Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 13 - Evidence - September 15, 2009
OTTAWA, Tuesday, September 15, 2009
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 5:35 p.m. to examine such issues as may arise from time to time relating to Foreign relations generally (topic: Canada-United States border).
Senator Consiglio Di Nino (Chair) in the chair.
[English]
The Chair: Welcome, honourable senators, to this first meeting of the Standing Senate Committee on Foreign Affairs and International Trade since the summer recess.
In 2008, Canada's goods and services trade with the U.S. was valued at $742 billion. Exports to the U.S. were $407 billion while imports were $334 billion. Approximately 28 per cent of the bilateral trade represents inputs and outputs crossing the border, some multiple times, during the production cycles, which are generally inter-company or inter- industry.
Today's meeting will focus on the Canada-U.S. border. We are pleased to have appearing before the committee from the Canadian Chamber of Commerce, Ms. Shirley-Ann George, Senior Vice-President, Policy; and from the U.S. Chamber of Commerce, Mr. Patrick Kilbride, Director, Western Hemisphere Affairs. The Canadian Chamber of Commerce and the U.S. Chamber of Commerce in partnership with 47 business associations from both sides of the border issued a joint report in July 2009 entitled Finding the Balance: Shared Border of the Future. As well, we will hear from Professor Margaret Kalacska, Research Fellow in Border Security, Canadian International Council, and Assistant Professor, Department of Geography, McGill University. She is the author of a paper entitled Technological Integration as a Means of Enhancing Border Security and Reducing Transnational Crime. Our fourth witness today is Mr. Michael Burt, Associate Director, Industrial Economic Group, Conference Board of Canada. Mr. Burt joined the Conference Board in March 2004 following his work with an economic consulting firm in the United States.
I suggest that we allow as much time as possible for discussion after the presentations, which should be 10 minutes or less each.
Ms. George, please proceed.
Shirley-Ann George, Senior Vice-President, Policy, The Canadian Chamber of Commerce: Thank you very much. The Canadian and U.S. chambers of commerce are pleased to provide input to a vital issue on the Canada-U.S. border. As we find ourselves in a global economic downturn, we must ensure that our economic fundamentals are working. Unfortunately, the recession is magnifying structural problems in our economies, one being the Canada-U.S. border. As you know, Canada and the United States have the largest trading relationship in the world, with $1.6 billion in two- way trade and 300,000 travellers crossing the border every day. It has been said often that we build things together, but you only have to talk to some of our members to really understand what that means.
One third of our trade is inter-company delivery of inputs. We talk a great deal about how auto parts travel the border multiple times during production, but even some of the ingredients and materials in the production of a can of soup come across the border multiple times. Major benefits flow from this relationship, including 7 million jobs in the United States and 3 million jobs in Canada.
The Canada-United States Free Trade Agreement tore down tariff barriers to trade, creating an integrated economy. With security concerns following 9/11 and the piecemeal application of border procedures, inventories and transportation costs are growing, even while companies cut their spending. Increased border costs add pressure to businesses' bottom lines, discouraging much needed tourism and putting at risk far too many jobs. You do not have to look too far down Main Street to see the effects of border costs. Trips from the United States to Canada are down 50 per cent from five years ago, in part because of the new U.S. border passport requirement. The number of Canadians travelling to the United States is down over 20 per cent just from last year.
Further, becoming a trusted shipper can cost more than $100,000 in upfront costs. Adding to the myriad of costs are direct fees added for crossing the border, such as the U.S. APHIS fee that costs businesses $78 million per year. Unpredictable border wait times and lengthy inspection times add to the problem. One company has said it cost them $1 million per year to meet the security requirements and deal with excess border costs. These costs hurt the Canadian and U.S. economies, making it harder for both countries to create jobs and compete against rising global competition.
We recently formed this coalition of 47 Canadian and American business associations to put forward to government practical, short-term recommendations for making the border more secure and trade efficient. Each recommendation may seem like a discrete undertaking, but collectively they refocus border resources on the unknown trade and traveller. This allows trusted shippers and travellers to move seamlessly between our countries. We believe that our recommendations can and should be put in place within the next 18 months.
Prime Minister Harper and President Obama meet tomorrow in Washington. Minister Van Loan and Secretary Napolitano prepare for the binational border meetings, and you will meet with your U.S. counterparts. It is the perfect time for our governments to commit to moving forward on this report's recommendations.
I would like to share some of the key recommendations of the report.
We strongly support the voluntary trusted-shipper and traveller programs, such as C-TPAT, FAST and NEXUS, which enhance supply chain and travel security. These programs should lead to more consistency in border crossings, including a lower inspection rate for participants. Border agencies can focus their resources on the unknown trade and traveller, making the search for the proverbial needle in a smaller haystack. Costs to participate in trusted-shipper programs can be over $100,000; it is a costly but needed step for securing our supply chains. Participants should be rewarded with a traffic light that stays green when crossing the border.
However, too few companies have reported that their inspection rates have decreased significantly. Few believe the investment in these programs produced enough benefit to justify the cost. Some companies are avoiding the program altogether because they think they will be inspected less by not being in the trusted programs. Trusted travellers are facing similar challenges. We must treat trusted shippers and travellers differently than unknown trade and travellers.
Canada and the United States need to ensure that a risk-based approach to border management enhances membership in trusted programs. This is very important. We need to provide the participants with clear, measured and reported benefits for participation. That is not happening today. With this, we could drive thousands more companies into these programs, which are very much needed.
We also would like to expand these programs so that companies regulated from other government departments beyond our border agencies can also participate. Our government should expand the definition of border to go beyond the physical location of the 49th parallel.
