Government policies have served Canadian railroads and their freight customers well. Today very few Canadian interests are involved in international shipping, and these only in foreign flag vessels operating outside Canada. Legislation, taxation and regulation make Canada unattractive for international shipping. Canadian exporters and consumers are well served by international competition that exists among both liner traffic and unscheduled international shipping. There is nothing wrong with Canada's policies insofar as securing competition among international shipping lines in the interests of Canadian trade is concerned.
Domestic shipping is another matter entirely.
Canadian flag vessels must be built in Canada. Foreign vessels must pay an ad valorem duty of 25 percent that extends even to repairs and modifications done outside Canada. Canadian shipping and shipbuilding industries are thus quite well protected. The need to assure a reasonable amount of domestic shipping capacity for Canadian shippers justifies this protectionism. Canadian shipbuilding is a small, high-cost industry that is restricted in the size of vessels it can build.