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Shipping Through the Northwest Passage: A Policy Brief

June 27, 2019


Thomas Herrmann

As climate change causes Arctic sea-ice to retreat at an accelerated rate, the region becomes more open to anthropogenic activities that Arctic communities have not seen before. The potential for new, shorter shipping routes through the Arctic seems promising for shipping companies that are looking to save time and money, but the impact they will have on the Arctic marine ecosystems and Indigenous communities in the area is still unknown.

The Northwest Passage (NWP) is a shipping route that connects the Pacific and Atlantic Oceans and makes shipping shorter and cheaper for companies travelling from Asia to North America. In 2013, the bulk carrier Nordic Orion traversed the Northwest Passage with an icebreaker escort that shortened their journey by four days and saved an estimated $200,000 USD. The proposed route from East to West would begin in the Davis Strait and travel north through Baffin Bay into the Canadian Archipelago. After crossing through the Canadian Archipelago, the route would continue into the Beaufort Sea and exit through the Chukchi Sea into the Bering Strait. Currently the route is not possible to complete without an icebreaker escort, but due to climate change, it may soon become possible with the Arctic being ice free in the summer months. With this opportunity for monetary savings, the Northwest Passage may very quickly become a popular shipping route that may have a dramatic impact on the ecosystems it passes through.

Researchers have attempted to estimate when the Northwest Passage will become ice free in the summer. Currently, the summer sea-ice extent in the Arctic at its minimum is around five million square kilometers and decreasing at a rate of 79,000 square kilometers per year. Using models, researchers have estimated that, “By the end of the twenty-first century the prolongation of the season with a free passage along the NWP may be increased from 2 to 4 months.” Based on other models, some say the Northwest Passage will “become substantially more accessible by 2040–2059” (as stated by Smith & Stephenson, 2013). When the NWP becomes accessible, it will decrease transit distance for most voyages by at least 7,000 km, compared to going through the Panama Canal or around the tip of South America. This decrease in distance decreases transit time and dramatically decreases the costs of shipping. This lower cost is attractive to shipping companies, making the prospect of an ice-free Northwest Passage very promising. In the future, it will likely include heavy ship traffic during its ice-free period in the future.

The Northwest Passage passes through the waters of three countries: Canada, the United States, and Greenland. The politics of the region may have an impact on the potential for future shipping when the passage becomes ice-free. In a report prepared by the Office of Naval Research, the Naval Ice Center, the Oceanographer of the Navy, and the Arctic Research Commission in the United States, “Both Russia and Canada assert policies holding navigable straits in the Northern Sea Route (NSR) and Northwest Passage under their exclusive control. The United States differs in its interpretation of the status of these straits, with a potential for conflict.”

With this potential for conflict, the question presents itself: How should Canada prepare for the opening of the Northwest Passage to shipping in relation to other countries’ claims of its sovereignty? In this policy brief, I argue that Canada should plan to charge companies a fee to send ships through the Northwest Passage, because fees can reduce the amount of ships traveling through the passage, generate revenue for the country, and provide some benefits of access to technology for the Indigenous people living in Canada’s Arctic.

Pre-Existing Policy

Currently there are no existing policies agreed upon between nations that determine who can and cannot pass through the Northwest Passage. In the past, Canada and the United States have made agreements about their relationship considering the Northwest Passage and its usage, but beyond that most countries have developed their own opinions regarding the ownership of the NWP. Even the Inuit living in Canada have separate claims about the ownership of the Northwest Passage.

The Canadian policy regarding the Northwest Passage is that it is part of their internal waters, and therefore their waterway to control. Representatives of Canada have previously implied that the Northwest Passage would be available for use, but under Canada’s terms, and reinforced those statements by placing borders around the Arctic Archipelago claiming it as their own. Many other countries have defied this argument stating that the Northwest Passage should be an international strait under the United Nations Convention on the Law of the Sea because it connects two major bodies of water.

The United States has been one of the countries with the greatest opposition to Canada’s claims of sovereignty over the Northwest Passage. Recently in a foreign policy speech, the United States Secretary of State said that, “The US has a long contested feud with Canada over sovereign claims through the Northwest Passage” (Pompeo, 2019). The United States and Canada resolved this conflict in the past through an agreement signed in 1988. The Agreement on Arctic Cooperation states that the United States will ask for Canada’s consent any time it sends an icebreaker through the Northwest Passage. It also discusses the sharing of information between the two countries in order to promote cooperation and knowledge of the area. It appears that today the United States is disregarding this agreement with the prospect of increased monetary gain from a shorter shipping route through the Arctic.

