International Trade Committee on March 12th, 2009

[The Chair, Conservative, Lee Richardson]

Order, please.

Welcome to the ninth meeting of this session of the Standing Committee on International Trade. Today we are going to start a discussion of our study of Canada-U.S. trade relations.

This morning we have as witnesses, from the Tourism Industry Association of Canada, Randy Williams, president and chief executive officer, and Christopher Jones, the vice-president of public affairs; and from the Canadian Chamber of Commerce, Shirley-Ann George, senior vice-president, policy—welcome back, Shirley—and Ryan Stein.

I think we'll start off with our customary opening remarks from the witnesses, and follow with questions from the committee.

I understand, Ms. George, that you have to leave about 10:30. Is that correct?

[Shirley-Ann George, Senior Vice-President, Policy, Canadian Chamber of Commerce]

Actually, I was able to move my agenda, so I can stay for the full time.

[The Chair, Conservative, Lee Richardson]

All right. Then we'll begin.

Randy, are you prepared to start with some opening remarks?

[Randy Williams, President and Chief Executive Officer, Tourism Industry Association of Canada]

Thank you, Mr. Chair. I appreciate the opportunity to speak with you today.

First, let me thank the committee for the opportunity to appear before you today to help situate the tourism sector within your investigation of trade relations between Canada and the United States.

As with many other sectors, the U.S. is Canadian tourism's biggest trading partner. With more than 80% of non-resident travel to Canada coming from the United States, the ongoing vitality of our tourism sector depends on overnight and same-day visits from our American neighbours. However, we are continuing to see some very concerning numbers with regard to the softening of this key market. To begin with, the overall number of Americans visiting Canada has slid precipitously in recent years, falling by 41% since 2000. Visitors from the United States made 5.2 million overnight trips to Canada during the third quarter of 2008. This is the lowest third-quarter level since records were first kept in 1972. In that same quarter, travel was down from all of the top U.S. states of origin, while spending by U.S. visitors stood at $2.8 billion, down 8.4% over the same quarter in the previous year.

Those are a lot of numbers, but what do they mean? I can tell you, from my discussions with our members across the country, those numbers mean a great deal to their bottom line and to their future.

For the tourism businesses in your cities, towns, and communities, those numbers mean fewer bookings, fewer patrons, and less stability. They mean that those from the traditional pool of travellers who used to make trips across the border are either not coming to Canada or are staying for shorter periods. They mean that small and medium-sized enterprises--the lifeblood of the Canadian tourism sector, if not the entire economy--are forced to do more with less to remain competitive. They mean they are unable to enhance their services or invest capital to improve their businesses. And sometimes they mean holding off on hiring, or in some circumstances cutting back on staff.

There are a number of factors that contribute to these declines, and while some of them may be beyond our control, this only underscores the need for us to take action where we can to help facilitate the process of crossing our border for our valued American customers.

With this in mind, I will speak today to two key issues for the tourism sector: the state of Canada's border infrastructure and technology, and the looming impact of the western hemisphere travel initiative, WHTI, at land crossings and seaports. As I speak to those two issues, let me take a moment to recognize some of the recent investments in these two areas.

The budget of 2009 promised $12 billion over two years for roads, bridges, and border crossings. Earlier in 2008 the government announced the allocation of $14 million over two years to expand the NEXUS program for high-frequency low-risk border-crossers, and $6 million over two years to support provinces and territories planning to introduce enhanced drivers licences. These are important steps towards addressing the issues of our borders, but there remain a number of key issues that still need immediate attention.

Overall, increased hassle at the border has resulted in the perception of a border that is becoming progressively more difficult and expensive for travellers to cross. Peak period wait times frustrate and sometimes deter potential visitors, and trusted traveller programs, such as NEXUS, often lack the necessary dedicated lane or inspection infrastructure.

Canada's tourism sector understands that in this day and age it is an absolute necessity to have a robust system of security at our land crossings. However, the thickening of the border over the past eight years must be reversed without compromising security interests if we are to encourage the free flow of residents between our two countries.

So what can we do to address these issues? First and foremost, the Government of Canada needs to make the necessary investments in physical and technological infrastructure at our borders. This includes improvements in new construction at border inspection plazas, dedicated lane infrastructure for individuals holding trusted traveller documents that are WHTI-compliant, remote document scanning technology, RFID readers, electronic traveller and congestion information to steer travellers to the least busy land-border ports of entry or rest stops to avoid lineups.

