International Trade Committee on April 14th, 2016

[Michael Ferguson]

Mr. Chair, the only thing really I can speak to at this point is the audit we undertook. That audit was focused on export controls, controlling exports, the work the Canada Border Services Agency does to do that.

In the past we have done some work on import controls as well, but this particular report was about the export controls.

We have made a number of recommendations to the organization, and I think maybe the one that is perhaps most pertinent to the question is the recommendation we made that the Canada Border Services Agency should take steps to ensure that gaps in coverage of export examinations are not predictable.

Again, that's not the import of the types of things that were mentioned in the question. A broader approach is important is to make sure that any of these controls are functioning in a way that is not predictable. In terms of export control, really the thing I want to mention is there are not controls on all exports leaving Canada. There are only controls on some exports.

The reason it's important for there to be those controls on exports is that Canada wants to make sure it is not exporting unapproved weapons technology that could be used to develop weapons of mass destruction, or that they are helping to combat organized crime by preventing the proceeds of organized crime from exporting the country and being sold, and then also making sure Canada is living up to its international commitments to put controls on some of these exports.

There are the two aspects obviously to international trade, the import and the export. This particular audit that we completed was primarily on the controlling of the exports, but there would be some things in this that could be considered in light of import controls as well.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

It is my understanding that when CBSA was created in 2003 it combined powers of Canada Customs and Revenue Agency, Citizenship and Immigration Canada, and the Canadian Food Inspection Agency.

Are there any measures that any of these departments can put into place that can assist CBSA in being a more effective, transparent, and efficient party?

[Michael Ferguson]

Again, this particular audit that we reported on and presented to Parliament was looking at the Canada Border Services Agency's role in export control. We were only really looking primarily at that. We looked a little at what Global Affairs Canada does in terms of issuing export permits, but, fundamentally, this was looking at CBSA's role.

We have identified that when you're dealing with exports, there are many government departments and organizations involved. It is not just CBSA. I think it certainly is very important for all of those partners and connected organizations to have a good way of working together to make sure that they're aware of what each other is doing.

I can't speak specifically, and maybe Mr. Swales will have some more comments on it, about all of the interactions that were going on in this particular world, but I can tell you that in many audits that we have done on many different subjects, an issue that is a common theme that comes up is often that departments have difficulty communicating with each other when multiple departments are actually involved in a particular program. That's something that needs to be improved, but I'll ask Mr. Swales to see if he has any more on that.

[The Chair, Liberal, Mark Eyking]

We'll have some time for Mr. Swales maybe a little later. We have to switch. Your time is well over, Mr. Dhaliwal.

We have to go over to the NDP now. Ms. Ramsey, five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you for your report. It's very comprehensive. I'd like to know that what we're talking about excludes export shipments to the U.S. We're simply talking about all other borders, is that correct?

[Michael Ferguson]

That's correct.

[Tracey Ramsey, NDP, Essex, ON]

I want to drill down into what one of my colleagues was mentioned, and that's the staffing levels. I'm going to specifically reference your report, page 9:

2.46 Staffing levels. Agency officials told us that one reason for not examining targets was not having staff available at the time needed to do so. We found that the Agency did not continue its usual level of export control activities during temporary staff reductions, such as vacation, sick leave, or reassignment to higher-priority import control duties. We found that at one port of exit, no export control examinations were conducted when the assigned border services officer was on vacation. As another example, due to staffing fluctuations, the centralized unit that reviews rail shipments had once gone longer than a month without any targeting.

I'm curious, in your report, why did the OAG not specifically recommend that the CBSA review staffing levels?

[Michael Ferguson]

I'm just going to double-check in this area. We made a couple of recommendations, one in 49 and one in 50, and also in 51, which was a broader type of recommendation: “should take steps to ensure that gaps in coverage for export examinations are not predictable”.

That would cover both looking at resourcing and looking at how resources are assigned to various different activities.

[Tracey Ramsey, NDP, Essex, ON]

Seeing these gaps, a strong recommendation to add some additional staff would correct some of these gaps that you've identified. Of course we all understand the importance of safety.

One of the other questions I have is around the automated risk identification tool.

The CBSA currently obtains electronic declarations from exporters through an automated system that you identify as being operated by Stats Canada. This system “does not have the capacity to automatically identify declarations that may be high-risk so that targeting units can focus their reviews”. What is more, Stats Can is planning to shut down the system in January 2017.

How much easier would an automated risk identification tool make it to target those exports that should be controlled?

[Nicholas Swales]

Part of the problem with the system is it was not designed for risk assessment. It was designed, essentially, for statistical data collection.

[Tracey Ramsey, NDP, Essex, ON]

But if there was one to be designed—

[Nicholas Swales]

One that was designed to do that would make a substantial difference, because it would allow you to encode into the system rules to look for things, which at the moment has to be done entirely by staff.

[Tracey Ramsey, NDP, Essex, ON]

Is that CBSA's strategy, to replace the automated system that's operated right now by Stats Can with one that's credible and viable, and created for that purpose?

[Nicholas Swales]

That is their long-term goal, yes.

[Tracey Ramsey, NDP, Essex, ON]

In January 2017 this one will expire. Will it be in time for January 2017 so that we don't have any further risks at our export borders?

[Nicholas Swales]

That was what led us to make the comment about uncertainty, because at the time that we were doing this work there wasn't a clear way forward agreed between the two organizations.

[Tracey Ramsey, NDP, Essex, ON]

Can you give us a snapshot of reports of things that have been exported, that have been identified, that have been caught? We heard about the cars. Can you give us a snapshot and tell us which countries they were being exported to? Is there one particular country that stands out as being more of a risk than others?

[Michael Ferguson]

What we identified was just sort of in the general sense, so I can't give you the specifics of that. As you mentioned, we identified the issue of exporting of stolen cars, but also that there were some technologies that they identified that they stopped through their targeting. Again, I can't give the specifics.

[Tracey Ramsey, NDP, Essex, ON]

Would it be reasonable to request that you undertake a report of that and return it to the committee?

[Michael Ferguson]

We don't have any further audits under way on this particular topic. If the committee would like to ask us to do an audit, we certainly would consider that. If that's something the committee would like to ask us to do, then we would figure out how and when we can do that.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

How much of a risk has the export of non-compliant goods posed to the safety and security of Canadians and populations abroad?

[Michael Ferguson]

I think our prime concern there is when they target something and they look at it they are able to identify things that shouldn't be exported.

Our concern is that they're only able to look at 20% of what they actually say needs to be looked at that is a high risk. That's really what the concern is.

When they're looking at things they're successful. It's what they're not able to look at that they've identified as high risk.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to move over to the Liberals, but before we go to the Liberals I'd like to welcome Mr. Picard. He's from the riding of Montarville and he's the PS to Minister Goodale who is, of course as everybody knows, the Minister for Public Safety.

Mr. Peterson for five minutes.

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

Thank you, Mr. Ferguson and Mr. Swales, for being here today. We appreciate your time and making yourselves available to answer our questions.

I want to pick up a little bit on what my colleague was discussing in regard to gaps, as I think you identified them. I may be presuming, but if there's a new software system in place, that may address the gaps and there may not be the necessity to hire more staff.

Your recommendation is to address the gaps. I think perhaps that's why you weren't specifically saying hire more people to fill these gaps because maybe some sort of predictive software, maybe there's a way when we start tracking more information on the exports, there are ways to target potential at-risk shipments. Is that fair? Is that a reasonable presumption for us to make that a more sophisticated system would perhaps close some of these gaps without the necessity of extra staffing?