Much of what border officers do can be done before the cargo or the traveller reaches the border. Currently, 12 million passengers per year are pre-cleared into the United States from Canadian airports. Rail, bus and marine facilities should also offer these same services. It has been reported that pre-clearance could decrease by one hour a trip between Montreal and Plattsburgh, Toronto and Niagara, or Vancouver and Seattle. Pre-clearance of goods could be done inside the processing plants.
For example, Canadian Food Inspection Agency, CFIA, inspectors are currently operating under a memorandum of understand from the U.S. Food and Drug Administration, FDA, and the United States Department of Agriculture, USDA. They are present in meat and poultry plants in Canada and could easily do the border inspections before the goods leave the plant. Pre-clearance could help relieve some of the traffic congestion at larger ports of entry, improve supply chain delivery and reduce border costs.
The lack of a single system for reporting imports and exports on the Canadian and U.S. sides of the border continues to frustrate businesses. Different shipments are regulated by different government departments. We are told there are 10 departments in 43 different programs. Canadian and U.S. border agencies are moving towards electronic importing and exporting reporting mandates. Other government departments use different systems that are still paper- based in some cases.
Canadian and U.S. businesses have stepped up to provide their information electronically to U.S. Customs and Border Protection and Canada Border Services Agency, CBSA. This was done not only because they were told to, but because they were told this was for the security of our nations.
Why are other government departments not held to that same test? Electronic reporting helps our border agencies manage risk. A uniform filing system across all government departments would boost information sharing within government and simplify reporting processes for businesses.
We strongly support the Canadian single-window initiative and the U.S. International Trade Data System. We recommend that both governments dedicate the resources needed to implement uniform reporting systems.
Another major concern for the business community is that not enough border lanes and inspection services are available during peak commercial and travel times. Traffic patterns — especially commercial traffic — are predictable and should drive border staffing levels rather than the time of day. We recommend that Canada and the United States offer 24/7 border services at all major crossings. This would include the operation of border booths of secondary inspections and border-related support services. It does not work if the border is open and the inspectors go home at five o'clock.
One of the most contentious border issues has been the Western Hemisphere Travel Initiative, WHTI. We are pleased to see that people can use trusted-traveller cards and enhanced driver's licences to enter the United States. However, we remain concerned there is not enough critical mass of WHTI-compliant documents in circulation. Without this critical mass, travellers are avoiding the border altogether. Unfortunately, you can see from the Statistics Canada report for June that there is clear evidence this is already popping up.
Enhanced driver's licences and NEXUS cards contain vicinity RFID, radio frequency identification, chips that could dramatically reduce border wait times. One study showed that if every border user had a travel document with vicinity RFID and each border booth had the needed reader, wait times could decrease from 65 minutes to eight minutes. All the information required for the border officer to grant or deny entry would be on the officer's screen as the traveller approached the land booth. The Canadian government should put in place the needed RFID reader in all border booths at major crossings.
Finally, a pandemic, natural disaster or terrorist activity — any of these — could lead to a partial or full border closure. The border's importance to 10 million jobs calls for a contingency plan to deal with these potential events. We applaud the progress made by Canadian and U.S. governments in the last few years in this area. We strongly support further work on a border contingency plan and communication strategy that could be enacted to reopen the border following a partial or full closure, especially for those trusted shippers and travellers.
In conclusion, the government plays a critical role in ensuring the efficient and secure movement of goods and people. We have many dedicated people inside our border agency who have worked hard on these problems.
However, more needs to be done. Improving supply chains and border access is vital to both the economic recovery as well as the long-term economic health. We view these improvements as an investment in the future of global trade and prosperity and an investment in the future prosperity of Canada and the United States.
We do not believe that the things we ask for are overly expensive or difficult to do. When you read the report, you will ask why we are not already doing this today.
The current economic climate amplifies the urgent need for action — action that delivers a big win for Canada and the United States in jobs and business and a more secure North America. At the conclusion, I would be happy to answer any of your questions.
Patrick Kilbride, Director, Western Hemisphere Affairs, U.S. Chamber of Commerce: Good afternoon Mr. Chair and members of the committee. Thank you for inviting the U.S. Chamber of Commerce to join you here today. I would like to thank my colleague, Ms. George, for sharing her time on the panel with me.
Regarding the substance of our joint border report, I would like to associate myself with Ms. George's comments. The U.S. Chamber of Commerce is proud to partner with the Canadian Chamber of Commerce on this effort. We are committed to working with officials in the U.S. Congress and federal agencies to move these important recommendations forward. We consider the bilateral relationship between Canada and the United States critical to our national and economic security and firmly believe that the open and efficient trade flows between our countries are central to our shared economic well-being.
Ms. George described the commercial relationship quite poignantly by the simple statement that we build things together. That is precisely the nature of the bilateral business ties that the U.S. chamber seeks to sustain and enhance on behalf of its member companies. We are engaged in the business of building those things together with our Canadian partners.
The extent of our outreach in Canada is broad and deep. We work with a number of worthy partners in Canada, including the American Chamber of Commerce in Canada and the Canadian Council of Chief Executives, and of course we have a special relationship with the Canadian Chamber of Commerce. In addition to this, our second joint border report, on November 18 we are co-hosting what has become an annual conference on U.S.-Canada relations in Washington. Today the U.S. chamber had the pleasure of joining the Canadian chamber in meetings with a number of your parliamentarian colleagues and federal officials regarding our joint border report. On November 18, we will have the opportunity to host the Canadian chamber for a reciprocal visit where we will try to advance these recommendations with our own key officials in Congress and the administration.
