Proceedings of the Standing Senate Committee on
National Security and Defence
Issue 3 - Evidence - March 30, 2009
OTTAWA, Monday, March 30, 2009
The Standing Senate Committee on National Security and Defence, to which was referred Bill S-2, An Act to amend the Customs Act, met this day at 3:07 p.m. to give consideration to the bill.
Senator Colin Kenny (Chair) in the chair.
[English]
The Chair: It is my pleasure to welcome you to the Standing Senate Committee on National Security and Defence. My name is Senator Kenny and I am a senator from Ontario. Before we begin, I would like to introduce the members of the committee.
On my far right, at the end of the table, is Senator Zimmer from Winnipeg, Manitoba. He has had a long and distinguished career in business and philanthropy. He has been a member of the Senate since 2005. He also sits on the Standing Senate Committee on Transport and Communications.
[Translation]
To my right as well, we have Senator Pierre-Claude Nolin, from Quebec. He is a lawyer and was appointed senator in June 1993. Senator Nolin is currently Deputy Chair of the Legal and Constitutional Affairs Committee and is also a member of the Standing Committee on Rules, Procedures and Rights of Parliament.
[English]
Beside him is Senator Moore. He represents the senatorial division of Stanhope St./South Shore in Nova Scotia. He has been active at the city level in Halifax and Dartmouth and has served as a member of the board of governors of St. Mary's University. He is also on the Standing Senate Committee on Banking, Trade and Commerce and on the Standing Joint Committee on Scrutiny of Regulations.
Beside him is Senator Banks from Alberta. He was called to the Senate in April 2000. He is known to many Canadians as an accomplished and versatile musician and entertainer. Senator Banks is a member of the Standing Senate Committee on Energy, the Environment and Natural Resources.
Second on my left is Senator Wallin, from Saskatchewan. She was appointed to the Senate in January 2009. After a long career in journalism, Senator Wallin went on to serve as Consulate General of Canada in New York and also served at the request of Prime Minister Harper on the special Independent Panel on Canada's Future Role in Afghanistan. She is the deputy chair of this committee and is also a member of the Standing Senate Committee on Foreign Affairs and International Trade.
Beside her is Senator Tkachuk. He is from Saskatchewan and was appointed to the Senate in June 1993. Over the years, he has been a businessman, a public servant and a teacher. He is also the deputy chair of the Standing Committee on Internal Economy, Budgets and Administration and a member of the Senate Committee of Selection.
We also have with us Senator Martin, who was born in Seoul, Korea, and immigrated to Vancouver in 1972. She was appointed to the Senate in January 2009. In addition to her career as an educator, she co-founded the Corean Canadian Coactive Society and has served on the Multicultural Advisory Council of British Columbia. She is a strong advocate of the arts and has produced and coordinated nearly a dozen festivals since 2003. Senator Martin is a member of the Standing Senate Committee on Human Rights and the Standing Senate Committee on Social Affairs, Science and Technology.
Beside her is Senator Mitchell. He was appointed to the Senate in March 2005 and is from Edmonton, Alberta. He has had careers in the Alberta public service, the financial industry and politics. He is the deputy chair of the Standing Senate Committee on Energy, the Environment and Natural Resources and he is a member of the Standing Senate Committee on National Finance.
Colleagues and members of the viewing public, we have before us today a number of distinguished witnesses. We are here today to study Bill S-2, An Act to amend the Customs Act. The Customs Act was first enacted in 1867 to serve three purposes: to ensure the collection of duties, to control the movement of people and goods and to protect Canadian industry from real or potential injury caused by actual or contemplated import of dumped or subsidized goods and by other forms of unfair competition.
Bill S-2 amends the Customs Act and makes several technical amendments. It imposes additional requirements in customs controlled areas, grants the minister the power to authorize entry, amends provisions concerning the determination of value for duty and modifies advanced commercial reporting requirements. The search powers of customs officers are expanded to include individuals and their goods that are in or are leaving a customs controlled area. The bill also provides that regulations may be enacted that describe the time frame and manner in which information about passengers may be provided by prescribed persons. Finally, it provides that regulations may incorporate material found in associated documents.
We have before us today on our first panel Ms. Deirdre Kerr-Perrott, Vice-President of Innovation, Science and Technology from the Canada Border Services Agency, CBSA; Mr. Carman Baggaley, Strategic Policy Advisor with the Office of the Privacy Commissioner of Canada; and Mr. Jim Facette, President and CEO of the Canadian Airports Council. You each have five minutes for your opening remarks, and then we will proceed to questions.
Deirdre Kerr-Perrott, Vice-President, Innovation, Science and Technology, Canadian Border Services Agency: I am pleased to meet with this committee to discuss the government's proposed legislative amendments respecting the Customs Act. The border plays a dual role of facilitation and security. Smart, secure and efficient borders support immigration, trade and tourism while keeping Canadians and their communities safe from crime, contraband and other serious threats.
[Translation]
Our never-ending challenge is to continuously find the right balance of border enforcement with the facilitation of travel and trade in a shifting and dynamic global environment.
[English]
Modern border management must meet the challenge of both these mandates while respecting the realities of today's fiscal environment. The Customs Act sets out the provisions respecting the importation of goods into and the exportations of goods from Canada, including border officer authorities.
[Translation]
While the CBSA has increased its ability to detect and respond to security threats, the Customs Act has not changed since 2001.
[English]
The proposed changes will ensure that the CBSA continues to evolve while strengthening its officers' abilities to combat internal conspiracies and organized crime at ports of entry. In order to combat internal conspiracies and organized crime's activities at ports of entry, the government created the concept of customs controlled areas in 2001. These zones are designated areas where international travellers and goods not yet released by the CBSA may come into contact with port of entry workers and other domestic travelers.
Within a customs controlled area, border services officers currently have the authority to stop, question and search only at exit points; and all persons leaving a customs controlled area must present themselves before exiting the area.
The proposed amendments will provide officers with similar authority to stop, question and search individuals within customs controlled area as well as at exit points. In addition, persons will be obligated to report to border services officers only upon request. This will remove the onus on all persons to report upon exiting the customs controlled area.
[Translation]
These changes will provide border officers more flexibility to examine persons and goods within the Customs Controlled Areas where most internal conspiracies occur, allowing a greater focus on areas of risk and persons of interest.
[English]
Empowering border officers to take action within the customs controlled areas will enhance the CBSA's ability to interdict contraband and other illegal items before they reach our communities. This will improve the security of Canadians as it will act as a deterrent to internal conspiracies at ports of entry and decrease the risk posed by organized crime and national security threats.
The proposed changes to the Customs Act will also enable the CBSA to implement the eManifest initiative, which is the next planned phase of the Advance Commercial Information initiative. Currently, carriers and freight forwarders provide CBSA officers with electronic air and marine cargo information in advance so that they are equipped with the right information at the right time to identify health, safety and security threats before goods arrive in Canada.
[Translation]
The Manifest initiative will require that all businesses involved in the import trade chain, including those from the highway and rail modes, provide electronic data on their shipments before the goods reach Canada.
[English]
As a result of this legislation, the CBSA will be able to make more informed decisions about the admissibility of goods, including identifying unknown and high-risk threats before the shipments arrive.
Consultation with the trade communities and others has helped inform these proposals. The CBSA has consulted and continues to work with trade and transportation associations, which provide support in building and implementing these systems. They support the overall efficiency of electronic reporting compared to paper-based reporting and measures to enhance security. Our consultations and work with these committees continue to focus on ensuring a balanced approach to keep the border operating smoothly efficiently, and to harmonize, where possible, our efforts with the United States. We are doing this.
We have also consulted with our federal partners including the RCMP, CSIS and Transport Canada. They also welcome the amendments to customs controlled areas.
[Translation]
Airport authorities view Customs Controlled Areas as sensible security measures and have already publicly expressed their support for this initiative.
[English]
Marine port authorities also recognize and support the need for customs controlled areas around commercial vessels and arriving cruise ships to counter rising border-related criminal activities and internal conspiracies.
To summarize, Mr. Chair, full implementation of the initiatives enabled by these amendments will help us combat organized crime and interdict contraband before it reaches Canadians communities, while facilitating the movement of legitimate trade and travel.
[Translation]
I appreciate the opportunity to discuss the proposed amendments with you.
[English]
The Chair: I would ask that we all keep to the five-minute time limit, please.
Mr. Baggaley is next.
Carman Baggaley, Strategic Policy Advisor, Office of the Privacy Commissioner of Canada: Good afternoon. I am pleased to be here to discuss Bill S-2. Our office's interest in the bill is based on our long-standing interest in issues that relate to the collection of personal information of passengers and crew members. Generally, we are interested in programs that involve the collection of personal information that have an impact on air travel.
Section 107.1 of the Customs Act gives CBSA the authority to collect advanced passenger information, API, and also passenger name record information, known as PNR. When the API/PNR program was first introduced, our office had a number of concerns about the program. However, the Minister of National Revenue, who had responsibility for the program at the time, made a number of changes that addressed most of our concerns.
Bill S-2 proposes to amend section 107.1, which, as I mentioned, is the provision authorizing CBSA to collect passenger information. The bill amends the act in two ways. First, it amends it with respect to timing; second, it also amends it with regard to who is required to provide this information.
However, we are pleased that Bill S-2 does not appear to increase the amount of personal information that will be collected, the number of people from whom personal information will be collected, or the sharing of personal information. Since limiting the collection of personal information is an important component of protecting privacy, we are pleased with the overall direction of Bill S-2.
We do not see anything in the bill that significantly increases or exacerbates the concerns we have with respect to the collection of passenger information. On the contrary, as we understand it, Bill S-2 focuses on the issues related to the movement of goods. It also enhances and clarifies the powers of customs officers in customs controlled areas. From that perspective, we are pleased with the overall direction of the bill.
To conclude, our office supports enhancing national security, and we welcome legislation that is able to do that without increasing the collection of personal information.
The Chair: Colleagues, a document has just been circulated that is in one language only. It came to us just in the last five minutes. As a consequence, we thought it preferable that people see it and we will get it translated in due course.
Mr. Facette, you have the floor.
Jim Facette, President and CEO, Canadian Airports Council: Thank you for the opportunity to address you on Bill S-2, a piece of legislation the Canadian Airports Council strongly supports as a way to modernize the day-to-day provision of border services at Canada's airports.
The Canadian Airports Council, CAC, is the voice of Canada's airports. Our members represent 180 Canadian airports, including all of the national airports system airports and most passenger service airports in every province and territory. Together, CAC members handle virtually all of the nation's air cargo and international passenger traffic, as well as 95 per cent of domestic passenger traffic in Canada.
CAC is a strong supporter of this proposed legislation, which we believe is essential to modernize the provision of border services at Canada's airports. In particular, the amendments that will allow for the practical implementation of customs controlled areas represent a natural progression for the Canada Border Services Agency, allowing officers to exert control over a much wider area. For airports, we see this extension as an improvement in both security and service efficiency.
These amendments will allow for the designation of customs controlled areas, as well as the restricting of access to customs controlled areas, and require travellers within a customs controlled area to report to a CBSA officer upon request. They will also allow for the examination of goods and services of travellers within a customs controlled area or upon exit of said area.
As officers today can request only to examine travellers' baggage when travellers leave the customs area, this change represents a significant increase in security. These changes will operationally benefit both the agency and travellers, as they will allow the agency to focus its efforts on areas of risk and people of interest and will enable travellers to attend to their business as usual without being stopped and questioned every time they exit the area.
There has been tremendous growth in both passengers and cargo travelling internationally over the past decade. The current economic crisis is impacting traffic negatively, but the overseas segment is Canada's strongest segment, and we anticipate international traffic to continue for years in the future.
Without changes such as those proposed in Bill S-2, Canada's border system will not be able to keep up with the pace of business. These amendments will provide the agency with the flexibility it needs in this busy operating environment to perform its crucial role more effectively.
The implementation of customs controlled areas is considered a crucial step in the creation of arrival duty-free zones, which currently is being considered by the Department of Finance. Arrival duty-free zones allow travellers to purchase duty-free goods on arrival into Canada, which is a win-win for government. Based on the experience in Australia, which has had duty-free arrivals for many years, we believe implementing them in Canada would repatriate sales currently lost to foreign countries.
In closing, we encourage this committee to pass Bill S-2 swiftly. We feel strongly that the reforms are overdue and essential to modernize the provision of border services in Canada for the 21st century. They will improve both the efficiency of border services and the security of our nation.
Senator Wallin: I would like to thank Ms. Kerr-Perrott and Mr. Facette for their enthusiasm and support on this. It is interesting to get their perspective, as well as yours, Mr. Baggaley. I know you have turned a critical eye on this and it comes with some reassurance.
I would like to go back to a small point. Can you give us an example of what you mean by "internal conspiracy"? Is it employee based, or are you talking about other kinds of issues?
On the broader point, could you give us an example of what might happen and how it might work under these proposed new laws — a situation that might unfold with a person carrying on illegal activity. What freedom or rights or tools would you have access to you have not had before?
Ms. Kerr-Perrott: An example would be a baggage handler taking baggage from an international flight, and instead of the baggage going to the international arrivals, it goes to the domestic arrivals. The Canada Border Services Agency officers now cannot really interdict that individual. However, as customs controlled areas are established, they could question that individual, and depending on the responses to their questions, they could then ask to see the luggage, which might contain illegal goods being brought into the country.
Senator Wallin: Right now, you cannot do that. If you know that happens, you have to wait until he or she is off duty and exits the area.
Ms. Kerr-Perrott: We do not necessarily have the opportunity to see that happening.
Senator Wallin: To even see it happening.
Senator Moore: With regard to Senator Wallin's question, how do CBSA agents see that bag taken from an international landing and put onto a domestic belt? How do they see that? They are in another area.
Ms. Kerr-Perrott: They would not see that at this point in time. We are trying to establish what should be a customs controlled area. In the event that became a customs controlled area, we would be able to see that.
Right now, we are looking at what should be designated as a customs controlled area and how we would go about designating customs controlled areas. Our officers would have the same rights that at this moment they have only at exit points. They would ask the same questions, and depending on the responses, they would take further action.
Senator Wallin: Could we get Mr. Facette's view on this as well?
Mr. Facette: Maybe I could make it more tangible for you at an airport. The best example would be a smaller airport—the one at Charlottetown, for example. The CBSA would be able to declare a certain area of the apron—for Flight 123 coming in from Detroit, for example—as a customs controlled area. That airplane would come to the gate, and everything within the area at that gate at that particular time of day would be a customs controlled area. Only officers would be able to enter that area and do their job based on advance information they might have about that airplane. If there were a bag or something on that plane they needed to see, they could do it at that point, not at the point of exit where the baggage must be handled and exited. It is much earlier in the process.
Senator Moore: Why are they looking?
Senator Wallin: They look based on information received earlier.
Mr. Facette: They have reason to look.
[Translation]
Senator Nolin: Ms. Kerr-Perrot, my questions concern clause 10 of the bill, the purpose of which is to amend section 99.2 of the present act.
You explained to us in a few words the differences between the present act and what Bill S-2 aims to do. I understand that searches can henceforth be identified not only on leaving the Customs Controlled Area, but within the Customs Controlled Area. Am I right?
Ms. Kerr-Perrot: Yes.
Senator Nolin: In general, Canadians' experience with your work is limited, first, to meeting a customs officer who asks them questions on the length of their visit, their purchases outside the country and their destination, and, second, to making a declaration to another customs officer upon returning. For the majority of people, your work is limited to that. Today you have the opportunity to explain to thousands of Canadians how these officers justify a search conducted on a person — because clause 10 concerns the search of persons; how do your officers come to suspect a person or persons of conspiracy to break the law?
[English]
Ms. Kerr-Perrott: Intelligence and targeting areas within the CBSA receive information on individuals, organized crime or conspiracies that might lead them to expect something to arrive at an airport or marine facility. This would provide an opportunity for border services officers to check that out.
[Translation]
Senator Nolin: The source of your suspicions is limited to your intelligence service?
[English]
Ms. Kerr-Perrott: No, not solely on the information collected in advance, although we have targeters and we receive information in advance. However, the officers are trained to watch what people are doing within the customs controlled areas. They are trained to look at particular kinds of situations and investigate them.
[Translation]
Senator Nolin: As these are now searches that can be ordered within the area and not only on leaving the area, can you explain to us how that works at that point, compared to how those suspicions will be applied after Bill S-2 is passed?
[English]
Ms. Kerr-Perrott: Currently, an officer would question the person at an exit point, where the person must speak to a CBSA officer. The officer can ask questions and can search if it is deemed necessary. In this new scenario, the customs officers could ask similar questions within the customs controlled area, and if there are reasonable grounds to conduct a search, the officer would indeed proceed with a search. The officers would be trained appropriately, and individuals within the customs controlled areas would be advised of the possibility that a search could occur. There would be notification.
[Translation]
Senator Nolin: Are your officers currently trained to detect these kinds of reasonable grounds that would lead them to decide that a search is necessary, or is that training that will be given at a later date?
[English]
Ms. Kerr-Perrott: Yes, the officers are trained. We have targeters who look at this kind of thing. However, there will be additional training programs for the officers and the supervisors who directly address customs controlled areas.
[Translation]
Senator Nolin: Section 92.2 refers to two exceptions. First, there are people who are exempted under the regulations and, second, a regulatory class of persons who are searched under subsection (2). Can you explain to us who these people are, how they are identified and how this search works under subsection (2)?
[English]
Ms. Kerr-Perrott: I do not have that information, but I will provide it to the committee.
The Chair: Please forward it to the clerk of the committee.
Ms. Kerr-Perrott: Yes.
Senator Zimmer: I have a question for each of the witnesses. Mr. Baggaley, when was an audit last conducted on a government institution within land and air borders and airports regarding personal information handling? To what degree or level would you say that we are at in terms of infringing on Canadians' privacy rights?
Mr. Baggaley: The last audit related to that was of CBSA in 2006. Specifically, when we audited CBSA, we looked not at its whole operations but at its sharing of information, in particular with the United States. As part of that, we looked at the sharing of some information that is collected in connection with air transportation, specifically the High- Risk Traveller Identification Initiative. The API/PNR program has an upfront risk assessment algorithm process to analyze the information collected by the CBSA in an attempt to identify people at risk.
