Fact Finding

Fact Finding

The Federal Maritime Commission calls its investigation into the movement of U.S. containerized ocean imports through Canadian imports a “fact-finding,” so let’s put the biggest, potentially most troubling but undoubtedly true fact right on the table: The U.S. government is not going to expand the Harbor Maintenance Tax to include imports arriving overland through Canada.

No, we did not just say the U.S. shouldn’t do it. Nor did we say the U.S. should do it. It simply will not happen, and the attention to the issue in Canada, at the FMC and in the United States distracts from the real questions that include broader U.S. trade and economic policies and how they affect the U.S. economy.

And, yes, there is an important issue here around ports and transportation, but the Harbor Maintenance Tax is only part of that question. Like other transportation funding programs, the HMT is a poorly managed mechanism that exists in its current form largely because, well, it simply exists. As with the Highway Trust Fund and other funding programs, there’s little political will or statesmanship available to look at the HMT critically, figure out what works for ports and port users and adjust the tax accordingly.

The result, according to testimony from Kurt Nagle of the American Association of Port Authorities last summer, is that the tax collects between $1.3 billion and $1.6 billion annually, while about $800 million is appropriated for the channel maintenance the HMT is supposed to serve.

If U.S. ports are concerned about their competitiveness with Canadian ports — and Mexico’s burgeoning Port of Lazaro Cardenas, by the way — taking the HMT down the levels needed for channel maintenance would be a start, but don’t expect that to happen, either.

And the comments to the FMC in this inquiry show ports are, in fact, concerned with their competitiveness and do not have blinders on regarding the HMT.

“America needs a national freight transportation system that serves as the backbone to the economy by making U.S. freight gateways more efficient, reliable and sustainable,” Geraldine Knatz, executive director of the Port of Los Angeles, wrote in comments on the inquiry.

She and others clearly understand the points that several shippers made, including one anonymous “port user” who said geographic facts are more important than the small dollar figures under discussion. “I hope you realize it’s not the taxes; it’s the transit times,” this commenter wrote. “So unless you’re going to change the curvature of the Earth, I will continue to import my U.S. goods through the Port of Prince Rupert.”

In fact, there are steps the U.S. can take that would be easier than changing the curve of the Pacific Rim. That was on the agenda at the White House last week when the administration brought in leaders of Ford, Intel and Siemens to look at ways to bring manufacturing now performed abroad to the United States.

What the White House called “in-sourcing” may include new tax incentives to companies that bring jobs back to the U.S. or invest in American manufacturing.

And the fact is, companies won’t move factory work back to the U.S. just to avoid the Harbor Maintenance Tax.

Paul Page is executive director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com. Follow Paul Page on Twitter, www.twitter.com/paulpage.