You should also be aware that we are working assiduously to repair the damage done to our cross-border supply chain relationships by protectionist provisions in the U.S. stimulus package and the American Recovery and Reinvestment Act. Today in Detroit, in a major speech, U.S. Chamber of Commerce president and CEO Tom Donohue spoke out again strongly on this issue and the importance of resisting protectionism generally. Our strong engagement with Canada begins with Mr. Donohue and runs throughout the organization.
We also today released a study that looks at the impact in the United States of protectionist measures such as Buy American as well as some other issues, and the report concluded that 500,000 U.S. jobs have been lost due to these protectionist measures.
I appreciate the opportunity to represent the chamber today, and I would be pleased to respond to your questions.
Margaret Kalacska, Research Fellow in Border Security, Canadian International Council, and Associate Professor, McGill University: Good evening and thank you for this opportunity to share with you some findings from our report, which examines the use of technology and the integration of technology as a means to improve security without imposing further restrictions on legitimate travel and trade. One of the key features that we have noticed recently is the increase in security measures, both for personal travellers and, as has been articulated by Ms. George, on shipping programs as well.
By focusing most of the attention on the legitimate ports of travel, be it airports, land crossings or marine crossings, we have neglected the areas in between, and the areas between these legitimate ports are porous and facilitate the movement of illicit goods or persons we would like to have the security measures directly affect. If we try to curb the flow of illicit goods by focusing only on the ports of entry, we are missing hundreds of kilometres where this flow of people and commodities is happening on a daily basis.
For example, one of the largest commodities that flow from Canada to the United States would be cannabis or other forms of drugs such as methamphetamines. Here in Canada there is a form of complacency within the public because cannabis is seen as a victimless crime, personal use, but where would a grow of 10,000 plants be considered personal use? That size of plantation is common in Eastern Canada as well as in Western Canada, and most of the production is for export, primarily to the United States, in exchange for other commodities such as arms or other forms of harder drugs. They are not being transported through the legitimate ports of entry; they are being transported in the rural areas. They are coming by truck or by ATV or by boat, but not in somebody's luggage through an airport.
We need to focus on increasing security without imposing these further restrictions on the legitimate traveller. While there have been significant efforts from both Canada and the United States in having integrated efforts such as the integrated border enforcement team, they are limited by the resources they are given. Increasing the technological infrastructure — technology that has been proven in the field to work — would increase their effectiveness on the ground, in addition to increasing the number of officers who may be able to respond in real time. It is one thing for them to know that a person has crossed, but they are not able to get there in time to actually intercept the person. If they have the tools or there is enough manpower to reach the most remote areas of our border, they can be much more effective.
Finally, technology does not work on its own. People who know how to use the technology are needed. The technology must be proven to work in the field and must be integrated with the communications on both sides of the Canada-U.S. border. There has to be a way for officials in Canada to communicate directly with border services in the United States and vice versa. It cannot be solely in one country or the other. This kind of integrated plan would increase the security against the illicit trade that we are trying to curb without imposing further restrictions on the legitimate traveller.
I welcome any comments or questions.
Michael Burt, Associate Director, Conference Board of Canada: Thank you for inviting me here today. For anyone who is unaware, the Conference Board of Canada is a non-profit, non-partisan think tank based here in Ottawa. We do research in a variety of areas, including public policy and economic forecasting analysis. One of our products is our international trade and investment centre. Under its banner, we conduct a wide variety of research on Canada's international trade investment, including our relationship with the United States.
Post-NAFTA, we are dealing with an environment where nearly all of the tariff barriers have been removed on products passing back and forth between Canada and the United States. We are talking about an era of non-tariff barriers. These include things like restrictions on investment, import quotas, regulatory differences and, increasingly, problems around clearing the border.
The main result of these non-tariff barriers is increased costs for businesses. Some are direct, such as complying with new and changing security policies. Some are indirect. There is significant evidence now that port substitution is taking place. Businesses are choosing a suboptimal port through which to transport their goods. The reasons for this may include varying wait times from port to port, the available infrastructure in place at a particular port, and also anecdotal evidence that there is inconsistent enforcement of policies between ports.
Another indirect cost is that there is evidence that businesses are carrying higher inventories than they were prior to 9/11. We call this just in case instead of just in time. Obviously there are costs of carrying higher inventories in lost benefits of just-in-time inventory management systems.
There is also some evidence that Canada-U.S. supply chains are becoming less integrated. Fewer imported inputs are being used in Canadian production. This has costs because businesses may be paying more for inputs than necessary, with implications for reduced productivity growth in Canada.
Research suggests that these problems do not affect all players in the economy equally. Industries that are more trade dependent, such as autos, electronics, machinery and equipment, are more sensitive to barriers at the border. We found that the impact on trade in services is generally larger than it is for trade in goods. That is not to say there has been no impact for trade in goods, but generally speaking, things like the Canadian dollar or the growing role of China in the world economy have had more impact on the border and on our trade performance with the United States in recent years. On the services front generally, the impact is larger because it requires movement of people rather than goods. Obviously, we deal with a new set of rules instead of transporting items across the border. We are now having to deal with immigration rules around people crossing, visas, et cetera.
For example, as Ms. George mentioned, exports services include tourism and arrivals coming here to Canada. The number of tourists arriving from the U.S. has fallen by more than half since it peaked in the summer of 2001, just before 9/11. It is a major loss of export revenue for Canada.
Finally, in terms of disproportionate effects, small and medium-sized companies are generally more affected than large businesses. This is because larger businesses generally have the resources to hire the legal and broker services that make crossing the border much easier. Also, large companies generally find it easier, at least on a cost basis, to qualify for programs designed to expedite the movement of goods across the border.
