Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 4 - Evidence - Meeting of June 7, 2006
OTTAWA, Wednesday, June 7, 2006
The Standing Senate Committee on Banking, Trade and Commerce met this day at 4:05 p.m. to examine and report upon the present state of the domestic and international financial system; and to study issues associated with potential economic consequences, on both sides of the border, of the Western Hemisphere Travel Initiative.
Senator Jerahmiel S. Grafstein (Chairman) in the chair.
[English]
The Chairman: Honourable senators, we have a quorum. I call the Standing Senate Committee on Banking, Trade and Commerce together. We are delighted today to welcome viewers from coast to coast to coast, not only in Canada, but in the United States, via television, and also, via the Internet, around the world.
The Standing Senate Committee on Banking, Trade and Commerce today is examining an important issue that affects us on both sides of the border, the Western Hemisphere Travel Initiative — WHTI — which is critically important for the economies of the United States and Canada since the measure has significant economic consequences for both nations. It flows from section 7209 of the Intelligence Reform and Terrorism Prevention Act of 2004 passed by the U.S. Congress.
Canada works as a global partner in making the world a safer place, and it is our pleasure to introduce, as our first witness, the Honourable Michael Wilson, the ambassador at the Canadian embassy in Washington. The floor is yours, Mr. Ambassador.
Hon. Michael Wilson, Ambassador, Canadian Embassy in Washington: Thank you very much, Mr. Chairman and senators. It is great to be with you and to be able to discuss this important topic, the Western Hemisphere Travel Initiative. This, as I have said on a number of occasions, along with softwood lumber, is one of my two top priorities and I have been working hard to address concerns Canadian have on both issues.
Senator Grafstein has covered some of the background on the Western Hemisphere Travel Initiative, which I will refer to as WHTI. This requires a passport or a combination of documents to enter the United States, whether it is a returning United States citizen or someone from Canada.
The requirement is a year and half away from coming into force so there is not much time to finalize and publish the implementing rule, conduct impact assessments, identify and develop the appropriate technology, produce the many millions of required documents, install readers, complete the related infrastructure changes at border crossings and then convince people to buy these documents.
WHTI is intended to improve security at the border. It would be wrong to set up WHTI as the only solution to the threat of home-grown terrorism. It may be part of the solution. What events in Toronto clearly demonstrate is that it is more important to have a solid intelligence and policing capacity, to have seamless cooperation among enforcement agencies and to continue to engage in cooperation with our allies, especially the United States. This has all been done with great effectiveness, as we saw last weekend.
We have done a great deal to augment security since 9/11. The money spent is only part of the story. Through the Smart Border Action Plan and other mechanisms, key federal departments and agencies are zeroing in on security as never before. We have done very good work in Canada in cooperation with the United States and other allies. When it comes to WHTI, it is vital that we coordinate with the United States every step of the way, and we are doing that.
This cooperation between our respective agencies is highly regarded amongst our respective practitioners. To ensure that the message around intelligence, law enforcement and our immigration policies is understood in Washington, especially on Capitol Hill, I have asked the Commissioner of the RCMP, the Director of CSIS, the Deputy Minister of Immigration and others to come to Washington. I want them to meet on an ongoing basis with those who influence policy within Congress and to describe how stalwart an ally and partner Canada is in combating terrorism. I call it ``myth busting.'' We need to discuss and clarify our refugee policy, our immigration policy, and to remind them again that none of the 9/11 terrorists were linked to Canada. They need to know and understand what we are doing and how much we have spent on security. We have a good story to tell and it needs to be heard.
Honourable senators, we all know that what happened in Toronto, unfortunately, is not a one-off event. Europe and parts of Asia have had similar experiences. Not all resulted in death and destruction. Some, as in the case in Toronto, were, fortunately, pre-empted. We are appalled by the weekend events but not surprised. That such groups can exist and plot mayhem in free and open societies should not come as a revelation. Solid police and intelligence work is protecting us while maintaining our civil liberties.
One vital lesson of the weekend is that our collective focus has to be on strong and intensive intelligence cooperation. Security documents such as those required by WHTI are an important part of the solution, but we would be wrong to think that documents alone are the most important part of our protection.
As Ambassador to the United States, it is my job to interpret events there and try to put them in context for Canadians. In that role, let me tell you that the shock of 9/11 has not worn off. Americans continue to place the highest priority on security. We in Canada must understand this fact or our ongoing relationship will be hampered. It does not mean that we move in lockstep or follow their lead. We each must choose policies that reflect our separate systems and situations and work collaboratively on issues of common cause.
This hearing demonstrates that you understand the importance to our mutual prosperity of a smooth and problem- free implementation of the WHTI requirement. Canadians want a smart border, not a thick one. I want to emphasize that a smart border is a more secure one. We support the need for security at the border. With so much of our livelihood tied to the border, it is also in our interests to make sure it is secure and to do so in a manner that does not impinge on commerce and legitimate travel.
We must encourage those involved to get WHTI right. You have statistics on the potential costs to both the United States and Canadian economies. These are large because of the 31.7 million visits from the United States to Canada in 2005 and over 37 million from Canada to the United States, or over 70 million two-way trips. Most of them are by car, bus or train.
There are integrated communities all along the border that would have a wedge driven between them if WHTI is implemented with confusion or disruption. That wedge could extend much further than just border communities. As members of Congress remind me, Canadians holiday, as well as invest and do business, in every state. Last year, we were the biggest investor in America, and for 38 states we are their biggest market. The U.S. does more trade with Ontario than with Japan. We are already seeing decisions being made around the convention trade that will hurt both countries because of the uncertainties over passage at the border, but we have allies in both the house and the Senate. You will hear from Congresswoman Louise Slaughter, a great friend of Canada, but last week in the Senate, there were also amendments sponsored by U.S. senators that would delay the implementation of WHTI. Congresswoman Slaughter will give you her submission on this subject.
The chairs of the two leading oversight committees for the Department of Homeland Security understand our concern regarding the implementation of WHTI and I believe that our efforts on the Hill are gaining traction.
These amendments to extend the time frame and to establish benchmarks for WHTI's smooth implementation reflect a growing sentiment that much needs to be done in a very short time.
With the deadline for implementation just 18 months away, we are determined to find a solution. We are equally determined to illustrate that Canada is strongly committed to making our border both secure, and accessible to the legitimate flow of goods and services and people. All legislators in Canada and our team in Washington must continue to take this message to our neighbours. Regardless of the outcome of the WHTI debate, let us remember that our border is best secured by diligent and comprehensive intelligence and policing, supported by strong and effective cooperation between our two countries.
Mr. Chairman, thank you for the opportunity to be with you and I look forward to your questions.
The Chairman: Thank you, Ambassador Wilson.
Senator Angus: Welcome, ambassador. From what you have told us today, it seems clear that you are opposed to the WHTI as it stands. The law that you and the chairman referred to calls for the bill to be enacted and for the new passport, or like document, to be in effect by December 31, 2006. The amendment made in the U.S. Senate has not gone through Congress, so for now, we are faced with that date. Is that correct?
Mr. Wilson: Yes, that will be the effective date for air and sea travel. The land travel effective date will be December 31, 2007.
Senator Angus: I am conscious of the delicate position you are in, but I understand that in the various meetings you attended on Capitol Hill with the members of the U.S. administration, you outlined the objections to either early implementation or implementation at all without addressing the various issues such as having readers in place and people's willingness to buy the documents, et cetera. What reaction are you receiving from the U.S. administration?
Mr. Wilson: It depends on with whom we are meeting. Some people are strongly committed and others have some real doubts and concerns about the impacts, particularly on border communities. I am sure that Ms. Slaughter will elaborate on that because she represents a border community.
