International Trade Committee on April 14th, 2016

[Michael Ferguson]

We weren't prescriptive on each of the aspects that they need to look at. Again, when you look at the issues that we raised in here, there were a number of issues in a number of different areas.

For example, if somebody was exporting something that didn't need a permit but needed a declaration, they could file that declaration at any CBSA office, regardless of where the shipment was leaving, regardless of the port of exit for that shipment.

If the shipment was leaving by plane they only had to file the declaration two hours before the plane leaves. They can file the declaration in one office somewhere in the country. The plane can leave from somewhere else. That declaration can be made on paper, not necessarily electronically. They have two hours to look at it and decide whether something needs to be done, get in touch with the Border Services Agency at the airport, get the shipment and examine it.

When you're dealing with something that's leaving by ship it's 48 hours, but even still that's still a short window when you've got declarations coming in in one part of the country and you've got goods leaving at another part of the country.

There are a number of gaps and issues in this whole system around controlling exports. That's why we weren't particularly prescriptive. We feel that they just need to look at the system from beginning to end and figure out how to make those gaps less predictable.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

You mentioned in your opening that it's a relatively small number compared with the total exports, and I think you did peg it at 11% of temporarily detained shipments that weren't necessarily released in a timely manner.

To characterize that as small, did you do any comparisons to other countries? Are there best practices out there in the universe that you were able to compare to, to benchmark what it was that our CBSA was doing?

[Michael Ferguson]

No. Certainly in terms of what types of shipments need to be detained, that's based on the laws of the individual country, the systems that are in place, and that sort of thing. Yes, for shipments that need to be detained and examined, they need to do that, look at them, and do the examination as quickly as possible. Our concern was that if something is a legitimate good that can be legitimately exported, they need to make sure they get through that process as quickly and expeditiously as possible so that it doesn't interrupt the free flow of goods and legitimate trade. Our concern there was about the situations where something was detained but it was all right, and how long it took to release that into the market.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That would potentially have an adverse effect on the commercial interests of the exporter. You said that “some”, in your words, experienced major impact, including lost sales and contracts. Can you quantify that number “some”? Do you mean some of that 11%?

[Nicholas Swales]

Mr. Chair, in paragraph 78 we talk about the work we did to try and get at that question, which was to survey the exporters whose goods were detained. We got responses back from about half of the exporters whose goods had been detained and subsequently released in our period. Of them, 11% said they had had a major impact. Now I know it's 11%, but it's not the same 11%.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That was some of my confusion. Thank you for clearing that up.

You refer to it as a survey. What approach was taken statistically? Did you sample exporters? How was this evidence gathered?

[Nicholas Swales]

Mr. Chair, we sent a survey to every exporter who had had a shipment detained and then released. There were only 300 such shipments during the period of our audit, which gets back to your initial question about how many. There are millions of containers that leave the country every year, and there were 300 that were detained and subsequently released, which gives you a sense of the overall magnitude. We sent the survey to every single one asking them about that specific shipment, and about half of them responded to us.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Okay, so are you confident that was a statistically valid approach?

[Nicholas Swales]

Yes.

[The Chair, Liberal, Mark Eyking]

Thank you.

We have Madam Lapointe, starting off for five minutes.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

Mr. Ferguson, thank you for being here with us today.

Earlier, you talked about shipments outside the country and abroad. You said that there was a two-hour wait for shipments leaving by plane and a 48-hour wait for those leaving by ship. That was really for outside the country, but it was not related to U.S. customs.

[Michael Ferguson]

That's right.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Those are exports. Do they also go through the United States?

[Michael Ferguson]

Those are not exports for the United States.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

So they leave only by ship and plane?

[Michael Ferguson]

Yes.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Okay, but could we not go through the United States to ship exports to Mexico, for instance? I know that companies in my riding must pass through the United States to get their exports to Mexico. Have delays occurred in those cases? You said that products were detained, which had an impact. Could you give us some examples?

[Nicholas Swales]

It is true that some exports go through the U.S.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

They use truck convoys.

[Nicholas Swales]

Exactly. However, in principle, they are part of our work because they are not exports for the U.S.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Okay.

What would happen if they were inspected and detained? For instance, I am thinking of Aliments O'Sole Mio, a company based in Boisbriand. That company exports its products to Mexico and, if they were detained at customs, that would be problematic. You know that products have a certain deadline for the trip. They must cross the U.S. within six days, otherwise they don't meet their shelf life once in Mexico. Have you seen cases like that? That is still a lot of time. If you are preventing fresh products from reaching Mexico, you are taking away from their quality.

[Nicholas Swales]

That was exactly our comment about the potential delays.

We have noticed two things. First, in a relatively small number of cases, which still add up to 11%, when the products were inspected and delayed as a result, we noticed that they were not being handled in the most effective way.

Second, before they even reached customs to be examined, exports may have had to wait a while before arriving at the destination. There was actually very little information about that, but there was more information about containers. As a result, we were able to find out that 26% of shipments were detained for seven days before customs even had the opportunity to examine them. So there are certainly risks involved in the situation you’re describing.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Okay.

Earlier, you talked about technologies and stolen cars.

Do border services look specifically for other risk factors for Canada in the products that we want to ship?

[Michael Ferguson]

Yes, of course, and we have identified those issues in a table. Item 2.1 outlines the three priorities in that regard.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Were you looking for cigarette smuggling? That’s a very common activity and those products move around.