We concluded that there were no specific problems with the collection of the information. However, we identified some concerns about the way the information is shared with American authorities, such that it is not always done following appropriate procedures. At times, the sharing is done verbally as opposed to in writing. That is the best example I can cite.
Senator Zimmer: Mr. Facette, what clause or amendments would be detrimental to the business interests of Canada's airports, and which ones will provide significant enhancement?
Mr. Facette: That is a broad and detailed question. At this time, I do not have any concerns over clauses that might have a negative impact on businesses. The proposed amendments will facilitate business, in that where the CBSA has a concern, it can be taken care of at that point. The remaining 99.9 per cent of honest, tax-paying Canadian citizens can go about their business without being inhibited by the 0.01 per cent.
Senator Zimmer: Ms. Kerr-Perrott, since inception, have the NEXUS and FAST programs been successful in addressing our needs around security? Will consumers with an identity card ever be screened or searched again?
Ms. Kerr-Perrott: We believe that NEXUS and FAST have been successful. There is a growth in the use of the NEXUS card in particular. We do believe that it facilitates movement at the borders.
Senator Zimmer: The second part of the question was about security. Will consumers with an identity card be screened or searched again?
Ms. Kerr-Perrott: On occasion, they are screened and searched; on occasion, they are found to be lacking. For the most part, the program is deemed to be a success. Certainly, our stakeholders would agree with that.
Senator Zimmer: I have two more questions, but I will wait for the next round, in the interests of brevity.
Senator Banks: Thank you for being here, witnesses.
Mr. Facette, I do not mean to scold you — and I am regrettably and resolutely and ignorantly unilingual — but this is the Parliament of Canada. If you are to come here with documents, they ought to be, particularly for someone in your position, in both languages. With the indulgence of the chair —
The Chair: In fairness, Senator Banks, Canadians can bring any language they want to this committee. It is the committee's job to translate the documents. In this case, we did not get them in time.
Senator Banks: "In time" is what I am talking about.
The Chair: He is entitled to bring it in whichever language he chooses.
Senator Banks: Of course, in either of the official languages.
Mr. Facette: I do not mind addressing the senator's point. Senator, you are correct in that it is common for industry associations to bring documents in both official languages. I must confess that, had we had the time to do so, we would have. Given that we have a small staff, we were unable to do so; our apologies to the committee.
Senator Banks: I appreciate that. I just wanted you to understand the indulgence.
I will address my question to Ms. Kerr-Perrott. It concerns applying requirements now to rail and road that already apply in other places in Canada. The movement of goods across the border in both directions, by rail and road, is sort of a different matter than those arriving by air and ship, I think, in terms of the mechanics. That is, the supply management, lien management and supply-on-demand management. We are so connected at the border that the ease of movement across the border by goods and services is cogently important.
In deciding to apply the Advance Commercial Information initiative to those two forms of transportation, have you consulted with and worked with the supply chain sector? They have some concerns with respect to a load of hubcaps going from Windsor to Detroit—namely that, in the time that will be required as may be set out in the regulations that could be promulgated under section 12 of this act, those things will become impossible and will impose a hardship, not on the suppliers or the consumers, but on the carriers.
Have you taken that into account? Can it be further taken into account when the regulations and the means by which this will be applied come to pass and the carriers have to deal with it?
Ms. Kerr-Perrott: Yes. Right now, we are consulting with the stakeholders. We have two committees: the eManifest Partnership Stakeholder Network and our consultative committee for CBSA. We are working with both of these committees as we look at our requirements in terms of time, data, and from whom we are requiring the data.
Senator Banks: While you are on that subject, regarding the other aspects of this bill — which tend, in the case of secure areas, to focus more on perceptible risks and less on everyone, if I understood you correctly — might you be able to apply that principle to carriers moving stuff across the border in this direction? Some people have contended that our requirements will be tougher in that respect than the U.S. requirements. That could cause difficulties for Canadian industry. It could cause jobs to move south of the border, for example.
Ms. Kerr-Perrott: Right now, we do get 80 per cent of the information we require electronically, but we would like to get the full set of information electronically.
The idea is that this would actually facilitate the movement of vehicles. It would facilitate the movement of low-risk vehicles and allow our customs officers to focus on the high-risk components. However, we know that the stakeholder community does have some concerns. We are looking at how we can facilitate the movement when all of the information is not available.
Senator Banks: Am I correct in understanding that when you get down to the meat and potatoes and the rubber hitting the road, that will be in the form of regulations under this act and they will be made well-known to everyone and will be susceptible to study by Parliament?
Ms. Kerr-Perrott: I am sorry. I would have to confirm this, but I think those specifics would be part of the regulations. We are working with the communities to deal with those issues, and yes, they have raised them.
Senator Moore: Thank you, witnesses, for being here.
I want to follow up on a question by Senator Nolin. How will you define the customs controlled areas? The officers have the ability to stop people now, but only at exit points. With these amendments, it would be within customs controlled areas, as well as at exit points. Could they go beyond that to, say, the main lobby of an airport? How is the public to know what these main areas are, and how will you make that known to the travelling public and to people doing commerce?
Ms. Kerr-Perrott: We are looking now at how we will mark those areas, what areas we would consider customs controlled areas, and how we would advise the public that they are in a customs controlled area and what that would mean. We do have research under way; we do have people looking at that to ensure that people understand what being in a customs controlled area would mean to them.
Senator Moore: Beyond the example of international arrival that Mr. Facette mentioned, do you envisage other parts of an airport as being customs controlled areas? Senator Nolin mentioned the situation we all experience when we arrive back in Canada, in that enclosed area. You can walk away and go into the main lobby or go to your car and depart. Are you looking at areas beyond that inside the airport?
Ms. Kerr-Perrott: We are looking at areas such as the tarmac, warehousing areas, airport lounges, that kind of area.
Senator Moore: The airport lounge?
Ms. Kerr-Perrott: Yes.
Mr. Facette: To help understand the physical set-up of an airport, when you arrive into the airport and once you leave the customs area, the door to exit to the public area is generally not that far, 15 feet or 20 feet approximately. The information we have at the Canadian Airports Council suggests that the agency is looking at declaring a customs area before a passenger crosses that point. It would be an area where you have yet to see the second officer.
Today, you see two officers. You arrive and you see the three inspection areas. There is the pre-inspection line, where you answer a couple of questions and write something on your arrival card. You then get your bag and you see another officer. Once you have seen that second officer and he or she says that you may go to the exit, once you have exited, you are out of the customs controlled area. You are now into the public domain.
Currently, prior to that point you are in a customs controlled area. If and when this bill is passed, we expect the agency to be working with us to define specifically, airport by airport, where those areas might be.
The areas in Toronto and Charlottetown that will be declared customs controlled areas will be different. Larger airports have aircraft arriving from international destinations at all hours, while at smaller airports international aircraft arrive only at certain times of the day.
Senator Moore: Can I currently arrive in Canada on an international flight and make my way to a lounge?
Mr. Facette: Yes, you can, provided you are transiting through Canada to another international destination. If you arrive into Vancouver from Hong Kong and are en route to New York, you would go into a lounge area. It depends on where you are going.
Senator Moore: And the configuration of the airport.
Mr. Facette: Yes, but you do not have access to the domestic public.
Senator Moore: Ms. Kerr-Perrott, you mentioned getting input from the community that does business across the border. Have you consulted with the Canadian Courier & Logistics Association, CCLA?
Ms. Kerr-Perrott: I would have to verify that. I do not have that information. Are you asking regarding customs controlled areas?
Senator Moore: Yes.
Ms. Kerr-Perrott: We certainly have regarding eManifest.
Senator Moore: I would like to know about the proposed documentation requirements and how they will impact on commerce generally.
Ms. Kerr-Perrott: In terms of eManifest?
Senator Moore: I will read to you from a letter the CCLA sent us:
If any of the required data is missing on any of the shipments within a conveyance, the entire conveyance and all shipments aboard will be refused entry, even those that satisfy the requirements. In many cases it would be impossible to provide the information required within pre-arrival time frames.
Are you aware of that concern?
Ms. Kerr-Perrott: Yes, we are aware of that concern. We have consulted with them to determine how we might enable them to move past the border if they do not have all the required information with them.
Senator Moore: Would an entire shipment be refused entry if a piece of information were missing?
Ms. Kerr-Perrott: That is possible. As I said, we have yet to finalize our requirements, and we are working with the CCLA as we are aware of that concern.
Senator Mitchell: I have several quick questions. It seems to me that we were talking about bringing duty-free back to Canada when I was in the Alberta legislature in the 1990s. Why is it so hard to do that?
Mr. Facette: We have asked ourselves that question. The short answer is that I do not know. The Canadian Airport Council has advocated for a long time for the ability to purchase goods upon arrival. We are pleased that the Minister of Finance has chosen to undertake consultations on this. By giving officers the ability to use a risk-based assessment of persons they think are of interest to them, this bill will negate the need for them to interview the employees of duty- free stores every time they go in and out. If they see them all the time, they will know their behaviours and mannerisms. They will observe those behaviours and talk to employees only when they believe it is necessary. I wish I knew why we do not already have this.
Senator Mitchell: The question of racial profiling is always an issue. As luck would have it, just before this meeting I was talking to a Muslim person who had a serious problem. He was held up for hours, because his name, which is very common — kind of like Smith for a non-Muslim person — converges with a name on some list.
I think you used the term "people of interest." What consideration is being given to the problem of racial profiling? What do you have in place to avoid it?
Ms. Kerr-Perrott: As far as I am aware, we do not do racial profiling within the organization.
Senator Mitchell: Do you have training and procedures on that?
Ms. Kerr-Perrott: We have targeting, and we have training on targeting. We utilize various pieces of information in doing that, but we do not do racial profiling.
Senator Mitchell: No, I am sure you would not.
There is probably an obvious answer to this question, but with regard to the pre-notice of what people want to bring across the border, anyone who is trying to smuggle something probably would not notify you. Is the advantage of this that it might catch people sending peanuts in, for example, when there is a food safety problem and they did not realize it? Would that be the kind of thing it would be useful for?
Ms. Kerr-Perrott: It could be that, but it is also to look at a lot of information. We are building data-warehouse and business-intelligence systems to enable us to look at historical information on supply chain trends. When we look at a shipment, we will be looking at it in the context of a lot of other information, which will enable us to determine whether there is a risk. It is information taken in the context of many other elements.
Senator Mitchell: Some time ago I was approached by a company that was developing a technology they felt could X-ray a truck or a train car. Is progress being made in that kind of technology, and would it be of any use?
Ms. Kerr-Perrott: We do currently use X-ray technology at our marine ports and other ports of entry.
Senator Mitchell: There is probably an obvious answer to this question, too. With regard to this pre-notice of what is being brought in, does a company like FedEx actually know everything that is in every parcel? Are they dealt with differently?
Ms. Kerr-Perrott: I am sure FedEx does not know everything in every parcel, although I think there is some indication of what is in a parcel. CBSA officers work at those sites as well and look at the packages.
The Chair: Is the X-ray equipment you are referring to VACIS equipment?
Ms. Kerr-Perrott: Yes.
The Chair: Have you made any progress on mail and cargo? As mail is not inspected going onto aircraft, how do you inspect it coming off?
Ms. Kerr-Perrott: I cannot tell you that. I will have to get back to you.
The Chair: Please answer the same question with respect to cargo.
Ms. Kerr-Perrott: Yes. I am sorry. Could you repeat the question about cargo coming off planes?
The Chair: Currently there is no equipment available to inspect cargo going onto aircraft. There is a federal government study underway to do that in order to ensure that it is safe. My question was how do you inspect cargo coming off an aircraft entering the country, since we have difficulty inspecting it going on. My other question was about mail, which is not currently inspected going onto aircraft. How do you inspect mail when it is coming off aircraft?
Just by chance, I spent four hours at Toronto Pearson International Airport yesterday. I would like to return to the question of what areas will be designated.
Mr. Facette, you talked about Prince Edward Island. Let us talk about Pearson airport. When you go down, as I did yesterday, into the cargo area where planes are unloaded and look at the belts, the belts going to customs are no farther apart from the belts going domestically than you and I are. Likewise, we have an overlap that is perhaps the length of this room where domestic and foreign baggage is travelling. This question is open to any member of the panel: How would the area be designated as to which would be the customs area?
Mr. Facette: I can only imagine, Mr. Chair, that that would be settled when the regulations get drafted and get applied airport by airport.
We have an expression: If you have been to one airport, you have been to one airport. Pearson handles 31 million passengers. Other airports do not handle nearly as many passengers. The complexities at larger airports will be so much greater than at smaller ones. When it comes time to apply regulations at different airports, the CBSA will have to sit down with the airport authority in question and see how those regulations can best be adhered to at that particular facility.
It is a little difficult at this time to detail exactly how situations that you described would be dealt with (a) without the regulations in front of us, and (b) without taking the time to walk through it.
I caution anyone trying to think too far ahead. Facilitation of cargo and passengers at an airport can be a complex exercise, and one where even some experts sometimes have to double their efforts and reread the regulations over again to ensure they get it right. Sometimes, sir, the situations you are talking about would have to be dealt with between the airport authority and the CBSA to see how best those regulations can be enforced and dealt with in a particular situation.
The Chair: In much of this legislation, when you talk about people you are talking about baggage handlers, because they are the people moving the baggage in these areas.
Mr. Facette: Yes.
The Chair: You are talking about people who are under a great deal of pressure to move bags at high speed if they are going to get their plane away. How long do you expect it will take, assuming this legislation is passed, before regulations are in place so that the legislation can be put into effect?
Mr. Facette: I cannot answer that, senator. I do not know.
The Chair: Are we looking at years?
Mr. Facette: There is a process for putting new regulations in place in Canada Gazette, as you know, senator. It takes some time. Years, I do not know; months, more likely.
The Chair: Perhaps we could move to fixed-base operations, general aviation. I spent a couple of hours wandering around the fixed-base area of Pearson yesterday. There is no customs facility there at Pearson. Customs gets phoned and officers come over in a car. I presume you are familiar with Pearson.
Mr. Facette: Yes.
The Chair: How would you deal with the fixed-base area around Derry Road, for example?
Mr. Facette: The regulations will be what they are. The airports across Canada, Pearson included, will have to adhere to them. When it comes time to accept international traffic, be it general aviation traffic or otherwise, if a customs officer chooses to declare an area to be a customs controlled area, he or she will do so based on advance information. He or she will apply it in the same way, I would imagine, that he or she would apply it in Charlottetown, where you have what we call swing gates, a domestic gate that gets transferred into an international gate. It gets dealt with, closed off, handled in that manner.
For fixed-based operations, or FBOs, as we call them, I can imagine that those kinds of things, and their applicability at the various FBOs across Canada, would have to be thought through with the CBSA.
The Chair: The FBOs do not have any security. Nobody gets searched at FBOs when they are getting on planes. There is no Canadian Air Transport Security Authority, CATSA, there; you just walk on a plane. Are you saying you will put in place some form of security for people getting off planes?
Mr. Facette: I am saying, Mr. Chair, that under Bill S-2, we are talking about passengers arriving into Canada and about general aviation arriving into an area. If the agency feels it has a person or persons of interest on a general aviation aircraft, those regulations will be applied perhaps in the same manner they would be applied at a smaller facility, be it Charlottetown, Moncton or anywhere else.
The Chair: So that people know they are in one of these areas, would you, Ms. Kerr-Perrott, anticipate that there would be an area painted on the ground, say blue stripes or some sort of signal to show people that they are in the customs area? How would an individual know when they are entering the area and when they are leaving the area?
Ms. Kerr-Perrott: It has yet to be determined specifically how an individual would know that he or she is in a customs controlled area. Those elements are being worked on. It would be marked and the individual would be aware.
The Chair: Can you give us any guidance as to how long it will take to work through the airport system? Will the project be phased in so that as the challenges of a particular airport are addressed, the law then becomes effective there and then the law rolls out, or will it all go forward at once? How long do you anticipate it might be?
Ms. Kerr-Perrott: We are expecting that it will take us a period of time to work out all of the things that you have mentioned — the communications, the designation of space for the customs controlled area and what that would look like. At the same time, we are preparing the regulations and we think that the first customs controlled area would be put in place in the summer of 2011.
The Chair: Earlier, in response to a question about NEXUS and FAST, you said it facilitates travel. It certainly does. I have a NEXUS card and it facilitates travel a great deal. Having said that, I have spent a lot of time talking to customs officers. The general view they hold is that the NEXUS card is a licence to smuggle. They say we are not auditing people going through the NEXUS or FAST process sufficiently and that supervisors, whenever they have to make economies or when lines seem to get too long, stop the random selection or the every twelfth person or whatever the number is that people will be checked when they go through NEXUS. Do you have a comment on that?
Ms. Kerr-Perrott: I do not.
The Chair: Have you ever heard a customs officer suggest what I have just said?
Ms. Kerr-Perrott: I have not heard a customs officer say that, no.
The Chair: I can assure you that members of this committee have.
Senator Tkachuk: I have not.
The Chair: You may not, but you have not visited any ports where other members have.
Senator Tkachuk: How do you know where I have visited?
The Chair: I know who has gone with the committee.
Senator Tkachuk: I am just telling you, I have not. I would like to know which others have. Two.
[Translation]
Senator Nolin: I can wait for the second round, Mr. Chair, but your questions and especially Mr. Facette's answers have raised a lot of concerns.
[English]
Mr. Facette, you say in your introductory statement you are a strong supporter of the proposed legislation. I wonder why. Do you know why? I am concerned by your answers. You cannot tell us the regulation will solve everything. Our job is to adopt that, and to enable regulation, we need to adopt that.
[Translation]
In Canada we have a Charter of Rights that protects us from unreasonable searches. I will ask Mr. Baggaley what he thinks about that later.
The airport will become a controlled area. I know them; they will wonder why they should stop at the baggage carrousel. They will want to search someone all the way to the parking lot. What will prevent them from doing that?
[English]
Why are you strongly supporting that?
Mr. Facette: We believe, as I said in my remarks, senator, that it will allow the agents to do their jobs better using a risk-based approach within defined areas. I believe you have correctly identified the importance of defining those areas and the ability to balance that with respecting the rights of individual Canadian citizens.
Senator Nolin: Are you going to ask the Governor-in-Council to balance that alone in the privacy of the cabinet? The right place is right here.
