U.S. Flag Share of the U.S./Canada Trade on the Great Lakes

GAO discussed the United States' share of the U.S./Canada trade on the Great Lakes. Although Canadian ships have historically carried most of the trade on the Great Lakes, in the last three decades, Canada has increased its trade and captured most of the new trade that resulted from the St. Lawrence Seaway opening. American trade has been falling because: (1) American ships are more expensive to build and operate; (2) Canadian operators upgraded their fleets to maximum seaway size to take advantage of new trading opportunities; (3) most American ships are too large to use seaway locks or too small to carry enough cargo; (4) the Canadian government assists fleet development through tax incentives and subsidy programs; (5) although the United States has aided its merchant marine, the programs authorized were generally unavailable to Great Lakes bulk-fleet operators until 1970; (6) all cargo moving among U.S. ports must be carried on vessels that are domestically registered, built, owned, and crewed by Americans, whereas Canada permits foreign-built vessels that meet its construction standards to engage in Canadian domestic trade; and (7) geography, long-term contracts, and domestic trade policies favor Canadian operators.