Canada pans USDA’s planned shifts in cross-border inspection fees

Plans from the U.S. Department of Agriculture to recover more of its agricultural quarantine inspection (AQI) costs from users moving goods into the country have left Canada officially underwhelmed.

Canada’s International Trade Minister Ed Fast said last week the proposal by USDA’s Animal and Plant Health Inspection Service (APHIS) to adjust AQI user fees “would impose disproportionate costs on Canadian exporters and commercial transporters.”

AQI services, according to APHIS, are those meant to “protect U.S. agricultural and natural resources from the inadvertent introduction of foreign pests and diseases that may enter the country and the threat of intentional introduction of pests or pathogens.”

USDA in late June announced an extension on the public comment period for APHIS’ proposed new AQI fee schedule to July 24, “in response to stakeholder requests to allow additional time for comments.”

Fast last week said his concerns have now “been formally submitted to the U.S. government.”

Canada’s government, he said, believes government inspection fees “should cover the costs of doing business,” but added the proposed APHIS fees “unduly affect goods that travel across the border by truck, which represent the majority of Canada-U.S. trade,” to the tune of an additional C$15.5 million for the Canadian trucking sector.

Further, he said, quoting the Chamber of Marine Commerce’s estimates, “increased inspection costs for Canadian ships could more than double under the new rules.”

APHIS proposes to eliminate its user fee caps for commercial cargo railcars and commercial cargo vessels, to “more closely align the user fee revenue received with the cost of providing AQI services for these conveyances and rail and vessel cargo.”

Fee caps refer to limits on the number of times a fee must be paid for a specific truck, vessel or railcar in a calendar year.

“Larger share”

A cap for commercial trucks using transponders would remain in place, APHIS said in a discussion document on its proposals, “because of the increased efficiency gained through the use of transponders at border inspections.”

APHIS’ current cap for other commercial trucks would increase, however, and affected businesses thus would pay in fees “a larger share of the cost of the AQI services they receive.”

AQI fees would rise to US$8 for a commercial truck, from $5 now. A commercial truck with a transponder would pay US$320 per year, up from $105. Commercial cargo railcars would be charged US$2 each, down from $7.75, while a commercial cargo vessel would be charged US$825, up from $496.

APHIS said it expects AQI user fee revenue for fiscal 2014 would increase to about US$700.1 million, compared to about $573.1 million under today’s fee schedule, while “reliance on appropriated (government) funds to finance certain AQI services” would drop by $46.8 million, assuming static total cost of AQI services (now about $948.9 million).

AQI user fees, APHIS said, “have not been updated to reflect the real cost of services in over a decade, and as a result, the program has been operating in a deficit, subsidized by taxpayers.” Updating the fees “will make sure inspection fees are aligned with the costs of delivering AQI services and are fairly and consistently applied.”

Canada, Fast said, has asked that the proposed APHIS fee changes take into account the “reality of our low-risk, high-volume trade.”

Given the “unique nature” of the Canada/U.S. trading relationship, Fast said, Canada/U.S. trade “is expected to suffer disproportionately when compared to other country trading relationships with the U.S.”

Further, Fast warned, the “market distortion” the proposed fee changes would create “may not be consistent with U.S. international trade obligations.” –– Network

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