THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Thursday, May 5, 2022
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 11:30 a.m. [ET] to study the subject matter of those elements contained in Part 9 of Bill S-6, An Act respecting regulatory modernization.
Senator Peter M. Boehm (Chair) in the chair.
[Translation]
The Chair: My name is Peter Boehm. I am a senator from Ontario and Chair of the Standing Senate Committee on Foreign Affairs and International Trade.
[English]
I’d like to introduce the committee members participating in today’s meeting: Senator Gwen Boniface from Ontario; Senator Mary Coyle from Nova Scotia; Senator Marty Deacon from Ontario; Senator Amina Gerba from Quebec; Senator Stephen Greene from Nova Scotia; Senator Peter Harder, deputy chair of the committee; Senator Victor Oh from Ontario; and Senator Yuen Pau Woo from British Columbia. I wish to welcome all of you, as well as people across the country who may be watching us today.
Today, pursuant to the order adopted by the Senate on April 28, 2022, we are examining the subject matter of those elements contained in Part 9 of Bill S-6, An Act respecting regulatory modernization.
To help us with our review of this part of the bill, we have before us two government officials. From the Treasury Board of Canada Secretariat is James Van Raalte, Executive Director, Regulatory Policy and Cooperation Directorate; and from the Canada Border Services Agency, we have Janine Harker, Director, Commercial and Trade Policy Division, Strategic Policy Branch.
I’d like to thank our witnesses for joining us today. Welcome. Mr. van Raalte, the floor is yours.
James van Raalte, Executive Director, Regulatory Policy and Cooperation Directorate, Treasury Board of Canada Secretariat: Thank you, honourable senators.
My apologies to senators who have been studying this bill in other committees for my repetition, but it’s important that I provide this context for this committee. Bill S-6, An Act respecting regulatory modernization, proposes to amend 29 pieces of legislation via 46 amendments that would help keep regulations relevant and up to date by reducing administrative burden for business, facilitating digital interactions with government, simplifying regulatory processes, making exemptions from certain regulatory requirements in order to test new products and making cross-border trade easier through more consistent and coherent rules across government.
Bill S-6 is the government’s second annual regulatory modernization bill. The first was included in the 2019 Budget Implementation Act.
Announced in the 2018 Fall Economic Statement, the annual regulatory modernization bill, or ARMB, is meant to be a recurring legislative mechanism that enables the government to make commonsense changes across many pieces of legislation at once in order to address overly complicated, inconsistent or outdated requirements raised by businesses and Canadians.
Bill S-6 is one part of the government’s agenda to improve Canada’s regulatory system while continuing to ensure the health, safety and security of Canadians and the protection of the environment. As such, taken individually, the individual amendments in Bill S-6 are modest in scope. Taken as a whole, they will make an impact and contribute to the government’s regulatory modernization agenda. Grouping these relatively minor legislative changes in one bill is both time- and cost-efficient.
Bill S-6 is designed specifically to propose multiple non-contentious legislative changes all at once. These are fixes that the President of the Treasury Board can represent or sponsor on behalf of her cabinet colleagues. Anything above and beyond this threshold may be a good proposal for regulatory modernization but should be brought forward by individual responsible ministers for parliamentary and public scrutiny.
All of the 46 proposed amendments are either stakeholder-driven — that would be 33 — or in response to issues raised by Parliament’s Standing Joint Committee for the Scrutiny of Regulations — the remaining 13.
TBS launched a public consultation via the Canada Gazette over the summer of 2019, inviting interested stakeholders to share their views on themes related to regulatory modernization, including to propose suggestions for this legislative mechanism. Forty-eight submissions referred to the ARMB under this consultation; however, most of those responses were not within scope, or they proposed changes to the regulations rather than the legislation. However, all feedback was shared with responsible regulatory departments and agencies. Following this consultation, What We Heard: Report on Regulatory Modernization was published in November 2020.
