Agriculture Committee on Nov. 21st, 2024

[Casper Kaastra]

Thank you for that.

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

That's it for me, Mr. Chair. Thank you.

[The Vice-Chair, Bloc, Yves Perron]

Mr. Poisson, Mr. Kaastra and Mr. Héroux, thank you very much for the great insights you have given us this morning. We also want to thank you for coming. We are always grateful to those who do. It's a great quality.

Colleagues, I'm going to suspend for a couple of minutes to bring in the next panel.

[The Vice-Chair, Bloc, Yves Perron]

We are resuming the sitting. We will start the second hour of the meeting.

As agreed upon at the beginning of the sitting, since I will not be able to chair the meeting to the very end, Mr. Cannings will take over for me as chair when I have to leave.

Concerning substitutions for today's meeting, I neglected to mention at the beginning of the sitting that Mr. Dave Epp is replacing Mr. Barlow. My apologies, Mr. Epp. Also, Ms. Marie‑Hélène Gaudreau will be replacing me as representative of the Bloc Québécois when I leave the meeting.

I have been informed that the witnesses will not be giving any opening remarks. Therefore, we will move straight into questions.

First, I would like to thank the witnesses for joining us this morning. We are always very appreciative when witnesses appear before us in person.

We welcome two representatives of the Canada Border Services Agency: Charles Melchers, director, regulatory trade programs, and Alexander Lawton, acting director, general trade and anti–dumping programs directorate.

From the Department of Agriculture and Agri-Food, we welcome Tom Rosser, assistant deputy minister, market and industry services branch. I must say that he is quite a familiar face.

Finally, from the Department of Finance, we welcome Michèle Govier, director general, international trade policy division. She has also appeared before the committee previously.

Thank you very much for joining us this morning.

The Conservative Party will kick off the round of questions.

Ms. Rood, you have the floor for six minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

Thank you all for being here today.

In the last hour we heard some shocking testimony, and I'm still trying to wrap my head around it because it's just so unbelievable to me that the government would authorize and grant a refund on fertilizer tariffs for shipments that were in transit. It was authorized and refunded, and then taken back after the company had already given the money back to the farmers. Then they had the audacity to ask for interest on top of the money that they were asking to get back. It's just so unbelievable.

I'm curious what power grants the authority for the department to do that. Is this action even legal?

[Alexander Lawton, Acting Director General, Trade and Anti-dumping Programs Directorate, Canada Border Services Agency]

The Canada Border Services Agency, unfortunately, is precluded from speaking to specifics of individual importers or individual importations due to the provisions of section 107 of the Customs Act.

However, I can speak in general terms about the customs duty regime and how the assessment and reassessment process works.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Was it the CBSA that made that determination?

[Alexander Lawton]

I'm sorry. Do you mean the determination, the assessment of duties, or the—

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

I mean the reassessment—asking for a refund after the refund was given back to Sollio and then asking for the money back.

[Alexander Lawton]

Again, I really can't speak to the specifics of any individual importer or individual importation. I can speak in general terms about how the assessment, reassessment and refund process works, if that would help.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Sure.

[Alexander Lawton]

The customs duty regime in Canada is based upon self-assessments at its foundation. An importer, upon importing goods and accounting for them, will self-assess the amount of duty owing based on the tariff classification, the origin and the value of the goods. Following that, if they've overpaid, they can seek a refund. If they've underpaid, of course, they can make an adjustment request to pay the difference.

Following that refund, and in general, just as a broad principle, the CBSA maintains a risk-based compliance approach. This involves reviewing both individual self-assessments upon import and also refund requests to determine if they are accurate. On occasion, additional information comes to light that indicates that there may be an issue with any individual importation or any individual refund. At that point, normally, in general, additional information can be requested from an importer. Based on any additional information that's provided, the CBSA will make a redetermination.

Following that, if the importer disagrees with whatever that redetermination is, they have the legislative right to appeal, initially to the CBSA's recourse directorate, which ensures an impartial review of whatever decision was made.

