditions as he shall prescribe: And provided further, That any vessel laden with merchandise in bulk may proceed after entry of such vessel to any place designated by the Secretary of the Treasury for the purpose of unlading such cargo, under the supervision of customs officers if the collector shall consider the same necessary, and in such case the compensation and expenses of such officers shall be reimbursed to the Government by the party in interest.”
The above provision of law is amplified in Article 135, Customs Regulations, 1923, as follows:
“It shall be unlawful to unlade the cargo or any part thereof of any vessel elsewhere than at a port of entry; but collectors may, if they consider the same necessary, permit any vessel laden with merchandise in bulk to proceed after entry of such vessel and its cargo to any place within their respective district for the purpose of unlading such cargo.”
The Canadian “coasting Regulations in Respect of Foreign Vessels” (Section 5 and 6) provide that “foreign vessels may tow other vessels and things from a foreign port to a Canadian port” and “from a Canadian port to a foreign port”, but in as much as “port” means port of entry or customs port the above phrases are officially interpreted and applied as meaning that foreign tug boats may not enter non-customs ports to move or tow cargo inward or outward even should they convey such cargo to an established customs port for clearance inward or outward and pay the expense of Canadian customs officers to supervise such operations.
On July 29, 1929 it is understood that the Customs Division of the Canadian Department of National Revenue ruled specifically in that connection, as follows:
American scows or barges may be brought to Canadian ports of entry by American tug boats, but must be towed by Canadian tugs from that port to non-customs ports for the purpose of loading or discharging cargo, inasmuch as there is no provision under the Customs Act which enables vessels of foreign registry to call at places which are not ports of entry for the purpose of loading or discharging cargo.
A large volume of bulk freight, consisting principally of logs, lumber, ore, coal, mineral products, heavy machinery, and miscellaneous raw and manufactured items, is moved by tug boats between British Columbia and points on Puget Sound in the State of Washington. Because of its nature, much of this freight emanates at isolated points not designated as ports of entry and is destined for various noncustoms ports in the United States and in this Province. Needless to say bulk freight of the kind mentioned may be more conveniently loaded upon and discharged from barges and rafts, rather than ordinary freight vessels, and the resulting economy in handling is a factor instrumental in encouraging and facilitating that important commerce. American transportation interests having extensive capital investment in tug boats, scows and barges appear to suffer in this trade from an interpretation of Canadian laws, while competitor concerns in British Columbia are afforded such advantages through the interpretation of similar American laws that they are enabled to procure freight contracts which, on a comparable basis, would go to towing firms in the United States.
The volume of business involved and the relative positions of American and Canadian interests concerned would appear to warrant adjustment looking to a more equitable arrangement for the former.