Beyond these improvements to the infrastructure, we need to see a greater commitment on the part of the agencies that oversee the borders to make them efficient, effective, and welcoming to travellers. This includes increases in peak period staffing and 24/7 border services at all major crossings and a new welcome-to-Canada policy for border guards. These officers are the first people that U.S. travellers see on a trip to Canada, and their demeanour leaves a lasting impression on our valued customers.

Of course, all of these issues at our borders will become a stark reality when the western hemisphere travel initiative comes into force at land crossings and seaports of entry on June 2. Announced in 2005, WHTI requires all travellers to present a valid passport or other approved security document when entering the U.S. WHTI has been in effect for air travel since January 2007. The effects on air travellers were always viewed as minimal, given that most air passengers were far more likely to hold passports.

But the larger question for those of us in the Canadian tourism sector, which depends greatly on the short-stay American traveller, is will there be a critical mass of WHTI-compliant documentation in circulation before June 1, 2009, for land and sea border crossings. The last figures that we have are not promising. Just 28% of Americans currently hold a passport, as compared to 53% of Canadians. There are 700,000 Americans who currently hold a passcard. The NEXUS card is currently held by 300,000 Canadians and Americans. Enhanced drivers licences have been put forth over the past few years as a viable option, and we have seen several American states and Canadian provinces move forward on offering these as an option for a secure document. However, adoption rates for these drivers licences, incorporating proof of citizenship, have been modest at best to this point.

Ultimately, this is where we stand, 90 days away from the introduction of these more stringent border policies and at the beginning of our summer peak travel season. Although the recession may dampen American demand for travel, the potential for border problems is a real concern for Canada's tourism sector as we approach this crucial travel period.

What we urgently need at this time is a more extensive and fully budgeted communications initiative designed to alert both Canadian and U.S. travellers to the new land and sea crossing requirements. If we cannot communicate these new requirements, we risk sabotaging some of the marquee festivals and events for this coming summer season. Take for instance the World Police & Fire Games being held in Burnaby, B.C., from July 31 to August 9. Organizers expect attendance for this event to be more than 10,000 athletes and families alone. Or take the upcoming Montreal International Jazz Festival this July, which attracts significant numbers of visitors from the northeastern states. Given the proximity of these venues to the border and the international nature of both events, a great number of participants and spectators will be traversing the Canada-U.S. frontier to attend.

In the case of the Burnaby event, it will be a critical pre-Olympic Games trial run for the staff, infrastructure, and technology of the Canada Border Services Agency. As we approach Vancouver and Whistler 2010, we must succeed in getting potential visitors across our border and into Canada in a seamless and welcoming manner if we are to truly prosper and thrive as a competitive tourism destination.

Thank you for your time. I'll stop there and welcome any questions you have.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you very much, Mr. Williams.

I think we'll proceed with the second of the witnesses and then we'll have questions for all the witnesses following Ms. George.

Shirley-Ann.

[Shirley-Ann George]

Thank you very much.

Good morning, Mr. Chairman and members of the committee.

The Canadian Chamber of Commerce is pleased to provide input on the vital issue of Canada-U.S. trade relations focused on our joint border. I won't speak on the tourism industry, as Randy has already covered this off well.

As we find ourselves in a global economic downturn, we must make sure that the fundamentals of our economy are working. As a trading nation, access to foreign markets is a key pillar of our economy, and no partnership is more important than ours with the United States.

You all know the numbers well. The Canada-U.S. relationship is the largest trading relationship in the world, with $1.6 billion in two-way trade and 300,000 travellers crossing the border every day. Over one-third of this trade is intra-company trade, delivering of input materials, because we do, indeed, build things together. Major benefits flow from this relationship, with ten million jobs in the United States and three million jobs in Canada, something that our American friends often don't understand.

While the Canada-U.S. Free Trade Agreement helped tear down the barriers, creating an integrated North American economy, security concerns following 9/11 have led to a piecemeal application of new border procedures. We now have a thicker border, one that is more costly for business and travellers, putting at risk many of these ten million jobs.

The new U.S. administration gives us an opportunity to reinvigorate our longstanding partnership, while strengthening our physical and economic security. We need to build on the momentum following President Obama's visit to Canada, where our leaders committed to enhancing North American security and to review the management of the Canada-U.S. border.

In a meeting that I had last year with then Governor Napolitano, it was very clear to me that she understood the importance of a balance between security and border efficiency. She strongly believes that both can be attained, and I think this bodes well for all of us here in Canada.