The following four themes emerged for changes in the legislation based on that consultation: One, reduce administrative burden; two, increase regulatory flexibility and opportunities for experimentation; three, enable harmonization with major trading partners; and four, remove duplicative, redundant and unclear requirements.
Similarly, a call-out to regulatory departments and agencies was initiated in August 2019. We received 174 proposals, impacting 72 acts and over 14 organizations. All of the proposals in Bill S-6 were reviewed extensively to ensure there would be no negative impact on the health, safety and security of Canadians and the protection of the environment.
Beyond what is contained in Bill S-6, additional proposals were set aside from further consideration for a variety of reasons. Some of them were considered too broad in scope or deemed not regulatory in nature, while others were not considered, for example, if they sought to alter service fees or proposed additional activities that actually contributed to increasing administrative burden.
In conclusion, the process to develop the third version of this bill is already under way, and it will be based on lessons learned coming out of the COVID pandemic. The President of the Treasury Board has committed to introducing this third annual regulatory modernization bill in spring 2023. Beyond that, the Treasury Board of Canada Secretariat will use its newly launched Let’s Talk Federal Regulations platform to seek input from Canadian businesses and individuals on ways we can further improve Canada’s federal regulatory system. As a result, consultations on the fourth annual regulatory modernization bill are expected to be launched in the fall of 2022.
Thank you.
Janine Harker, Director, Commercial and Trade Policy Division, Strategic Policy Branch, Canada Border Services Agency: I appreciate the opportunity to speak with you this morning about a proposed amendment to the Customs Act that’s contained in Part 9 of Bill S-6.
The proposed amendment to section 164 of the act will provide a clear overarching authority to make regulations to implement free-trade agreements. This amendment will accomplish a number of things.
First, it will simplify the process of drafting regulations to implement free trade agreements because the authority to do so will be unequivocal and clear. While authorities to make regulations to implement free trade agreements already exist in the Customs Act, they are scattered throughout the text. For example, subsection 164(1.1), as currently written, provides the regulations-making authority for “the uniform interpretation, application and administration” of a specific protocol, chapter or provision of the free-trade agreements that are listed in Part 5 of the schedule to the act. Paragraph 35.1(4)(b) of the act provides the regulation-making authority with respect to certificates of origin, while subsection 97.1(1) pertains specifically to certificates of origin for exported goods. Subsection 43.1(2) of the act provides the regulation-making authority for advanced rulings —
The Chair: Ms. Harker, could I interrupt you for just a moment. You’re speaking a bit too quickly for our interpreters to keep up, so if you could you slow down a bit.
Ms. Harker: My apologies.
Just to round out the regulatory provisions that already exist, subsection 43.1(2) of the act provides the regulation-making authority for advanced rulings, while subsection 43.1(1) describes the interplay of advanced rulings with free trade agreements.
A cohesive provision to implement regulations for free trade agreements will make it easier to identify the authority when drafting and, indeed, for the Standing Joint Committee for the Scrutiny of Regulations to identify where the authority resides for free trade agreement-related regulations. A single enabling authority may also simplify the process of amending regulations if a domestic court, tribunal or panel were to determine that the existing regulations are inconsistent with the requirements of a free trade agreement. Finally, a cohesive authority will ensure that regulations drafted to implement free trade agreements can address new or unforeseen requirements.
While the traditional focus of free trade agreements has been to reduce or eliminate duty-related barriers to trade, new agreements are often drafted with provisions concerning other matters, such as intellectual property protections, environmental and labour considerations and contracts for services. Having a single, cohesive enabling authority in place will ensure that customs-related regulations to implement those agreements can incorporate and address these new considerations where appropriate.
I’ll conclude my remarks here, and I am available to answer questions.
The Chair: I’d like to thank our witnesses for their comments.
Before I open the floor to questions, I wish to inform members that you will each have a maximum of five minutes for the first round, and this will include questions and answers. If you wish to ask a question, please signal to me or to the clerk, Ms. Lemay, and we will put you on the list.