The focus that we have placed on many of these calls is on the implementation, the tight time frame, and the need to do the things that I referred to in my opening remarks. In those calls, particularly over the last few weeks, I am hearing a growing concern about whether the Department of Homeland Security will be in a position to meet those deadlines.
We are trying to seek information on where the administration stands on those key factors, whether time frames are established and whether they are being met. You may recall that when Secretary Chertoff and Public Safety Minister Day met a few months ago, they established a working group. That group has seen a limited amount of activity, but we hope that will be our best insight into where things stand so that we can get a better understanding of the impacts.
Senator Angus: When we talk about ``the administration,'' I assume we mean the executive branch of the U.S. government?
Mr. Wilson: That is right.
Senator Angus: Not too long ago, the Chairman of the Banking Committee, Representative Slaughter, Senator Fitzpatrick and I, among others, met in Charleston, South Carolina, for the Canada-U.S. Parliamentary Association. It was quite an interesting dynamic because we found that those senior Republicans present were ill at ease about evincing any opposition to this proposed legislation because, according to them, it is a number one agenda item for President Bush. They were suggesting, in a way, that other people do the work because they do not want to be seen opposing their chief.
Mr. Wilson: The broad point that I would make is that security is a very important issue, and I covered that in my earlier remarks. Whether it is the president, members of Congress, or the man or woman on the street, it is important, and that is a fact of life and the obvious driver behind the WHTI legislation. We are trying to get a better understanding of the process, the time frames, the costs and the economic impacts. I would imagine that Representative Slaughter will speak to those in her remarks, because we have not had that information. A Government Accountability Office report this week indicated that they could not come up with the information on the economic impact because they did not have information on which to base conclusions. We, and Congress, are pressing for that information.
Senator Massicotte: Welcome, Ambassador Wilson, and thank you for joining us today. I want to understand our position. We lack the economic data to understand the significance of this initiative. Are we simply asking for more time? Are we saying that other measures are much more important — intelligence and cooperation — and are adequate? What do we seek and why?
Mr. Wilson: We seek more information on which to base judgments to address some of the issues. I will not repeat what I said before, but it is that information that we have not been able to find out. We have talked to members of Congress who have not been able to gain the information. Now, we have heard that the GAO study cannot proceed because they do not have that information.
In my comments today, I thought it was important to include the context of last weekend's events in Toronto and address the motivation for WHTI, which is a security precaution. I want to make the point that the more important element of the security side is not the card but the policing, the intelligence work, the cooperation and other related elements.
Senator Massicotte: I agree, and I encourage you to get that message across to the people of the world so they understand the effort we are making in Canada and are not taken in by the many comments we have heard in the past about Canada doing its part.
On that note, if we do not have adequate information, I presume our position relative to WHTI is not to decide anything until we do. That is usually how we make decisions.
Is that the case now? Should we say that we are not sure that we support the measure and need better information before we decide?
Mr. Wilson: That is exactly right. We need the information.
Senator Eyton: Welcome, ambassador.
All of us appreciate the cause and the need, and we recognize that we need to develop an acceptable solution.
I want to start with a question of cost and point out the different constituencies that have to act, taking cost into account. Is there good awareness on both sides of the border of the costs that may be involved if we get this wrong, here in the Canadian Parliament and in the U.S. Congress? Is there an awareness of the cost in the various agencies in the intelligence communities and among government officials on both sides of the border? I have read enough to know that the business community in Canada is concerned about costs if we get it wrong. Tourism Canada, in particular, is concerned.
I wish to explore the general awareness of the cost among the constituencies that I mentioned if we get this wrong.
Mr. Wilson: There are three elements of cost. One is the direct cost of implementing the technology — the readers and the cards themselves — and the distribution costs, as well as the cost to the consumer, the user of the card. There is the potentially disruptive cost if the implementation is not carried out effectively. We have talked about various ways of addressing that, including limited pilot projects at a small number of border points.
There is also the broader cost of the economic impact that this could have if the approach is too heavy-handed and the final product is such that it creates a wedge between the two countries, particularly in border communities. We talk about our economies being integrated, but our border communities are very integrated. Representative Slaughter can talk about that, from firsthand knowledge, better than any of us here.
All of those costs must be taken into consideration. There is an awareness of the importance of those three points, but we do not have the numbers to be able to make judgments. That is where the information becomes very important.
Senator Eyton: I find that remarkable. This has been a top-of-mind concern of Canadians for some years now, and I find it remarkable that there is no awareness of the kinds of costs that you talked about on both sides of the border. If you do not have an awareness of cost, you will not get to the solutions to a potential problem.
Mr. Wilson: Studies have been done, and I am sure you will hear from people who have been involved in or have sponsored some of them. I do not think it is appropriate for me to comment on them. Those are significant costs.
The important point, which relates to the need for a delay, is that we do not have enough information to address the questions arising out of two of the elements of cost — the actual, direct cost of the cards and the cost if there is inappropriate implementation.
That leads to the third element, the longer-term economic impact, which could be higher than studies have already shown.
Senator Eyton: If we do it wrong, it could be anything.
Senator Moore: Thank you, Mr. Ambassador, for being here.
Last week, there was a report out of Woodstock, New Brunswick, with regard to border officers requiring Canadians crossing the border to tender their drivers' licences and passports for electronic scanning. The speculation is that the U.S. policy will require passports or other form of ID for border crossing even prior to the implementation of the WHTI. Does the administration give you notice that they will put a different type of policy in place leading up to the WHTI implementation date? The law is on the books, and until it is agreed to change it, I suppose the administration has to adhere to it as best they can, regardless of all the other considerations we have discussed today.
Do you get any notice of that? When you hear about that, do you have the opportunity to contact your counterpart in the U.S. to discuss it?
Mr. Wilson: The simple answer is that we did not receive any warning. The officers at that border point took the decision themselves, as they are empowered to, to require 100 per cent screening of licences or other documentation such as birth certificates. However, the important message was the confusion, the delays, the disruption of people's lives that that caused. If you expand that to similar delays at every border point in the country, you can see the real economic impact and the impact on people, and that is what we are worried about.
Senator Moore: It all comes down to the costs Senator Eyton was talking about.
Mr. Wilson: When people waiting at the border saw that the situation was not about to improve, they turned around and went home.
Senator Moore: The United States has proposed various cards to be used by Americans to cross the border into Canada and to return home. There are the NEXUS and the PASS cards. Has anyone in the administration talked to you about those proposals and what they might involve? Some of these cards might have personal information embedded in them. I am thinking about privacy concerns. If such information is required to be embedded in cards, people could be tracked.
Do you have an opportunity to have input into the nature of the card or what it might contain so it will be satisfactory to Canada and the laws under which its citizens live?
Mr. Wilson: This legislation could require the FAST, NEXUS or PASS card, or Real ID. We still do not know which. However, this is to get into the United States, so the privacy laws to which you refer would be those of the United States. If you want to go to the United States, you must comply with U.S. laws.
If you want to enter the United States, you will require these things. That is U.S. law, not Canadian law. We want to be able to discuss these requirements so that we can assess their impact.
Senator Fitzpatrick: Welcome, ambassador. I would like to narrow the question down somewhat. It seems inevitable that there will be some form of requirement, whether it is a passport or an ID card. It comes down to a matter of process, time and cost. Has consideration been given to determining which of these alternatives we should look at and getting it done as quickly as possible? Obviously, there will be some delay and confusion at the border if this is enacted too soon because people will simply be discouraged from travelling across the border again.