Another group that contests Canada’s claim of sovereignty over the Northwest Passage is the Inuit Circumpolar Council (ICC), who claim that the ice and water in the Northwest Passage is their territory. The Inuit define their land as “anywhere our feet, dog teams, or snowmobiles can take us.” This definition includes the ice that covers the Northwest Passage in the winter. They claim that the ice is integral to their society because it allows movement, as well as provides necessary resources to ensure their survival. For these reasons, the Inuit challenge Canada’s claim to the Northwest Passage, and claim that they should have power in determining the governance of the Northwest Passage moving forward. There are no official treaties confirming the Inuit claims, but they are trying to make their way into the negotiations regarding the passage.

Policy Options

  1. Charging fees to users of the Northwest Passage in order to restrict use and promote revenue.

The opening of shipping routes through the Northwest Passage offer the potential for incredible economic opportunities for shipping companies, but also present massive threats to the Arctic ecosystem and the people who live in it. By charging fees for people trying to traverse the Northwest Passage, Canada could both decrease demand for passage by making it financially unsustainable for some groups, as well as raise money to reinvest in the Arctic to further research on the region and aid Indigenous groups.

The increased traffic through the Arctic has the potential to harm the ecosystem and many of the organisms that live there. These ecosystems are necessary to support the communities that live in the Arctic, and at the same time provide ecosystem services that are important for the rest of the world. Increased human activity in the Arctic during a longer ice-free period and other economic development in the Arctic are forcing native Arctic species out of their habitats. This displacement is making it more difficult for them to survive. In some areas of the Arctic where shipping has already increased dramatically, species have recovered at a much slower rate than those who occupy less developed parts of the Arctic Ocean. By implementing a fee on the usage of the Northwest Passage, Canada would be able to decrease the total number of ships crossing through the passage, therefore reducing the total impact that ships have on the ecosystem.

Charging fees on ships through the Northwest Passage also gives Canada the opportunity to raise money. Canada can use the money raised to invest in research in the Arctic so we can learn how to better protect the resources found there. Money raised from fees can also give Indigenous people financial help in order for them to continue living their lifestyle.

Another benefit to charging fees on users of the Northwest Passage is that it still allows anyone access to use the Northwest Passage. This option may work as a compromise with the countries who defy Canada’s claim to sovereignty over the passage. Although they will not have free use of the passage, Canada would not place specific regulations that prevent them from using the Northwest Passage altogether.

  1. Allowing Free Use of the Northwest Passage

Another option for Canada is to allow anyone to use the Northwest Passage freely. By opening the Northwest Passage to free trade, Canada could increase its standing with other world powers. Allowing them free trade through Canada’s waters would improve their relationship with Canada, as well as increase the potential for Canada to benefit from cheaper trade. Indigenous people in Canada’s Arctic may also benefit from the increased access to technology and proximity to resources.

Canada has the potential to improve its relationship with Asia by opening the Northwest Passage to free trade. Companies in Asia have been looking to the Northwest Passage as a way to reduce their costs and expand their business ever since the ice in the Arctic began to melt. Free trade would help to create bilateral agreements with many Asian countries that could benefit Canada in the long run.

Increased shipping could also provide some benefits to Indigenous people in Canada’s Arctic. More ship traffic through the Northwest Passage could lead to the development of better infrastructure in Inuit territories along the passage. These upgrades in infrastructure and easier access to technology could boost Indigenous communities to make greater economic gain and give them greater power to speak for themselves on an international scale. More activity in the Arctic will also likely increase access to education, which will further promote Indigenous advancement. These changes may also threaten the Inuit way of life. New technologies and industries in the area may make it impossible for local residents to continue their traditional way of life. The potential damage to the ecosystem is another danger of opening the Northwest Passage to free trade. The threat of oil spills, pollution, and noise interference all impact the fragile ecosystems that exist in the Arctic. Destroying these ecosystems would contribute to the loss of the traditional way of life for the Inuit people, and also contribute to the loss of valuable ecosystem services.

Policy Recommendation

I recommend that Canada pursues a policy that would charge a fee for ships using the Northwest Passage because it would reduce the negative impacts that shipping has on the Arctic ecosystem and Indigenous communities. This policy would also grant the region some of the positive aspects of shipping by increasing the flow of technology and money into northern communities, as well as increasing revenue for Canada which they can invest in more Arctic research. Finally, this policy would appease countries who disagree with Canada’s claim of ownership of the Northwest Passage by allowing them to use it with only monetary restrictions.

This whole argument relies on the fact that other countries respect Canada’s claim to sovereignty over the Northwest Passage, which is unlikely especially in the case of the United States. Therefore, my recommendation of charging fees for people wishing to use the Northwest Passage is what Canada should plan to do when the Northwest Passage becomes more accessible even if other countries are unlikely to comply. Other countries are likely not to comply because they will be seeking the maximum profits that they can obtain through usage of the Northwest Passage. These issues will likely cause debates in the near future as the possibility of travelling through the Northwest Passage becomes more likely. When the time comes for Canada to make a decision on how they will govern the Northwest Passage, they must decide how to control usage of the passage and enforce these decisions while still maintaining their relationships with other countries around them who may disagree.



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