Senator Oh: Welcome, witnesses.
Global Affairs Canada identified 12 trade agreements that Canada is negotiating, including with the Association of Southeast Asian Nations, India, MERCOSUR, the Pacific Alliance and the United Kingdom. What customs-related regulations might the Government of Canada make if these negotiations are successful, and to what extent would any customs-related regulations that implement such agreements be affected by section 161?
The Chair: Ms. Harker, I think that one falls to you.
Ms. Harker: Yes. Thank you for your question, senator.
I believe that the question about outcomes of the trade agreement negotiations would be better deferred back to Global Affairs Canada. I can’t speak to what specific regulations would be put into place until I understand what the final text of the agreements and related legislation would be.
With respect to your second question, were you speaking to section 161 or 164 of the Customs Act?
Senator Oh: Affected by section 161.
Ms. Harker: I can take a look at that and provide a written response afterwards. I don’t have any particular information that I can provide to you at this time.
Senator Oh: Thank you.
The Chair: Thank you, Ms. Harker. We will take you up on your offer to provide a written response, and we would like that as soon as you can get it to us so we can include that in our report.
Senator Woo: Thank you, Mr. van Raalte and Ms. Harker, for appearing today.
My question is for Ms. Harker and has to do with the current regime for making regulations pursuant to a free trade agreement. Can you tell us if there have been any regulations under existing free trade agreements that we were unable to put in place because the authorities were not clear and which would then be remedied by Bill S-6?
Ms. Harker: Thank you for the question, senator.
I am not aware of any specific free trade agreements that currently exist where we have run into an issue with the regulations. Rather, what has happened in the past is that often we are working fairly quickly to try to implement drafts and regulations in order to align with the coming into force of an agreement. There is, at times, a concern that maybe we’re overlooking something in our urgency to make sure that these regulations are comprehensive and meet all the requirements of the agreement. By having this one overarching provision, we have a measure of confidence and certainty that if we do need to go back later and find something that was perhaps overlooked in the drafting process, we have the authority to go ahead and do that.
Senator Woo: Thank you.
Senator Harder: Thank you to our witnesses.
My question is for James van Raalte of the esteemed Treasury Board Secretariat, and it concerns process. I welcome your statement in that you propose a work plan that actually makes the ARMB annual, as it was designed to be, considering that it has not been annual since it was announced. That is terrific for process. I appreciate the extent to which Treasury Board and the relevant departments are engaging with stakeholders, but from a private sector point of view, one of the frustrations about regulations in Canada is that there are jurisdictional issues between regulations federally and regulations provincially that complicate the lives of the private sector. Can you describe to us what steps you are taking institutionally and even, perhaps, electronically or through the facilities of the technology that you’re bringing to bear, how the issues of provincial regulation can be better harmonized with federal advancements so that from the consumer of regulation — principally the private sector — there is a more rational and consistent approach?
Mr. van Raalte: Thank you for the question, Mr. Chair, and I think the senator is raising a very pertinent topic.
Under the Canada Free Trade Agreement between the Government of Canada and the provinces and territories, we have a mandated regulatory cooperation table, of which Canada occupies one chair and the provinces and territories each have their representatives. That committee is mandated with exactly what you’re talking about, looking at those internal trade barriers and removing duplication and inconsistency between provincial — potentially just provincial, if it’s outside of federal jurisdiction — but also federal-provincial-territorial regulations. That committee meets on a monthly basis. Sometimes it’s more than monthly in terms of advancing its work plan. We have oversight over the work of regulatory cooperative bodies, that is, the experts on the ground in each jurisdiction, and we provide direction and guidance in terms of prioritizing those work plans.
To bring life to my answer, honourable senator, one of the first problems defined by that regulatory cooperation table was the myriad of building codes and construction codes across the country. The federal government was able to facilitate concluding a reconciliation agreement with the provinces and territories to further harmonize those building codes. You’d be surprised that the design of a toilet in one jurisdiction may not meet the standards of design of a toilet in another jurisdiction. That work is estimated to save the Canadian economy somewhere between $750 million and $1 billion a year.