Mr. Facette: I have no disagreement with that whatsoever. In an airport today, there are clear demarcations where the areas are customs controlled areas, where there are international areas and where there are domestic areas. The customs officers do not have the authority to run after people once they leave an area, as a peace officer would have authority in an airport. If you look right here in Ottawa, at the transborder international area arrivals, there is a sign for waiting visitors that is quite legible in both official languages that says it is a customs controlled area. It is key to focus on customs controlled areas being defined, that there are defined customs controlled areas today, and that the entire airport will not be zoned a customs controlled area that will infringe upon the rights of Canadian citizens.
Senator Nolin: What will prevent that?
Mr. Facette: The law today prevents it, sir. There are demarcations today. We are talking about taking an existing piece of legislation and an existing area and being able to say that we need to do this and here is why. They will not have carte blanche. They will have to have reasonable cause to proceed forward.
[Translation]
Senator Nolin: I believe that the present act favours a reduced controlled area. There is a check at the entrance to the area, a visual check between the officer and a traveller. Then there is a meeting with an officer at the exit. That is where they send someone to be searched.
So that favours a smaller area, does it not? What we are being asked to adopt favours a larger area.
[English]
Mr. Facette: You are correct to point out that a two-step process today exists to protect Canadian citizens. We at the Canadian Airports Council do not see that changing. This allows officers to do their jobs in the zones a little bit better and more efficiently.
Senator Nolin: Mr. Baggaley, what do you think about that?
Mr. Baggaley: You referred to the issue of regulations, and quite often the substance of legislation ends up being in the regulations.
The best example of that from our perspective is the no-fly program, the passenger-protect program. That is authorized by the Public Safety Act. If you look at the Public Safety Act, you cannot see any reference in the act to a no-fly or passenger-protect program, as it is called. That was subsequently introduced based on the Governor-in- Council's ability to make regulations.
I would like to think, and certainly hope, that the issue of what gets designated as a customs controlled area would be looked at very carefully. We look at regulations when they are proposed. The possibility of greatly enlarging the customs controlled area in order to facilitate searches would trouble us and I hope would trouble Canadians, and it potentially raises significant Charter concerns.
Senator Nolin: Time will tell.
The Chair: Just to finish up on this subject, when goods are crossing the border by train they are not inspected at the border. They carry on to their point of destination, and then CBSA carries out selective audits when it chooses to determine whether or not goods have been smuggled. There is no designated area. CBSA simply shows up wherever it wants to, conducts an audit and then enforces the law. Why do you need to have this when you already have the powers to go wherever you want and conduct an audit for anyone who has shipped goods across the border?
Ms. Kerr-Perrott: Are you asking why we need to have customs controlled areas?
The Chair: When something comes across on a train, the train is not stopped; there is no one at the border who wants to go through the train looking in each car and examining all of the goods. The train goes through to its destination and is unloaded, and then the CBSA, at its sole discretion, goes to the recipients of the goods and conducts an audit after the fact, sometimes many days later, to determine whether the goods were dutiable or legal into the country. There is no customs area at all; they simply go and enforce the law. You know that is the case. Therefore, why do you need an expanded area here?
Ms. Kerr-Perrott: Customs controlled areas are within the current legislation, only CBSA officers are restricted to exit points and deal with people and goods accompanying people.
I want to clarify that when we look at areas that were designated as customs controlled areas, we are looking at perimeters of these areas that would be based on the element of proximity of goods and people engaged in international movement. There is a relationship between custom controlled areas and people and goods related to international movement.
The Chair: I did not hear an answer to my question. Perhaps I missed it.
Ms. Kerr-Perrott: This proposed legislation deals with customs controlled areas and people and goods from an international travel perspective. I could refer your question to my colleagues, if you would like further response to the rail example that you gave.
The Chair: If your colleagues are present, I would be happy to have them come forward.
Ms. Kerr-Perrott: Ms. Xavier is very familiar with customs controlled areas and is working on that particular component.
The Chair: Welcome to the committee.
The question was if goods crossing by rail are dealt with in a subsequent audit at a later date, why is it necessary to expand the controlled areas at an airport. Why could you not carry out the same function as you do with goods coming across by rail?
Caroline Xavier, Director General, Policy and Program Development Directorate, Canada Border Services Agency: As a point of clarification, the audits you are talking about that occur are called verification audits, and they occur after the fact, as you have identified, with relation to administrative actions.
For example, when our admissibility branch staff perform a verification audit, they will go after the fact to where goods have been received and determine whether or not what was said to have been received is exactly what was received. Those verification audits occur regardless of what happens at a port of entry. That is part of our mandate and within our authority to do.
As Ms. Kerr-Perrott highlighted, the designation of customs controlled areas will happen as regulations are put in place. Those areas will be very well designated and outlined with signage.
Individuals who enter a customs controlled area will know they are in a customs controlled area. We will not deem them to be just anywhere, as Ms. Kerr-Perrott pointed out; they will be in close proximity to where there is commingling, if you will, of domestic travellers, international travellers and workers within an airport area.
One area we might deem to be a customs controlled area might be a tarmac, as per the examples given earlier, where you have baggage handlers. We will clearly identify with signage or blue lines, as was mentioned, in order to designate an area as a customs controlled area.
The plan is not that we are augmenting the areas or designations per se; a consultation will be completed with the airport council and the airport authorities to determine where it is best to place a customs controlled area depending on where we find the threats exist in that airport.
The Chair: You have covered a great deal of ground. At the Pearson airport, for example, there is commingling already; domestic and foreign goods are in exactly the same area. Perhaps a blue line will help, but the people who catch the smugglers say it is easy to move across from one side of the room to the other.
Ms. Xavier: That is correct.
The Chair: You did not answer the question about the utility of post-audit. CBSA has the authority to do the audit at the recipient's place of business or place of residence any time it feels like it.
Ms. Xavier: That is not the same authority as being able to stop a traveller at the port of entry. Currently, when rail comes to a border, we have the ability to do an inspection at that point in time. Trains are stopped and inspections with respect to their identification are completed.
The Chair: An inspection of personnel is completed, but not of freight?
Ms. Xavier: That is correct. However, having said that, this is an area we want to improve overall in terms of how we address cargo coming in that is not inspected, whether by air, rail or any other mode of travel.
With regard to an audit and the ability to look at a traveller or the cargo accompanying that traveller at a port of entry, it is a separate type of authority than that of a post-verification audit.
Senator Zimmer: Ms. Kerr-Perrott, what is the current state of cooperation between the various government associations, including yourself, the RCMP, Transport Canada, CATSA and others, within our Canadian airports? Is the work being done by all of these associations creating synergies, or are they butting heads?
Ms. Kerr-Perrott: We are working very closely with the departments and agencies that you have just listed. We have ongoing consultation with them, and we are working closely with them.
Senator Zimmer: Thank you. Amendments to Bill S-2 are intended to improve security and efficiency, but a major role within efficiency is customer awareness. Therefore, I ask, what communication tools will be implemented in order to create consumer awareness and understanding?
Ms. Kerr-Perrott: We are looking at that now, both with the customs controlled area initiative and changes and with the eManifest. We have a website we update with the information. We also have, as I mentioned, our consultative committees that we will deal with closely. We are also looking at communication as a subgroup of those committees. We recognize it is something we have to look at closely and ensure we manage appropriately.
Senator Zimmer: You are all working together?
Ms. Kerr-Perrott: We are working together.
Senator Moore: In Ms. Kerr-Perrott's report, your remarks and that of Mr. Facette, you say that this bill will help us facilitate the movement of legitimate trade and that we see this as an extension to improve security and an improvement in service efficiency.
I expect, at least I am not hearing otherwise, that we will still have the same arrival process we have today. I hear that we will now have an expanded possibility of search, and I am concerned about the Charter aspect of that. I do not know what a non-intrusive search is; I cannot imagine what that would be.
I see more suspicion and more anxiety for Canadians, law-abiding people arriving home, and I feel more time will be consumed here.
How do we facilitate more efficient travel and making life better, easier and less anxious for our law-abiding Canadian travellers?
Ms. Kerr-Perrott: Currently, travellers must meet with a CBSA officer upon exit; they will not have to do that anymore. They will not talk to a CBSA officer upon exit.
Senator Moore: Will they have to complete the first part where they arrive and go to the booth? Will that continue?
Ms. Kerr-Perrott: That is right.
Senator Moore: From there, you get your bags, and then you go to the second officer. You say the second officer will now be eliminated?
Ms. Kerr-Perrott: That is right. Well, not eliminated.
Ms. Xavier: Perhaps I can jump in for clarification. The customs controlled areas are not yet implemented. Although we have the legislation in place, we do not have the implementation of customs controlled areas. We have areas under customs control; those exist as identified. Currently, when you land in an airport, you go through the primary inspection line, and then you may potentially be referred to a secondary inspection line, and then you must provide your E311 card upon exiting.
With the implementation of customs controlled areas and where those areas will be designated, the anticipation is that, if anything, it will facilitate things.
Currently, the legislation allows us, at every possible exit point of a designated area, to have a border officer question people entering and exiting, especially if they are workers. It means they will be stopped and potentially questioned in a non-intrusive manner about why they are presenting themselves, what they do there, et cetera.
With Bill S-2, the facilitation that is improved is that in that designated area, upon exiting, there may not necessarily be a border officer at that point, but that does not mean there could not be; we could still have that in place. The advantage is that the border officer will be able to mingle inside the customs controlled area and will be able to question upon potential suspicion or as required.
A person entering or exiting a customs controlled area will not be questioned every single time. If anything, it will enable travellers to move more freely, to go about their business and for us to be able to focus more on the high-risk employee or individual who could potentially be suspicious.
Senator Moore: Once you go through the primary, you get your bag from the carousel and you walk away?
Ms. Xavier: Potentially. It is possible.
Senator Moore: There will not be an officer there looking for that card?
Ms. Xavier: We will still have an officer always collecting the E311, but depending on where a customs controlled area is designated outside of the zone.
Senator Moore: So that person is not being removed. Everything is the same as it is today except that you will expand the area and the potential for search.
Ms. Xavier: Exactly, but one point of clarification: We will potentially make it that there is a larger designated area. Right now, we do not have customs controlled areas. We have areas under customs control, which is that area you just defined with the primary and then the second officer to whom you give your E311 card. Beyond that, though, you might decide to designate a CCA in a tarmac zone, for example, where the baggage is taken out of the airplane. The plan is to have that clearly designated, with signage, and the border officer would be able actually to venture into that zone and potentially be able to ask a suspicious individual non-intrusive questions at that point, such as, "What are you doing here? What is your name? May I see your ID? What is your reason for being here?"
Senator Moore: That was explained earlier. My concern is the law-abiding Canadian traveller coming back into his or her country. Nothing will change except the area of possible search will be expanded. You are nodding yes.
Ms. Xavier: The areas will possibly be expanded. I do not want to say they will be expanded, because the areas have not yet been designated.
Senator Moore: I am very concerned about that.
The Chair: In fairness, on this point, on any number of flights, particularly from the Caribbean, planes are virtually surrounded by customs officers now, and those are not designated areas. Likewise, dogs are going through the customs areas now. If the dog sits down in the wrong spot, you will be questioned. What is the difference?
Ms. Xavier: Within our current mandate, we are able to use our authority within what we call an area under customs control, which is the area where you arrive in an airport from an international flight. A customs controlled area is different; it could be exactly the same zone, or it could be a zone where we feel there is a potential threat of organized crime, perhaps, doing internal conspiracies. Through analysis and discussion with a port authority or an airport authority, we will determine the best locations.
The Chair: Could you stop there. The customs officers go where they think there is the greatest threat right now. They go through the planes. They stand around the planes. They talk to baggage handlers who are taking goods off the planes. They do that today. You can go to Pearson airport today, and you will see, on the flight from Montego Bay, people standing around the plane, and they will be CBSA officers. They will be questioning anyone who looks like they do not belong there. How will it be different?
Ms. Xavier: That is different in that when an officer is doing that, they are doing it based on reasonable grounds, perhaps from advanced targeting information they have received. It is not just because they feel like it today. It has to be based on a reasonable ground. When an officer is doing what you have just described, it is because it is based on advance information that has been received potentially about the flight, that there is a potential threat or contraband goods. They have that authority to do that within that mandate.
The Chair: You are saying they have reasonable and probable cause, and that is why they are out there?
Ms. Xavier: That is correct.
The Chair: For every flight from Montego Bay, there is reasonable and probable cause?
Ms. Xavier: I do not want to answer for every flight. I can only say that that would be why they are there.
Senator Banks: I am confused. I think I understood you to say that, at the moment, we have something called something other than a customs controlled area.
Ms. Xavier: We have this legislation before you, and we are asking for an amendment. The legislation has been in existence since 2001, as Ms. Kerr-Perrott said earlier, but we have not implemented customs controlled areas because the way the legislation is written now would make them resource-intensive and inefficient to implement.
Senator Banks: The bill before us now does not enable the creation of customs controlled areas. That has already been done. They exist in the existing act.
Ms. Xavier: We are already permitted to do that.
Senator Banks: They exist now. We are not making anything new.
Ms. Xavier: No. The only change is that border officers would not have to be only at exit points but could be within a customs area.
Senator Banks: I will pursue the line initiated by Senator Nolin and Senator Moore from the other side of the question. I am a bad guy, having got in from Montego Bay. I have fooled you all. Is there a line beyond which I cannot be stopped by a CBSA officer when I step into an area that is commingled and not a designated customs controlled area? Mr. Facette said earlier that we need a peace officer for that. If there does not happen to be a Mountie around, am I scot-free when I step across that yellow line?
Ms. Xavier: Under CBSA's authorities as they are now, if not in a customs controlled area or in an area under customs control, border officers are limited as to what they can do.
Senator Banks: If I get past that yellow line, they cannot stop me?
Ms. Xavier: If you get past a designated customs controlled area or an area under customs control, unless an airport authority or an RCMP officer, or unless we have some other reasonable grounds to nab you —
Senator Banks: A CBSA officer seeing something leaking out of my suitcase could stop me.
Ms. Xavier: They could call their RCMP colleague and ask them to do the action. They may not in their current authorities be able to act. Our mandate is to deal with entry at the border. When you are past that, it is no longer within our jurisdiction. Having said that, we work, as was mentioned earlier, with Transport Canada, the RCMP and other domestic partners, so it is not to say we would not pass on that tip to someone.
Senator Banks: I just wanted to establish that we are not establishing customs controlled areas in this bill. They already exist. The authority to provide them already exists.
Ms. Xavier: Yes.
The Chair: Thank you, panel. We appreciate your coming and helping us to understand this bill. It has been a valuable exercise for us.
The Chair: We requested documentation for last Wednesday. It did not arrive. It has arrived now in a single language. I would like to have some direction from the committee.
Senator Nolin: Only in French?
The Chair: Yes, and the rest of us are really stuck. I would like to have some sense from the committee as to how you would like me to deal with this.
Senator Banks: What documentation?
The Chair: It is speaking notes.
Senator Tkachuk: From Mr. Bradley and Mr. Laurin? I think that is fine.
Senator Nolin: It is acceptable and durable.
Senator Tkachuk: I will go back to other matters; Senator Mitchell and I have discussed this at length and we agree on this matter. Internal documentation that we distribute, our documentation, always has to be bilingual, but citizens have the right to address us in either both official languages or one official language. Our job is to ensure that we have the interpreters and everything else to be able to understand what they are saying. Therefore, I do not have a problem.
The Chair: I agree with you. The issue is when we ask for the information ahead of time so we can translate it, if it does not come, what do we do at that point?
Senator Tkachuk: We soldier on because our job is to serve them; it is not the other way around.
The Chair: On our second panel of witnesses, advising us and providing testimony on Bill S-2, are Mr. David Bradley, Chief Executive Officer of the Canadian Trucking Alliance; and Mr. Jean Michel Laurin, Vice President, Global Business Policy, from the Canadian Manufacturers and Exporters. I understand you both have a short, introductory comment.
David Bradley, Chief Executive Officer, Canadian Trucking Alliance: The Canadian Trucking Alliance, CTA, is a federation of the provincial trucking associations in Canada that represents more than 4,500 trucking companies in the country. As you may know, trucking is the preferred mode of freight transportation, including cross-border transportation where trucks account for over two thirds of Canada-U.S. trade by value and over 80 per cent of northbound shipments into Canada. Anything that affects the balance between security and efficiency of the borders is of great concern to us and, ultimately, to our customers, whom Mr. Laurin represents.
I will focus my comments on proposed section 12.1 of Bill S-2, which would give the Governor-in-Council regulatory power over pre-arrival data collection for imported goods. I will talk to you about how things work now.
Currently the Customs Act requires the carrier, who is the trucking company, to provide advance information to the CBSA on the truck's licence plate number, the driver's name and citizenship, and a description of the goods being brought into Canada, including their value, origin, destination and weight. The carrier does not own or package the goods, and the trucking company does not necessarily load the goods.
To meet this obligation, carriers gather all information from the importer and/or the manufacturer, who can be one and the same. They supply this data, usually by fax, to a customs broker who, incidentally, works for the shipper, for submission to the CBSA prior to the truck's arrival at the border. If any of the data provided to the carrier is incorrect or found wanting, the truck can be delayed at the border for further inspection, where they will try to sort things out. Failing that, the driver has the option of moving the truck in bond to an inland secure CBSA facility for customs clearance at a later date. I will come back to that point later.
Bill S-2 would enable the Governor-in-Council to prescribe who must provide pre-arrival truck, driver and goods information. This could remove the sole obligation for the carrier to gather and present the required data as it pertains to the goods and to introduce, in our view, a fair sharing of the responsibility by all supply chain partners. Consequently, we support that amendment. We believe that over time, far too much regulatory obligation has been placed on the carrier community relative to other supply chain partners. The proposed amendment could provide a better balance. We have advocated for some time that increased responsibility should be placed on all parties in the supply chain that own the information supplied to CBSA.
The proposed amendment is also necessary, we understand, to enable CBSA to proceed with the Advance Commercial Information initiative. ACI is the transition from paper to electronic submission of data for all imports into Canada before the truck arrives at the Canadian border entry point. ACI would require both carriers and importers and their agents or the customs brokers to submit information to CBSA electronically in advance of a truck's arrival at the border. Carriers would be required to submit manifest information and truck driver destination. Bill S-2 would also appear to provide CBSA with the authority to require importers to transmit shipment data, known as importer admissibility data, which includes detailed shipment information, the manufacturer, the value of the goods, description, origin and destination to CBSA in advance of the truck's arrival.