From our research, we have come up with several policy recommendations, one of them being to simplify the alphabet soup programs. There are many overlapping programs on both sides of the border with many different names. It can be confusing for a layperson. At a minimum, we should set up as a contact point an information broker within the government to help businesses navigate the myriad different programs that exist at the state, federal and provincial levels on both sides of the border. We should ensure there is only one check at the border rather than having to deal with multiple agencies when crossing the border, and that one agency is responsible for all of the items that are moving back and forth across the border.
The second big recommendation is consistency. The first issue is harmonizing border clearance rules so that if you qualify for a trusted-shipper program on one side of the border, you also qualify on the other side of the border. Right now, that is not necessarily the case under some circumstances.
Also, there should be consistent application of the rules at all border crossings. Businesses should not be choosing their border crossing point on the basis of what the culture is at a particular border crossing.
The third recommendation involves infrastructure: Ensure that there is staff, equipment and infrastructure in place to take full advantage of the trusted-shipper programs. Also, some of the concerns around wait times that have been expressed post-9/11 actually deal with capacity constraints that existed prior to 9/11. We have made significant strides in recent years in improving the infrastructure at the border crossings, but more needs to be done to ensure there is adequate capacity at the border for the required level of trade that is taking place.
Finally, there is the issue of pre-clearance. Ms. George talked at length about this; essentially, take the pressure away from the border point. What functions in the border clearing process could take place away from the border? That way we minimize the activity taking place and hopefully minimize wait times at the border itself.
The Chair: Thank you kindly, all four of you. We appreciate your sharing your thoughts with us.
I have a list of colleagues who will be asking questions. I implore them, as I did our guests, to be brief and concise.
Senator Stollery: I was looking through the fourth report of this committee in 2003: Uncertain Access: The Consequences of U.S. Security and Trade Actions for Canadian Trade Policy. I was looking through the recommendations that this committee made six years ago. Mr. Richard Harris, who has appeared before the committee several times, is a former member of the research advisory group on trade policy of the MacDonald commission, which originally recommended free trade with the U.S. He observed to the committee six years ago that increases in border costs had to be regarded ``as one of the single most important national economic issues of this decade,'' in that it could reverse the positive economic trends of the past 15 years.
We are quite aware at this committee, because we have followed the U.S.-Canada trade situation for some time, that trade has dropped from essentially 86 per cent three or four years ago to, at this point, the last I heard, less than 70 per cent. Our trade has dropped precipitously, which is exactly what Mr. Harris predicted six years ago. We have a 50 per cent drop in tourism.
I come from Toronto. I have known the U.S. border all my life. If I were an American citizen, I would be really upset about all of this. In my lifetime, the population of Buffalo has dropped by 500,000 people; Rochester, by 80,000 people; Syracuse, by 20,000 people. Any of us here have noted the shabbiness of the border states near where I come from. Yet, I do not detect any sense of urgency.
I have one of those NEXUS cards. I crossed over at Cornwall to go to a Home Depot, and I drove from Cornwall to Ogdensburg on my motorcycle to get something. I asked myself what the taxpayers of this area must think about their congressman. There was no development. There was a gigantic Home Depot in a county; the entire county had a 100,000 people in it. I checked the population when I got home.
I appreciate your testimony, and I am sure many other groups will make similar recommendations, but the fact of the matter is that nothing has been done, or very little. We have the NEXUS cards. We all have seen the trucks coming and going, the pre-clearance system and all the rest of it, but the fact is that it is part of a larger, devastating effect on the U.S. side of the border. It is not just this. Also, it is having a bad effect on the Canadian side of the border. The trade has dropped. That is a huge drop in our trade.
The Chair: Can we have the question?
Senator Stollery: When will we do something about it? I do not see anything happening.
Mr. Kilbride: I would be glad to take the question.
Thank you, senator. I take your point and I think it is an excellent one. Much of my family is in Syracuse, New York. I can bear witness to the statements you made. I still believe it is a beautiful town, but they have suffered. All of our border communities on both sides will do better when we keep the border open to trade and travel. That is why we are here today. The U.S. Chamber of Commerce shares your concern. We even share your urgency. Recently we announced that we would launch a $100-million public campaign on free enterprise. International trade is a big part of it. Of course, the biggest part of our national trade is with our neighbour and friend, Canada.
We take this seriously. We are raising not only the border issues but other issues of protectionism, such as Buy America, on a daily basis. We joined last week in sending a joint letter with the Canadian Chamber of Commerce to President Obama and Prime Minister Harper to outline our concerns in a number of areas. We will be very public in our opposition to protectionist measures.
In fact, just today, our president, Mr. Donohue, was in Detroit speaking out against protectionism and released the study that I mentioned, showing that the U.S. has lost 500,000 jobs because of four specific actions.
The Chair: Thank you. I do not know if anyone else would like to tackle that question and give Senator Stollery a little more comfort.
Ms. George: I live every day the frustration that you expressed in your comment about how can we get more done. In fairness to the people on both sides of the border who are employed by our governments and who work on this issue, it is not fair to say that nothing has happened. The challenge has been that as we have been trying to deal with some of the efficiency issues, there has been a far greater effort and focus on some security issues. Consequently, the bar of how we keep the border working keeps rising higher and higher because we have all these security measures that have been put in place. You can look at each and every one of them and say, ``Yes, that one makes sense,'' but when you add them all up, you see they have really caused constriction at the border. We must be smarter and find ways to have both a secure and an efficient border. That takes an equal emphasis on both.
The Chair: Thank you for that. I am sure all our colleagues can probably utter the same expressions of frustration that Senator Stollery did. If you have any further thoughts on that, obviously, we are looking for some wisdom, which I know will come as the evening progresses. Keep in mind that there are reports to the Government of Canada, so if you have some ideas that you think are worthwhile, we can include them in our report.