To fix the border, we have five short-term recommendations and one long-term border vision to share with you today. While each of these recommendations may appear an isolated item, combined they create a more secure and competitive North America.

First, we strongly support the voluntary trusted shipper and traveller programs, which enhance supply chain security and travel security. Properly implemented—and I stress “properly”—these programs should lead to more border-crossing consistency for businesses and lower inspection rates for participants. Border agencies can then focus on the unknown traveller, the unknown trade, in essence, making the search for the proverbial needle in a haystack in a smaller haystack.

While the initial cost to participate in these trusted programs can cost $100,000, and up to two years to get certified, we believe that it is a necessary step for securing our supply chains, and participants should be rewarded with a traffic light that largely stays green when crossing the border. However, a number of companies have reported that their inspection rates did not decrease when they entered the programs, and few believe that the investment has produced enough benefits to justify the costs.

We need to treat trusted travellers and shippers differently from the unknown trade and travel. This includes ensuring a risk-based approach to border management, enhancing the membership in trusted shipper and traveller programs, and providing clear, measured, and reported benefits for participation. We also should expand these programs so that companies that are regulated by other government departments beyond CBSA can also participate, something that's not permitted today.

The second major concern for the Canada-U.S. business community is there are not enough lanes open during peak commercial and travel times. While unfortunately this not a major issue today, hopefully we will soon return to normal traffic patterns. These traffic patterns, especially for commercial traffic, are largely predictable and should drive border staffing levels, not the time of day. We recommend that Canada and the United States offer 24/7 border services at all major crossings, including the operation of border booths and secondary inspections—and I stress including “secondary inspections”—and border-related support services.

The third issue is the lack of a single system for reporting imports and exports at the Canada-U.S. border, which continues to frustrate businesses. Different shipments are regulated by different government departments and agencies. And while Canada and U.S. border agencies are moving towards electronic importing and exporting reporting mandates, other government departments are still using other systems, and in many cases these systems are still paper-based.

Electronic cargo data reporting helps our border agencies manage risk. A uniform system across all departments will boost information sharing within government and simplify the reporting process for business. We strongly support the single window initiative in Canada and the international trade data system in the United States.

We recommend that both governments mandate the implementation of uniform reporting systems and that this be a starting point for a long-term strategy to put in place a fully secure and interoperable customs system within North America. If there's one thing you could do that would really make a difference, and that I encourage you to do, it's bring in the other government departments that are not participating in the single window initiative and ask them why it is that small businesses and all businesses in Canada have to go to systems that require electronic reporting to cross the border, as this is for the good of our nation, for the security of our nation, but government departments don't have to meet the same standard.

A pandemic, natural disaster, or terrorist activity, any of these could lead to full or partial border closures. The border's importance to these ten million jobs calls for a contingency plan to deal with these potential events. We applaud the progress made in this area by the Canadian and U.S. border agencies and encourage them to complete the job. We strongly support that a border contingency plan and the needed communications plan be put in place to reopen the border following an incident, especially for our trusted travellers and shippers.

The fifth issue, as Randy mentioned, is the WHTI, the western hemisphere travel initiative. We are pleased to see that when WHTI will be implemented at land and sea people will be able to use their trusted traveller cards and enhanced drivers licences. However, we remain very concerned that there is not the critical mass of WHTI-compliant documentation in circulation, and this will discourage visitors and increase congestion at the border.

We believe that the enhanced drivers licences denoting identity and citizenship, and containing secure RFID technology, are a less expensive and more practical form of documentation than a passport for the many Americans and Canadians whose only travel interests are limited to land crossings. We applaud the foresight of the provincial and state governments that have put in place this option, and we strongly encourage them to expand participation and encourage others to do so quickly as well.

I'd like to now move on the long term. The recommendations I have just listed are short-term border fixes, but they lay the groundwork for a longer-term border vision. Moving forward, we need to strengthen our long history of border cooperation. Successful cooperative models between our two countries already exist, including such examples as NORAD, the St. Lawrence Seaway, and the International Joint Commission.

We recommend taking border cooperation to the next logical level of cooperation with a co-managed border made up of officials from Canadian and U.S. border and infrastructure agencies, with potentially a rotating chair in the same spirit as NORAD. This concept could be tested using a pilot project at an existing border crossing with low-risk, pre-screened trusted shippers and travellers. We have border crossings that are ready to sign up today. A co-managed border will provide uniform border planning, coordinating agency resources, linking cross-border infrastructure projects, and strengthening port and between-port security enhancement protocol and incident responses.