The CTA is supportive of moving in the direction of a more automated border. The U.S. has already moved in this direction through the implementation of its Automated Commercial Environment, ACE, program. We fully support the notion that supply chain partners should provide, within reason, information in advance to CBSA in order to effectively assess risk. However, while we support the authority that Bill S-2 would confer upon CBSA to collect data from importers, this committee should be aware of some problems that could arise depending on how CBSA deals with the situation where the importer's data has not been received prior to the truck's arrival at the border or the data is incomplete or somewhat inaccurate.
Under a model currently being contemplated by CBSA, unless both the carrier and the importer data are received and approved prior to a truck's arrival at the border, the truck would be turned back. The option of moving the load in bond to an inland facility for clearance would be removed. This could impact substantially the efficient movement of goods into Canada. Allowing carriers to proceed beyond the border in bond helps to avoid costly delays by freeing up the truck and driver to get back to productive operation. This would also facilitate compliance with service regulations and would be consistent with low-risk security programs. Many existing business models are built on the practice of moving goods in bond, whether for storage, duty deferral or otherwise. While the obstacle might not be caused by the carrier, it is the carrier's truck and driver that will be held up on the U.S. side of the border.
Importers have made it clear that providing IAD information often will prove extremely difficult and time- consuming for the importer or customs broker. In some cases, the information is simply not available. In the case of a less-than-truckload shipment, the goods of several importers will be on board the one trailer. However, if the IAD for even one of those importers is not received on time, the whole shipment would be stopped and returned to the U.S., possibly to an insecure facility such as a street or vacant parking lot, to await the transmission of the data.
The CTA has proposed two possible solutions that would allow the flow of legitimate business to continue, while meeting CBSA's mandate of enhanced security. When the IAD has not been received by the time the truck arrives at the border, our preferred approach would be for CBSA to allow the carriers to move goods in bond inland for release at a secure facility. This would allow the supply chain an opportunity to adapt to new requirements for IAD without holding up shipments or turning trucks back to the U.S. and a relatively seamless transmission to electronic processes at the border. Failing that, we recommend at a minimum that in-bond moves be allowed for low-risk carriers, such as those pre-approved under Customs Self Assessment, CSA, or Partners in Protection, PIP, when the IAD has not been received. Surely there should be some benefit to being a low-risk carrier.
The trucking industry has already made significant investments in electronic processes aimed at enhancing security and streamlining legitimate trade. We trust that all efforts will be made to ensure costs to industry are mitigated and established business practices are considered as the project of ACI continues to develop. The CTA, CBSA and the trade community at large have a history of responsive, constructive and productive relations. Currently, the trade community is discussing its concerns over this issue with CBSA. We hope to achieve a mutually satisfactory resolution.
[Translation]
Jean Michel Laurin, Vice-President, Global Business Policy, Canadian Manufacturers & Exporters: Mr. Chair, thank you for welcoming us here today. I represent the Canadian Manufacturers and Exporters, the leading trade and industrial association in Canada. The members of our association represent 82 per cent of industrial production and 90 per cent of our exports. Our members are businesses that manufacture and export products to the rest of the world.
Our association thus represents the two main sectors of the Canadian economy, when you know that manufacturing represents 16 per cent of GDP and exports, broadly speaking, 21 per cent of our economy.
In Canada, manufacturing represents $600 billion in annual manufacturing shipments, and, when we talk about exports, we are talking about nearly $500 billion in annual export sales that exporting businesses achieve every year. Manufacturers employ nearly two million Canadians and pay wages on average 25 per cent higher than the Canadian average. The manufacturers themselves are responsible for two-thirds of Canadian exports, the rest coming mainly from raw materials, energy and services.
[English]
I would like to speak today about Bill S-2, the proposed legislation before you. The Canadian Manufacturers & Exporters (CME) is here today because we support CBSA in its efforts to improve the risk assessment of goods entering Canada using upgraded electronic tools. We also support CBSA in its efforts to move to a more modern, sophisticated electronic border management regime. Finally, we support CBSA in adopting a more scientific approach to customs and border management in order to expedite cross-border processing, which is important to us.
A significant part of CBSA's efforts depends on successfully implementing eManifest as part of its Advance Commercial Information initiative, which I think previous witnesses talked about. CME supports that initiative. In fact, our members have been working closely with CBSA in implementing eManifest and ACI over the last months and years.
In the bill you are currently reviewing, Bill S-2, we are specifically interested in clause 6, which is an enabling provision that allows a minister to request elements as part of this eManifest and ACI project. My colleague Mr. Bradley talked about his concerns with those provisions.
I would like to talk about the context in which this is being introduced. CME is encouraged by recent statements by the Prime Minister that the Canadian and American governments would be working together to strengthen security and facilitate trade along the Canada-U.S. border. We were also encouraged by the comments of the Minister of International Trade that he is worried about the detrimental impact of increasingly complex regulatory compliance requirements on trade, on border efficiencies and on the economic competitiveness of integrated supply chains on which much of North American business depends. Most of the manufacturing businesses depend on integrated supply chains that go across the Canada-U.S. border.
We are obviously preoccupied with which data elements our members would be asked to provide specifically, because of the impact that this could have on trade and integrated supply chains. This is why we have been involved and active in consultations with CBSA as they are implementing this project. Also, as an element of context, you should know that while we are doing this in Canada, the United States is implementing an initiative called 10+2, which is ten carrier elements and two manufacturers' data elements that will be required for people who import goods to the U.S. through marine mode. We are talking about ships coming through American ports.
Focusing our resources on our ports and on the North American perimeter makes sense, especially if it allows us to free up resources to do more risk assessment on goods entering the perimeter and focus less on goods crossing the Canada-United States border because that would facilitate Canada-U.S. trade. We have been working closely with the government, especially the Department of Foreign Affairs, the Canadian embassy in Washington and other associations in the U.S., to ensure that we work as closely as possible with the Americans and adopt a perimeter approach to national security.
With regard to this bill and our work with CBSA going forward, we must ensure that the information that will be requested from manufacturing companies will be available, that our members have that information, that they can easily acquire it, that they can also provide it within the time frames of efficient border management — which Mr. Bradley spoke about earlier on — and that the data being requested is actually required to secure the border.
To conclude my opening comments, CME supports the legislation, and it is important that as we proceed further along, and as regulations are drafted and the act is implemented, we need to ensure that data elements being asked for are necessary for security and do not add an administrative burden to Canadian importers, do not undermine our economic competitiveness and do not add to the border thickening, which is an important issue for our members.
We will continue to work with CBSA in implementing these initiatives. We need to prevent a one-size-fits-all approach to risk assessment at the border. We need to focus more on higher risk, and this is why we support this bill and the provisions that are included in it.
We agree with the principle of asking for more information to do a better risk assessment, but obviously we do not want to see information asked of companies that they are not able to provide or to provide at the time that it is needed to ensure that our goods can cross the border.
Finally, we need to ensure that what is being required of carriers and importers does not increase the complexity, costs and time delays that we experience in bringing goods into Canada.
Senator Tkachuk: So I understand, I think both of your organizations support the proposed legislation. You are here to make public some of the concerns that you are either negotiating or discussing with CBSA.
Mr. Bradley: Yes. I speak for the CTA. That is absolutely right. It is not the legislation or the fact that the minister would be able to request or require certain information—in the practical sense we understand why he needs to do that—but depending on how CBSA implements some of the programs surrounding this, we could have some real issues. It is a case for us that in a sense we are moving beyond where the Americans have moved when they introduced their ACE program. We are just not sure why that should be. We should be trying at the least to harmonize. We have all spent millions of dollars to meet the southbound prerogative. Why are we not taking things to the next step?
Some of our more recent discussions with CBSA have been productive, and I am hopeful that we can resolve some of those things, but we feel you need to be aware of them.
Mr. Laurin: To answer your question, as I indicated, we agree in principle with the legislation, but the article I was referring to is quite special. We are talking about an enabling provision. In other words, this article gives powers to the minister. I know he is coming here later today. When a piece of legislation gives new powers, we want to know why the new power is needed and what the government intends to do with it, which is why I explained a little bit of the context of why we think the legislation is being introduced and what some of the issues are that we are currently discussing with CBSA.
CBSA has been open in discussing these issues with us and our members, and going forward we are confident that we will find a way to work these issues through in a way that does not thicken the border. However, with these hearings on this bill and these provisions being enabling, it was relevant for us to address these issues today.
Senator Tkachuk: We appreciate that. Mr. Bradley, one of your main concerns is the fact that at the border presently you can go to a secure, bonded facility, if I got that right, and under supervision you could clear product. You are concerned now that perhaps the ability to do that will not be provided. What would lead you to that assumption, and why would they take that ability away?
Mr. Bradley: I think that question is better posed to the CBSA, but I am making that assumption because in the model that has been described to the trade community to date, that would be the outcome. They would remove the ability to move goods in bond to an inland facility. If the data did not show up on time and if it was not accurate, the truck would be sent back to the United States, so the truck driver would have the enjoyment of spending the night in a parking lot in Detroit as opposed to being able to move inland where he can then drop the load at a secure CBSA facility — there are sufferance warehouses, they call them, across the country — and then being able to get himself and the tractor and trailer back to work. They would have to sit at the border and wait while the importer scrambles around to find the data, correct the data, and then start the process over again. Even from a security point of view it does not make sense.
Senator Tkachuk: When they get to that bonded facility, are they waiting for information before the truck is cleared to go to the next step because the information has not arrived there?
Mr. Bradley: That is right; the goods are sitting there in bond and will not clear until the proper information is provided, which can be minutes, hours or days.
Senator Tkachuk: When they are cleared, does someone pick up the load and haul it to wherever?
Mr. Bradley: That is right. It has worked very well for decades now, and the is question why would we want to get rid of that.
Senator Tkachuk: Mr. Laurin, do you have one item that is of concern to you, much like Mr. Bradley has that one item, so that we could focus with the minister and his officials when they arrive? I am referring to anything that you would like to get cleared up before we go to clause-by-clause consideration.
Mr. Laurin: The point that Mr. Bradley raised is certainly one that we are concerned about.
Senator Tkachuk: Do you mean the same issue?
Mr. Laurin: As I said in my remarks, we just need to ensure that the data required from importers can be obtained, that it is out there already and that we can acquire it easily, and that we can provide it within reasonable time frames, which is the issue that Mr. Bradley was describing, and that it actually is needed for national security. In a nutshell, I would say these are the elements and the framework in which we are looking at these data elements that we will be asked to provide.
Senator Tkachuk: Mr. Bradley, you had said you assume that the two borders are interested in some harmonization, and that this bill takes the program just one step more than the American one. Could you explain that a little further so we are clear about that?
Mr. Bradley: Yes. It is two things. One is that in the United States they did not move on the land borders to require the same amount of data that is proposed presently to be required to cross into Canada, and they do not have the same history of sufferance warehouses in the United States. They did not move to abandon that approach in the U.S.
Senator Tkachuk: Could you give us one example of information that we require that the Americans do not?
Mr. Laurin: I do not have a specific piece of information, but I could follow up with the committee afterwards. I do not have that information with me. I do not know off the top of my head.
Mr. Bradley: I have here four additional data elements. I cannot say that the Americans do not ask for one or another of them, but the importer will now have to provide information on fumigation; on special handling, which could be for a particular type of product; on dangerous cargo, which seems reasonable—again, dangerous cargo can be soap or anything else; and finally information will have to be provided on the manufacture itself, which can be really difficult if you have a manufactured good that has all kinds of different elements to it. The manufacturers could be from anywhere and it could be difficult for the importer to track that down. We are working in a just-in-time situation. Particularly in moving auto parts between Windsor and Detroit, it is not a question of hours; it is minutes that we are talking about here.
Currently, if the importer cannot get that data in time, the truck can go into a bonded warehouse and wait until they do get it. However, if you send the truck back, that will create havoc.
Mr. Laurin: It is hard for us to answer your question directly, because the elements have not yet all been defined. We are still in discussions and consultations with the agencies.
Senator Tkachuk: These are legitimate concerns and I am glad they are brought forward here. We will ask the minister and the department officials when they are before us.
The Chair: I do want to question on just a point, Mr. Bradley. You said "just in time." If you are in a just-in-time relationship with an exporter, do you not know that person pretty well?
Mr. Bradley: You may or you may not. You may know the shipper but not necessarily all the other supply chain partners, the people whose goods are business inputs into that product. You will not know that necessarily. The carrier does not work for the customs broker. The customs broker works for the importer. There are parties to the supply chain that the carrier does not have a relationship with.
The Chair: I am talking about a manufacturer who has a just-in-time system. Clearly he knows exactly what he is getting, otherwise he does not have a just-in-time system.
Mr. Laurin: The nature of integrated supply chains now is such that if you are a Canadian manufacturer and you import components from the United States, to take an example, you may be importing components from an American manufacturer that might have 25 product lines. They might manufacture different types of brake pads. They might manufacture many different types, and some types might have a lot of value added, and some product lines might be manufactured all around the world. The manufacturer might be buying from various vendors and suppliers from different parts of the globe. They are in many ways a manufacturer and in many ways also a distributor. When you deal with a distributor, let us say importing goods from an American distributor who also manufactures some products, in the distributing component you do not necessarily know where all these goods have been manufactured. You would think that in most cases they would, but in some cases they might not. In fact you are seeing, for example companies, going bankrupt now and their assets are being sold in the market and someone might buy some brake pads from a company that went bankrupt. Who manufactured each and every brake pad is the type of information that can be very difficult to obtain, and especially difficult to obtain within a reasonable time frame.
Senator Banks: I want to get a comfort level here. I believe you know the process here. We are going to try to deal with whether this committee will recommend the passage of this bill to the Senate. If it does, and we will try to do that today, then the Senate will consider the bill and consider that recommendation. Ordinarily that would mean that the Senate would pass the bill.
A lot of the stuff that will actually apply to what you are talking about is not known yet. I want to find out a certain comfort level about the nature of the consultation that is going on. I think you were probably in the room when our previous witnesses were testifying, were you? No. Mr. Bradley, you were, so you heard what they said about consultation.
Winston Churchill said that consultation is a wonderful thing. You can consult the prisoner as to whether he would like to have his head chopped off in the morning, and on the whole he is likely to say that he would rather not, and then when you chop his head off in the morning you can say that you consulted with him.
Is the consultation you are involved in now satisfactory to you? Are you comfortable that you are having input into the consultation as opposed to receiving announcements? Is it real consultation?
Mr. Bradley: I would say that at this stage, yes, it is real consultation. If I can show my Churchillian side as well, the proof is in the pudding at the end of the day. You may be completely dissatisfied if, after the consultative process, after having made these reasonable arguments founded on fact, they are not adopted; then the consultative process would have been a failure. I do think at this point in time the discussions are showing a degree of responsiveness; however, we do not have any answers at this point.
Senator Banks: If it turns out to be a compromise, which all good negotiations or consultations are, where everyone gains a little less than they wanted to and leaves a little more on the table than they wanted to and you get halfway, will that be okay?
Mr. Bradley: That depends on what "halfway" means. We have proposed two solutions, a best choice and a second- best choice. We could live with that second-best choice, but I think we have to be extremely careful. We have been very concerned for many years about the costs that predominantly the United States has been imposing upon trade facilitation, which have been critical at times. I think this is our opportunity to harmonize with some of their programs. I am not saying we should adopt everything they do holus-bolus, but we need to be cognizant of not going down the same road of adding more cost where it is not warranted. We are always looking for compromise, and we propose to compromise.
Senator Banks: Your members probably keep track of the amount of movement of trucks back and forth across the border. We have always had a trade advantage in that respect with the United States, a trade surplus, and I suppose that the movement of trucks is one way to measure that. Is the movement of trucks going in the right direction in the interests of Canadians?
Mr. Bradley: No, it is not. It is down substantially.
Senator Banks: By comparison with what it used to be?
Mr. Bradley: Yes. In fact, in 2008, the number of trucks crossing the Canada-U.S. border at the busiest border crossings in Ontario, where the bridge operators themselves keep this sort of data, was down below 2001 levels.
As well, we have seen what has always been the Canadian head haul, that Canadian advantage. The southbound movement of freight has virtually dried up. It is not a surprise to people in the trucking industry that Canada is now in a trade deficit. This is not a new phenomenon that just started last November when the banks went into crisis; this has been going on now for almost two years.
Senator Banks: Does it have anything to do with the bill before us?
Mr. Bradley: There are always a lot of factors at play, whether the dollar or the U.S. demand situation, et cetera. I would suggest to you that the thickening of the border, which has taken into account a number of different facets, is a contributing factor to that, absolutely.
Senator Banks: Do you find that as well, Mr. Laurin?
Mr. Laurin: I would echo Mr. Bradley's comments in response to your question. Yes, we have been consulted, and this is more an ongoing process. We have a lot of discussions back and forth. Have we been listened to? We will see with the results. If we continue to have dialogue with the CBSA, it is because we think it is important. We certainly value this dialogue very much.
We are obviously concerned. We are talking about something that could, if we do not do this correctly, have disruptive impacts on the North American supply chain. Obviously, it is important both for us and, we feel, for the government to ensure that we implement these measures in a way that does not have these disruptive impacts.
Senator Banks: If there were such disruptive impacts, would that have a major effect on Canadian manufacturing? Canadian manufacturing is in a jam already as a result of the global situation.
Mr. Laurin: Our members are under severe stress currently with what is going on in the credit markets in Canada and internationally. With respect to the downturn in the U.S. markets, most of our industrial production in Canada is sold in the United States, so anything that happens south of the border is of huge interest to us.
Our members are having difficult times right now. We are talking about supply chains that are integrated between Canada and the United States. If you look at the auto sector, which is a classic example, you are talking about cars assembled in one country relying on components brought in from another country that has components coming in from yet another country.
Senator Banks: Such as India?
Mr. Laurin: Yes, different parts of the world. With respect to the future of manufacturing, our members are telling us that the future of their business is focusing on where you have the most value-added, finding supply chain partners throughout the world. You work with the best, and that is how you organize your business.
