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Does Canada Need and Integrated Strategy for Air Cargo and Distribution Presentation to the CAC ACIN

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Cabotage. 8. Access: Designation Policies. Designation Policy ... cabotage? 19. Air Cargo Vision. Seek improvements in border facilitation ... – PowerPoint PPT presentation

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Title: Does Canada Need and Integrated Strategy for Air Cargo and Distribution Presentation to the CAC ACIN


1
Does Canada Need and Integrated Strategy for Air
Cargo and DistributionPresentation to the CAC
/ACI-NA Air Cargo Conference
Mike Tretheway
Vice President
7 December 1999
2
The Air Cargo Opportunity
  • Air Cargo is a direct generator of jobs
  • ex) Hamilton 1000 cargo jobs on site
  • Air Cargo supports jobs in other industries
  • ex) fish processing linked to air cargo
  • Air Cargo is fastest growing sector

3
Air Cargo Supports Pax
  • Many routes are of marginal profitability
  • Air cargo adds up to 15 of revenues
  • Many pax routes would not be economically viable
    without air cargo

4
Current Air Cargo Policy
  • No Ministerial policy announcements
  • exception 1998 policy on air cargo designation
  • Little in bilateral air service agreements
  • No policy on distribution businesses

5
Air Cargo Policy Dimensions
  • Broad policy issues
  • Access to routes
  • Border facilitation
  • Price disincentives
  • Promotion of value added distribution businesses

6
Broad Policy Issues
  • What is the objective of air policy?
  • Protection of combination carriers?
  • Protection of all cargo carriers?
  • Promotion of air cargo industry?
  • Improve efficiency of economy generally, via
    availability of safe, efficient, price economic
    air cargo?
  • Reduce regional disparities?

7
Access to Routes Bilaterals
  • Bilateral Air Services Agreements
  • allows designation of all cargo carrier?
  • 5th freedom services?
  • 7th freedom services?
  • Co-terminalisation?
  • Cabotage

8
Access Designation Policies
  • Designation Policy
  • will Minister designate when all cargo carrier
    desires service?
  • or will goal be protection of combination
    carriers?
  • can one protect air cargo when trucks cross
    borders?

9
Access to Routes Multilateral
  • Potential for Multilateral Approaches
  • regional open skies for air cargo
  • EU
  • Mercosur
  • inter-regional open skies
  • US with EU?
  • ICAO convention for air cargo access?
  • GATS air cargo as first step into hard rights?

10
Border Facilitation
  • Time is money
  • Reduce border crossing times
  • full adoption of EDI, reduce costs
  • machine clearance of low risk shippers/carriers
  • improve customs staffing levels
  • cross train customs staff as some facilities
  • cost recovery fees for service levels?
  • shift burden to facilitator/handlers

11
Cargo Preclearance
  • 1974 Preclearance agreement
  • passengers, crews, personal effects
  • commercial goods not covered
  • commercial samples and tools of trade not allowed
  • subject to re-inspection upon arrival
  • officers require different training to clear
    cargo

12
Cargo Preclearance
  • Would require US licensed brokers
  • Changes required to achieve cargo preclearance
  • change Canada-US preclearance bilateral agreement
  • Change US Customs tariff to change the conditions
    under which goods may be entered
  • Change US/Canada Free Trade Agreement

13
Price disincentives
  • Ground lease
  • general levels
  • participation rent
  • Nav Canada charges
  • Canada-US treaty allows over-flight at lower
    charge than if flight stops at a Canadian facility

14
Promotion of Distribution Businesses
  • Geography would favor major intercontinental
    distribution businesses in Canada
  • Burden of doing business in Canada
  • pay duties and refund
  • pay GST and refund
  • cost of paperwork
  • delay of paperwork

15
FTZs
  • US inverted tariffs favour value added processing
    prior to clearance into US economy
  • FTZs developed in US
  • Opportunity to perform value added processing in
    Canada
  • Advantage of storing goods without prepayment of
    duty and GST

16
FTZ vision for Canada
  • Encourage location of NAFTA distribution
    businesses in Canada
  • Allow modern value added distribution
  • Encourage addition of Canadian products to
    imported goods

17
An Air Cargo Vision for Canada
  • Recognize the high incidence of diversion by
    truck to alternate airports
  • Give much higher priority to the interests of the
    general economy and shippers
  • Air cargo is an industry to be promoted and
    encouraged

18
Air Cargo Vision
  • Phase-in open skies in air cargo
  • bilateral approach when required
  • multilateral when possible
  • cargo as pilot for multilateral agreements
  • Multiple designation
  • Coverage
  • 3rd/4th, co-terminalisation
  • 5th, 7th
  • cabotage?

19
Air Cargo Vision
  • Seek improvements in border facilitation
  • ultimate goal continental clearance
  • cargo preclearance only if cc not possible
  • automated clearances when possible
  • re-engineer clearance processes
  • greater role, responsibility and training for
    facilitators/handlers
  • Focus clearance on controlled goods, not economics

20
Air Cargo Vision
  • Remove price disincentives
  • eliminate participation rents
  • review Nav Canada charges
  • recognize contribution of cargo to regional/local
    economies
  • via taxation and support policies

21
FTZ vision
  • Allow/encourage development of Canadas natural
    advantage in distn
  • FTZ regime which is simple, low cost and
    perceived as being simple
  • Allow value added processing
  • Encourage addition of Canadian content
  • Recognize the contribution of distribution jobs
    to economy

22
Thank You !
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