The strength of the Canada-U.S. relationship and our ability to ensure an efficient border is a top international priority for Canadian businesses. We applaud your recognition of the importance of this issue through these hearings.

Thank you for the opportunity to present today, and we'll be happy to answer any of your questions.

[The Chair, Conservative, Lee Richardson]

Thank you very much, Ms. George.

That will move us to our first round of questioning. These will be seven-minute rounds. That is, seven minutes for question and answer.

We'll start with Mr. Cannis today. I think we'll have lots of time for a second round. Mr. Cannis will begin the seven-minute round.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you.

I'll split with my time with my colleague, even though I think we'll have time, Mr. Chairman.

Welcome, guests, and thank you for your very precise and wonderful presentations.

Mr. Williams, you talked about a fully budgeted communication requirement. I remember I was parliamentary secretary to John Manley when we first brought forth the Canadian Tourism Commission, and there was x amount of money appropriated. I believe it was $75 million or $78 million at that time. Has that increased? What percentage of that would be applied towards a communication strategy?

[Randy Williams]

What we're referring to is actually a communications strategy that would be issued through another department. The CTC's budget, which was around $75 million, did receive a boost in the last budget, which was helpful for emerging markets and also some domestic marketing, which was much needed. But what we're speaking about is a different administration for communicating the document requirements from both the CBSA on the Canadian side and whatever other agency needs to promote it, and also from the DHS in the States.

[John Cannis, Liberal, Scarborough Centre, ON]

Wonderful. Thank you very much.

I appreciated very much also, sir, your comments when you said we need to facilitate and improve better services when crossing the border, and a new policy with respect to our border staff. I think you were being very kind and very polite, but certainly very firm.

I'll speak from my own first-hand personal experience. As much as I will be constructively critical with respect to coming back into Canada and the way you are questioned, which I find very unacceptable, I will also say.... And this is just a reflection of the comments that you also made, Ms. George, on a co-managed border: it's a wonderful idea, but I'm sure you'll agree it's a two-way street.

We do have hassles. I remember a former colleague, a member of Parliament, with a delegation going down to visit U.S. representatives in Washington, and boy, was he given a hard time because he was born.... I'm not going to name the country; I'm not going to name his ethnicity. But it's a two-way street.

Do you think there's room where they're going to listen? Sometimes we have a mentality there, a block there, that is just so paranoid, for lack of a better word. Have we made progress, in your view, from their side? Because we get comments that things happen there, which we appreciate and understand, but sometimes we're blamed for things that we really are not to be blamed for. How can we overcome it? You referred to Minister Napolitano as well. Again, it's a different mentality from our predecessors. How is that going to blend in?

[Shirley-Ann George]

I believe that the change in the head of the DHS will serve us well. She has a history of working cooperatively with business, while still very much keeping her eye on the security ball. She has extensive experience with the Mexican border, given where she's from, and is very interested in understanding the northern border as well.

Some of this attitude comes from the top, and we're quite hopeful that we'll see some changes, but we have to understand that the United States is always going to take the protection of their country very seriously. We are hopeful that if we move towards a co-managed border, being inside the tent would allow us to try to have greater influence over some of the issues.

[John Cannis, Liberal, Scarborough Centre, ON]

On our border staff, Mr. Williams, do you have any comment on that? How do we overcome it? Every six months, do we kind of bring them into a PR session? Any suggestions?

[Randy Williams]

We appreciate that their major responsibility is security and making sure that people don't enter the country improperly.

Three words: Welcome to Canada. Just start off the conversation with that and it makes a heck of a difference. That's all we're asking.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

I have a couple of points.

Ms. George, you spoke optimistically of the prospects in terms of Canada-U.S. and the border issues. Secretary Napolitano's view of border issues is based on the Mexican border, which is very different from Secretary Ridge's view from Pennsylvania. His view on border issues was more shaped by the northern border. There is a growing trend in the U.S. towards trilateralism, where they view the two borders as being the same. This is of great concern to Canada, as we see the situation in Mexico in recent weeks decline precipitously in terms of security issues.

A couple of weeks ago, three of the Republican congressmen and senators I met with had the Fox News view of Canada, that our immigration policy was a root cause of great insecurity to them. I'm concerned about Secretary Napolitano's ominous northern border security study and some of the other initiatives. This is a point for both organizations, that your counterparts.... Congressmen and senators aren't elected or financed by Canadian legislators, but your counterparts in the U.S. have a lot to do with votes and money for American legislators. So I think that those counterparts play an important role in terms of communicating that message.

