There are restrictions on the commercial activities of foreign and non-duty paid vessels in Canadian waters and in waters above the continental shelf. Such activity is regulated by coasting trade legislation.
On this page
- What is coasting trade?
- When is a coasting trade licence required?
- Coasting trade licence application process
- Duty implications
- The Canada-European Union Comprehensive Economic and Trade Agreement (CETA)
What is coasting trade?
Coasting trade refers to any commercial marine activity within Canadian waters. Above the continental shelf of Canada, these activities must be related to the transport, exploration or exploitation of the minerals and non-living natural resources of the continental shelf.
The Coasting Trade Act supports Canadian marine interests by reserving the coasting trade of Canada to Canadian registered duty paid vessels, with limited exemptions. The legislation provides a process to temporarily import a foreign or non-duty paid vessel under a coasting trade licence when a suitable Canadian-registered duty paid vessel is not available.
Priority to engage in Canada's coasting trade is given in the following order:
- Canadian-registered, duty paid vessels
- Canadian-registered, non-duty paid vessels under licence
- foreign vessels under licence
When is a coasting trade licence required?
A licence is required to use a foreign or a Canadian non-duty paid vessel in Canada's coasting trade.
Licences are issued by the Minister of Public Safety when the Minister is satisfied that:
- The Canadian Transportation Agency has determined that no Canadian vessel is suitable and available to perform the activity described in the application.
- The activity described in the application includes carrying passengers on a vessel and the Canadian Transportation Agency has determined that a similar marine service is not available from any Canadian vessel.
- Arrangements have been made for the payment of the duties and taxes under the Customs Tariff and the Excise Tax Act applicable to the foreign vessel in relation to its temporary use in Canada.
- All certificates and documents relating to the foreign vessel are valid and in force.
- The foreign vessel meets all applicable safety and pollution prevention requirements.
Changes to coasting trade: repositioning of empty containers in Canada
As part of Transportation 2030, the Government of Canada made changes to laws through the Transportation Modernization Act that will improve the transportation system. This included changes to the Coasting Trade Act.
As of December 10, 2018, vessel owners can use a vessel of any registry without a coasting trade licence to reposition the containers they own or are leasing between locations in Canada (on a non-revenue basis). This will help address the current shortage of containers available for export and may reduce costs for trade.
Coasting trade licence application process
First you search the Canadian Register of Vessels using the vessel registration query system. This will help identify whether there are Canadian-registered vessels suitable to perform the proposed activity.
An application can be made to both the Canada Border Services Agency and the Canadian Transportation Agency by a resident of Canada or their agent. This is done using the Canada Border Services Agency Form C47: Application for Vessel Temporary Admission to the Coasting Trade of Canada. The Canadian Transportation Agency requires applicants to provide an application containing specific information regarding the proposed activity. The required information can be found in the Canadian Transportation Agency Guidelines Respecting Coasting Trade Licence Applications.
The Canadian Transportation Agency makes a formal decision as to whether a Canadian vessel is suitable and available. In the case of passenger vessels, it must determine whether an identical or similar marine service is available from Canadian vessels. Its decisions are provided to the Minister of Public Safety and are also published online in a decisions database.
Read the coasting trade filing requirements to find out how to submit applications and related submissions.
Upon a successful application to the Canadian Transportation Agency, Canada Border Services Agency contacts the applicant and outlines the remaining requirements for licensing. This includes the payment of any applicable duties and taxes, as well as certification from Transport Canada with respect to safety and pollution requirements and international shipping convention certificates. Inspections are now carried out by Transport Canada Marine Safety and Security’s vessel inspection services.
When the applicant has received the necessary documentation, they must go to the assigned Canada Border Services Agency office. A licence will then be issued on behalf of the Minister of Public Safety. This licence authorizes the vessel to begin its specified operations.
Note that there are also regulations in Canada with respect to the use of temporary foreign workers. For immigration purposes, foreign nationals entering Canada on a vessel as members of a crew engaging in the coasting trade typically require a labour market impact assessment from Employment and Social Development Canada as well as a work permit from Immigration, Refugees and Citizenship Canada.
In Canada, rates of duty on imported goods are prescribed in the Customs Tariff. Imported vessels are generally subject to a tariff of 25%. However, duties are currently waived on the importation of cargo vessels, tankers and ferry vessels of more than 129 meters. For vessels imported on a temporary basis under a coasting trade licence, duty reductions are calculated in accordance with that legislation and the Vessel Duties Reduction or Removal Regulations.
Duty implications are dealt with in more detail in Memorandum D3-5-7: Temporary Importation of Vessels, which is published by the Canada Border Services Agency.
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA)
Canada’s trade agreement with the European Union, known as CETA, allows eligible European Union entities to offer a limited number of coasting trade services without a licence. Learn more about how CETA impacts coasting trade and foreign vessels.
Learn more about CETA.