Is there a task group looking at finding a way to narrow the options and the costs of proceeding with that? Could our governments give consideration to providing some form of assistance to those trying to obtain either passports or ID cards? I believe that 20 per cent of Americans and 30 per cent of Canadians have passports. Obviously, if everyone had a passport now, it would be a much simpler issue. It is a matter of that first step.
I question the extent to which the options are being studied when it is inevitable that we will have to put something in place. Perhaps we should determine what will work best.
Mr. Wilson: You referred to a task group, whereas we call it a working group, which was established for that very purpose. Our senior representative is Alain Jolicoeur, President of the Canada Border Services Agency.
The passport of today is not the answer because, first, it is expensive and some people will simply to refuse to buy one. Second, it is not always a highly efficient process. A card with the proper technology contains a chip of information that a reader, which might be 10 feet away, will scan and then access a real-time database. It can be a faster way of getting across the border. However, we are still seeking answers to these questions through this working group.
Senator Fitzpatrick: Does the working group have a timetable for obtaining the answers?
Mr. Wilson: No, and that is one of the objectives in establishing this group.
Senator Fitzpatrick: A few moments ago you mentioned ID cards, or the NEXUS process, and the requirement to meet the laws of our respective countries. I happen to be a NEXUS cardholder, which I find most effective. Will the requirements for a NEXUS cardholder or the PASS process change as a result of this study?
Mr. Wilson: The NEXUS card will, I believe.
Representative Louise McIntosh Slaughter (New York) United States House of Representatives: I think they will stay the same.
Mr. Wilson: It could be one of the eligible cards.
Senator Fitzpatrick: I would suggest, ambassador, that we might encourage more people to obtain NEXUS cards because it is an effective and efficient system.
Senator Meighen: Nice to see you, Ambassador Wilson. I am thinking along the same lines as Senator Fitzpatrick. I cannot help but feel that only recently has there been a real sense of urgency about this. Working groups without someone standing over them with a whip tend to drag on. Are you satisfied from what you know that both in Canada and the United States, there is someone with a whip, figuratively speaking, to urge the group to reach a conclusion as soon as possible? It would seem, and please confirm it if I am wrong, that the card offers the better possibility in terms of cost and of providing the necessary information, as opposed to the passport. Is that the general consensus of most of those who are following this process?
Do we know what information, at least from the American point of view, they will require, or have they determined the extent of the information required?
Mr. Wilson: Is there a whip?
Senator Meighen: Other than circumstances?
Mr. Wilson: One of our frustrations is that we cannot get information. We do not know how much has been done. Some of these questions might have moved beyond where we have been advised they are. We will find out sooner rather than later, we hope.
As to whether the card is the right option, I was just saying to Senator Fitzpatrick that a card can be faster than the passport that you and I have right now because it does not have the information in it.
In answer to the third question, no, we do not have the information. Again, there is frustration that that information might exist but we cannot have it.
Senator Tkachuk: Mr. Ambassador, we have received a number of pieces of information on the card, on the objective of moving traffic back and forth without a passport. What do they want on the card that they do not have now? Do they want the same information as the passport contains? That would be my first question.
Where will this information go? When that information is read at the border, what happens to it?
Mr. Wilson: I would be speculating if I answered that question. The legislation requires certain data. I believe it is place of birth and place of residence. We are speculating at this time on whether there will be a further requirement.
Senator Tkachuk: You said ``one of the eligible cards'' to a previous questioner in reference, I believe, to your card. It could be a driver's licence with that information. Is there more than one card that could be used or will it be a system where only one card is valid?
Mr. Wilson: We do not know what the final answer to that question is. There are a couple of cards now — NEXUS, and Real ID, which is an upgraded driver's licence. However, they have talked about a combination of cards.
That is the information we seek.
Senator Goldstein: Has any consideration been given to creating a staged implementation process rather than delaying the implementation as a whole, on the theory that that would at least avoid the tremendous lineups when this initially comes into force?
Mr. Wilson: We do not have the answer to that. The legislation does provide for a plan for its introduction. It may be that the deadline can be met if a plan is in place, but that is a matter on which we need more information. We do not have it at this point.
We have been discussing a pilot with the people with whom we have been meeting, that is, rather than starting with the Ambassador Bridge, we should start with a couple of crossing points to see how it works and get the bugs out of the system before proceeding with the broad implementation.
The Chairman: That sounds like a great idea.
Senator Biron: It is my information that the NEXUS and PASS cards cost approximately U.S. $50, whereas a passport costs close to $100. The cards will have digital fingerprints and biometric information that we do not have in passports. Will the cards eventually replace the passport if they contain more information?
Mr. Wilson: I hate to give the same answer, but we do not have the information. There has been a discussion of different types of biometric information that could be required. It could be a fingerprint, an eye scan or simply a picture; we do not know. Those all play into that ultimate direct cost to which I referred earlier.
The Chairman: I want to thank you, ambassador, for coming to Ottawa, given your very busy schedule. We may ask you to come back to respond to all the testimony we hear before we conclude our report. We will try to arrange a convenient date. As you can see, senators are keenly interested in probing this problem with precision.
This has been enlightening and we wish you well in your representations to Congress.
The Chairman: Our second witness is an old friend. We have known each other for many years. She is the powerful and outstanding Representative from New York, Louise Slaughter, whose constituency borders on one of the Great Lakes.
Welcome, Representative Slaughter.
Ms. Slaughter: Thank you for inviting me to testify before the committee. I hope I will be able to answer some of your questions, particularly about what in the world the Americans are up to. I deeply appreciate the opportunity to offer my perspective on WHTI and the importance of keeping our common border open for business.
I will briefly summarize my written remarks and ask that the formal statement be inserted in the record.
The Chairman: We will indeed append your full statement to the record.
Ms. Slaughter: I understand that the Department of Homeland Security and the State Department have declined to participate in your hearings. I will ask that past statements they have made before Congress be entered into the record as well.
The Chairman: Thank you so much. That helps our record immensely.
Ms. Slaughter: Senators, as you know, our nations are bound by shared values, culture, history and geography. I represent a congressional district that includes the cities of Niagara Falls and Buffalo. My constituents do not think of themselves as living in a country separate from Canada. Instead, they envision theirs as one united, binational community with a river running through it. The relationships among the members of this community are both close and critically important.
U.S.-Canada trade supports 5.2 million jobs and generates tens of billions of dollars in revenue each year. Western New York's four binational bridges, including the Peace Bridge in Buffalo, are some of the busiest in the country; $160 million in trade and 20,000 vehicles cross the Peace Bridge every single day.
In addition to its importance to international trade, the Niagara frontier is also a gateway for millions of tourists each year. I learned this week that 25 per cent of the people who attend the games of the Buffalo Bills and the Buffalo Sabres are Canadians, and we cannot mess with that.
Tourism is the fastest-growing industry in the Buffalo-Niagara region and our economy is heavily dependent on Canadian visits to sporting events, cultural institutions and our local wineries.
The loss of just a fraction of these visitors would prove devastating for the people of Western New York, but I am convinced that the WHTI, as currently envisioned by the Department of Homeland Security and the Department of State, will destroy the dynamics of our shared border communities. The U.S. Congress simply must require the Department of Homeland Security and the State Department to change course on this most pivotal issue.
In the post-9/11 world it is indeed imperative that we know that those who enter our countries are who they say they are, mean us no harm and have the secure documents to prove it. That is the reason the U.S. Congress, based on a recommendation by the 9/11 Commission, included the WHTI provision in their 2004 intelligence reform bill.
