SUPPORTS ITEM NO. 5
FINANCE AND PRIORITIES AGENDA
FEBRUARY 26, 1987

MANAGER'S REPORT

February 9, 1987

TO: Standing Committee on Finance and Priorities

SUBJECT: Western Grain Transportation Act (proposed amendments)

CLASSIFICATION: RECOMMENDATION

The Manager of Economic Development report as follows:-
"BACKGROUND

In recent years, there has been considerable study of issues associated with
the transportation of grains in Canada, as well as a number of legislative
initiatives, notably the passage of a new Act ". . . to facilitate the
transportation, shipping and handling of western grain", given Parliamentary
assent 17 November, 1983. That legislation addressed such issues és:
administrative measures to facilitate grain transportation, the setting of
transportation rates {including the so-called “Crow Rate"), Government
payments and subsidies, and other considerations.

Although the Western Grain Transportation Act (WGTA) has now been in force for
several years, there are a number of significant recurring issues which are
unresolved and which could result in amendments to the Act. From the perspec-
tive of the City and the Port of Vancouver, principal among these recurring
issues is the statutory definition of the term “export”, which requires export
grains receiving a freight rate subsidy to be shipped through Canadian ports.

A recent Review of the Western Grain Transportation Act (April 1986) has
recommended to the Minister of Transport that the definition of export be
eliminated from the legislation. The effect of this amendment would be that
these substantial freight subsidies (amounting to 80 per cent of the total
rail costs) would apply to all export grain, whether shipped through Canadian
or U.S. ports.

There is a strong consensus among the Vancouver Port community (the Port
Corporation, associated industries and employers, and the port unions) that
such an amendment would lead to the diversion of a significant volume of
grains to U.S. ports and could have serious implications for the vital
grain trade. This report is intended to set out the relevant issues and
their potential implications, and to Suggest recommendations for Council
action.

IDENTIFICATION OF MAJOR ISSUES

A small group of grain producers and malting barley interests in the prairie
provinces have pressed for the freedom to choose between Canadian or U.S.
ports, citing concerns about capacity and costs of the Port of Vancouver,
However, recent briefs prepared by the Port of Vancouver and port associations
have established that the Port of Vancouver offers services to all existing
and potential markets and is competitive in price and service with the ports
of Seattle, Tacoma and Portland.

At the same time, a substantial series of studies and briefs prepared by
members of the Vancouver port community indicate strongly that the
amendment of the W.G.T.A. to permit export of grain through U.S. ports could
seriously impact the Fort of Vancouver. These impacts include the following:

1. The specialty grain traffic currently handled by the Port of Vancouver
would be Jost, putting at risk the Port of Vancouver's entire

® These include the Vancouver Port Corporation, the 8.C. Chamber of
Shipping, the B.C. Maritime Employers Association, a number of individual
port industries, the Longshoreman's Union, and Grainworkers Union.

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