Senator Harder: Thank you very much. Your response is going exactly where I hoped it would, namely, to highlight the opportunity for more progress in implementing the free trade agreement. A study I recently read said that there was between 3 and 4% GDP gain for Canada to actually move forward more comprehensively on regulatory implementation of the interprovincial free trade agreement. I am told that most of the obstacles to that progress are provincial-to-provincial disagreement as opposed to provincial and federal coordination. Could you confirm that and give us some hope that there will be that productivity gain welcomed by your provincial counterparts quickly?
The Chair: I’m going to have to interrupt here because we’ve hit the five-minute mark. Senator Harder, if you agree, you can pose that question on the second round.
Senator Boniface: Perhaps you can answer Senator Harder’s question for me. I won’t need my whole time, so for continuity, please continue.
Mr. van Raalte: Thank you for the question.
Anecdotally, we understand that much of the problem is province to province. When I say that, it could be between just two provinces; it could be between all of the provinces and territories. The challenge for all governments is an inventory of all of that friction and where it’s housed and defining the actual scope of the problem. I’m not trying to give a process answer, but the landscape is quite large in terms of what provinces regulate, how they regulate and how they best regulate that.
With our Let’s Talk Federal Regulations platform that I spoke about at the conclusion of my opening remarks, the first theme we are consulting on is regulatory cooperation. We are seeking feedback from any and all stakeholders with respect to those types of internal trade barriers, as well as international trade barriers, because we have formal regulatory cooperation tables with both the EU and the United States.
Senators, I am happy to share the link with you in terms of disseminating that consultation piece to identify those trade barriers so that we can bring those to our provincial colleagues. They may be federal-provincial as well, senator.
Senator Boniface: My question is brief, far more general and for the benefit of anyone who may be watching.
Can you give an example as to the type of regulations currently in place that the Minister of Public Safety would be involved in for free trade purposes? I’m trying to make the link between his department and free trade.
Ms. Harker: Certainly. The Customs Act includes responsibilities both for the Minister of Public Safety and the Minister of National Revenue. In the case of implementing free trade agreements, many of the regulatory provisions that are contained in the Customs Act tie back to the Minister of Public Safety to implement. We would be talking about things related to the release of goods prior to payment of duties and taxes. Anything that has to do with the actual movement of goods themselves resides with the Minister of Public Safety.
The Chair: Colleagues, we’ve been joined in progress by Senator Michael MacDonald from Nova Scotia and Senator Marie-Françoise Mégie from Quebec.
[Translation]
Senator Gerba: My question is for Mr. van Raalte. According to a report by the Canadian Federation of Independent Business, 90% of Canadian businesses believe that reducing the administrative burden should be a priority for the government.
Can you explain how amending Bill S-6 will help Canadian businesses — particularly those operating internationally — to tangibly reduce their administrative burden? Thank you.
[English]
Mr. van Raalte: Thank you for the question.
I will delineate my answer in that tax policy and tax administration is policy set by the Department of Finance. The administration of that policy is with Revenue Canada and outside the purview of regulatory policies that are my responsibilities. I would defer that question to the experts at those two departments.
The government has a one-for-one rule, senator, which requires that for any new regulation that is brought forward that has an administrative burden, that department is required, dollar for dollar, to remove administrative burden elsewhere within their regulatory portfolio. We call that the one-for-one rule. It is embedded in the Red Tape Reduction Act. Since that rule was put in place in 2012-13, the net administrative burden across the Government of Canada has been reduced by $60.5 million.
[Translation]
Senator Gerba: The proposed amendment to Bill S-6 would ensure that the minister could take steps to, among other things, implement any agreement referred to in the first column of Part 5 of that schedule.