It is important, not only at the land border but also through all points of entry, that we have a seamless logistics system because companies will increasingly rely on our borders, our logistics systems, our carriers and everyone else to operate just in time but also to ensure that their supply chains work efficiently.
Senator Zimmer: Mr. Bradley, Mr. Laurin, thank you both for your presentations. I have the same question for each of you.
Based on your experience, what is the most significant impediment to efficiency for the organizations and companies within your respective associations?
Mr. Bradley: I would say that it is the loss of risk assessment principles that has occurred since the signing of the Smart Border Accord in the fall of 2001. The FAST program, the Free and Secure Trade Program, was developed in order to allow for not only facilitated trade, but more facilitated trade than on September 10, 2001. There were problems at the border before 9/11.
The promise was that for legitimate trade—the vast majority of trade, the vast majority of trucking companies, drivers, manufacturers, importers and exporters, who are not bad guys—we would have a better situation, in that the resources would be focused on the bad guys or the people we do not know.
That has not happened. Frankly, many people in the trade are questioning what the value is of the low-risk programs. The situation has not turned out the way we wanted, and there has been a continual piling on of more requests for more data, more systems, more regulations, more charges and more fees.
I realize how difficult it is dealing with the Americans when their thought processes are perhaps a little different than ours here in Canada. We have lost sight of the risk assessment approach to check everything and everyone all the time. You cannot do that.
Mr. Laurin: From our members' standpoint, the most significant impediment to efficiency or what can actually help us reduce inefficiency has much to do with technology. From a manufacturing company's standpoint, inefficiency is what you are trying to get rid of. Companies try to improve their productivity and they strive to be efficient in manufacturing, and much of that is accomplished through acquiring new technologies. That is why when we go to the Minister of Finance, we try to improve the tax treatment of technology, and we try to provide incentives for companies to invest in new technology, new machinery and equipment.
From a border perspective, using better technologies they can do a better risk assessment in order to facilitate trade and to ensure that the legitimate companies that are importing legitimate goods and using legitimate carriers and just want to go about their business are not the people we are sending into secondary inspection at the border.
Because we have these more advanced tools, we are better able to target the goods that should not be entering Canada. With respect to legitimate trade, we do fewer inspections because we have a better way of assessing which shipments should be inspected at the border and which should be left alone and be allowed to pass the border freely. Technology is where a lot of the solutions lie.
Senator Wallin: I ask for just an opinion, I guess, from both of you. As I listen to you today, it certainly makes me wish that we had taken on the issue of perimeter security more directly.
You have talked about harmonization, as Senator Tkachuk raised, and said that you are trying not to get ahead of that. Do you see things in this bill or in other legislation that are making it more difficult even to contemplate some notion of perimeter?
Mr. Bradley: It depends again on how the powers are used. I do think this ties into the move to automate the border. That is the direction we need to go in. However, the problem is that through automation, if people — the enforcement community, for example — start to see this as an opportunity to ask for more and more, that is where we run into problems. Directionally, the bill is fine. It is what is done with those powers afterward that is the concern.
I look back on the experience the trade community went through when the Americans introduced their automated customs environment: we supported the direction philosophically, but they made an absolute sham of the introduction. It was the most poorly rolled out, untested program imaginable, and the costs were horrendous.
The issue is how things play out at the end of the day. The direction is right, but we have to get it right once we have that power.
Mr. Laurin: I agree with Mr. Bradley. The short answer is no. This is enabling legislation, so the details will follow later unless the bill is amended. I do not see anything in this bill as it stands now that would not allow us to do that. When the bill is interpreted and the regulations follow, it is important to ensure that we work more closely with the United States.
Senator Zimmer's question asked about the inefficiencies. Border management has a lot to do with regulations administered by CBSA but actually drafted by other agencies. We are seeing that in Canada and in the United States. Things from product safety to animal plant inspection are the types of regulations that are becoming more and more of a burden for companies exporting to the U.S. or importing into Canada. Many of our advocacy efforts with government have been focused on these other requirement and regulations that actually create many inefficiencies and do not always end up having the public policy impact they were initially drafted for. In fairness, even though CBSA has to administer them, some of the regulations and burdens do not necessarily originate from that department. CBSA is there to administer what is put in place by other departments.
Senator Mitchell: I would like to pursue the differential application of this bill or these provisions potentially to train and truck traffic. It seems to me, first, that the review and investigation will be much more intensive for trucks than it will be for trains, because trucks are coming right up to the border. From what we heard earlier, there is a greater, more intense structure. Is that the case? If it is, how will that affect your competitiveness with train shipping?
Mr. Bradley: How will it affect our competitiveness with trains?
Senator Mitchell: Yes.
Mr. Bradley: We are in two different businesses. Trucks are in the shorter-distance, smaller shipments that are time sensitive. Rail tends to be in the longer-distance, bulky stuff that is usually not time sensitive.
Over the last eight years, we have not necessarily seen a deterioration in freight moving from truck to rail. There has been no big shift there. It has simply added costs onto the supply chain, so that the customer of the trucking industry, to whom these things ultimately flow through, pays more.
We look at it from a North American context, and we hear the U.S. president and the Prime Minister and the president of Mexico talking about wanting to make North America more competitive with the other great trading blocks, yet we have added this cost onto our supply chain. We hope it has made things more secure.
Senator Mitchell: But it has not really.
My follow-up question might fall more within Mr. Laurin's purview. If all the paperwork is not in place, particularly if you had a truck with two or three different importers' goods on it, the truck would be turned back and held up. Would it be the same with trains? Every train has to have more than one importer receiving materials, and as big as they could be, would we actually turn that whole train back because one importer had not provided the paperwork?
Mr. Laurin: I am not sure I know the answer. I do not know whether the railway association will appear before the committee. I do not have that information. I would presume that the same treatment would prevail.
Mr. Bradley: I am out on a bit of a limb here, but the railways have had a different system that you were talking about with the previous panellists. They do not have the same sufferance warehouse situation we have in trucking. I do not expect it would impact them the same, but I do not know that for a fact.
Senator Mitchell: I will pursue it elsewhere. Thank you very much.
The Chair: You both have counterparts in the United States. What do they say to you when they are faced with the same sorts of issues? Do they express the same level of concern that you have about the thickening of the border?
Mr. Bradley: We work closely with our counterparts in the United States. We have to, because it does not always work for us to march down to meet the Department of Homeland Security. We have a very good and productive relationship with them. However, I could probably say across the board that while there is a degree of interest, it is nowhere near the level of interest that exists here in Canada. Other than Mexican trucks coming into the United States, border issues do not get the same degree of concern amongst the width and breadth of the American trucking association membership as they do in Canada; clearly not. Saying that, we have a productive relationship with them, but it is not top-of-the-list of their priorities, whereas it is for us, because it is for our economy.
Mr. Laurin: I can speak for my association. Our counterpart in the United States is the National Association of Manufacturers. We meet with them and talk to them continually. We have been great allies not only on customs and border issues but also on other issues. With Buy America, more recently, they have been helpful in carrying some of the messages that our joint members have been raising. Mr. Bradley might have a lot of joint memberships with his counterparts. A significant portion of our members, especially larger companies, are members of both the Canadian and the U.S. associations. It makes sense for us to work together. When issues relate to the Canada-U.S. border, they have certainly expended the resources they needed to expend so that we could work together.
Going forward, they are taking the same message to Washington that we are taking to Ottawa, which is to try to have a perimeter approach and to get the Canadian and U.S. governments to develop compatible regulations and a compatible regulatory environment so that we do not overburden our companies with regulations and with compliance requirements that are not necessary. As much as possible, when it makes sense for the two countries to work together, we should strive to do that. It is vital for the manufacturing community, which is really a cross-border business. It makes sense for us to raise these issues and to ensure that, as much as possible, going forward we try to work together on them.
The Chair: Your experience, Mr. Laurin, is not quite the same as Mr. Bradley's, and Mr. Bradley's experience is much closer to the committee's experience. When we talk to legislators from border states, they say, "It is interesting you are concerned about this, but we do not hear about it from our own constituents."
Frankly, we sometimes wonder whether we are seeing non-tariff barriers being created, and whether it is in the interests of representatives and senators from some of the border states to have a difficult, slow border. We frequently wonder whether some of the regulations are being put in place so that their chambers of commerce can say, "Come and locate in New York State or in Michigan. You will not have any border problems."
Mr. Laurin: We have certainly run into that in some of our and our U.S. counterparts' representations in Washington. What has been key to us, and what seems to work much better, is working with companies. We have companies in Canada — Canadian companies or U.S. companies with operations in Canada — that have plants in the U.S. that employ people in different jurisdictions. Instead of focusing only on senators and members of Congress that are in border states, who can be important allies, we have focused on and worked with the embassy in targeting members of Congress and senators who have jobs in their district that depend on a border that works efficiently.
If you have a plant with 1,000 employees in your jurisdiction and most of their imports or inputs come in from a plant from the same company in Canada because they have the knowledge and technology to supply the U.S. company with the best inputs in the world, then it makes sense for them to ensure that the border continues to work.
It is certainly always difficult to get an ear in Washington. However, we have been effective working with our U.S. counterparts and with the Canadian embassy in raising some of those issues, not directly but through our associations and finding allies in Washington.
Mr. Bradley: I would add that we always have to be on guard against protectionism. That may not even be the right word. I prefer to call it supporting the home team, which sometimes we do not do enough of here, quite frankly.
I have had lots of experience over the last couple of decades dealing with border states, working with Senator Wallin on the New Jersey franchise tax and, just recently, with Michigan under the Michigan business tax. Lansing must be further from the border than I thought, because the legislators clearly do not understand the trading relationship. Their natural inclination is to support the home team.
However, I also have found repeatedly that if you can appeal to the Americans' knowledge of business, how business works, and bring solutions, they are pretty pragmatic.
Sometimes we Canadians are guilty of going down there and saying the border is very important. The congressman says yes, but what do you want me to do? We need to have things that we want them to do.
This is a very important time in our relationship. To me, things like the Security and Prosperity Partnership of North America and others have been underwhelming in terms of what they have accomplished for a variety of reasons. I would like to see us go back and try to re-engage the Americans, as we did.
Our most productive time in terms of the border was the first few months after 9/11 when we had the Smart Border Accord. We need a smart border accord 2010 to get people back to looking at where we have gone. That is my opinion.
Senator Moore: Mr. Bradley, when you were commenting about the in-bond facility that we have had the practice of using, and hope to continue, you mentioned that the United States does not have that same history of sufferance warehousing. Is that so? Can you tell us a bit about that?
Mr. Bradley: There has not been the same level of cross-border traffic by U.S. trucks to develop those sorts of industries to the same level of sophistication that we have had in Canada.
Senator Moore: Is it just a function of the volume?
Mr. Bradley: Yes. We have had that market.
Senator Moore: The chair was asking about your relationship with your American counterparts. Have you discussed your concerns, things that could arise under this legislation, with U.S. truckers who may be bringing cargo into Canada?
Mr. Bradley: Yes.
Senator Moore: What do they say about that?
Mr. Bradley: Their association is working hand in hand with us on this. Again, to clarify my point, transborder trucking would be of concern to only a small subset of the American Trucking Association's membership.
Senator Moore: What per cent of the U.S. trucking business would be involved in transborder work?
Mr. Bradley: Maybe 2 per cent; whereas here, up until recently, transborder trucking has been the sole growth area for our industry for the past 20 years. That has now disappeared. We are seeing capacity moving back into domestic markets, where it probably is not needed. To Mr. Laurin's members' benefit in the short term, rates are being cut to the bone because there are too many trucks chasing too little freight right now.
Senator Banks: I have a short or long question, depending on your answer. I want to read you clause 17 of the present act, which says:
A regulation made under this Act may incorporate by reference any material regardless of its source and either as it exists on a particular date or as amended from time to time.
One can imagine a set of specifications for a piece of machinery that might be invoked by reference as part of a regulation. If that manufacturer's set of specifications is changed by the manufacturer two years from now, that change is also incorporated as a matter of legislation.
The clause goes on to say:
Material that is incorporated by reference in a regulation is not a statutory instrument for the purposes of the Statutory Instruments Act.
This means it would not be susceptible to publication in the Gazette, for example, and might not be — I am not saying "is not," but might not be — susceptible to examination by Parliament.
Do you have any experience in that respect, or am I looking for a bogeyman under the bed?
Mr. Bradley: Does that section pertain to in the case of an emergency?
Senator Banks: No.
Mr. Bradley: I cannot say that I have a whole lot of familiarity, then, with that sort of situation.
Mr. Laurin: Me neither.
The Chair: Are there any further questions at this time?
Senator Tkachuk: I do not know if you know the answer to this, but a question came up a little while back about trains and trucks. Trains already have electronic manifests, right? That has been going on for years with trains — they just cross the border, is that correct?
Mr. Bradley: I am not sure if it is because they have electronic manifests.
Senator Tkachuk: I think they do.
Mr. Bradley: They may now.
Senator Tkachuk: I will ask the department officials when they come. I think that is what they do now. They do not even stop at the border; they just cross.
Mr. Bradley: They never have stopped. Whether electronic means fax, it could be. We use fax now and have for a few years, but it is hard to put a fax in every truck.
Senator Tkachuk: Yes, exactly.
The Chair: I have, I hope, a final couple of questions on the perimeter approach. It seems to be one that is supported by both of you. Is that correct?
Mr. Laurin: Yes.
Mr. Bradley: Yes. My comment would be that perimeter approach means lots of things to lots of different people. We used to hear, we still do, the comment "like in Europe." "Like in Europe" means a joint Parliament. I cannot ever see the Americans sharing power with us, so we need to be a little more concrete in terms of what we mean by that.
Certainly, to move the commercial border out to the perimeter seems to be an achievable goal. However, I do not know that the Americans have that much interest in it when just last week, the new secretary said what they need is a real border between Canada and the United States. I am not so sure how much investment is worth making in that at this time.
Mr. Laurin: From our perspective, most Canadian exports are shipped through the land border and most of our imports come through the land border. We think these are among the safest. In terms of managing the shipment of goods, from American and Canadian perspectives, container ships coming into a port go through one set of requirements. It is much easier to import, in terms of other requirements. When a shipment comes to a port, it is inspected. Considering the requirement per container, given the equivalent number of trucks that cross the Canada- U.S. border, we need to ensure that we do not give importers from other parts of world the competitive advantage over importers of goods through the Canada-U.S. land border. Otherwise, we will be shooting ourselves in the foot. In Canada and the U.S., it is the same companies; we are doing things together. Let us try to ensure that we do not put our companies at a competitive disadvantage.
The Chair: You have taken me a little off course. For example, the Port of Halifax will self-promote by saying they can get goods to New York City faster than if the goods are shipped through Bayonne, New Jersey. They are not taking any jobs away from Canadians. It is simply a matter of the port that is picked. The same is true if you talk about the Port of Montreal or the Port of Vancouver. Their promotional material is not taking away Canadian jobs. It simply gives jobs to our ports.
Mr. Bradley: That is a question of the level of congestion at some of the competing ports. Marine security requirements are currently being developed. A container that is loaded onto a truck at a port has to clear the border again when it goes to the United States. It has to go through the process twice.
The Canadian Vehicle Manufacturers' Association used to have a number that they bandied about. They studied it and I have every reason to believe it is true. They said that for a car being shipped into North America from Korea, there is one customs transaction. However, a car that is manufactured in North America, having a piston that has gone across the border six times, might go through 3,000 customs transactions. We have to realize that we are blowing our own brains out.
Senator Wallin: Well said.
The Chair: That comes back to the question of whether we are hearing from American legislators about a non-tariff barrier. You will not have to cross the border if you build your parts plant in Michigan, whereas you will have to do so if you build it in Ontario.
Mr. Bradley: There is no doubt there will always be an element of that, because that is part of the nature of the competitive playing field in North America. Canadians simply have to be aware of that and be that much smarter.
The Chair: With a common perimeter, how do you address tariffs? Would you have common tariffs?
Mr. Bradley: I have not been thinking a great deal about the perimeter, and I do not know if we want to get into the WTO.
The Chair: A number of issues have come up frequently tonight, including tariffs or common goods that are banned. A variety of issues arise when we talk about no land border versus a common continental border.
Mr. Laurin: We are not necessarily talking about that level of integration. For example, Canada recently developed new consumer and product safety regulations and the United States developed their set of guidelines and regulations at the same time. This was done somewhat independently of each other. It would make sense for us to try to do these things together. To what extent would Americans be willing to work with us is another question. When you look at the legislation, you see that objectives are the same, but the means to reach the objectives are different. The differences are simply an accident of history, and companies are stuck with two competing systems with which they must comply. Having one system, or at least mutual recognition, would make sense and help to increase business efficiency.
The Chair: Thank you. We appreciate having you here today. The conversation has been interesting, even when we moved off topic.
Honourable senators, we have with us General Walt Natynczyk, Chief of the Defence Staff. Mr. Natynczyk, please proceed.
General Walt J. Natynczyk, Chief of the Defence Staff, National Defence: It is a great pleasure to be here when we recognize someone who has dedicated his entire life to the service of Canada. As I look around the room, I see many people who are very successful in their career. At a certain point in your career, it is time to retire. There are those who have been successful in a career but who have failed to retire. I would like to talk about Major-General Keith McDonald, who has had an exceptional career serving the military. After many years in the Canadian Air Force, he took off the uniform and yet stands before us continuing to serve.
I welcome his wife, Cathy, and his daughter, Jocelyn, here today. Major-General McDonald could not have served without the tremendous support of his family by his side. We have a medallion to present for exceptional service post- Canadian Forces. If I may, I will ask my assistant to read the citation.
Lieutenant-Commander J. R. Michel Thibault, Aide-de-Camp to Gen. Natynczyk: The Canadian Forces Medallion for Distinguished Service is presented to Major-General Keith McDonald in recognition of his contribution to the defence and security of Canada through his role as consultant to the Standing Senate Committee on National Security and Defence since 2001. Drawing on the extensive experience gained during his career of over 30 years in the Canadian Forces, Major-General McDonald provides expert advice, greatly enhancing the committee's understanding of current military and defence issues, such as personnel, funding, equipment, transformation and Canada's mission to Afghanistan. His active participation, dedication and unique perspective are of great benefit to the committee and, in turn, to the Canadian Forces.
