Agriculture Committee on Nov. 21st, 2024

[Alexander Lawton]

By CBSA, and vice versa. If, ultimately, additional amounts are owing, interest will be assessed.

Either way, the idea is that the ultimate goal is to ensure the accurate assessment of duty and tax as though that assessment was made on the day that it initially should have been.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay, but the likelihood of.... If there's a payment that has to be rendered, the charges are just going to be forgone. Am I right that the interest would be forgone and that you wouldn't actually pay interest on a payment that would be due to somebody?

[Alexander Lawton]

I apologize. If the CBSA were to issue a refund, the interest would be paid to the importer on that amount.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay. Well, maybe the CRA should follow that policy, but that's another battle. That's not why we're here.

I know, Mr. Lawton, that I won't be able to ask specific questions, so I'll just move my questions to Mr. Rosser generally.

I want to go in the same vein as Ms. Rood in terms of the issues of food security globally and the importance of.... I know this was raised when fertilizer prices were skyrocketing back in 2022 and 2023, but this is a concern that agriculture ministers across the world are discussing at the G20 or G7. This is an issue that they're addressing, that they're discussing, in terms of finding other sources where like-minded countries would be able to trade with Canada, as opposed to Russia, obviously.

[Tom Rosser]

That's right, absolutely. As I alluded to earlier, in recent years G20 agriculture ministers have been very focused on global food security issues. We have seen instances of global food insecurity increasing by hundreds of millions of individuals in the aftermath of 2022.

In terms of price volatility for fertilizer and fuels, as well as for grain products, we saw dramatic increases in prices in the aftermath of Russia's invasion. For example, urea, a nitrogen fertilizer, was up by 120% in value in May 2022 versus the year prior.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

In Canada, obviously we have some good producers and great minds. Mr. Epp alluded to this previously with other witnesses. The west-to-east transportation is often an issue. I've certainly had some conversations with companies that to this day would themselves admit that shipping remains the cheapest way of transportation. I think that's the biggest challenge.

With the trade corridor and some investments we're making, do you see some light at the end of the tunnel to facilitate that west-to-east transportation so that it would be economically viable for someone to buy it like that?

[Tom Rosser]

Certainly we have seen important investments in our rail and port infrastructure to facilitate movement of goods. We at the Department of Agriculture are most familiar with grain transportation, but of course transportation of inputs like fertilizers is an important issue for us. It is absolutely the case that although western Canada produces significant amounts of nitrogen fertilizer, the logistics of utilizing that product in the east are relatively unattractive compared to importing it by ship from overseas.

Certainly, in the aftermath of what happened in 2022, there have been discussions about whether there is potential to increase supplies in eastern Canada or to facilitate transportation. That's ultimately a decision that private investors and marketplaces will make, but it is a vulnerability. As the Sollio witnesses described, eastern Canada is supplied from western Canada with potash, but in the case of nitrogen fertilizer, the fertilizer used in the eastern part of the country tends to be imported from overseas.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay. Are we—

[The Acting Chair, NDP, Richard Cannings]

You have 10 seconds.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

That's fine. Thank you.

[The Acting Chair, NDP, Richard Cannings]

Thank you, Monsieur Drouin.

We'll now turn to Ms. Gaudreau

You have the floor for six minutes.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Thank you very much, Mr. Chair.

Thank you to the witnesses for joining us today.

I will speak slowly in French, because I'm thinking of the interpreters. As a result, Mr. Chair, I would ask for your indulgence with respect to my speaking time. When we speak too quickly, the interpreters have a hard time doing excellent work.

My question is for the Canada Border Services Agency. You may tell me that you cannot provide an answer, but I am asking the question again.

Can you explain why the agency reversed its decision to refund Sollio Cooperative Group? The agency asked it not only to reimburse a sum of money, which had already been distributed to its members, but also to pay interest on it. People would like to know why the agency acted in this way.

[Alexander Lawton]

Regretfully, I have to apologize, but specific details of any individual transactions or of any individual importer are considered customs information, and the CBSA is prohibited from disclosing that.

In general, any time there is a refund request or any other assessment of duties, we use a risk-based approach in our compliance efforts to identify specific transactions, specific importers, who are identified for further verification pursuant to the Customs Act.

Additional information as part of that verification effort can always be requested, and based on that additional information from the importer or from other sources, a redetermination of the duties owing can be made.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

That said, I'm appealing to your judgment. I would like to know whether you think it's normal for the agency to reverse its decision. It's a matter of opinion, but we are here to try to shed light on the issue. I'm not asking you to reveal any secrets.

In your opinion, is this a normal way of doing things?

[Alexander Lawton]

I would note that the sort of situation you're describing is not normal, but at the same time, it is not unusual.

Over the last three years, the CBSA has received, on an annual basis, approximately 167,000 adjustment requests from importers. Forty-four per cent of those were refund requests. Of that 44%, approximately 5% of refund requests were not accepted, and 5% of 44% of 167,000 is somewhere around 600 to 800 refund requests a year. I think my back-of-a-napkin math is correct.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Do you agree with me that the situation is an extraordinary one? I fully understand that there can be a processing change. However, in your opinion, could this have been processed in a way that accounted for the current context?

[Alexander Lawton]

Ultimately the goal of the CBSA, as the administrator of the customs tariff and the duties regime, is to arrive at the accurate determination of the duties and taxes owing. In that regard, we administer the Customs Act as impartially as possible.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

My next questions are for Mr. Rosser.

Concerning fertilizer orders, do you feel that the measure was justified, given that the tariffs on Russian fertilizers mainly affected the supply chain in Quebec and the eastern provinces?

[Tom Rosser]

We maintain a very close relationship with Sollio Cooperative Group, which is a key stakeholder in the agri-food sector.

We do not get involved in a dispute over a fertilizer shipment. Our concern is supply security, and it was our main concern in 2022. Fertilizer is a key input for agriculture. We worked in close collaboration with Sollio Cooperative Group to ensure that the ships transporting urea could enter Canadian waters. We were mainly involved in matters related to supply security, not those related to tariffs, such as who owes what amount for a shipment.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

If I understand correctly, you are saying that the measures were justified.

[Tom Rosser]

The department is not involved in matters related to the Canada Border Services Agency and Canada Revenue Agency. When stakeholders encounter problems, we usually do not get involved.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Now that suppliers like Sollio Cooperative Group no longer have a lot of markets, do you fear that this measure will drive inflation on food products? We talked about this earlier and heard testimony to that effect. What do you think about this?

[The Acting Chair, NDP, Richard Cannings]

Please provide a very short answer. We're out of time.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

It's already over? Out of respect, Mr. Chair, I will come back to it during my next round of two and a half minutes.

[The Acting Chair, NDP, Richard Cannings]

Okay, thank you.

Normally, this would be my time for questioning. I'm going to pass over that but retain the right to ask questions at the end, just to keep things going and so that I'm not trying to watch my own time as well as think.

We will go on to the second round.

Mr. Lehoux, you have the floor for five minutes.