Mr. Chair, thank you for this opportunity to discuss our report on controlling exports at the border that was recently presented to Parliament. Joining me at the table is Nicholas Swales, principal, who was responsible for the audit.
Exports are vital to Canada's economy, but some are controlled to achieve a range of policy objectives, such as protecting Canadians' safety and security. Although several federal entities play a role in controlling exports, the Canada Border Services Agency is the last line of defence to prevent goods that contravene Canada's export laws from leaving the country.
Our audit focused on whether the agency had the necessary information, practices, and controls at the border to enable it to implement its enforcement priorities, prevent the export of goods that contravened Canada's export laws, and facilitate legitimate trade.
We found weaknesses in the information, practices, and authorities the agency applied to assess export risks, assign its resources, and act on its priorities. As a result, the agency missed opportunities to stop some goods that did not comply with Canada's export control laws from leaving the country.
For example, the Canada Border Services Agency relied on export declarations to identify and examine high-risk shipments, but was unable to review all the declarations it received. We noted that it was not able to review export declarations received on paper as rigorously as those received electronically. The agency's ability to continue the level of review of electronic declarations was also at risk because of uncertainty about the future of the system that collects these declarations.
Once the declarations are reviewed, the agency recommends that its staff at ports of exit examine selected high-risk shipments. These processes were effective on some measures. For example, the agency found approximately 700 stolen cars in 2013 and 2014. Furthermore, the agency prevented the export of several shipments that were cause for national security concern.
However, about one in five high-risk shipments identified by the agency's centralized targeting unit was not examined at the port of exit. We also noted some systematic gaps in coverage. For example, as a result of staffing challenges, the agency did not conduct any examinations of parcels leaving Canada at one large processing centre.
We found that the agency had limited information, capacity, and authority to review and examine shipments that were not reported on export declarations. For example, the agency had limited ability to conduct random examinations of these shipments, which hindered its ability to assess the level of non-compliance.
We also looked at the impact that the agency's export control activities had on legitimate trade. The Canada Border Services Agency's mandate includes facilitating the free flow of goods. However, to ensure that exported goods comply with Canada's laws, the agency must stop and examine some shipments at the border, resulting in possible delays and increased costs.
We found that the number of legitimate export shipments that were delayed by the agency's control activities was very small compared with total exports. However, the agency did not process 11% of temporarily detained shipments in a timely manner. Our survey of exporters whose shipments were delayed but later released found that some experienced a major impact including lost sales and contracts.
We also looked at the timelines of export permit processing by Foreign Affairs, Trade and Development Canada, now Global Affairs Canada, and we found that the department was meeting its service standards.
We made six recommendations to the Canada Border Services Agency. The agency prepared an action plan to address each of our recommendations and presented it to the Standing Committee on Public Accounts.
Mr. Chair, this concludes my opening remarks and we would be pleased to answer any questions the committee may have.