Gen. Natynczyk: Major-General, although you have taken off the uniform, your heart is still with the men and women of the Canadian Forces. You are still serving them and, indeed, all Canadians. God bless you.
With this medallion, I say thank you, again.
Major-General (Ret'd) Keith McDonald, as an individual: It is not often I am without words. Perhaps the CDS is referring to the fact that when he and I worked together I told him I would never go away. That is probably true.
When I met with Senator Kenny in 2001, two weeks before 9/11, he asked me a number of questions, one of which was, "You really do not want to get paid, do you?" I said, "A little bit, maybe," and that is what we did. He said that it had to be something that I really believed in, almost a sacred fire kind of job, because the committee needed a translator and someone to set them straight from time to time. As I have told the committee all along, they do not necessarily get the straight goods but they get the goods from McDonald's point of view. Hopefully, they are consistent with what the committee has been looking for. I have been with the committee for a long time and I have enjoyed my time with them, although I am not sure whether this means I have to retire again.
I thank the CDS because I know that I have been a thorn in the department's side from time to time as I have looked to try to do what my aim always was: to improve the lot for the outstanding men and women in the Canadian Armed Forces. I felt I could not do as much inside the organization, so I tried to do a little outside the forces.
This award is a real shock and surprise, and totally unwarranted. CDS, thank you very much.
Hon. Senators: Bravo!
The Chair: For our final panel, I am pleased to introduce the Honourable Peter Van Loan, Minister of Public Safety. Accompanying Minister Van Loan, we have Deirdre Kerr-Perrott, whom I am happy to welcome back to the table. We also have Ms. Kristine Allen, Senior Counsel, Legal Services with the Canada Border Services Agency.
Minister, welcome to the Senate. We are pleased to have you here and we are looking forward to hearing what you have to say. You have the floor.
[Translation]
Hon. Peter Van Loan, P.C., M.P., Minister of Public Safety: Thank you, Mr. Chair. It is a pleasure to be here with you this evening. Unfortunately, my speech is in English, but I expect questions in French from Senator Nolin.
[English]
So I apologize for that; I just noticed that right now. In any event, I am glad to be here, and I thank you for inviting me to discuss this important issue. I know it has been the subject of attention from this committee before the legislation arose. In fact, the proposed legislation responds to concerns that have been highlighted by this committee.
The Canada Border Services Agency is responsible for providing integrated border services that support national security and public safety priorities and facilitate the free flow of persons and goods, while meeting all the requirements under program legislation.
One of the key pieces of legislation governing the Canadian Border Service Agency mandate is the Customs Act. The Customs Act was first enacted in 1867 to ensure the collection of duties, control the movement of people and goods, and protect Canadian industry from real or potential injury caused by dumped or subsidized goods or by other forms of unfair competition.
It is important to note that the act is note a taxing statute; rather, it provides the legislative authority to administer and enforce the collection of duties and taxes that are imposed under straight taxing legislation, such as the Customs Tariff and the Excise Act, as well as to administer and enforce laws protecting Canada from dangerous goods and contraband.
The current Customs Act is the result of the total revamping of the 1867 act, which was undertaken in 1986, to maintain the original act's three purposes and to allow greater flexibility in light of developments in transportation, communication, trade and business practices. Since 1986, the act has been amended several times in response to free trade and related international agreements to fine tune international trade measures and to allow more effective enforcement against contraband and goods controlled under the legislation of other departments.
The changes to the act reflect the degree to which our border priorities have changed over our history as a nation and how this change has intensified over the past three decades. As Canada has embraced free trade arrangements as a driver of economic prosperity, and gained a reputation as a welcoming country for those seeking a better life, attention at the border has gradually shifted from collecting import duties to emerging challenges related to contraband, illegal migration, health and safety, criminal and terrorist threats and equally to facilitating cross-border trade and commerce, the lifeblood of our economy.
The environment in which we manage the border continues to be dynamic. It is fair to assume that the overall level, variety and complexity of risks we are called on to identify, assess and mitigate will not diminish, in spite of any economic downturns such as the one we are currently experiencing.
We can also predict that Canada's changing demographics will result in new sources of travellers to Canada, while new trade agreements and evolving economic forces will result in shifting sources of imported goods, including some goods that will present new risks in the areas of food, product safety and intellectual property.
It is therefore likely that we will need to update the act more regularly in the future to ensure that the agency has the appropriate legislative foundation to effectively balance security and access at the border.
A critical prerequisite for achieving this balance is providing the Canada Border Services Agency with the authorities, tools and intelligence required to anticipate and assess border risks, interdict dangerous people and goods as early as possible in their voyage, and facilitate legitimate travel and trade.
Over the past five years, the government has made significant investments to improve border operations and to tighten border security.
For example, we are arming our border services officers and hiring 400 new officers to eliminate work-alone situations. The arming of border service officers and the elimination of work-alone sites will provide greater protection to our officers at the border. In addition, the government has committed to adding 1,000 new Royal Canadian Mounted Police. In fact, we have already delivered over 1,500 new Mounties. Almost $20 million is being invested in the RCMP Integrated Border Enforcement Teams, which work together with other law enforcement agencies and are strategically located along the border to disrupt smuggling activity between border offices. We have implemented radiation detention systems at ports in Saint John, Montreal, Halifax, Prince Rupert and Vancouver, which provide a tight radiation detection net at marine ports.
The current bill seeks to amend provisions of the Customs Act to further support the government's strategy to strengthen security and facilitate trade. In the bill, two key amendments are being proposed that will fully implement two key programs: the Advance Commercial Information (ACI) initiative and customs controlled areas. In 2004 and 2006, the Canada Border Services Agency implemented the ACI initiative in the marine and air modes of transportation, requiring carriers to provide electronic information on cargo destined to Canada within advanced time frames.
In 2007, the Canada Border Services Agency commenced development of eManifest, the third phase of the ACI program. Amendments are being made to the act to require that advance information be provided electronically and in advance by all participants or links in the trade chain.
Requirements already faced by the marine and air modes of transportation will be extended to highway and rail carriers, freight forwarders, and importers, allowing a rigorous risk assessment of all cargo prior to its arrival at Canada's borders and minimizing the processing required upon arrival.
Over the past two decades, the CBSA and its legacy organizations have been at the leading edge of the worldwide development of electronic commerce systems. EManifest is a complex project that continues this leadership and parallels systems being implemented by other countries, including the United States.
We recognize that there will be a period of adjustment for some of our stakeholders, but the end result will make border clearance more efficient for carriers, for freight forwarders, importers and brokers, while at the same time significantly strengthening the risk management foundation that we need for border security.
Free trading nations such as Canada cannot guarantee absolute safety against border threats. We can, however, optimize our resources and respond to the threats through systems such as eManifest. We can remain agile and effective in a shifting global environment.
On the second key piece of the legislation, with respect to customs controlled areas, we see a response to a desire by the CBSA for new tools to deal with crime resulting from internal conspiracies at Canada's ports of entry. Various amendments were made to the Customs Act in 2001. The 2001 amendments allowed for the creation of these customs controlled areas, which are defined as designated areas close to or associated with the border where domestic travellers or workers may come into contact with international travellers and/or goods that have not yet cleared customs.
To create functional customs controlled areas, there must be three elements: legislation, regulations and designations. Although legislation is in place, regulations and designations are not, meaning that customs controlled areas are not really currently operational. Under current legislation, border services officers have the authority to stop, question and search individuals only at exit points, and all persons leaving a customs controlled area must present themselves before exiting the area. While the 2001 legislation laid the groundwork for customs controlled areas, they could not be effectively and practically implemented.
The proposed amendments will provide our officers with similar authorities to stop, question and search individuals within customs controlled areas as well as at exit points. In addition, persons will be obligated to report to border services officers only upon request, removing the onus on all persons to report upon exiting the customs controlled area.
These changes will provide border services officers with the flexibility to examine persons and goods within the customs controlled area, where most internal conspiracies occur, allowing a greater focus on areas of risk and persons of interest. This will help improve the security of Canadians by enhancing the Canada Border Services Agency's ability to interdict contraband and other illegal items before they reach the streets of our communities.
In addition to these key amendments, there are also a number of technical and housekeeping amendments incorporated into the bill. For example, a technical amendment in the section dealing with advanced passenger information is proposed in order to provide greater certainty on when this information must be provided. Housekeeping amendments deal with the inconsistencies between the English and French versions of the act.
Global security is a complex objective that is subject to the shifting tides of international trade, travel and migration, advances in technology and the increasing sophistication of criminal and terrorist elements. While designated points of entry into Canada are the critical decision points for the formal clearance of goods and people, the smart administration of national borders must incorporate advanced information exchange with the private sector and government partners, extensive intelligence efforts, enforcement in the adjacent port areas and, indeed, security between border offices, which is the responsibility of the RCMP.
As we manage the flow of people and goods, we gain a better understanding, not only of trade and travel patterns, but criminal tendencies as well. This, in turn, allows us to improve our programs and policies in defence of public safety. We must continue to capitalize on modern technology and risk management strategies that minimize security risks while facilitating the efficient movement of goods, services and people.
The past several years have seen tremendous change in how our border operates. Too much is at stake if we do not get the border right. The legislation is critical to our ability to meet challenges of securing Canadians' safety and prosperity in the rapidly changing world in which we live. I would be happy to take your questions.
Senator Tkachuk: I have a couple of questions on areas of concern that have been talked about throughout the day. A number of senators have asked how customs controlled areas at airports would affect the ordinary traveller, whether they would create undue burden or extra burden that the ordinary traveller does not face now. There is perhaps a feeling that border officers being able to go into a customs controlled area and create a customs controlled area might infringe on the rights of a citizen to be left alone unless there is good reason to bother him or her. If you could address those two or three areas, I would appreciate that.
Mr. Van Loan: The airports are one example. This, of course, would apply not only in airports; we would also be dealing with marine ports and other similar customs controlled areas.
I do not anticipate that in practical terms you would see a significant difference at all, if you could see any difference at all with what ordinary passengers passing through would experience. They would be subject to the normal customs control process, which makes it unnecessary to use any of these other devices, because they do have to report to a Canada Border Services Agency officer, who has the opportunity to direct them to secondary search if the officer feels that there are grounds or a reason to do so. That process will continue unaffected by this.
Some of you, certainly the chair, may be familiar with Project SPAWN, which looked into, for example, the problems of organized crime and drug trafficking operating through airports. This would allow border service agents, if they saw something that looked fishy out on the tarmac where luggage and cargo are being off-loaded, the opportunity not to wait until someone came to exit the customs controlled area to ask them questions about it, but they could actually ask them questions about why they are there and whether they have their identification. The officers would be able to deal with the goods at that stage, before someone could go into the duffel bags and take out the narcotics.
That is the objective. We still have the normal protections under the Charter that people would have in those circumstances or any kind of search that was more than "show me your identification to be in this area." Anything more intrusive than that would require the same reasonable and probable grounds and would have to be justifiable under the Charter and court-established protections that already exist. Tell me if I am saying anything that is off the mark there.
Kristine Allen, Senior Counsel, Legal Services, Canada Border Services Agency: That was exactly right.
Mr. Van Loan: I would say ordinary travellers going through the airport probably would not notice any difference. They must go through it and they must bring their luggage through it all. They are in a controlled area that is fully monitored. Between there and when they hand in their card and get sent off to secondary, there is no reason to stop them at that point. The areas of concern are on the tarmac, for example.
A better way of explaining it is to use the example of a port. Historically, the reason the ports police were disbanded is, as I understand it, that they were always on the docks with the same guys who were long-established longshoremen, some involved in very sophisticated and ongoing criminal conspiracies. Essentially, the ports police were seen to have been corrupted or subject to intimidation. That is why we disbanded them.
If you only have the ability now to control people as they are leaving, all kinds of things can happen between containers and so on within the area. We need the ability to have the CBSA officers get in there immediately if they sense there is a conspiracy or something that needs to be addressed.
Senator Tkachuk: The Canadian Trucking Alliance members are concerned because currently when they are stopped at the border, if there is a problem with containers they are carrying, they can off-load at a bonded and secure place and go about their business until the missing paperwork arrives, the situation can be cleared up and the product can be taken to its destination. They are concerned that the CBSA is moving in a direction such that, if the paperwork is not complete, the truck will be turned back, and they will have to return to the United States where they would have to care for the truck, rather than the truck being warehoused in a bonded area. You might want to comment on that concern, which they raised this afternoon.
Mr. Van Loan: My understanding is that, while we are still working out some of the deals with them, they are generally supportive of the legislation. We need to work on some implementation there. Obviously, there will be a time frame for adjustment while people get up to speed on the normal practices.
The benefits from being able to accomplish this are considerable. We already have the benefit in the marine terminals, and I do not know whether anyone has had the opportunity to see how they work. Looking at it, they are able to assess through a matrix of values whether or not something is high risk. A high-risk shipment from a company you have never heard of before or from a first-time shipper from a jurisdiction that is known to send dodgy stuff are things that will raise red flags. Those are the ones more likely to be sent for full examination. That is helpful and much easier to do when you can do it in advance, while the container is coming across the ocean, the same as the objective here with the trucks.
In terms of the bonded warehouse situation, did either of you have anything to add on that?
Ms. Kerr-Perrott: We are working with the community, the stakeholders, to determine how we might enable them to move inbound instead of turning back at the border if they do not have the full data set, so we are examining what processes we can put in place to facilitate that.
Senator Banks: Thank you for being here, Mr. Van Loan and Ms. Allen, and it is nice to see you again, Ms. Kerr- Perrott.
Minister, I will take a complete left turn and talk about other things. I am sure we will return to the normal application of the bill, but I would like to direct your attention to clause 17 of the bill before us, on the last page, page 7. I had not noticed this provision before in any other act of Parliament, but I know that it exists in several other acts of Parliament, five or ten of them, including Bill C-10. As I said earlier to Senator Tkachuk, the sponsor of this bill, the fact that we have not paid attention to something before does not mean we should not now.
The proposed amendment is to add to section 164 of the act the following language:
A regulation made under this Act may incorporate by reference any material regardless of its source and either as it exists on a particular date or as amended from time to time.
The amendment would be by someone else other than the government or Parliament. It would be by the source, I presume.
The proposed amendment goes on to say:
Material that is incorporated by reference in a regulation is not a statutory instrument for the purposes of the Statutory Instruments Act.
This would mean a number of things. It would not be published in the Canada Gazette and would therefore escape or evade the scrutiny of Parliament.
I will use a few absurd examples to indicate my concern. You could incorporate by reference under this act, as a part of a regulation under this act, a provision of the customs regulations of North Korea, or, more likely, the entire maintenance manual of a 747. I understand why it is necessary to be able to do that. I understand why, because of the volume of material that is sometimes involved in that, it would be impractical to incorporate it into the regulations in the normal sense of the word and have the regulations go through the normal process, which is to say being susceptible to a certain amount of scrutiny by Parliament.
However, proposed subsection 2 bothers me when it says that that material that is incorporated by reference is not a statutory instrument, and that therefore allows it to escape the scrutiny of Parliament or anyone. Here we have a part of a regulation under a Canadian statute that will have been written, in my absurd examples, by North Korea or by the Boeing aircraft company. They are made part of Canadian law. They are not susceptible to any scrutiny by Parliament. We have exported the capacity to make regulations at least under Canadian law that are applicable. These will not be susceptible to scrutiny by the Standing Joint Committee for the Scrutiny of Regulations. Therefore, we are doing two things. We are exporting the capacity to make regulations that are part of Canadian applicable law, and we are exporting the capacity to amend those parts of those regulations by someone else at any time in the future, and those amendments will be part of Canadian law. It escapes the scrutiny, and it is theoretically at least possible, I suggest, minister, that someone could, therefore, in Canada break the law or break a regulation, operate against a regulation, without knowing what that regulation is, since it is not susceptible to the normal process.
Minister, I am proposing, or will propose, that this needs to be solved, in this case, perhaps not in other legislation, but in the bill that is before us, by two possible means. One is an amendment, which I have drafted and which I will show you and which I have prepared in both official languages. It says:
That Bill S-2 be amended in clause 17 on page 7 by adding, after line 29, the following.
(3) For greater certainty, material that is incorporated by reference in a regulation that stands permanently referred to the Committee referred to in section 19 of the Statutory Instruments Act —
— which is to say, the Standing Joint Committee for the Scrutiny of Regulations —
— may be reviewed and scrutinized by the Committee.
That amendment would satisfy my concern about this. The words "for greater certainty," minister and Ms. Allen, have been added not by me but at the suggestion of the Senate's legal counsel in order to, he says, ensure that this change would apply only to this act and would not have effect on other acts in which similar wording as this applies. Those changes may be made separately or otherwise.
The necessity for this proposed amendment could be obviated by a simple and perhaps more expedient means, and it was suggested to me by Senator Tkachuk that he understands that perhaps the department would prefer this, and that is by simply eliminating from the present bill the second paragraph of this proposed amendment, that is to say, that part of the amendment that says this statutory instrument is not a statutory instrument for the purposes of this act.
I invite your comments.
Mr. Van Loan: Thank you very much. I think you demonstrate a healthy mistrust of unlimited legislative power to unaccountable bureaucrats without process.
Senator Banks: I could not have said it better. I will refer to Hansard to use that sentence again in the future.
Mr. Van Loan: That healthy mistrust replicates the conversation we had when I was briefed in detail on this bill. I went down the exact same set of questions with the exact same set of concerns. I was told by the department officials that the only document that is intended to be incorporated by reference is the Electronic Commerce Client Requirements Document, which will set out what people have to do to fill out their eManifest form, and that they might want to be able to change that from time to time without resorting to the full regulatory process, which I thought was fine. However, I was uncomfortable with the notion that that could happen without anyone in the world having any opportunity to know about it and there not being some element of accountability. My preference would be the second of your options, simply the deletion of subsection 2. I was advised during the briefing that the department could live with that when I raised exactly the same issues.
Senator Banks: Thank you.
Senator Wallin: We heard from several witnesses today who were mostly very supportive of the legislation, as you have noted. Their concern is that there is a big-picture issue and a small-picture issue.
