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America’s Filet-O-Fish supply chain travels through Canada. That may change.



Thanks to a legal battle involving a few million pounds of Alaska pollock, the McDonald’s Filet-O-Fish is a threatened — if not endangered — species.

As of Wednesday, the fish in question is just beginning to be moved from cold storage in Canada as the United States and two shipping companies duel in federal court. At the heart of the case is whether a brief jaunt across the Canadian border is enough to exempt the companies from American shipping laws.

The scheme that the companies have used to exploit a loophole in the Jones Act is actually kind of genius.

The U.S. government says that the companies in question — Kloosterboer International Forwarding and Alaska Reefer Management, both part of the American Seafoods Group — have been “violating the Jones Act, which requires that goods shipped between U.S. ports be transported on U.S.-owned ships,” The Associated Press reported.

That the companies have been using foreign-flagged ships isn’t in dispute. But the scheme that the companies have used to exploit a loophole in the Jones Act is actually kind of genius. Here’s how the trade publication The Maritime Executive breaks down the plot, which begins in Dutch Harbor, Alaska, and is almost Bond villainesque in its level of complication:

These ships are loaded in Dutch Harbor, and they transit through the Panama Canal and around the East Coast to the port of Bayside, Canada. At Bayside, the cargo is offloaded into truck trailers for delivery to the Eastern United States.

If the trucks carrying this fish drove directly into Maine, the whole arrangement would be prohibited by the Jones Act, which bans the use of foreign vessels to transport goods between U.S. points. However, the “Bayside route” takes advantage of an obscure clause in the Act – the “Third Proviso” – which permits foreign-flag vessels to be used if a “through route over” a Canadian rail line is also involved in the delivery.

To pass through this little-known loophole, each truckload of fish at the Bayside terminal is driven up a ramp and onto the sole train of the “Bayside Canadian Railway” – a 100-foot stretch of track with two rail cars and no destination. A small shunt engine pulls the train to the far end, then pushes it back to the ramp again. The truck then drives back down the same ramp, out to Route 127 and across the Maine border at Calais, completing a 7,500 nm foreign-flag shipment between two U.S. points.

That’s a change from 2012, when, according to the U.S. Department of Justice, the companies “legally used the New Brunswick Southern Railway to transport their seafood in Canada, a journey of more than 30 miles along an established railway that moved the seafood from one point to another.” In contrast, a video of the process that the U.S. Customs and Border Protection highlights just how ridiculous the current performance is.

Failing to see the elegance, or inherent comedy, in the ludicrous system the companies had developed, CBP slapped them and their associates in the scheme with over $350 million in penalty notices. The companies balked and sued the government in court for “excessive fines,” leading to the standoff that has America’s supply chain of fish sticks threatened.

This may all seem kind of weird and arbitrary, but American history is littered with examples of the government taking incidents involving fishmongering and the Canadian border very seriously. After the Revolutionary War, one of the biggest victories for the Americans at the peace talks was retaining the right to continue fishing off the coast of Nova Scotia and Newfoundland, a key demand for New England’s elites. A tariff dispute between the U.S. and Canada over herring in 1894 nearly turned into a full-on brawl that froze relations between the countries for years. A dispute over salmon in the Pacific Northwest in the 1990s saw hundreds of Canadian fishermen blockading an Alaska state ferry for three days, heralding a wave of “flag-burnings, insults based on national stereotypes, and even a mild version of gunboat diplomacy,” The New York Times reported at the time.

For now, the scales of justice have tipped on the side of the shipping companies.

Canada’s government has stayed mum on this current dispute so far, despite its territory being used for such fishy business. That’s probably for the best — the U.S. and Canada are still reeling over the trade war that former President Donald Trump initiated. These days, Washington and Ottawa are still casting about for agreement on matters including tariffs on solar energy products and softwood lumber from Canada and quotas on American dairy products heading north.

Meanwhile, The Wall Street Journal’s editorial board weighed in last month to call the Jones Act enforcement “economic destruction” and call on President Joe Biden to “use his authority to suspend Jones Act enforcement and then ask Congress to repeal it.”

For now, the scales of justice have tipped on the side of the shipping companies. U.S. District Judge Sharon Gleason for the District of Alaska approved an injunction that puts the U.S. fines on hold, allowing the tons of pollack that had previously been in limbo to cross the border. It’s not clear how long it will take for the estimated $41 million worth of fish to be delivered. But her ruling only lasts until the full case can be heard on the merits, leaving open the possibility that the companies are on the hook for millions after all.

Seafood executives say this is a terrible time for such uncertainty, as pollock sales tend to boom during Lent — and the time to start processing ahead of that surging demand is now. If that’s the case, the Alaska pollock that gets transformed into a crispy square covered with cheese and tartar sauce may become much harder to come by in the immediate future.

In this current debate, though, I have to declare my neutrality. The Jones Act’s provisions have costs and benefits that warrant debate over whether it actually serves the national security interests it was meant to or if it’s mostly a gift to U.S. shipping companies, protecting them from foreign competition. But I can’t be swayed one way or another by the effect it may have on the Filet-O-Fish — I’m more of a McNuggets kind of guy, myself.

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