Right now, there are many agreements being negotiated around the world. If this bill were to go ahead, it would have to be flexible enough to include agreements that are being negotiated today, of which there are about 12 in the world, and also to include an important agreement with the African Continental Free Trade Area.
Is there any flexibility to add potential new agreements?
[English]
Ms. Harker: There is flexibility to add new free trade agreements. Once they become ratified, they could be added to the schedule. Additionally, however, this new regulatory provision will allow us to proceed with regulations even if a new and ratified free trade agreement is not included in that schedule, for example. Right now, as the act is written, we need to rely on the agreements that are written in that schedule and the specific chapters or provisions that are identified. This broader overarching regulation-making authority would allow us to develop and implement regulations even if the specific chapter or provision noted was not indicated in Schedule 5.
Senator M. Deacon: Thank you both for being here today.
It has taken me a while to work through the different aspects of Bill S-6. I want to come back to the “why.” The wish is to try to fix or modify an overly complicated, inconsistent and maybe outdated or irrelevant system we have in place now.
In the Senate, this bill is being observed in a number of ways from a number of different committees. Are there aspects of this bill that you think, from your conversations, will be more difficult to move forward than others? Are there one or two parts of this as we go through it that will be more sticking points for trying to move forward as they are presented?
The Chair: Senator Deacon, are you directing that to both of our witnesses?
Senator M. Deacon: I am, yes, absolutely.
The Chair: Thank you.
Mr. van Raalte: Perhaps I can start, Mr. Chair. Thank you for the question.
I think the lens that public servants provide in terms of what may or may not be contentious may be different from what parliamentarians have. The assessment and the advice that was provided from the public service was that we were looking for straightforward, common sense, non-contentious issues that could be brought forward for parliamentary scrutiny. We will not be perfect on that.
I think that given the time that has elapsed since our intention to move this bill forward in 2020 — because of the pandemic, other far more important pieces of legislation have been brought to Parliament — the views of stakeholders may have evolved in those three years. You may hear over the course of deliberations that new ideas have surfaced. When stakeholders actually see the draft text when they are consulted early in the development stage, we have to talk about concepts, and then the advice goes in as a cabinet confidence and out the other end comes draft text of legislation. When stakeholders see the finer points of how something may be written, they may say that this was not exactly what they were talking about. I have to give some leeway for that in terms of that definition of non-contention in terms of that evolving stakeholder perspective.
In general, we are quite confident with the package. We have been challenged — this is my third committee appearance — on different parts of the bill. We have been challenged on the scope and the level of ambition of the bill. I have made the point with those committees that if the Senate has advice on future bills and on the types of measures they would like to see, that kind of scoping, that would be quite welcome as well.
The Chair: Ms. Harker, you have about a minute to respond.
Ms. Harker: Thank you, chair.
I support the comments from my colleague Mr. van Raalte, and I would just note that as a representative of the Canada Border Services Agency, I can only speak to the amendments that pertain to the mandate and responsibilities of my department. I’m not really in a position to speculate on the success or lack of success of amendments proposed for others.
Senator M. Deacon: I was looking to touch on that 2020-22 time period, so thank you for your response.
Senator Coyle: Thank you very much to our two guests today, Ms. Harker and Mr. van Raalte. I have questions for each of you, and I hope to fit them into the time.
I have two questions for Mr. van Raalte. You spoke about the various ways that stakeholder consultations are taking place. We have heard a little bit more commentary come out as a result of the questions here today.
Could you speak about the active outreach? You have talked about publishing things in the Canada Gazette. You have spoken about this new instrument for consulting Canadians and interested stakeholders. What kind of active outreach is going on, particularly to the stakeholders that would have an interest in this Part 9 that we are studying here today? What kind of active outreach would you be taking, and which stakeholders would you be reaching out to?
You also spoke to us about results of some of your consultations and that some of the commentary that was coming back was not within the scope of these regulatory changes that we’re talking about. When things are out of scope, where do they go?
Mr. van Raalte: Those are big questions, Mr. Chair. I will try and be brief.