The big-picture issue is that after 2001, we did a good job of harmonizing and working on the smart border issue; and then because of many reasons we could cite, the two countries went off on separate courses. We have doubled the workload for everyone and it is complicated on both sides. Truckers — or even consumers, ordinary flyers, for that matter — are dealing with different systems on both sides. They want to see this bill in the context of a larger harmonization of our rules and regulations on security and trade with the U.S., and how does that fit.
The flip side was their concern that the devil is in the details, that while the legislation is fine, the interpretation of regulations by someone on the ground could result in a trucker being asked to provide evidence his mother was really born in Ireland and not some other country. The paperwork was getting so detailed.
The two questions are related in the sense of harmonization. Does this help or prohibit us, or is there any intention of trying to deal with that issue on a day-to-day basis with the American side?
Mr. Van Loan: On this, I assume you are referring to the eManifest aspect.
Senator Wallin: Yes, that, but there is a larger issue on the harmonization side.
Mr. Van Loan: On the larger harmonization issue, to the extent we can harmonize, we believe we have advantages at a whole bunch of levels. First, it is easier for businesses on either side of the border to understand what they need to do to conduct trade. Second, we are more likely to maintain the confidence of our trading and border partner, which will allow relief from unduly harsh measures that we might otherwise face. For those reasons, harmonization — to the extent we can and our law permits it — is a positive thing.
In terms of the eManifest program, its companion program in the United States is the Automated Commercial Environment program. That is also evolving. The objective of eManifest is to have something that is as harmonized as we can.
However, as I said, they are still in process too and evolving, and that consultation back and forth continues. That is one reason I think there is a desire for some flexibility in that document that will be incorporated by reference to allow for that harmonization and fine detailing to occur.
To the extent we do it, we are helping our businesses, making it easier for them coming and going, and we are more likely to maintain the confidence of our partners.
Senator Wallin: Their message to you, both in testimony here and in conversations afterwards, was this: Do not put Canada at a competitive disadvantage by making our rule book thicker, or so completely different that we cannot do it. One case, raised by Senator Tkachuk, was holding vehicles in compounds.
Mr. Van Loan: The paradox is that if our rule book is thinner, we may face a disproportionate rule book going in the other direction—that the American response is, if we are not harmonized, they have to do more because we are not up to the job. For that reason, by being harmonized we can actually be more pro-trade and not face undue barriers.
Senator Wallin: I wanted to pass that concern on.
Senator Zimmer: I have two questions. First, what has been done post-9/11 on behalf of the Canadian Air Transport Security Authority that has enhanced screening services, other than screening items on Transport Canada's prohibitive items list, and how successful has it been?
Mr. Van Loan: I would love to answer the question, but it is probably better that I defer to the Minister of Transport, whose responsibility that actually is. Under Public Safety, we do not have responsibility for CATSA, for the Canadian Air Transport Service Agency; that is the Minister of Transport.
Senator Zimmer: My other question is from the newspapers. On Wednesday, March 25, in the Embassy editorial page, you said in an interview that a push for a delay of the Western Hemisphere Travel Initiative became a moot point after Secretary of State Hilary Clinton and Secretary of Homeland Security Janet Napolitano indicated they are ready; there is no mechanism for further extension. You said there is a gap between Canada and American preparedness, and that it was interesting they have signed off because they felt they are ready. You noted that we are more ready than they are; while about 28 per cent of Americans have passports, we have 53 per cent. You are right on that.
There should be an advertising campaign to let them know the deadline is coming; but in the Calgary Herald, on March 26, Ms. Napolitano said they were so ill-prepared to implant these new rules that the loss of the plan will result in chaos. She also indicated that widespread border delays during next February's Olympics will be a major problem.
You are absolutely right. We are ready, they are not. What happens now? Do we wait until they work it out? They will be launching a bill trying to delay this until June 1 of next year, which I think is a good idea. However, at the moment, it is a moot point, as you say, because we are ready and they are not, but it looks like they will go ahead. Do you have any comments?
Mr. Van Loan: First, from our perspective, the government has to conduct itself responsibly in the expectation that the June 1 deadline will be in effect. That is the stated intention of the Obama administration. It was one of the first acts of Hilary Clinton as Secretary of State and Janet Napolitano as Secretary of Homeland Security after their confirmations. One of the first things they did was certify that the United States is ready.
As a result, our major focus must be on ensuring our Canadian travellers and businesses are as ready as possible. We are committed to some advertising to do that. We are exploring an innovative idea that is so innovative because it is incredibly simple, which is having CBSA agents simply hand people crossing the border without compliant documents a handbill that says "Effective June 1, you will need something better than this." That is a simple way of getting the information into the right hands.
Regarding the legislation Louise Slaughter, the representative from the Buffalo area, is bringing forward, we support and encourage that. It would be great if it passed. It will be tougher for that to pass in an environment where the administration has certified that it is ready. Then again, it is a clear democratic majority, and Representative Slaughter is in a critical legislative position. There is some cause for optimism there and we have been supportive of that legislation. We will continue to be so, but it will not put a stop to our efforts to be ready.
In terms of readiness, you cite the numbers on passport possession, which is a big gap, but it is not entirely representative of the gap, because many Americans never travel outside their borders. A higher proportion of Canadians do. Simple ownership is not a good indicator of who is actually crossing.
Even on who is actually crossing the border, the latest numbers indicate about 80 per cent of Canadians are travelling with compliant documents and only about 76 per cent of Americans, and this is their initiative. When it comes to frequent travellers — truckers, for example, or those in border communities — surprisingly, the possession of compliant documents is even lower. They are so used to being able to do it the old-fashioned way with a driver's licence that they have not taken seriously the notion that they will have to change.
In that case, only about 56 per cent of American truckers are crossing the border with compliant documents; we are up around 63 per cent. It is still far lower than we need to be. There is a lot of work to be done on both sides, but we are more ready than the Americans are.
We are working with the administration on approaches to implementation, looking for opportunities for some kind of flexibility. We will see what can come of that. We will continue to try to get Canadians as ready as possible.
The natural fear, of course, is that the Americans will be flexible in application with Americans and not so flexible with Canadians. I think that would also be foolish for them, however, because their businesses need the tourism; they need the trade as well, and I am hopeful we can work on something practical on the implementation side. We are working on all three fronts: flexibility on implementation; getting Canadians as ready as possible; and working for the common-sense thing, which is delayed application of the date. We will see.
Senator Zimmer: Is there any plan afoot to maybe enhance the driver's licence, going right up to a passport, which would be acceptable to both sides?
Mr. Van Loan: We obtained the opportunity under the Western Hemisphere Travel Initiative to utilize the enhanced driver's licence. That option is available but depends on the provinces choosing to implement it. British Columbia has done so and Quebec announced theirs a couple of weeks ago. The uptake on those is relatively small. Canadians have high uptake on passports, but it is an option for those who do not want a full passport. We must respect provincial jurisdiction and cannot compel them to create the opportunity.
Senator Mitchell: Minister, as mentioned earlier, we heard from the Canadian Trucking Alliance this evening. To a degree, they are encouraged by this bill, happy that they have been consulted and concerned about whether they will be listened to. Of course, the overhang of this for them is the question of competitiveness. They made a couple of suggestions that I would like to run by you. They are disappointed in the results of the security and prosperity agenda of the North American Competitiveness Council for working out some of these problems. They have proposed the creation of a cabinet committee on border issues. Could you give me your comments on that?
They indicated that one of the highlights in the last eight years was the smart accord in 2001 and they are wondering whether it might be worth considering a smart accord 2009.
Mr. Van Loan: Without dealing with those two specific proposals, I will look at the broader question. We thought we were going off in a good direction and then, notwithstanding the Security and Prosperity Partnership of North America, things have become tough. With the arrival of the new Obama administration in the U.S. there is real opportunity for cooperation on a number of these fronts, including a more cooperative approach to the border, which we are exploring. The Department of Homeland Security has been established since September 2001 and a new culture has evolved from that. We think the new administration has a different view and culture. It might take them some time to get that culture imprinted on the department, but we are of the view that a more cooperative approach to delivering security and facilitating trade is possible.
In terms of mechanisms for doing this, during my visit to Washington two weeks ago, the Secretary of Homeland Security made a commitment to hold high-level meetings with the Minister of Public Safety twice a year, separate and apart from the context of other meetings, solely committed to border issues. It is hoped that through such a mechanism, we will be able to facilitate discussion on the issues important to us and to create an impetus to resolve issues, which was missing in the past. When political figures meet with the President's administration and the Canadian minister, there is a need for results for announcements, if you will. She was quite candid about this. I hope this creates the pressure point we need to get our departments to bring things to a conclusion that might otherwise be stuck in perpetual talk and development.
It is a positive step forward and we are planning the first meeting in the months ahead. We have talked about focusing on issues faced at border locations. We can physically go out and inspect sites. It is the most welcoming action that we have seen in a number of years from the Americans on border management issues. There is recognition that we can achieve security in a thoughtful and intelligent way that does not damage trade. We must focus our resources and apply them where they get the biggest results. Let us share responsibilities and look for other opportunities to share instead. For example, instead of having two boats on two sides of the Great Lakes, put our guys on one boat and they can chase the smugglers as they cross the border. We are working on that as a permanent project. It is a classic example of the approach to pooling resources to get a bigger bang for the buck. By working together we can be more effective at our jobs. There is a real willingness among the new U.S. administration to adopt that kind of philosophy.
Senator Mitchell: It is reassuring and inspiring to hear you embracing this relationship with the Democrats and distancing yourself from the Republicans.
You mentioned boats on the Great Lakes and the issues of smuggling and contraband. However, such a program does not work if there are no teeth behind it. I remember reading the announcement last summer of the $1.1-billion agreement you made with the tobacco companies to settle this issue when tobacco executives had knowingly engineered a $4.4-billion smuggling fraud on the Canadian people. It seems odd to me that Canadian tobacco companies could do that and that their executives would not be charged. I juxtapose that position against the initiative to put 14-year-olds in jail forever. What teeth have you put into this so that it matters? How could these tobacco executives get away scot- free?
Mr. Van Loan: As for the tobacco executives, that has not been my realm. It dates back to before our government's time. It might be best to ask the RCMP and law enforcement officials, who are responsible for deciding whether charges are laid. As you know, we are not in a police state where government makes those decisions. Government makes decisions on lawsuits and civil actions, and I believe the government did so.
As for giving teeth to something, what would that be?
Senator Mitchell: If you catch people smuggling, clearly there must be something behind it. My concern is that in the one case there was not anything. Can you influence that at all? Clearly, you are getting tough on crime.
Mr. Van Loan: We have enough laws on the books. It is up to the law enforcement officials to make the decisions to press charges. Certainly, every week I read about new drug busts at the borders; a couple of them in the past seven days involved quite high-profile people. They are being charged and are likely to be convicted. We have a bill for mandatory prison sentences for serious drug crimes, and we hope that will pass and become law.
Senator Mitchell: You mentioned outfitting border guards with guns. Could you give us an indication of how much that would cost? Have they used guns? Have they been given Tasers?
Mr. Van Loan: I do not think anyone at the CBSA has a Taser. The process for training in weapons use has been ongoing. The focus has been on the areas of highest risk, which are land crossings. I can forward you notes later. In 2006, we approved $781 million to fund a 10-year initiative. There will be 4,800 officers fully trained by March 2016. As of February 28, 2009, we have 773 deployed armed officers across the country. Training is fairly successful, such that 88 per cent of those who take the courses pass. A two-day recertification course is required annually for all armed border services officer. There have been 39 incidents where duty firearms have been drawn. Whenever that happens, there is a review of the incident. I think that answers your questions.
Senator Mitchell: Could you reassure us that if we pass and support Senator Banks' amendment, you will not say that the Senate forced you into calling an election?
Mr. Van Loan: I do not expect this will be the kind of bill where we will make it a confidence matter, but there might be others, you never know.
[Translation]
Senator Nolin: I would like to thank you, minister, and your departmental assistants for having confidence in our institution to conduct the first review of this bill. I see in you a man who respects our institution's high standards of quality.
I have two questions. The first concerns the regulations respecting the implementation of the Customs Controlled Areas. The second concerns the difference between searches with suspicion and discreet checks without suspicion.
First, the regulations. Minister, you are a lawyer, and you are able to appreciate the difference between a search of an individual following an arrest, let us say a regular arrest under the Criminal Code of Canada, and an arrest made by a peace officer following a judicial review, and that leads to the laying of charges. The mechanism is somewhat different under the act that concerns us and the bill before us this evening.
The search is conducted without an arrest, but the tests that must be met to justify the search are the same: suspicion, reasonable grounds. There is a major difference. No one, unless you tell me the contrary — at least not under the act — conducts a judicial review of the suspicions or reasonable grounds leading your officer to proceed with that search. However, that is the way the act is; we have accepted that; it is entirely consistent with our rule of law and with the Canadian Charter of Rights and Freedoms.
What concerns me is this: currently, you have an area-setting mechanism, even though they are not yet called Customs Controlled Areas, the aim of which is to force the administration to have a smaller area. In other words, there is a first checkpoint, where you have one of your officers, who questions the traveller arriving in Canada and examines the traveller's declaration form. In the second stage, the traveller goes and picks up his bags. In the third stage, a second officer recovers the declaration, and it is then, under the present act, if we do not consider the amendment currently before us, that a search can be conducted.
I think the amendments you are introducing today will have the effect of encouraging the establishment of larger Customs Controlled Areas. Some today have even suggested that the airport could be that area. All that will depend on the regulations you put in place, minister.
My question is this: With regard to the rights of all the individuals who, after this act comes into force, go through the port or airport Customs Controlled Area, whichever it may be in Canada, what are the mechanisms, the criteria that you will use, you and the government, to ensure that we do not have to breach the rights of those who go through the system?
[English]
Mr. Van Loan: It is reasonable to assume that a customs controlled area will extend logically from the area of the plane itself, when a passenger exits a plane, or the tarmac portion, which is probably the more significant question for the purposes of this bill, to the point at which you clear customs and you walk out that door. One criterion is that once you have gone out that last door and you have cleared customs, you are obviously in an uncontrolled area. That is where the general public would be.
In order to be able to function, the airports will want to restrict the number of customs controlled areas, because it will be more restrictive and difficult to operate within them, and they will want them managed obviously to minimize the impact.
As for the impact on rights, again, for the normal passengers proceeding through an airport, I do not see that their experience would be changed dramatically in any way. There is really no reason to stop them to search their suitcases before they head out. There is no reason to search their suitcases at the luggage carousel when we could do it 30 feet away in secondary search. If the border services agents made that decision when they endorsed the card, with whatever the fancy code is and I do not know what it is — I have been fortunate not to have been sent to secondary so far — it is difficult to foresee a circumstance where there would be an issue relating to the ordinary travellers. Where the issues will arise, where the new powers are being granted and where you will see them exercised, is with personnel, workers in these areas, from the airline, from the catering company, the luggage off-loading people, who are often on contract if not employed with the airline—those are the individuals who potentially will be subject to the non-intrusive search. As well, if the CBSA agents see something going on, there is the opportunity to search in more detail, through X-rays or something like that, the actual cargo shipments or luggage.
I am not terribly concerned that you would see their rights unduly interfered with. They are accorded the same normal protections. The higher standard is that they have to justify why they are in that area, but beyond that there would have to be reasonable and probable grounds that someone would have to be able to defend, the same as they would searching someone on the street.
[Translation]
Senator Nolin: I am going to rely on your word, minister, and we will examine the regulatory scheme as it is introduced. The very end of your answer leads me to my second question, concerning the distinction you draw, in clauses 10 and 11 of the bill, between a search with suspicion, which we have just talked about, which is referred to in subsection 99.2(1) of the act as amended, and a non-intrusive examination of goods without specific suspicion.
[English]
Mr. Van Loan: I will let Ms. Allen answer the question.
Ms. Allen: You were saying between proposed section 99.2 and —
[Translation]
Senator Nolin: Because the minister closed by saying that he is convinced the rights of individuals in this process will be protected by the evaluation of tests, that is to say reasons that lead an officer to take the action he takes.
Under subsection 99.3(1), an officer may, without individualized suspicion, conduct a non-intrusive examination of goods. I would like to compare that with subsection 99.2(1), under which the officer may have reasonable grounds to suspect that a contravention will be committed. Explain to me how that happens. Why do you need this distinction? Why, in the case of subsection 99.3(1), is the test that theoretically is examined by no legal authority so low?
[English]
Mr. Van Loan: Let us take a scenario where a luggage handler is involved in a drug importing conspiracy. He knows he is supposed to look for the yellow suitcase coming from Wilf Moore on that flight from Jamaica.
Senator Nolin: No names.
Mr. Van Loan: He finds the yellow suitcase with the pink ribbon on it. He opens it up somewhere out of view of the camera, takes out a package of cocaine, puts it somewhere in his jacket and goes about his business. Later in the day, he has another flight coming in. He puts the cocaine into the bag of someone he thinks is a trusted traveller. The bag goes out in the carousel with someone he does not think will be under any suspicion because that person was on a flight from Buffalo or somewhere the Canada Border Services Agency is not concerned about. The traveller may be some 6- year-old kid or something; you can tell because their suitcase has Dora the Explorer on it. The baggage handler who put the cocaine in there figures out some way to get it back at a later point.
That would be the type of case where if you suspect that that is taking place you would want to search the suspicious party on the tarmac. Would that be a good scenario?
Ms. Allen: Yes, it would be. I can explain more specifically the difference between the two provisions.
You will note that proposed section 99.2 is about people and proposed section 99.3 is about goods. Section 99.3 is meant to look at things like mobile X-ray machines; for example, when workers at the airport are leaving their shift and taking their backpacks, those can be scanned as a matter of routine. That is a lower threshold.
Proposed section 99.2 is about people. We always take the rights of people very seriously. In this case, you would have the power to do routine questioning, but any further questioning, examination of goods or searching of the people are in compliance with the Charter there. For further questioning and search, you would need reasonable grounds under proposed section 99.2 of the bill. Those two sections are intended to address two different scenarios.
[Translation]
Senator Nolin: In other words, in 99.3(1), we are talking more about an X-ray examination?
[English]
Ms. Allen: Yes, like the roving security machines that you see when coming into this building, for example; that kind of thing.
[Translation]
Senator Nolin: In subsection 99.3(1), we are still talking about individuals.
[English]
Those goods are in the care of someone.