WHTI requires both the Department of Homeland Security and the State Department to implement a plan by 2008 that will require travellers who enter the United States from the Western hemisphere to present documents denoting both identity and citizenship, and it seemed so simple at the time. What has become lost during the debate surrounding the bill is that the 9/11 Commission also recognized the political and economic importance of keeping our border open to legitimate travellers. In their report, the commissioners noted that:
Our border screening system should check people efficiently and welcome friends. Admitting large numbers of students, scholars, businesspeople and tourists fuels our economy, cultural vitality, and political reach.
The commission understood what the Department of Homeland Security and the State Department have unfortunately forgotten, that is, that any new border policies must maintain both our homeland security, and our economic security. I am not laying blame on the Department of Homeland Security and the State Department, because Congress passed the legislation. While some may wish for nothing more than for it to go away, it is highly unlikely that Congress will rescind it, particularly now.
The challenge has become how best to address U.S.-Canadian border security and to implement WHTI in a way that will increase security without causing unintentional economic harm.
We have a few ideas that I want to mention to you this afternoon. They are wrapped up in a bipartisan piece of legislation that I introduced this week, along with my colleague, John McHugh, from Northern New York, called the protecting American commerce and travel act. We had to have a catchy slogan, so we call it the PACT act.
It has two parts. The first extends the WHTI implementation deadline from January 2008 to September 2009. I chose September because I did not think it made a lot of sense to implement new crossing requirements in the middle of the summer tourist season.
Calls for extension have been gaining steam as it has become increasingly obvious that neither the State Department nor DHS will be prepared to implement a plan. Only last week, the Government Accountability Office, the report of which you have, which is a non-partisan, investigative arm of the Congress, well respected by us all, reported back on their initial observations of the impending implementation of WHTI.
We asked for the study because anything affecting international borders required the agencies involved to give us an economic impact study.
They could not give us an economic impact study because no one has implemented anything, so there was simply nothing to study. Once this decision is made, we will come back with our economic impact study and hold this off as long as we can.
Their findings were not a surprise to those of us who have followed the plan for the last year. The GAO confirmed that neither DHS nor the State Department has made the necessary programmatic decisions. Most importantly, they did not ask for WHTI-related funds in the 2007 federal budget and have failed to prove their ability to meet the implementation deadline of 2008. The Senate has voted to extend this deadline for 18 months beyond 2008.
This is all wrapped up in the immigration issue, which, as you know, has everyone in the United States on the edge of a cliff. The house immigration bill and the Senate immigration bill will go to a conference of both Houses to discuss the extension to the 18 months, which we will do. As a backup, we have proposed legislation that we hope will be passed.
I want to put your minds at ease at this point. As the ambassador made clear, we do not know what we will do. They discussed encrypting drivers' licences, but each state has control of this. They do not want the expense and do not intend to do it. The NEXUS card is wonderful. It has already been in effect for several years. It provides a total background check. All of us who live on borders should have them. It should always be required, because then we can zip back and forth. This proposed legislation does insist that the United States do more to promote NEXUS. In fact, around Buffalo and Niagara County, we even have to come to Canada to apply for it.
The first thing we are hoping to ensure in this proposed legislation is alternatives to passports, as we do not want to use those because Americans will not pay $100 for a passport. We have to ensure these alternatives are secure, low cost and easily obtainable, that the governments of both the United States and Canada work on them together, and that there is agreement on what is doable.
We lay out a series of qualifications and benchmarks that DHS and State must meet in this implementation. It first requires that DHS evaluate existing documents and determine the feasibility of securing them with necessary features under WHTI, such as encryption. We should avoid at all costs creating new cards and more bureaucracy. If this is not possible, any new developments must take place in a systematically rational manner. The most important priority is that we get it right. That is one of the reasons for extending the time, because the long-range effects could be devastating.
For example, DHS and State have announced that they will create an alternative card, often referred to as a PASS card. Unfortunately, it will cost $50 and take four to six weeks to obtain. The simple truth of the matter is that most travellers will not go to the extra expense and time of acquiring such a card. Our proposed legislation caps whatever we do at $20, and it has to be delivered to the purchaser in 10 days or less.
WHTI must also expedite the act of crossing the border for low-risk travellers. We are concerned about the casual traveller. If, for example, my relatives visit from Kentucky, of course, they will want to come to Canada, but do not carry passports with them. We want to ensure the casual traveller has an easy and, frankly, cost-free way to cross into Canada for a day, for example.
Almost 50 per cent of border crossings are made by only 400,000 people, and that is the audience we are aiming at. We must enrol them in programs that make it easy to cross the border and allow inspectors to focus their limited resources on the high-risk traveller. That, again, is our NEXUS card and the FAST card.
We have two joint programs that we think meet that objective, but regrettably, there are a number of barriers, such as the high cost of enrolment in NEXUS and FAST, and a limited number of centres, which we have insisted be open, including some travelling centres, that is, trailers to travel to areas where people cannot get to the border easily. We must be sure to push what works well. The PACT act will expand both programs.
I should also point out that the last time we passed a homeland security bill I passed an amendment to use the NEXUS card, which is a joint card, to expedite the boarding of airplanes. That should also be an attraction for people to get them.
More broadly, NEXUS and FAST provide a model whereby we can work together to achieve stronger security while also facilitating low-risk trade and travel. With all that is at stake for our border economies, both governments should use these programs as a blueprint for the future.
The PACT act also requires that DHS and State develop a plan to readmit to the U.S. American travellers who do not possess a passport or an acceptable alternative document. One of the questions raised at Charleston by one of my Canadian friends was: ``You will not want them back in the United States. What do we do with them? Do we take them into custody, or what is the answer?'' As I recall, that was met by blank stares.
This provision will allow travellers to return to the United States. Finally — and I think most importantly — the act requires DHS and State to complete the cost-benefit analysis of the final plan before it is implemented. That is where the GOA comes in again.
The completion of such a study will assist DHS in evaluating secure and cost-effective options for implementation while avoiding the adverse effects on legitimate travel and trade with Canada. It will force the agencies to prove the benefits of the final plan and that the benefits outweigh the cost. The PACT act is bringing members from both the Democratic and Republican parties together in an attempt to bring common-sense solutions to a critical problem.
I wish to congratulate the Government of Canada and the RCMP for the incredible arrests made over the weekend. It was wonderful work, and we stand in awe of it. However, it shows us yet again that we are not safe in either country. We have a shared threat, and together we can and must harvest our resources to keep both countries safe, but we cannot undermine our economies and quality of life in the process.
There are many members of Congress who do understand that the current WHTI plan has the potential to inflict major economic damages on both our countries. With their help and the help of leaders here today, I believe we will ensure a smart and secure U.S.-Canada border for years to come.
I am pleased to answer any questions you may have.
Senator Angus: Thank you very much, Representative Slaughter. It is wonderful to see you here in Ottawa. There are two matters I wish to confirm with you. The Senate has a Republican majority, does it?
Ms. Slaughter: Both Houses.
Senator Angus: What was the vote in the Senate?
Ms. Slaughter: It was a bipartisan bill. Let me acknowledge at the outset that there is much contention in Congress, but that is the way we like it.
However, on this issue, there is complete accord in both the Republican and Democratic Parties, among all of us in the northern border caucus, which we have established to work on this issue. This proposed legislation is co-sponsored by Congressman John McHugh, a Republican from upstate New York.
Senator Angus: You say that vote was bipartisan. Does that mean it was a unanimous vote in the Senate?
Ms. Slaughter: I do not think it was close, no. It was part of the immigration bill, and as I pointed out, that is so important, because if we cannot do a commensurate bill in the house, it can still be dealt with in Congress.
It is a ``Congressable'' item, as we say; it is in scope. I am sorry this issue was caught up in our immigration problems. That is an entirely different can of worms. We know we have a border problem in the United States, but it is not at the border we share with you.
