“M/T Heather Knutsen” and “M/T Jasmine Knutsen” Repair or Alteration Remission Order: SOR/2019-42
Canada Gazette, Part II, Volume 153, Number 4
Registration
SOR/2019-42 February 1, 2019
CUSTOMS TARIFF
P.C. 2019-63 January 31, 2019
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 115 footnote a of the Customs Tariff footnote b, makes the annexed “M/T Heather Knutsen” and “M/T Jasmine Knutsen” Repair or Alteration Remission Order.
“M/T Heather Knutsen” and “M/T Jasmine Knutsen” Repair or Alteration Remission Order
Remission
1 Remission is granted to Canship Ugland Ltd. of St. John’s, Newfoundland and Labrador, of the customs duties paid under the Customs Tariff in respect of vessels “M/T Heather Knutsen” and “M/T Jasmine Knutsen” that were returned to Canada after having been exported in 2015 for repair or alteration.
Condition
2 The remission is granted on condition that a claim for remission is made to the Minister of Public Safety and Emergency Preparedness within two years after the day on which this Order comes into force.
Coming into force
3 This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issues
Canship Ugland Limited (Canship), a Canadian company located in St. John’s, Newfoundland and Labrador, manages shuttle tankers, which transport crude oil from the Hibernia, Terra Nova and Whiterose oil fields off the coast of Newfoundland. Canship is seeking remission of the duties paid on the reimportation of the two tankers, “M/T Heather Knutsen” and “M/T Jasmine Knutsen,” following maintenance and repair work performed in France in the winter of 2015. Canship was obliged to refit and upgrade these tankers in 2015, footnote 1 but the repair and maintenance work could not be performed in Canada as the vessels were too large for any domestic dry dock facility.
The tariff rate applicable to ship repairs performed outside Canada is 25% on tankers. Given the lack of adequate repair facilities in Canada that could accommodate tankers of the size of the “M/T Heather Knutsen” and the “M/T Jasmine Knutsen,” Canship has asked for relief of the duties applied on the repair and maintenance work done abroad on these two vessels.
The Government previously remitted $3.1 million in customs duties to the same company in 2014 under similar circumstances through the M/T Kometik and M/T Mattea Repair or Alteration Remission Order, 2014.
Objectives
To remit customs duties paid by Canship for maintenance and repair work performed offshore since the work could not be undertaken in Canada due to a lack of facilities large enough to accommodate the two tankers.
Description
The “M/T Heather Knutsen” and “M/T Jasmine Knutsen” Repair or Alteration Remission Order (the Remission Order) remits $2.8 million in customs duties paid by Canship on the reimportation of these two tankers following maintenance and repair work performed in the winter of 2015.
Regulatory development
Consultation
Given that the Remission Order only impacts Canship, the company who requested the remission of duties, no consultations were undertaken. For the same reason, prepublication of the draft Order in the Canada Gazette, Part I, was not considered necessary.
Modern treaty obligations and Indigenous engagement and consultation
The Remission Order will not impact Indigenous peoples, nor trigger modern treaty obligations.
Instrument choice
The only available mechanism to remit the duties to Canship is through a remission order made under the Customs Tariff. Therefore, no other instrument or policy options were considered.
Regulatory analysis
Benefits and costs
The Remission Order remits $2.8 million in customs duties paid. The funds will come from the Consolidated Revenue Fund. The remission of the duties paid on the reimportation of the two tankers will enhance the cost competitiveness of the Hibernia and Terra Nova oil projects and will partially offset the revenues lost by Canship during the months these vessels were out of commission. The measure will have no effect on the Canadian ship repair industry given the lack of adequate shipyard facilities to perform this work.
Small business lens
The Remission Order is relieving in nature, and only impacts Canship, which is not a small business. Accordingly, no impacts on small business are anticipated.
“One-for-One” Rule
The “One-for-One” Rule does not apply to this Order, as it would not result in any incremental changes in administrative burden costs for businesses.
Regulatory cooperation and alignment
The Remission Order remits customs duties to one company; it has no impact on Canada’s regulatory alignment with other jurisdictions, nor are there any opportunities for regulatory cooperation.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that this Remission Order would not have any positive or negative environmental impacts; therefore, a strategic environmental assessment is not required.
Gender-based analysis plus (GBA+)
No GBA+ impacts have been identified for this proposal.
Implementation, compliance and enforcement, and service standards
The Canada Border Services Agency is responsible for the administration of, and compliance with, customs and tariff legislation and regulations. The Agency will administer the provisions of this Order in the normal course of its administration of customs and tariff-related legislation.
Contact
Samuel Roy
International Trade Policy Division
Department of Finance Canada
Ottawa, Ontario
K1A 0G5
Telephone: 613-369-3982