Senator Dawson: I welcome that we are debating this. For all of us who have had occasion to travel, the level of ignorance on the importance of trade between Canada and the U.S. on both sides of the border is astounding. In the case of the American legislators, when they have a conference of any kind at an international level, they will talk about their trade with Europe and their growing trade with China, but they will never mention the importance of their trade with Canada. I do not think they will even notice that reduction in trade from 84 per cent to 76 per cent. I do not think most of the American legislators recognize the fact that a 50 per cent reduction in tourism is obviously worse for border cities and border states but is also bad for the whole American economy.
It is important to talk about this. It is also very important sometimes to avoid, professor, what I think is exaggerating. We will leave the marijuana transfer between Canada and the U.S. to the specialist, Senator Nolin. You gave numbers about the cross-border trade and about its being higher than any product trade between Canada and the U.S. I do not know where you get your statistics, but they are alarming. If they are true, someone is not doing his job. It is not a trade issue; it is an enforcement issue that goes beyond what is happening across the border.
You still have two American secretaries of the government who still believe that the 9/11 pilots flew through Canada to go to New York. That is being repeated in Congress and in the Senate. While I would like the issue to be debated, because I want people to understand how important it is, I feel uncomfortable when these problems, and security is one of them, do not seem to be substantiated by evidence as they should be.
There are issues here, and I want to ask you about one of them. About 95 per cent of the containers that go through Prince Rupert do not even stop in Canada. There is growth of containerization as a method of travel in the world, but we still do not have the technology to control where the container is located. We do not have the widget in the container to track it, but it does exist. For example, someone on the export side in Asia sends a container to Houston via Prince Rupert to the Western provinces and then on to the United States. We do not have the technology to follow that container. We should make that one of our priorities.
We all know that the Americans brought in this policy but did not bring in at the same time an improvement in their passport delivery system. Consequently, there has been a reduction of 50 per cent in tourism. One reason that reduction occurs is that Americans are not known to be holders of passports. They are saying, ``Instead of crossing the border to go to Saskatchewan, I will stay in the northern United States because it is a lot less of a hassle.''
As the chair said, this committee will have recommendations to make. You talked about communication strategies. Talking about it and accelerating these types of events will certainly be better than allowing these myths to perpetuate, which is not necessarily good.
The Chair: What is the question?
Senator Dawson: Let us do something about it. As the senator said, it is dramatic. We are missing many opportunities because of ignorance. During your travel over the last two days, you listened to the wonderful speech on Monday from the Leader of the Opposition. I am sure you understand that we will be making foreign affairs, foreign communications and relationships with our counterparts in the U.S., as well as the rest of the world, a priority.
I encourage this activity. Like the chair said, if you have clear recommendations, we would like to support them.
The Chair: I should ask Ms. Kalacska to make a comment on the statistic that she has applied, and then if anyone else would like to jump in, please do so.
Ms. Kalacska: Thank you for your comments. To clarify, first, the total number of operations or people involved is unknown. That is, the overall size of the problem is unknown. We do know how many sites the police actually eradicate annually. They have a limited budget and a limited number of personnel who conduct the eradication on a yearly basis. During that time, they do the best they can to reach as many of the sites as they can get to and eradicate as many plants as they can. From that, there is also arrest data — that is, how many people were arrested once, twice, three times or more for the same offence. Using the arrest data, for example, and a technique called capture-recapture models, it is possible to estimate the total size of the population, that is, how many other people may be involved in the activity who may not have been arrested yet. We know that not every single person involved in these activities is arrested. It is the same with trying to estimate how many sites there are, for example. We know that within the one- week time period, law enforcement were able to visit, for example, 150 sites or 20 sites.
Senator Nolin: Are you talking about B.C. or the U.S.?
Ms. Kalacska: In Canada, whether on the West Coast or in Ontario, for example, there is a limited amount of time in which these eradication activities can take place.
By knowing how many sites were visited, how many plants are located at each site, and having a larger survey of the area through images collected through either satellite or aircraft, we can count how many sites were missed. A study was conducted on Texada Island, B.C., starting in 2005 and concluding in 2007, that showed that at least three sites were missed for each one that they had the time to go to. That does not mean they did not know about the other sites; they did not have enough resources to go to those other sites. Knowing how many plants were located in the ones they actually went to, we can extrapolate and estimate how many plants there would be in the sites that were not visited.
In that way, we have a sense of what would be the size of the population involved in the activity, as well as an estimate of the size of the actual problem and the total cost.
Senator Dawson: In your brief, you state:
For example, in Québec, over 15,000 people of 15 years of age or older are estimated involved in the growing of the crop alone.
That is a nice statistic; it is alarming.
Senator Nolin: What page?
Senator Dawson: That is on page 12. The conclusion is that we have to increase security. We are trying to find ways to increase trade, and some people, I think, are trying to find ways to make the border tighter. Do not get me wrong here. I do not want to loosen it for people to abuse it, but I do not want to let the illusion of problems encourage people who already want to build a fence between Canada and the U.S. As the governor said, ``If you build a 12-foot fence, I will build a 13-foot ladder.'' You will not solve the problem only with that. We have responsibilities in our own country. However, tightening up the border has not proven to be a success economically if we have had reductions from 84 per cent to 76 per cent in both of our economies. We are only increasing the ignorance we both have of each other.
I want to be sure that we do not become too security conscious. I do not want to be unconscious.
The Chair: You have made your point, senator.
Does anyone else wish to make a brief comment on Senator Dawson's comment?