Senator Angus: In your personal view and that of your colleagues in the border caucus, will this tightened-up type of passport or other card do anything to obviate the arrival of terrorists in the United States?
Ms. Slaughter: No, and I have told everybody who will listen to me. We had a seven-year-old boy come across on a bicycle and no one noticed him. We have enjoyed this open border for over 200 years.
One of my favourite comments came from a senator from North Dakota, who said that all they ever needed to guard the border between North Dakota and Canada were four orange cones; and we like it that way. If people want to come in and do us harm then I hope we can stop them, but I do not think it is realistic to think that we can. I do not think any of this takes into account what we can do with new and emerging technology. The NEXUS card, the technology at the Whirlpool Bridge, is impressive.
Senator Fitzpatrick: I want to welcome you, Representative Slaughter, and thank you for your common-sense approach and cutting to the chase on this issue. I have to go to another meeting, but I did not want to leave without thanking you for coming to give us your views.
Senator Goldstein: I now understand, Representative Slaughter, why so many people around this table think so highly of you. Thank you for coming.
I wonder what trigger would cause GAO to enter into the cost-benefit study, the results of which might well have a slowing effect?
Ms. Slaughter: They are willing to do it. However, they said, ``There was nothing for us to study. We could not give you a cost-benefit analysis of it because we do not have anything.'' They are talking about all kinds of cards, passports, but there is nothing. I can lay your minds to rest about that; we are not ready.
Senator Goldstein: Does that not tell the State Department to put the brakes on?
Ms. Slaughter: No. We will get something because that legislation is out there, unless they decide to do something about that. I am intent on making sure that it makes sense and does nothing to upset the incredible trade we have with each other or our friendship.
Part of the immigration bill called for a study on building a fence between the U.S. and Canada. I said that we ought to consider a moat and crocodiles; what do you think?
Whatever we do, I want to ensure it is done correctly.
Senator Meighen: You will be surprised, but my question is about politics. It seems clear that the northern caucus, the border caucus, is a bipartisan effort and there is a great understanding of the problem and a willingness to solve it. To what extent is the lack of that same attitude an impediment to progress and achieving an early solution to our common problem? Can something be done, and is there any role for Canadians in that?
Ms. Slaughter: My bill says that whatever happens must be decided jointly between governments. This will not have to come back to Congress once they decide what to do. They will be implementing legislation that has already passed.
Senator Meighen: We do not have to worry about getting more votes, then.
Ms. Slaughter: I do not believe we do. We pass the legislation telling the federal agencies what we want done, they write the regulations and implement it. If people resent it, they could write a resolution that might call for a vote, but what we are waiting for now is implementation by the federal agencies.
Senator Meighen: Is there anything we could be doing in Canada to aid the process?
Ms. Slaughter: We have a lot of border issues on which we need to find closure. Shared border management is one of them. We have to come to an agreement on the Ambassador Bridge. People want to build the Peace Bridge adjacent. Those people have to be told that we will not allow an international bridge in private hands. Once we get them out of this picture, we can move faster on that bridge. We have to have the NEXUS lanes and people with NEXUS cards to use them. A lot of our bridges are approached from two-lane roads and it is not easy to access them. We have a duty- free shop off a highway now; why they built that on the road I will never know.
We are getting good cooperation. I think Ambassador Wilson saw that we were pretty shell-shocked when we passed a lot of this legislation. We had been hit badly and were not sure where it came from and what the end of it all would be. We have learned a lot, but have moved at such a snail's pace with it.
This is the first year that Homeland Security came out with a threat assessment, and to our great surprise, they said New York City did not have any monuments or icons worth defending, so they sent the money to Omaha.
I have to add, in defence of Homeland Security, that we have put together an agency of 17,000 people who did not want to go there. They have no building and it is not working all that well. We do not want to get caught up in their problems and implement something that we will live to regret. We have to be vigilant. We talk to each other all the time and what we do has to be compatible with both countries. We need to get those issues out of the way, off the table.
Senator Harb: I rather sympathize with the administration. There are 15 million people in the United States without any identification.
It seems to me there is some discussion here in Canada of the introduction of a national identity card for everyone. Has the same discussion taken place in the United States?
My last point is that the largest number of illegal refugees in Canada comes from the United States. One would think that an identity card of some kind might curb the flow. I assume you have the same problem of illegal immigrants coming to the United States from Canada.
Ms. Slaughter: Most of our illegal aliens come across the southern border. We do not have control of our borders, and that is a concern. Right after 9/11 I called Immigration to ask how many illegals were in the United States and they did not know. Obviously, you cannot count those whom you do not know are there. It is a critical issue and we are in the throes of trying to deal with it.
There are people in Congress who want us to round them all up, if we can find them. As you know, the proposed legislation in the house declares them to be felons, which means they would have to go through the court system. I do not know where we would put them all. Perhaps we would pay to send them somewhere. That is not working.
I am really impressed by the people who work at the borders. I think they almost develop a sixth sense. I was so impressed by what happened in Vancouver with the millennium bomber. They stopped the people who were going down to Los Angeles to blow up the airport. They do a difficult job and we have to thank them for it.
Senator Eyton: We are talking about a lot of money and neighbourhoods and communities that live side by side. In human terms, they are also important. We are looking for a process, a system or a solution to the challenge that we both face.
I find it remarkable that thus far, the task force, as far as we know, has not done much of anything cohesive, important or useful. More than that, we do not know what they are doing. I want to put that in context. I talked about costs before, but now I want to mention business opportunities. Many of my American friends are entrepreneurs. Let us say there are approximately 100 million people in the U.S. You helped to define the strategy. You said $20, 10 days, and 400,000 people.
I would have thought that some of those entrepreneurs would be proposing aggressive solutions, because as I say, there are big dollars involved. I would see providing a solution as a great opportunity. I have not seen anything like that or heard any discussion about it. Where are the entrepreneurs who have the possible solutions?
Ms. Slaughter: They may meet with the task force. I do not hear from them personally, and I should have a lot of them in my district.
I have to tell you that as an issue for the United States as a whole, I do not think this would rank very highly. If we were to talk to someone from Oklahoma, I doubt they would have any interest in it.
Senator Eyton: We are talking big money.
Ms. Slaughter: Absolutely. It is imperative, too. Canada is doing well as far as its economy is concerned. On the other hand, we are still trying to climb out of the depths that we got into in the 1990s.
I see Arlene White from the Binational Tourism Alliance is in the audience. We met last week. One of the things that trouble us, which we did not bring up today, is that too many people believe you need a passport already.
We see a chilling effect on tourism, trade and other things. People are cancelling conventions they had planned because they think they have to have a passport to come here.
Ms. White has told me that they will ensure that everyone in the tourism industry will put on their web pages ``Come to Canada, you will be fine.'' However, I was asked me for my passport today. I really hated having to show it. I thought to myself, I have been fighting this issue for 16 months, and now I have to hand over my passport? If I did not hand it over though, I would not have been allowed to come up here to visit you.
[Translation]
Senator Hervieux-Payette: First of all, I would like to welcome you and tell you how much we appreciate receiving this information directly from those who have to deal with this issue.
You can be a very useful spokesperson. I organized the Canada Loves New York event together with Senator Grafstein. There was a very moving testimony from Canadians who shared the Americans' grief. It is now difficult to explain to Canadians that they are considered not trustworthy and that they must have more specific identification documents in order to cross borders.
I would like the record to show that this past weekend's events involved Canadian citizens and the events that occurred in London involved citizens from that country and that the issue of borders had nothing to do with it. It is important for politicians to reiterate this.