Following that, there are additional levels of appeal, both to the Canadian International Trade Tribunal and to the Federal Court of Appeal.

The ultimate goal of the CBSA in assessing duties and taxes is to ensure the accurate assessment at the end of the day of whatever duties are owing.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Does the minister have direct oversight on this kind of decision? Would the minister have made that order in this particular case, when we're talking about fertilizer tariffs?

[Alexander Lawton]

Again, I can't speak about individual importations or individual decisions.

However, when it comes to duty assessments, reassessments and refunds, as a general rule, invariably the decision-making authority is delegated down to the individual officer level.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

We're the only G7 country applying this tariff to fertilizers. The EU and the U.S. have tariffs for domestic industry protection, but not as a retaliatory measure, as is the case in Canada.

Why is fertilizers, when there's an exemption for steel and aluminum, for instance?

[Michèle Govier, Director General, International Trade Policy Division, Department of Finance]

The way it works to withdraw MFN is that it's a horizontal provision. It's done through an order in council and is effective for 180 days. It can only be renewed upon the agreement of Parliament.

For Canada, when you withdraw MFN, a 35% general tariff applies to virtually everything. There's a very narrow set of products that aren't included, like art objects. I don't know the exact ones, but they're not anything significant. Steel and aluminum were also included in this. This is in contrast to certain other countries that might have a more variable rate that applies when they take steps. Of course, theirs are structured differently within their law. It might require legislation, etc.

Part of the reason was simply that it was a horizontal measure done through an order in council and applied broadly.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

I'm running short on time here.

At last year's G20 leaders' summit in India, all leaders, including Prime Minister Justin Trudeau, signed the G20 New Delhi Leaders' Declaration, which includes a paragraph that I can read. Actually, I'll just summarize it. It's about making sure we have food security and don't apply certain things to food and agriculture.

I'm curious about whether the continuation of fertilizer tariffs directly contradicts our G20 pledge.

[Michèle Govier]

I'm not familiar with that pledge, but perhaps there are different measures included in that. I can't necessarily speak about that.

I will say at this point that it was initially done by OIC, but was then required to be done through legislation, which was done in budget 2023. It was agreed through Parliament that they would be maintained as a horizontal measure as well.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

I'll quickly read this paragraph into the record:

Commit to facilitate open, fair, predictable, and rules-based agriculture, food and fertilizer trade, not impose export prohibitions or restrictions and reduce market distortions, in accordance with relevant WTO rules.

Mr. Chair, am I out of time?

[The Vice-Chair, Bloc, Yves Perron]

There is time for a brief answer.

[Tom Rosser, Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food]

Mr. Chair, may I quickly respond to that?

Since the invasion of Ukraine, G20 agriculture ministers have been very active in food security issues and in trying to mitigate the shock linked to the Russian invasion of Ukraine.

One of the things that drove up phosphorus prices was a restriction put in place by the Chinese government on their exports in the months after the invasion in February 2022. I think that may be, in part, what the text references.

[The Vice-Chair, Bloc, Yves Perron]

Thank you very much, Mr. Rosser.

Mr. Drouin, you have the floor for six minutes.

During your time, a new chair will take over.

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

I know that you're not leaving because you don't want to listen to me, Mr. Chair, but rather for a good cause, one which I also support.

My first question is for CBSA.

Obviously, we've heard.... I'm not going to speak about a specific case, but I want to make sure I understand CBSA's rationale.

There's a reason that the CRA and the CBSA were once linked, way back in the old days. It might seem unfair to Canadians, but when the CRA owes us money, we never get interest paid. I'm assuming this is the same rationale that the CBSA applies. There's a difference between what a client, a customer, an importer or a company owes. When you apply certain duties.... Let's say you owe x amount of duties, and you haven't paid those. You should have paid those on that particular day, and now it's 10 months later. Even though you come down with a decision, there would be interest applied.

Am I reading that correctly?

[Alexander Lawton]

Actually, under the Customs Act, it flows both ways. If a refund is ultimately provided, then the amount that was assessed will be returned. In addition, interest will be paid, and vice versa—

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

By CBSA?