Ms. George: I will comment briefly on two points you made. First, on illegal trade, this is a serious issue for Canada and it is a serious issue for the United States. We need to provide the resources necessary for our law enforcement to deal with it, especially, as was mentioned, between the border points, because that is where most of this illegal trade is happening. As was mentioned, we need to shift the focus away from trying to find out what is in the suitcase to rather finding the illegal cigarettes or drugs and arms that are crossing our border.
To be clear, we do support the necessary resources to deal with that problem, and that can be done without tying up our border. It is important that we focus on achieving both. It is when we focus on one or the other that we end up with problems.
On the issue of ignorance and how much our American friends know about us, we all have stories to tell about that, but the cold, hard truth is that it is up to us to change that. We simply have not put enough resources into Washington and into some of the other areas of the United States to help them understand what trade is done with Canada and why we are so important to each other. When we do go down, we spend too much time talking about how what they are doing is hurting us, as opposed to turning it around and helping them understand why this is important to them. Anything you can do to help drive home the message that we need to do our work would be very helpful.
Mr. Burt: I know the topic of discussion tonight is the border, but many other issues have been going on in the last 10 years that have affected our trade relationship with the United States, such as the wide swings in the value of the Canadian dollar and transportation costs.
You mentioned the shifting population in the U.S. Many of the rust belt states have seen large declines of population. At the same time, the south and the west have seen a big increase in their population. You are seeing a shift in the political power in the United States away from the border states. The big elephant in the room is China. China's ascension to the WTO in 2001 was a big deal. Pick an industry in this country and you can see we have lost market share to China for almost every single product we have produced over the last eight years or so.
There are a lot of varied issues going on here. Obviously, the border is not helping, but it is important to keep in mind that it is not the only thing happening.
Senator Nolin: I will focus on the question of harmonizing sentences for smuggling of narcotics. I did not have time to read them all, but I was looking at your references and I will probably do that afterwards. It is a subject I am interested in.
We did that in the Senate of Canada. We studied that quite at length seven years ago. We have compared, over years and over decades. One conclusion is that whatever you do legally to try to curb or to downsize or to affect the use or the traffic of drugs — because the traffic is driven by the use — it does not change. It is not affected by law. It is affected by mentalities, cultural behaviours, the fashion, and it goes like that.
When we compare Canada and the U.S. out of the pack, because we have compared Australia, we have looked at Europe, comparing some countries to others, when we were comparing over the decades, 1960s, 1970s, 1980s, 1990s, the U.S. and Canada, we have followed the same pattern of use independently of the toughness of the law.
Now you are recommending to us to harmonize sentences. Try to convince me that that will do it in Canada. Obviously, in the U.S. they have not succeeded. The rate of use is the same as it is in Canada no matter what they do, no matter how tough they are. Of course, I have in mind the three strikes you are out. It does not work. Use of drugs, mainly cannabis, among the young population, is not affected by laws. Whatever the drugs that are being used in the U.S. for the last eight years — frying eggs in a frying pan — it did not affect the rate of use.
How will harmonization of sentences affect the rate of use in Canada? Tell me that.
Ms. Kalacska: Thank you very much for your comments. I completely agree when you mentioned the reasons for use, whether it is culturally accepted or not, or if it is, as you mentioned, fashionable.
Senator Nolin: It is quite accepted because 70 per cent of all youth between the ages of 12 and 17, all minors, 70 per cent, have used it at least once in the last year.
Ms. Kalacska: Many will continue to use as well when they are adults.
Senator Nolin: It is culturally accepted by them. That is why I am telling you that if the driving tool of our effort is to amend the law, we will try to find something else because it does not work.
Ms. Kalacska: However, those comments come from speaking to law enforcement officials and from reading transcripts of interviews with individuals who are not necessarily recreational users but rather involved in the business more on a commercial scale, whether they are the ones doing the production or the sales or they are involved in other aspects of the business on a large commercial scale, and one comment that comes back often is that they are not worried about getting caught because nothing will happen to them. They may receive a short sentence. They may actually improve their skills, speaking to other individuals who are incarcerated at the same time, but they know they will be back to their business in a very short period of time. The laws are not a deterrent to them whatsoever.
Some individuals incarcerated in the United States received much longer sentences than they anticipated; for example, they thought they might receive 5 or 10 years at the most, and they are serving sentences of 25 years for trafficking large amounts of marijuana or large amounts of cocaine or heroin. They had never expected to receive those kinds of sentences. One aspect that comes through in interviews with those individuals is that if they had known they might possibly get those kinds of sentences, they might have thought twice. It does not mean they would not do it, for sure, but it would have served as a potential deterrent to them. However, knowing that nothing will happen to them other than perhaps having to pay a fine or serving a few days or weeks in jail is not a deterrent whatsoever.
Senator Nolin: While you were reading Mr. Matas's research, I am sure you found out that many big drug traffickers, or organizers of trafficking, are using illegal Canadian aliens to grow.
Ms. Kalacska: Yes.
Senator Nolin: Guess what? They are doing the same in the U.S. Why? It is because they do not want to get caught. A big profit is there and you are good at reporting on that. If they are not doing it someone else will probably do it because the market is there.
Ms. Kalacska: Yes.
Senator Nolin: The market is moving independently of the laws, and tough laws, that we are adopting; the market is going up or down, affected by something other than the laws. There is a business to provide the product.
Ms. Kalacska: What you just mentioned is the key, that it is a business. There is certainly a demand and there will always be a demand for their products.
Another reason the traffickers might be using illegal aliens is that if the workers get caught it will not affect the traffickers directly, but also they do not necessarily have to pay the illegal aliens the same wages as Canadian citizens who may know their rights. They may be told that this is what they have to do in order to secure safe passage for their families. There are other motivations than just the fear of being caught.