It was mentioned after 9/11 that the problem could have originated from Canada, which was unfair because in fact all those who were involved in the 9/11 attacks, or the great majority of them were United States residents.
Foreign-born Canadians have been living here for 15 or 20 years. I wonder whether any procedure or the obligation to have a new ID card will solve their problem. These people have passports. As soon as they have a Middle East sounding name, they are being arrested at borders. They then have to wait from two to four hours to board a new flight; they are being intercepted every time, so much so that these people who are from Algeria, Egypt or other countries, even though they have been Canadian citizens for a long time, no longer want to go through the United States to travel anywhere else in the world.
Will the fact that they would have to carry a new ID card help them stop being harassed at border points? Whichever card we decide to use, if we do not really believe in this initiative, the whole exercise will have been futile. I wonder if in your system, the identification document or the passport will help prevent this kind of problem. Will the new card increase security for Canadian citizens?
[English]
Senator Tkachuk: Perhaps the delay will allow us to see this as an opportunity. I think you tried to say that in your remarks.
When I went to the States a number of weeks ago I forgot my passport. On the way there I got by with my driver's licence. However, on the way back to Canada I was asked to produce my birth certificate and my driver's licence. If I did not, they would not have let me on the plane. Fortunately, I had a copy of my birth certificate in my office. That allowed me to return home.
I come from Saskatchewan. If you think it is easy to get across the border in New York, you ought to try it in Saskatchewan, where North Dakota and Montana are across the border. Except in January, the border is pretty open.
When does the conference on your two amendments take place between the two Houses? Who is involved? Is there anything that this committee, members of the House or the Senate can do — for example, communicate our concerns to the conference participants?
The Chairman: We will hear from Senator Moore and Senator Biron and then Representative Slaughter will respond.
Senator Moore: Is the deadline in the PACT act September 1 or September 30?
Ms. Slaughter: It is September 30.
Senator Moore: Does that date coincide with the deadline in Senator Leahy's bill that passed in the Senate? That might make it more approachable with regard to the conferencing.
I do not understand the roles of the task force and the Department of Homeland Security. Is there a jurisdictional problem? Is there an overlap? It seems odd, as another senator said earlier, that some of these issues have not been advanced and studied in view of the known implementation date of the legislation. It is a little surprising. Is there an internal struggle?
Senator Biron: We receive about 45,000 refugees each year from the U.S., whereas we send to the U.S. about 5,000 refugees. Should we not have better control? Refugees come to Canada mainly by air and sea. In Europe, there are no borders between France and Germany and Spain, et cetera, because of the EU. Would a card eventually play a part in moving toward a common market with the United States?
Ms. Slaughter: No. I will address that question first, if I may.
We do not have borders in the United States between the states. This is simply a security measure to travel from one country to another. I do not think Canadians are required to do anything, are they? Only Americans returning to the United States are required to do this. That is my understanding from the people involved.
The card has nothing to do with anything inside the United States. It would be used only at the borders. On the question about Middle Easterners having to carry extra identification, I have found in America that they are never asked but the rest of us are. The TSA goes after me as if I was public enemy number one. One of my colleagues had two hip replacements and is asked to strip down to his underwear before they will allow him on a plane, and Ted Kennedy is on a watch list.
The task force is not a creature of Congress. It is made up of a number of agencies such as the CIA, the FBI, Customs and Border Security, and DHS are involved. They are trying to work out some common problem, but it is important that they work with the Canadian government at the same time. I learned today at the embassy briefing that we are attempting vigorously to do that.
The immigration bill has passed both Houses, so when the Majority Leader of the Senate and the Speaker of the House pick conferees, they will select those who were on the involved committees. Both Houses will meet in conference to iron out the problems, which will be immense, because the two immigration bills are like night and day. We are interested in the extension, the Leahy piece, which can be in conference, even if the House does not pass anything. It can take place any time that they decide to put the conferences together, but it will surely happen before October, which is the end of the fiscal year.
Senator Moore: Do the dates in the PACT act and the Leahy bill coincide?
Ms. Slaughter: I am not talking about the PACT act but about the measure that passed the Senate. The PACT act is in the House.
Senator Moore: I want to know if the dates coincide.
Ms. Slaughter: They do. It is 18 months, but we wanted to ensure that it would be September so we did not interfere with the summer tourist trade.
I believe that you said ``not trustworthy.'' Certainly Canadians are trustworthy. I was talking today to a number of American interns, college kids working in the Senate for a few weeks, and I reminded them of what Canadians did for us in Iran, when the hostage crisis was taking place, and on 9/11, when all those planes were diverted and told to land immediately. The Canadians were wonderful. In our part of the country, everyone crosses back and forth regularly. Most of the people I know in Buffalo have cottages in Canada. They intermarry and travel back and forth for personal and work-related reasons. If we cannot trust Canadians, then we cannot trust anybody. You are the best neighbours anybody could have.
Sometimes we set these rules, and then I feel badly for the people who have to enforce them. Congress always does that, and you may have a problem too in that respect.
The Chairman: Representative Slaughter, we will listen to the evidence, of which we will send you a transcript, and if there is anything further you would like to add, we would be happy to receive that.
Ms. Slaughter: I would like to be able to provide more material for the committee. I will keep you informed as we move along.
The Chairman: Senator Angus and I sit on the Canada-U.S. Interparliamentary Association, of which I am chairman and he is vice-chairman. We will be going down to Washington this summer, where we will meet with governors, state senators and state legislators to lobby for a push-back of the implementation date of the bill. We are greatly concerned by the report out of the GAO.
Ms. Slaughter: I hope that sets your mind at rest.
The Chairman: It set us on edge.
Ms. Slaughter: It said, ``We cannot do what you are asking us to do because there is nothing to work with.'' Once they have something to work with, we will ask them to do it again. Nothing can be implemented until that takes place.
The Chairman: I want to end your portion of the evidence with this quote from the report of the Government Accountability Office. It states:
Falling short in any of these areas may hinder the ability of the agencies to achieve their goal of improving security while facilitating commerce and tourism.
This is a yawning gap.
Ms. Slaughter: Remember what I said a while ago: There is no money in the 2007 budget for either of these agencies to work on this or to implement it. They did not request any money, and that speaks volumes. Thank you for your hospitality.
The Chairman: We look forward to seeing you again. We appreciate your evidence and your time.
Our next witnesses will be strictly limited to three and a half minutes for their presentations. We will hear all the presentations and then have questions.
We have had an interesting introduction to the problem via the words of Ambassador Wilson and Congresswoman Louise Slaughter, from New York State.
I wish to welcome you to our committee as we study the economic consequences of the Western Hemisphere Travel Initiative, which flows from section 7209 of the Intelligence Reform and Terrorism Prevention Act of 2004, passed by the U.S. Congress.
It is important, as we believe you understand, to recognize that the consequences could be significant on both sides of the border. We are looking at this issue from the perspective of both sides.
Randy Williams, President and CEO, Tourism Industry Association of Canada: I wish to thank the committee for allowing me to present on behalf of the Tourism Industry Association of Canada. My colleague, Margot Booth, is here with me today.
TIAC is the national private-sector advocate for Canada's $61-billion tourism industry. We also lead a binational passport coalition representing over 50 tourism organizations in Canada and the United States. We obviously seek to address the issues of the Western Hemisphere Travel Initiative and have since last April.
Given the tremendous importance of the U.S. market to Canada's tourism industry, the WHTI is the number one issue facing our membership today.
The U.S. market, which has traditionally provided up to 25 per cent of Canadian tourism receipts, has been declining for the past several years, and the WHTI is making a bad situation worse.