[Translation]
So the personal element is still there. It is the personal search that is different. Under subsection 99.2(1), the officer may search the person and the goods, whereas, under subsection 99.3(1), he may search only the goods, without searching the person.
[English]
Ms. Allen: That is exactly right.
Senator Tkachuk: May I ask a supplementary to that? When Senator Nolin is talking about what the rights of a border security officer are within that new perimeter we are talking about, it is because right now he does not have that right. Is that correct?
In other words, you have to be leaving the site. It would be no different than a Saskatoon city police officer who has particular rights on 2nd Avenue to stop someone on the street who he has information is a bad person. There is no police there; there are only border security officers.
I think this bill attempts to give border security officers the same rights within that area that a police officer would have in any other situation.
Senator Nolin: I am ready to answer Senator Tkachuk's question. I would love to hear from the minister. I think any lawyer would provide the same answer; the answer is no.
The Chair: The questions go to the minister and not to each other.
Mr. Van Loan: I will defer to Ms. Allen.
Ms. Allen: Would you repeat your question for me so I know I am answering the right one?
Senator Tkachuk: I want to know what the difference is between a border security officer in this bill given power to act under certain information to investigate what is happening on the tarmac and a city police officer in Saskatoon on 2nd Avenue getting information to act about a particular person who they have information is a bad person. What is the difference?
Ms. Allen: I think the primary difference is that the Customs Act is a regulatory piece of legislation. It is not criminal in nature. Border service officers have limited powers as a result. That is the first primary difference. The police officer in the province would primarily be investigating up-front criminal offences.
In addition, the powers set out in the Customs Act are quite a bit different and are tied to that regulatory purpose.
Senator Moore: Thank you all for appearing. My question is further to what Senator Nolin was asking with respect to proposed section 99.2, that any officer may search any person who is in or is leaving a customs controlled area other than a prescribed person or a member of a prescribed class of persons. Who are those prescribed persons or classes? Who are we talking about there?
Ms. Allen: Ms. Kerr-Perrott, if I get this wrong, please let me know, but I believe there are two types of people who would be considered there. First, under the regulations, you would have people who are, for example, emergency personnel, people who you actually want to be able to be in the customs controlled area, but because of our concern about internal conspiracies would still be subject to questioning and to search, if there were reasonable grounds to do so.
The second scenario, if you read the link back in the legislation, is ministerial authorizations. Those are designed to deal with last-minute situations that we cannot possibly foresee. I do not know of an example; perhaps a visiting diplomat or something like that.
Senator Banks: In respect of the answer to Senator Moore's question, is it helpful to look at the proposed amendment to section 107.1 of the act, which seems to me to describe airline employees and crew, among others?
Ms. Allen: We are looking at clause 107?
Senator Banks: It is clause 12 of the present bill, which seeks to amend section 107, and says that certain of the described people.
Mr. Van Loan: That is 107.1, which is advance passenger information.
Senator Banks: That would be an airline employee.
Mr. Van Loan: No. That is the advance passenger information. This is one of the technical changes, separate from the two major issues in the bill. This section deals with the need to send the passenger list to Canada at least 15 minutes before they arrive. Is that the deadline now? It is to move up that time frame a lot sooner so we are getting the list of passengers coming to Canada on an airline early.
Senator Banks: From whom?
Mr. Van Loan: From the airline.
Senator Banks: So the prescribed persons or class of persons in 107.1 are airline employees; right?
Mr. Van Loan: Prescribed time and manner, and prescribed information about any person. It is not a prescribed person. This is basically name, address, birth date, sex and flight number of the passenger. This has nothing to do with the customs controlled area. It has nothing to do with the eManifest. This is the system for letting CBSA agents know before a flight lands in Canada who is on that flight. It is the way they can flag the persons of concern in advance before they go through customs.
Senator Banks: I understand. What I am asking is who is a prescribed person or prescribed class of persons. Proposed section 107.1 says:
The Minister may, under prescribed circumstances and conditions, require any prescribed person or prescribed class of persons to provide, or to provide access to . . . information . . .
Are not those airline people?
Mr. Van Loan: "Prescribed persons" simply means it is in the regulations, and presumably the regulations will say. In this case, it is the list that has to provide that. You can require the airline to tell you who is on the plane, who they are and their birth date.
The Chair: And 32 other pieces of information.
Mr. Van Loan: I think it will only be three or four.
The Chair: Currently, it is 32.
Mr. Van Loan: Is that true? Americans only want three or four from us.
The Chair: No, no. They want 32, and we are following them.
Senator Moore: I want to follow up on a question that Senator Mitchell asked and then you made a comment, minister, with an example. With the implementation of this bill, if it is passed into law, and the seizure of illicit goods, we then get into the matter of control of those goods. I am not sure whether you are familiar with a story that was in the press today about the Canada Border Services Agency, pointing out that in excess of $400 million of seized contraband ended up in landfill sites, 70 per cent of the warehouses or bond rooms were not continuously monitored, in 15 of the facilities the agency did not control access by non-government persons, and 23 of the sites had no inventory control whatsoever. Government policy requires the CBSA to turn over most prohibited drugs to the RCMP for eventual incineration, and workers were not aware of that requirement. Destruction in most cases involved putting it in the garbage for a trip to the local landfill. This all comes out of an internal CBSA audit that was done last month, and these things were brought to the attention of the CBSA in 2007 by the Auditor General.
I would like to know whether you are aware of these things, first, and second, what framework for the management, control and disposal of these goods do you intend to implement?
Mr. Van Loan: I am aware of the media reports today. I have not yet seen the actual audit, so I am not in a position to be able to comment right now.
Senator Moore: The audit is on their site. I think you will find it interesting and alarming reading.
The Chair: Minister, I have several questions. These are not in any particular order.
You raised the question of Shiprider. Some members of the committee have had the opportunity to visit Shiprider. We thought it was a terrific program. It did not exist last year. It did not function at all. The commandant of the Coast Guard has told some members of the committee that he is prepared to provide as many vessels as you are prepared to provide RCMP officers. There are currently plans to build four vessels on the Great Lakes in Canada. We have only 14 RCMP officers on the four Great Lakes and on the St. Lawrence Seaway down to the Saguenay. How do you expect Shiprider to function? We think it is a terrific program in principle, but it appears to be badly underfunded, and it appears to lack not only personnel but also interest in making it move forward. Right now, no one is enforcing federal statutes between Kingston and the Saguenay.
Mr. Van Loan: The Shiprider program was a pilot project, and the pilot has completed. Currently, we are in discussions that I will say optimistically are going well with the Americans to establish it as a permanent program on a go-forward basis. Those are not concluded yet, so I am not in a position to tell you what the final form of the program will be or that we will in fact have it. I will probably get in trouble for going as far as I have already, but I am optimistic we will have Shiprider operating as a permanent program soon.
The Chair: You will get a great deal of support from this area if that happens, because it seems to be as good as the Integrated Border Enforcement Teams, only on the water. It makes a lot of sense.
There was also questioning about armed CBSA officers. Can you advise the committee of any problems that currently exist in the Akwesasne area with CBSA officers moving onto the reserve armed?
Mr. Van Loan: None of the officers at Akwesasne are armed right now. Training is under way for them. Some of them have been trained. However, we do not wish to commence that program until we are satisfied that we have a sufficient complement to do it properly.
The Chair: The issue does not, at least from my perspective, sir, appear to be a question of complement. It appears to be more a question of respect and how the people who live at Akwesasne are approached about the problem and whether it is done in a cooperative manner rather than with a big gang of people.
Mr. Van Loan: That is an aspect of doing it properly.
The Chair: You and your officials mentioned earlier that there would be only one check, and that would be at the primary inspection line, but it seems to us that there are two checks, one as you are leaving the hall and one at the primary inspection line, the second check being the one that sends you to secondary, if you are going to secondary.
Mr. Van Loan: I did not follow exactly.
The Chair: You mentioned earlier that there would be only one check of people leaving, and it seems to us that you are always going to have to have someone at the door to send people to secondary.
Mr. Van Loan: Absolutely. I thought I explained that properly. I meant that you were not going to have further checks upstream before you get to that first primary check. I did not anticipate that is what you would see.
The Chair: That is good.
You raised the question of ports. We had not discussed it earlier, but since you raised it, members of the committee have received reports from customs officers about ghost cans, containers that are not on the manifest of a ship. An example would be a manifest with 260 containers, and 266 come off and then cannot be accounted for. How will the new customs control area affect or change that?
Mr. Van Loan: I would hope that any containers coming off that are not adequately accounted for in the paperwork would be held for search. I expect that would be standard practice.
The Chair: The issue is they cannot be found right now.
Mr. Van Loan: The containers cannot be found?
The Chair: That is correct.
Ms. Kerr-Perrott: We are looking at developing what we call a bay plan, where we get the information about the cargo containers and where they are specifically laid out. We will be looking at that particular issue. We will know how many containers, and where they are actually located on the ship.
The Chair: When do you expect this program to be in effect?
Ms. Kerr-Perrott: I cannot give you the exact date, but I can supply that for you.
The Chair: Thank you. You could provide it to the clerk.
Ms. Kerr-Perrott: Yes.
The Chair: Mixed areas in airports. It was a slow day yesterday and I spent four or five hours wandering around Pearson. Down in the baggage area, the line going to customs runs as close to the domestic line as you and I are. People wander around there freely without being interrupted, stopped or having their passes checked.
I recognize that much of this is probably a Transport Canada issue. However, since you are proposing a new system that will be directed primary at people who are handling baggage or mechanics or people working around aircraft, how will your system improve that?
Mr. Van Loan: You are right that it is primarily a Transport Canada issue, and we have to look at the working operation in the circumstances of every airport. You were with the Minister of Transport doing some of this looking around, as I understand it.
The Chair: I cannot confirm or deny who I was with.
Mr. Van Loan: Those are legitimate questions you have raised, but it is primarily a Transport issue, as you have indicated.
The Chair: Of principal concern — and it has turned up in a number of committee reports — is the issue that people who work around planes go to work without being checked in any fashion, unlike customers who are flying on planes. The current procedure, as was described to me and my friends yesterday, was that they have a biometric card; they swipe it, put their finger in and a fingerprint is taken, but no one looks in their bags. In fact, one individual who was speaking to us said that no one has looked in a bag, lunch pail or rucksack that he has had for the last three years.
Are you proposing that now people will have their bags inspected when they come into a customs controlled area and when they leave a customs controlled area? Is that going to be part of the protocol for people who are dealing with baggage?
Mr. Van Loan: The bill would create the opportunity for that within customs controlled areas. The difficulty is that this bill can do nothing for the areas dealing with domestic flights and for workers in domestic areas. A lot of workers work in both areas, sometimes in one place and sometimes in another. That is one reason why you need some of these powers, so you can inspect people moving from one area to another.
The Chair: At Terminal 1, they overlap. They are both in the same location.
Mr. Van Loan: When you say they overlap —
The Chair: If this was the hall, where you are sitting would be the domestic belt and where I am sitting would be the customs belt.
Mr. Van Loan: Are you talking about removing luggage, or individuals walking off?
The Chair: You can pick up a bag here and move it to that belt over there, and no one would say hello.
Mr. Van Loan: That would be a legitimate concern that needs to be addressed. That is all I can say.
The Chair: Do you believe this propose legislation would address that?
Mr. Van Loan: I do not think you even need this legislation to address that. CBSA should be ensuring those areas are satisfactorily secure, in any event. You do not need this legislation in order for that to be done, and it should be done. I do not know the particular case you have in mind.
The Chair: I am free to go down any time you would like to go.
How would this proposed legislation impact on fixed base operations, general aviation?
Mr. Van Loan: That is a very good question. Will it have any impact on general aviation?
Ms. Kerr-Perrott: Not that I am aware of.
The Chair: Sir, this is an area where no one is inspected, no one is searched. Aircraft carrying up to 120 people regularly fly into and out of —
Mr. Van Loan: If you are dealing with terminal aviation and they are in a position where they have to report at an airport — let us say it is not a tier 1 airport, but a tier 2 or tier 3 airport and it is a terminal aviation flight — they will still have to report to the CBSA. They will still encounter a customs controlled area. The question will be how that is defined operationally in the case of that airport.
The Chair: Right, but if it is a tier 1 airport — take Pearson, for example — there is a phone call that goes to CBSA. Because it is close, most of the time there is a CBSA response — not always, but most of the time. How will the system change? Will people be inspected getting on and getting off? Will agents ask to look in their luggage? Will people look inside the aircraft?
Mr. Van Loan: To deal with it in the hypothetical, you would have to look at each particular airport, if they are going to establish a customs controlled area. I do not know where the CBSA does their searches. I am not familiar with that. I imagine there would be a different solution in different airports.
The Chair: In fairness, all tier 1 airports have virtually the same sort of separation, where general aviation is off to the side.
Mr. Van Loan: You still have the same obligations to report to a Canada Border Services officer when you arrive, so you would still be subject to the provisions of this bill.
The Chair: Having said that, there is no Canada Border Services officer there. You wait 15 or 20 minutes while he or she drives over to have a chat with you.
Mr. Van Loan: Right.
Senator Banks: During which time your luggage could be gone.
Ms. Allen: It is probably not quite answerable now. I understand we are still consulting on the development of the designations.
Ms. Kerr-Perrott: That is right. We are still looking at those areas that we would determine to be customs controlled areas.
The Chair: I would be enthusiastic if you said that would be a customs controlled area.
Mr. Van Loan: I expect it will have to be managed there, but how it is done will be different in each airport. It is hard to say in the hypothetical how it will work.
Ms. Allen: One thing to keep in mind is that this legislation is really geared to internal conspiracies and protecting national security. To the extent the analysis demonstrates that those areas that you are referring to pose a particular threat under those headings, it is likely something the CBSA would look at. Aside from that, I am speaking generally. I do not have enough information to say whether that would be the case.
The Chair: I think it is fair to say that members of the committee who have visited those places feel they are the black hole of aviation in terms of smuggling and security threats.
Senator Tkachuk: My view is that for private planes coming in, those people are checked. Maybe we should invite some witnesses to talk about that at a future meeting to see exactly what is going on at Terminal 1 in Toronto.
The Chair: Perhaps we should do that before we go to clause by clause?
Senator Tkachuk: No. This is a separate issue.
The Chair: No, it is not. I would be happy to see if we can get them. It is your suggestion, Senator Tkachuk, and I am happy to comply.
Senator Tkachuk: I am happy to comply as well.
The Chair: We will do clause by clause after we hear these witnesses, if that is where you want to go.
Senator Tkachuk: Chair, I just asked the question.
The Chair: The questions are to be asked of the minister, not of me.
Mr. Van Loan: My view would be that you would have to wait until it was working in practice to get really good answers from the witnesses about how it is working. You could get valuable information from them now on how it might work today. You might be able to get valuable information from them on how it might be implemented. Neither of those things need delay the passage of the bill.
To get information on how the statute works in practice, you would need to pass it. I see no need to delay your clause by clause today.
The Chair: I would have no opportunity to jerk Senator Tkachuk's chain, if that were the case.
Senator Wallin: Are you applying to be a witness?
The Chair: No, because you would make too many comments from the bleachers.
Minister, if I may, I have one last question that actually has nothing to do with the bill. Senator Collins, from Maine, is the ranking member of the Homeland Security Committee. She had proposed a harmonization of exemptions for individuals crossing the border between Canada and the United States. Do you favour that generally?
Mr. Van Loan: What does "harmonization of exemptions" mean?
The Chair: I am talking about someone travelling across the border for a day and being entitled to bring back a certain amount in goods. It is a finance question.
Mr. Van Loan: Questions on customs exemptions would be for Finance Canada.
The Chair: Yes, but are you in favour of it generally?
Mr. Van Loan: That would be a question for Finance.
The Chair: Thank you. I knew I would get a good answer.
We have exhausted the time. Minister, you have answered all of the questions of the committee in a helpful manner and we are grateful to you for coming. We recognize that you had difficulty getting away from votes but, on behalf of the committee, thank you for being here to discuss the bill with us.
Senators, we have two small budgets: First, $1,200 for working meals. I need a motion, please.
Senator Tkachuk: I so move.
The Chair: Is there discussion? All in favour?
Hon. Senators: Agreed.
The Chair: Opposed? Abstentions? Carried.
The second is $1,600 for working meals for the special study. I need a motion, please.
Senator Manning: I so move.
The Chair: All in favour?
Hon. Senators: Agreed.
The Chair: Opposed? Abstentions? Carried.
Does everyone have a copy of the paper dealing with clause-by-clause consideration of Bill S-2?
Is it agreed by the committee to proceed to clause-by-clause consideration of Bill S-2, An Act to amend the Customs Act?
Hon. Senators: Agreed.
The Chair: Opposed? Carried.
Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 2 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 3 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 4 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 5 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 6 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 7 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 8 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 9 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 10 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 11 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 12 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 13 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 14 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 15 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 16 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 17 carry?
Hon. Senators: Agreed.
Senator Banks: I move that clause 17 be not carried but that it be amended by deleting proposed section 164.1(2), on lines 27, 28, and 29, which states:
Material that is incorporated by reference in a regulation is not a statutory instrument for the purposes of the Statutory Instruments Act.
The Chair: What page is that, please?
Senator Banks: Page 7.
The Chair: It is clause 17, at what line number?
Senator Banks: Line 28.
Senator Tkachuk: Do you require a seconder, Senator Banks?
The Chair: No, not in committee.
Is there debate? We have an opportunity if anyone wants to discuss it.
Seeing no debate, I put the question.
Is it your pleasure to adopt the motion in amendment?
Hon. Senators: Agreed.
The Chair: Opposed? Abstentions? Carried.
Shall clause 17, as amended, carry?
Hon. Senators: Agreed.
The Chair: Shall clause 18 carry?
Hon. Senators: Agreed.
The Chair: Shall the title carry?
Hon. Senators: Agreed.
The Chair: Shall the bill, as amended, carry?
Hon. Senators: Agreed.
The Chair: Does the committee wish to discuss appending observations to the report?
Hon. Senators: No.
The Chair: There are no observations. Is it agreed that the bill be reported with an amendment and without observations to the Senate at the earliest opportunity?
Hon. Senators: Agreed.
The Chair: Thank you. That went as expeditiously as it could, and I appreciate your cooperation.
(The committee adjourned.)