Senator Nolin: I have one question about transborder movement of drugs. As my colleague Senator Dawson mentioned, there is a lot of mythology in that. I am not sure we will be able to clear the maze, but let us try. Did you look into the rate of use of cannabis in the U.S. before writing this report?
Ms. Kalacska: Colleagues of mine have.
Senator Nolin: Production of it and where it is coming from within the U.S.?
Ms. Kalacska: Within the U.S. colleagues of mine study specifically the production in various states, and one of the states they report as having the highest production is California.
Senator Nolin: I am sure those colleagues have told you that only 5 per cent of the marijuana Americans use is coming from Canada?
Ms. Kalacska: There are figures that are up for debate.
Senator Nolin: They are not for debate. They are exact. It is 5 per cent. It depends on how tough the border guard is. Nobody objects that they have been tougher since 9/11. That is why they have increased their rate of capture.
The trade of marijuana between the U.S. and Canada has always been between 4 per cent and 10 per cent.
What is the national production of cannabis in the U.S.? Do you have an idea of that?
Ms. Kalacska: The overall volume?
Senator Nolin: How much marijuana do they produce for themselves? In terms of percentage, if 5 per cent comes from Canada, how much comes from the U.S.?
Ms. Kalacska: It is uncertain because its goes to other countries as well. It is not only within the U.S.
Senator Nolin: I will tell you that more than 50 per cent of the marijuana used in the U.S. comes from the U.S. and the rest from Mexico; that is the mix of where the production comes from.
The Chair: Senator Nolin, we would like to hear the witness respond.
Senator Nolin: I am all for having an effective, business-oriented border. However, if we build on a false problem — which I am not saying it is — and buy into the rhetoric of the law enforcement organizations, they will tell you it is huge, it is an even bigger problem than terrorism, which is not the case. The big problem is terrorism. They do not want someone to cross the border with a bomb.
The Chair: Senator Nolin, I will give Ms. Kalacska the last word.
Ms. Kalacska: Because it is an illegal market no one knows the exact size, and all the various activities will be interlinked. It is not possible to separate the production of cannabis from other activities as well. As you mentioned, terrorism is a huge concern.
The Chair: Senator Nolin, I am sorry, but we are running out of time.
Senator Nolin: I do not think I can accept an answer that suggests it is an unknown.
The Chair: You have made your point.
Senator Nolin: Every year the RCMP reports the amount of production in Canada. They know the size of the production of cannabis in Canada. I can tell you that in 1999 it was 800 tonnes of cannabis.
Ms. Kalacska: I respectfully disagree that no one knows the size of production within the country. It is an illegal market.
The Chair: Senator Nolin, I appreciate your intervention.
We will go to Senator Andreychuk, without much debate with the witnesses, please.
Senator Andreychuk: I was going to say that will be hard to follow.
We are talking about the border issue, and I appreciate the comment made that there are many issues that go into our trade and protection issues that are not just Canada-U.S.; they are international issues that impact on us. There are people who are concerned about security, and they will come along and talk about whether it is terrorism. Rather than the debate about marijuana, I would say the issues are crystal meth, certainly guns going across the border that affect women's groups, et cetera. There is a legitimate concern about security and that we increase or maintain our trade.
I want to go to Ms. George as a devil's advocate. You say we should be aiming for a secure and efficient border. I do not think any politician on either side of the border would disagree with that. It is the fact that we keep struggling to get that. What is the formula? What are the issues on a secure and efficient border? Is it the lack of money? Is it the lack of coordination? Is it the lack of technology? Every time we get reports, we get what I call ``broad principles'' that no one disagrees with. However the implementation seems to be beyond us.
I hear things like if we had proper computers that spoke to each other between all of these — I do not know how many departments and regulations we have — we would be further along. Trade would be more efficient. Our borders would be more secure. As Senator Dawson pointed out, if we had chips installed it would be better.
We are back at the same thing. I can appreciate a politician on either side. When confronted with a security issue, they will worry about the security. When they are talking about more trade, we hear that. To combine the two, secure and efficient border, I think is right.
What is the single one thing that we should recommend today that would move that yardstick closer to a secure and efficient border?
Ms. George: I do not know that I have one, but, if you will allow me to, I will give three specific recommendations that you should consider. I will focus on what can be done in Canada, recognizing that much work also needs to be done in the United States.
We should implement pre-clearance programs and move some of the border requirements away from the border. We should make the trusted-shipper programs far more effective by ensuring that there is a commercial benefit for participating in them.
Look at how many times somebody in a trusted program gets inspected versus how many times somebody who is not in the program gets inspected. Is it faster with a trusted program than not? Measure and report it, and work hard at making it even better. Then we will get more people into those programs, and the more people in those programs, the faster we can move goods and people across the border.
Equally important, get the other government departments that use the border for their inspections to step up to the plate and put in place inspectors that are available 24/7 at major crossings so we can move our trucks at off-peak hours and make the border less congested.
Implement the single-window initiative so that — as you mentioned — all of the reporting is done electronically into the government, and they can start sharing information and do better risk management. When it is done uniformly we will be able to cut a lot of costs out of the system. These are very practical things that would make a difference.
Mr. Kilbride: It is important to remember when addressing these border issues that we have technical problems with technical solutions and that the way we get to them is to take them on a one-by-one basis, show them for what they are and offer practical, short-term recommendations, which is exactly what we tried to do in this joint report. That way we really expose them for what they are: needless obstacles to trade.
To Senator Dawson's point, we are dealing, to some extent, with a mindset in the U.S. agencies that are responsible for border security that is security-centric. We have to make it easy for them. Again, the way we do that is to offer simple, pragmatic, short-term solutions that build towards an open or efficient border.
