Thank you, Madam Chair and members of the committee, for including the Canadian Association of Importers and Exporters on your agenda to allow for input on this important topic.
My name is Kim Campbell. I'm the chair of the association and we thank you for providing us the opportunity to appear before this committee to affirm our support for a transitional trade agreement between Canada and the United Kingdom.
The Canadian Association of Importers and Exporters is a national association that has been speaking on behalf of the trade community for almost 90 years. Our members include importers, exporters, Canadian manufacturers who both import and export, wholesalers and distributors, retail importers and supply chain service providers. We represent some of the largest importers and exporters in Canada, as well as small and medium-sized businesses. Our members import and export across most commodities and product lines.
I.E. Canada endeavours to be a trusted facilitator between business and government to inform and influence outcomes of policy and real-world application for the movement of goods across Canada's international borders.
The private sector needs transparency, predictability and ease of use in all its interactions with government, but really nowhere more so than at the border. The last few years have been very challenging for our members as two important pillars, transparency and predictability, have been shaken now that we live in an era of trade wars.
The COVID-19 pandemic has added another hardship to an already difficult environment. One really needs to be a geopolitical afficionado and tea-leaf-reader to manage the world of cross-border trade in our current environment. We applaud the Government of Canada and Canada Border Services Agency for their great work in keeping our borders open to commercial trade. We would have been at great peril without that predictability, and this effort should be commended.
The importance of our border was reinforced as we had to pivot to manage extreme supply chain disruption while at the same time ensuring critical goods moved to our citizens, including but not limited to personal protective equipment and food. For some additional excitement, we were forced to implement CUSMA with minimal information to guide the importers and exporters sector, and there was no transition period. We believe that some great lessons have been learned and hope that as we support the U.K.'s transition from the EU, the Government of Canada will support importers and exporters with transparency, predictability and ease of use in the transitional agreement.
We would also like to take the opportunity to share our work on a path to a smart and secure commercial border. We provided supporting documents in our submission to the committee for this hearing. This information might also inform your study of a transitional agreement between Canada and the United Kingdom.
Our members are focused on the mechanics of how goods move across borders. It is important to state that although the word “free” appears in these agreements, it does not mean that the goods are duty-free as a result of an agreement. The goods must qualify in order to be claimed as duty-free and there is a lot of process and regulation required for that to happen.
How one qualifies to claim no duties on their goods is extremely complicated and confusing. Those of us who work in this space have a hard time keeping up, as each agreement has its own unique set of rules and requirements. Each agreement also has its own form or format to certify that the goods qualify, and each commodity has its own rules. This applies to importers claiming a free trade agreement at time of import and exporters having to provide the certification to their customers who are importing Canadian goods into their respective countries. It is important to emphasize that many of these goods are required inputs to create the goods manufactured in Canada.
This is not a “one and done” undertaking. These certifications need to be completed once a year and are specific to the individual part that a business would be importing or exporting. In addition, the regulator may come to you four years later and state that they do not think you qualified and make you pay back all the duties and taxes. It is no wonder that small and medium-sized enterprises are not utilizing these agreements at the rate we hoped to see.
Our members are currently managing, for the third time this year, North American, NAFTA or CUSMA, certifications. For a majority, the bulk of this work occurs at the calendar year end. The uncertainty for the importers and exporters trading between Canada and the U.K. adds to the many burdens they already face.
Cash flow is paramount to the survival of many businesses during this pandemic. Just the reinstatement of duties at the border on goods entering from the U.K. on January 1, 2021, might be the end of such businesses' existence. It will also impact their customers in the United Kingdom and will encourage them to look for lower-cost alternatives.
We respectfully submit the following recommendations as key elements for a transitional agreement:
One, allow the use of existing CETA certification to substantiate free trade duty status. Two, adopt the same rules of origin and certification requirements that exist under CETA. Three, allow importers to certify goods during the transitional period if new documentation will be required.
In summary, we fully support a transitional agreement between Canada and the United Kingdom and look to the Government of Canada to support business with transparency, predictability and ease of use in cost and process.
Thank you for allowing our members to participate in your study of a Canada-United Kingdom transitional trade agreement and the potential impacts to importers and exporters if not implemented.
I look forward to answering any questions you may have.