I want to emphasize that the tourism industry is unified in its desire to see the WHTI implemented as efficiently as possible. We are looking for five things. First, we want one single implementation date of January 1, 2008, as the law dictates, or later, provided that we can obtain some certainty around implementation requirements if a later date is chosen. Added confusion for a longer time will not help us.
We want accessible and affordable passport substitutes, like the PASS card, the Real ID and so on, to be allowed.
We want an exemption for people aged 16 and under when they are travelling with adults who have proper documentation.
We want both the U.S. government and the Canadian government to invest in an awareness campaign. We must start communicating to citizens what the law of the land is and will be.
Finally, we want expansion of the NEXUS and FAST programs and for those to be allowable cards.
Our written submission provides a tourism perspective on WHTI and outlines its potential impacts, and you have been provided with that submission.
I want to give you two irrefutable facts. WHTI is damaging travel between Canada and the United States today. It will, before its full implementation, negatively impact tourism between Canada and the United States by $2.5 billion.
Second, even if WHTI is 100 per cent successfully implemented, it will continue to damage travel between the two countries. That is irrefutable as well because we will have less freedom than before, and there will be more costs and more bureaucracy involved in travel between our two countries.
Senators, allow me to provide a context for WHTI. This slide before you shows 2000, our benchmark year for travel between Canada and the United States. Over the last five years the number has decreased from 45 million travellers to just over 31 million. That is a 40-per-cent drop, and that is without WHTI. This is the context we are working in today.
Senator Angus: That is more due to 9/11, is it not?
Mr. Williams: It is due to 9/11, SARS and the currency. All of those things are having an impact, and I want you to think about WHTI in that context.
This slide shows our travel deficit. This is the amount of money that is spent by outbound Canadians versus visitors from all countries. In 2000 it was just over $2 billion. You can see that we had some success from 2000 to 2002, but it is now at a 14-year high, close to $6 billion.
Senator Angus: That includes international travel and is not border specific, is it?
Mr. Williams: I am giving you a perspective on tourism and our ability to take this hit.
This is our global ranking. We were the ninth most visited destination in the world in 2000. We improved to seventh in the world in 2002. However, since then we have dropped. In 2005, we were twelfth in the world.
The five requests that we have are important for WHTI. Please understand that the environment we are working in is not rosy, as the graphs I have showed you illustrate.
I will give you one more solution. We need to look at how we are investing in the U.S. market, because three or four years from now we will have the WHTI. Think proactively about what we will need to do. We will need to spark the market between Canada and the United States. Whatever the required documentation, we need to invest in the U.S. market to get Americans here, and the United States is looking at doing the same. We know what we will be; we know the irrefutable facts. We need to invest in the market.
The Canadian Tourism Commission budget was at $85 million and is now at $75 million. It has been cut three years in is a row, and that helps to explain the current environment.
We have given a business case to the Department of Finance. We have asked for an additional $100 million to help overcome the impact of WHTI. The private sector will match that. Putting $200 million into the marketplace will increase tourism by $1.4 billion. It is anticipated that WHTI will cost tourism in Canada $1.6 billion, so at least we will get some of this back.
That is $413 million in additional tax revenues. Of that, $202 million will go to the federal government. If the federal government puts in $100 million, it will double its money as well as create 19 million jobs.
Gordon Cherry, Director, Trade and Commercial Policy, Canadian Manufacturers & Exporters: Canadian Manufacturers & Exporters welcomes the opportunity to provide comments on the potential economic consequences.
The Chairman: Your entire statements will become part of our record.
Mr. Cherry: Thank you
CME represents Canada's businesses engaged in the manufacturing and export of goods and services. Our membership produces approximately 75 per cent of Canada's manufacturing output and 90 per cent of Canadian exports.
While our large member companies are well-known manufacturers, the overwhelming majority of our members are small and mid-sized companies. These members deeply appreciate the efforts of this committee.
Millions of jobs on both sides of the border depend on the Canada-U.S. trading relationship, as you know, and 300,000 Canadian and U.S. citizens cross the border every day. In this context, requiring passports or passport-like documents for legal travel across the shared land border for business people, service workers, friends, families and tourists will impact historic and vital relationships as well as our economies. Many Canadian manufacturers are part of an integrated manufacturing network with manufacturers in the U.S. and Mexico. For example, in the auto industry it is estimated that components and subsystems of North American-produced vehicles will cross borders seven times during the production process. This integration has helped to strengthen the competitiveness of North American industry and keep more jobs in Canada than might be otherwise possible in the face of global competition.
The success of this integrated manufacturing network depends on the timely movement of goods and people across the border. Most manufacturers today rely on just-in-time inventory and production systems to reduce costs and remain competitive. Even relatively short delays — several hours in shipping parts and subsystems from one plant to another — can cause costly disruptions in production schedules.
Reducing costs is very much on the minds of manufacturers these days, particularly small and mid-sized companies that have little or no pricing power in the marketplace. For companies that manufacture in North America, direct and indirect border-related costs are becoming a significant operating expense. Customs and security compliance costs and border transit delays fall disproportionately on companies engaged in business in the U.S. Calculating the potential economic impact of the WHTI is difficult, given all the current uncertainties around implementation dates and acceptable documentation. While you have heard estimates of the impact on tourist receipts from Mr. Williams, the potential ripple effect on the rest of the economy is less obvious. I have many numbers in my submission that you can refer to later. I will not go through them.
The Chairman: Do you have any that you want to share with us that are cogent?
Mr. Cherry: I will mention a 2003 report prepared for the U.S. Department of Transportation, which estimated the annual costs associated with transit delays, program compliance, document requirements and other border-related expenses and uncertainty to be U.S. $2.5 billion to $5.3 billion, just for Canada-U.S. trade. The Coalition for Secure and Trade-Efficient Borders' report, entitled Rethinking Our Borders: A New North American Partnership, estimated that additional reporting, compliance and delay costs at the Canada-U.S. border cost North American automotive companies an estimated $800 per vehicle.
The Ontario Chamber of Commerce has estimated that border delays alone cost Canadian and U.S. economies an estimated $13.6 billion annually. Uncertainty, which is the key issue here, about delays at the border is requiring automotive manufacturers, for example, to increase inventory at costs of upwards of $1 million per hour, and a four- hour delay at the Ambassador Bridge costs the Ontario economy approximately $7 million in lost production.
I will skip the tourism numbers here.
Canadian Manufacturers & Exporters members recognize and share the security concerns of the U.S., which the WHTI is attempting to address through improved security of documentation at the border for identity purposes. At the same time, our members have questions and concerns about whether the WHTI, as proposed, will improve security and at what cost. These questions and concerns are shared by many of our American business counterparts.
Canadian Manufacturers & Exporters members are concerned that the WHTI as currently proposed falls short in advancing the Security and Prosperity Partnership goal of further streamlining the movement of legitimate, low-risk traffic of goods and people across the border, and that the introduction of these document requirements has the potential to disrupt border flows. Members are also concerned about the number of ramifications for Canadian domestic policies related to documentation.
In addition, members are concerned that the exemption removal may limit the travel of U.S. citizens to Canada and that U.S. citizens employed in Canada will also be affected. The relatively short time frame for implementation of the proposed requirement for use of passports or other types of secure travel documents is also a concern.
I will skip several of these concerns and go straight to our recommendations.
Canadian Manufacturers & Exporters has recommended that the Canadian government take steps to help minimize the potentially negative economic impact of WHTI by undertaking an awareness campaign across Canada to communicate the current and new rules, and to encourage all Canadian citizens to obtain a passport or acceptable substitute once those have been identified.