In terms of active outreach, the vast majority of the active day-to-day outreach on regulatory legislative issues resides with those responsible departments and agencies. I will give you an example of a consultative committee on which I sit, which is Agriculture and Agri-Food Canada, chair of agile regulations table. It is comprised of Agriculture and Agri-Food Canada, Canadian Food Inspection Agency and Health Canada — the regulators within that sector — and also industry stakeholders. There is a provincial rep from an agriculture perspective, and I happen to sit on it from a Treasury Board perspective. It is an interesting experiment in that active outreach. They are following through on projects related to regulatory experimentation and innovation as well as on how best to measure cumulative burden within the system — a recognition that the regulatory burden does not just rest with the Government of Canada but that there are the provinces and territories, municipalities and international. I think that is a really positive example of what is going on out there in terms of that active outreach. Ms. Harker might have an example of what CBSA does in terms of their active outreach.
In terms of what happens to items that are out of scope, we definitely refer anything that comes in to the Treasury Board of Canada Secretariat on to departments and agencies. We do not own regulatory issues; they are owned by the departments and agencies. Sometimes we facilitate a broad Government of Canada consultation. Sometimes we get one-off outreach from stakeholders in terms of a problem they’re having with the system that requires our help to solve. We take active responsibility for that and maybe put the stakeholder in touch with the right person in the system. In terms of when things are out of scope, it depends.
More broadly, I would say there is a challenge within Canada around what I call regulatory literacy about navigating this very complex system, understanding what the difference is between legislation, regulations and guidance under regulations and how best to effect change when you are running into an irritation or a problem or you have got something new coming forward that is not necessarily caught by regulations, and how you navigate the system. That concept of regulatory literacy, Mr. Chair, is something we have brought forward to the OECD. I think it is a challenge that countries all around the world are facing just in terms of democracy and faith in our institutions. I do not have answers for it yet, but I think that the honourable senator has touched upon that active dialogue that is necessary to even build our understanding of the problem and how to address it.
The Chair: Thank you, Mr. van Raalte. We have come to the end of the five minutes, Senator Coyle.
Since there are no other questions, I would like to ask one myself. I would like to ask Ms. Harker to respond to the question that Senator Coyle asked. Also, in listening to this very interesting presentation on just how stakeholder consultations work — and I know that they are different in every department, and there are different methods — I would be curious to know how many of these requests — the 33 out of the 46 — may have been driven by the new NAFTA — CUSMA — in terms of trying to respond to stakeholders’ requests. Ms. Harker, I don’t know if that last one is fair or not, but in any event, please respond to Senator Coyle’s question.
Ms. Harker: I will respond to Senator Coyle. I am not sure that I have insight into the chair’s question.
For Senator Coyle, building on what Mr. van Raalte mentioned, we have a similar sort of consultative organization called the Border Commercial Consultative Committee. It is comprised of the CBSA as well as representatives from across the supply chain and trade chain partner industries. We have importers, exporters, customs brokers and freight forwarders, among others. This is the primary venue by which we communicate information and seek engagement from our trade chain partners to identify issues of concern to them and to communicate new information, such as when legislation such as this is tabled. We meet regularly, either as a collective or through various policy and program sub-working groups.
I apologize, chair; I’m not sure that I have the information about the various proposals that came forward and how many were related to CUSMA or the new NAFTA.
The Chair: Thank you. That is just a personal interest of mine, and I will save it for future witnesses.
Colleagues, I do not see any of you wanting to go to a second round, so I would like to thank both Mr. van Raalte and Ms. Harker for their excellent presentations today and for responding to our questions.
Before we adjourn, colleagues, I wanted to say that we have received the budget implementation act. As expected, various elements in that will fall to this committee. As a result, we’ll be reaching out to you with more information in terms of how we will be scheduling meetings and witnesses, including on the ongoing study that we are engaged in.
If there are no other items, colleagues, I thank you very much.
(The committee adjourned.)