On the WHTI initiative coming in on June 1, we had an official from the government this week who wasn't certain what the Canadian government's position was on that issue. I, for one, don't believe it's absolutely inevitable. I think we still have an opportunity. If that goes through, what will be its impact? I'll give you an example. You mentioned one event, Mr. Williams, but what about the 2010 Olympics? What will be the effect on the border between Washington State and British Columbia if we don't get this right and get it right quickly?

[Randy Williams]

The effect would be devastating. The amount of media attention that goes around the world.... The media will pick up on it. You can be sure of it. If there's a negative occurrence during the Olympics that happens to be two-, three-, four-hour lineups at the border, it's going to hit international news.

That's something we just can't afford to have happen at any time, let alone during a time when we're supposed to be showcasing our country. And it's the time the Americans should see that they're showcasing the relationship between Canada and the United States to the world as well. It would be devastating.

[Scott Brison, Liberal, Kings—Hants, NS]

What are you doing, in terms of your counterparts in border states, to create pressure on American legislators and policy-makers to make that case?

Ms. George, you were mentioning that around 40% of Canada-U.S. trade is intra-company. We make things together, so you can't de-scramble an omelette.

It will cost American jobs. But in terms of both tourism and commerce, how active is the relationship between yourselves and your counterparts, people like Scotty Greenwood and others, to make that case to legislators that this is going to cost American jobs?

[Shirley-Ann George]

We work very closely with the U.S. Chamber of Commerce. As you may remember, last year in February we released a joint report on the border with the U.S. chamber. We've just started to engage in an update of that report that will be released over the summer. Through that, we have been able to work very closely with our friends at the U.S. Chamber of Commerce, who are very focused on this issue and have put a lot of attention on the border. Just through the process of working with us jointly and consulting with their members, they better understand the importance of the issues.

I think we have some good allies at the U.S. chamber. The problem for us, and not just for the border, but with every issue we have in Canada when were dealing with the U.S., is that they're dealing with so many other issues. We have to constantly be vigilant about remaining at the table.

[Scott Brison, Liberal, Kings—Hants, NS]

We have a global recession that is a borderline depression, and we have a new U.S. administration. This is no time to increase the moving parts in terms of the U.S. economy, so it's a case to be made to the Obama administration.

Delay this another year, and work more fervently on things like enhanced drivers licences in the interim, but this is no time to create more impediments to trade.

[The Chair, Conservative, Lee Richardson]

Mr. Guimond.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Chair.

Greetings, lady and gentlemen.

You began by talking about the tourism industry. That concerns and interests me greatly, because I come from a region of Quebec where the tourism industry is very important, especially for Americans.

In addition, you refer to problems at the border. This situation goes hand in hand with a recession and an economic crisis that is hitting us hard, the Americans even more than us. I think we have a great deal of work to do in order to improve the tourism industry.

Mr. Williams, you talked about communication initiatives in Canada and the United States. I would like to hear more on that topic. How do you see this project? Do you have an elaborate communication plan? How do you see this communication between Canada and the United States?

[Randy Williams]

My vision would be that both sides of the border—the United States Border Patrol and DHS and CBSA—work hand in hand. It could be the start of a co-managed agreement whereby we look at setting a significant budget to advertise jointly, using a campaign that looks and feels the same, by both governments to both Canadians and Americans.

When WHTI was first announced, there was no discussion about a communications plan. We advocated back in 2005 for a communications plan to be put in place. There was some money allocated by our government here—close to $2 million, I understand—to promote document requirements, and the same in the United States. But that's not significant enough to penetrate the North American market; we need to step it up.

I understand Mr. Brison's comment with respect to delaying WHTI, and if we're not ready to implement WHTI it should be delayed. The challenge with another delay is that there's no urgency for Americans to get documents, when they keep believing it will be delayed and delayed. The transition time has been as hurtful as the actual implementation. We need to get Americans informed about what documents they need to cross the border, and that requires a penetration of their awareness levels by communicating to them through an advertising campaign.

I think there's an opportunity. Both groups work closely together, CBSA and DHS, so we should be working together on a communications plan that looks and feels the same to create more awareness.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

If I understand correctly, you want a fairly extensive advertising campaign and you also want the government to invest in this campaign to encourage Canadians, it would seem even more than Americans, to make sure they have the documents required to travel between the United States and Canada.

[Randy Williams]

That's right.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Do you have an idea of the scope of the advertising campaign that you would need?