The Canadian government should work with the appropriate Department of Homeland Security authorities to certify Canadian identification in order to ensure that security requirements are met and a citizenship verification mechanism is included to allow for cross-border travel. We also recommend continued and expanded use of the FAST and NEXUS programs and that FAST and NEXUS cards continue to be accepted as secure documentation for cross- border travel. It is also critical that the Canadian government work with the appropriate Department of Homeland Security authorities to ensure that people who come to the border without documents are facilitated and do not impede the flow of legitimate trade and travellers.
Canadian Manufacturers & Exporters recommends negotiating a reasonable grace period to be established at border crossings, during which time people lacking documents are educated about their options and allowed to pass.
Thank you again for the opportunity for Canadian Manufacturers & Exporters to present its views. We appreciate the efforts of this committee on this important issue.
The Chairman: Thank you very much for your cogent comments.
Shirley-Ann George, Vice President, International Policy, Canadian Chamber of Commerce: I will be brief. Thank you, Mr. Chairman. As you all know, the Canadian Chamber of Commerce is the largest and most representative business association in Canada, representing more than 170,000 businesses from every region and industry of Canada. As you can appreciate, the vast majority of our members are employers who have a direct interest in the management of the Canada-U.S. border.
I begin my remarks by stating that the Canadian Chamber of Commerce fully recognizes the critical importance of Canada-U.S. border security. Without a secure border, we could not enjoy the benefits of the free flow of people and trade between our two countries. We also acknowledge that the U.S. will require some form of enhanced documentation for entry into the United States, so our focus is on making this as efficient and least costly as possible.
With fewer than 25 per cent of Americans and fewer than 40 per cent of Canadians holding passports, a tremendous amount of work needs to be done between now and the implementation dates to ensure the efficient movement of people and goods across our borders. The Canadian Chamber has been actively engaged on this file for some time, including submitting a response to the advance notice of rules-making and working actively with the U.S.-based advocacy coalition BESTT, which is comprised of Canadian and U.S. local chambers and industry groups and has been successful in their advocacy efforts in Washington. I would like to point out that Ken Oplinger, from Bellingham, is here with us today.
We have also worked closely with the embassy in Washington, which is doing an excellent job in leading Canadian efforts on this file.
Local and provincial chambers of commerce from across Canada have expressed deep concern about the impact of this American legislation. Concerns raised go beyond the important tourism sector. Many of our chamber economies are so intertwined in their Canadian-U.S. regional activities that these border changes go to the very root of their economic health. Our corporate members have also expressed real concerns about border slowdowns, as long lines of occasional travellers start fishing around for their passports, causing delays. Some have said that if this is not implemented smoothly, long lineups could jeopardize corporate support for ongoing Canadian operations.
Today, the uncertainty associated with the WHTI is deterring further investment in Canada. Credible assurances must be quickly put in place to provide certainty that the efficient operation of the Canada-U.S. border will be maintained.
The Canadian Chamber of Commerce would like to offer the following key recommendations. The Canadian federal government should work to minimize the impact of the WHTI by encouraging the U.S. to delay implementation unless the Department of Homeland Security and the State Department are fully confident that it can be implemented with minimal disruption. We recognize, however, that this is a U.S. law and that we have to be careful and intelligent in our approach in the United States, just as they would need to be careful about making suggestions for change to Canadian law.
There needs to be a common implementation date for land, air and sea travel. We need to work to encourage the United States to provide an exemption for children under 16.
As a general principle, any document or combination of documents deemed to be acceptable for presenting proof of identity and citizenship should be readily available in terms of accessibility and cost to both Canadians and Americans.
Existing programs such as FAST and NEXUS must be maintained — in fact, must be enhanced — and the capacity for enrolment in and use of these programs must be widespread.
The U.S. government, in cooperation with the Canadian government, should set up a voluntary pilot at a border crossing prior to full implementation to work out the kinks. No large technology project ever has been implemented without some challenges. We need to work these things through.
Perhaps most importantly, the Canadian and U.S. governments should engage now in extensive communication campaigns to let citizens know that there are no passports required today and to explain what the requirements will be in the future.
Finally, although all the focus has been on the United States, it is equally important for the Canadian government to determine if any changes are to be made on our side of the border — at this point, that is still an open question — and that any of these changes be implemented in a way that does not disrupt our or the American communities and economies.
We would be happy to elaborate further on these points and answer any questions that your committee members may have.
The Chairman: Regretfully, we will only have time for five questions from five senators. If we get to 6 o'clock there may be time for responses; if not, you could respond to us in writing, if you do not mind. We will look at all your testimony carefully. We thank you and apologize for the shortness of time.
Senator Meighen: Thank you for coming here today. In the interests of time, I will dispense with pleasantries and get right to the question.
You heard the previous witnesses. I think we are all pretty well on the same page in terms of the potential damage that WHTI could do and how it is essential to work with the Americans to come up with a speedy and satisfactory solution. I think we all know about the loss of investment and tourism dollars, et cetera.
That being the case, I wish to ask Ms. George and Mr. Cherry, especially, if there is anything we can do better or faster at the borders now, particularly at Windsor, to speed up the border crossing, reduce the delays and reverse border inspection? Just-in-time inventory is prejudicing our automotive sector. Do you have any evidence — and I do not suggest this is occurring — that plants on the United States side of the border, particularly in Windsor, are not particularly interested in seeing the delays reduced, because if there is any further investment, guess where an investor would like to go to avoid delays?
To Mr. Williams, I hear you loud and clear. Does your research show the major factor in the decline in American tourists coming to Canada? Is it gas, it is the dollar, is it SARS, is it poor facilities in Canada within your industry, is it border delays? Do you have breakdowns for that?
Senator Hervieux-Payette: Could you also tell us how they come to Canada and where the delay was? Was it by plane, by bus, by car or by train? Where is the barrier?
Second, do you feel we are still competitive in terms of the rationale for coming here? It is because we do not have enough important events that Americans do not have at home, or are we not giving enough support to the tourist industry per se? Would people go Butchart Gardens if there was another one that was similar? Do you see it as a tourist attraction?
France is the number one tourist destination in the world and I know how much they invest in tourist infrastructure. They put billions of dollars into every piece of their history. Do you have a plan of action for that? We are not manufacturing boots any more, so maybe we should change our employment structure.
Senator Tkachuk: I have one specific question on the tourism side. In planning conferences and/or conventions, I would think that people would book well in advance. Could you provide the committee with information as to what the average is for small conferences and for large, international conventions? This will probably affect where those are booked and at what time.
Senator Goldstein: Thank you for your excellent speaking notes. We had the advantage of seeing them beforehand. You speak of the doubts entertained by your members as to whether or not this will improve security and at what cost. You note that those concerns are shared by some Americans. Have there been specific studies done of the extent to which these measures bring with them economic provisions that will accomplish what people are seeking in terms of enhanced security?
Senator Massicotte: I am trying to get a grasp of the issue specific to the WHTI. Are we simply worried about a screw-up in administration? Is that the only issue? That is, if we did this well and both countries were to cooperate, open up the border and spend more money on it, do the problems disappear, or is it more fundamental than good administration?
The Chairman: What lobbying efforts are your organizations making in the United States Congress? The issue is not here; the issue is in the United States Congress. Precisely what efforts are your organizations making to lobby members of Congress, senators and business associations to persuade their government to at least delay or amend this piece of legislation?
Ladies and gentlemen, I apologize, but you will understand the time constraints. I apologize to my colleagues, because they are quite disgruntled with me as the chair. They want to get at this topic with more vigour. We will see if we can extend the hearings, but for now I wish to thank you for coming here and putting up with the short period. It is important to have an impact on the American Congress and on everything we are doing. Thank you so much.
The committee adjourned.