Senator Merchant: When these security issues arose, mainly after 9/11, there was a heightened sense of what was happening with racial profiling. I am wondering if, in the ensuing time, you have been following developments or you have any studies. Could you tell us what advances have been made to expedite the movement of people?
In addition, we have had a few unfortunate incidents where the colour of someone's skin or their inability to communicate mainly in English has resulted in tragic outcomes.
I am wondering whether any of you have followed this situation and whether you can report something positive to us, as well as what steps are being taken to improve the situation.
The Chair: Mr. Burt, were you ready to make a comment?
Mr. Burt: It is not something we have studied extensively. We have had interviews with a number of different organizations about professionals, for example, crossing the border. One thing that often crops up is misunderstandings of people when they cross the border, understanding what is required of them and how the rules change depending on what the purpose of the trip is. They may have crossed previously for tourism purposes, and now they are going over for a different purpose not realizing they need different paperwork. The source of many of these problems is the lack of public knowledge about how to deal with the border.
I used to be a customs officer many years ago, and just the simple fact of people understanding that they were crossing an international border that required them to have certain identification with them was sometimes difficult.
With respect to the issue you are referring to, I cannot tell you whether progress is being made on that, but it is the source of many of the misunderstandings; the public is not necessarily aware of what is required of them when crossing an international border.
Senator Merchant: I was told of an incident that I have not verified. Someone in Regina, where I live, was telling me just last week that a friend's baby now had to have a passport to go across the border to the U.S. It used to be that one's children, up to a certain age, could be named on the parents' passport. I am not sure whether this is still the case or not.
Mr. Burt: There are now separate passports for all people. You can no longer have children on your passport. With respect to the WHTI's requirement for passports, as I understand it, people under the age of 16 do not require a passport for land crossings.
Senator Merchant: I was thinking children change so much that with the regular passport that is good for five years, a two-year-old would not look anything like himself by the age of seven. If they do not require passports, how do children cross the border?
Ms. George: It is only for land crossings that children do not need a passport. If a child is travelling by air, they will still require a passport.
Senator Merchant: Even the youngest of children?
Ms. George: Even the youngest of the children.
Senator Merchant: I am wondering what the validity of a passport is.
Mr. Burt: Children's passports also have a shorter expiry date. I believe children's passports are good only for three years, so obviously their pictures would require updating more often.
The Chair: Mr. Kilbride, you have not entered this particular discussion. Would you like to make a brief comment since it relates to practices of your country?
Mr. Kilbride: I would simply say that I think there was broad recognition of the profiling problem that you raise following 9/11. I think the reaction was, to make things fair, that stricter security measures have been applied very broadly. The solution that we would identify is to turn that on its head; instead of selecting certain people to be inspected more strictly or subject to stricter measures, we would like to see more emphasis on trusted travellers and trusted cargo to enhance the people we know are safe and to allow them to move back and forth more freely.
The Chair: I want to thank you all. I wanted to get involved in some of these discussions, but I think we covered a lot of points, and you have shed some light on a number of them and given us some ideas on a number of others as well.
We seem to focus on the transfer or the transport of goods across borders. Trade is also about allowing men and women to cross the borders, and NEXUS has certainly helped, but there is still much work to be done in that area.
Senator Dickson, I will give you the last brief word.
Senator Dickson: I am impressed with the comments of the previous speakers, particularly Senators Stollery and Dawson, as to the need for more awareness of the economic value of our trading relationship. I want to compliment the presenters on the development of the report Finding the Balance, because you have partnered with almost 50 organizations. This report should carry a lot of weight. It is not just one organization; it is 50.
It is often said that when one wants to draw particular attention to an issue, one comes forward with a bill. I note here on page 7 of your report that you make reference to the summary definition of the PORTS act — Putting Our Resources Towards Security — which is before Congress in the United States. You are suggesting that similar legislation should be put forward in Canada.
I have a two-part question: First, what is the status of that bill moving forward in the Congress in the United States? Very briefly, what are the advantages of that particular bill, the PORTS act?
Mr. Kilbride: We did identify that specific bill, but a number of legislative vehicles are currently pending in both our House of Representatives and the Senate. There is the PORTS bill, there is a customs reauthorization bill and there is the surface and transportation reauthorization bill.
Honestly, I could not give you a blow-by-blow on the legislative side or the likelihood of seeing them pass this year. As you know, the health care debate, and before that the debate on climate change and cap and trade, have dominated the time of our Congress.
From our perspective, we are focusing on all of these vehicles as ways to move individual recommendations. Going back to my comment to the senator, we are approaching this on a point-by-point basis and looking for every opportunity, whether in a legislative vehicle or a regulatory measure, to advance some of these goals.
Going beyond that, I would say we are placing a particular emphasis on the consultative and cooperative process between the United States and Canada. The subject of many of our meetings this afternoon with the Canadian federal agencies responsible for the border was that we need to sustain those working groups and consultative mechanisms that are helping to put in place harmonized border measures and to reach ways where we can be partners in security and not impose our security from the United States onto Canada.
While I do not have a specific response to your question about the PORTS act, I can tell you that we are extremely active in working with members of Congress and with U.S. government officials to find ways to move these recommendations forward.
The Chair: Mr. Kilbride, could you undertake to have someone send our clerk an update on that particular bill for the benefit of all of our members?
Mr. Kilbride: I would be more than happy to send something.
The Chair: Once again, I would like to thank each of you for appearing. We certainly look forward to seeing you again as we continue discussions on this very important issue.
In the meantime, if you think of something new or different or you discover something new or different, we would encourage you to send any material to our clerk, who will then not only distribute it to the members, but make sure that we use it as a reference for our reports.
I ask the committee to stay for a brief in-camera meeting.
(The committee continued in camera.)