International Trade Committee on Sept. 25th, 2024

[Ted Gallivan]

We have had the benefit of using this tool over the summer. I would say that there are two parts to the calculation. There's the math and the accuracy.

On the math, we ran 2,000 transactions that went through legacy systems and through CARM 2.0. Of the 2,000 transactions or submissions that we ran through, only two had a discrepancy. In terms of a mathematical calculation, they're identical.

In terms of interpretation of the Excise Tax Act and the Customs Act, we're finding significant discrepancies. Our estimates show that in the range of $200 million in discrepancies will be identified by CARM each year. We have a detailed list of recurring errors that are being made. We've already launched dozens of compliance campaigns through which we're contacting businesses and alerting them to these interpretive errors.

I would say that the concerns around calculations fall into two camps—the legislative interpretation of the correct coding and treatment of the acts, and the math. Our experience over the summer shows that the math is identical between CARM 2.0 and legacy, but CARM does have better analytics to flag compliance issues.

[Maninder Sidhu, Liberal, Brampton East, ON]

We heard about ticketing issues, contacting CBSA's help desk if a retailer or an importer had some issues. The response time wasn't as quick as we had hoped. Where are we in terms of response times when someone raises an issue with duties, taxes or calculations?

[Ted Gallivan]

This goes back to the registration question. We've registered 35,000 people in the last few months, and we've had a 500% increase in the calls. People have, I think, been a little frustrated with the response time.

We created a four-hour emergency service for businesses because we didn't want to hamper trade in this country. Actually 10,000 of the BNs that we have issued happened under this four-hour express service; we just don't want fruit to be rotting at the border. There has been a 500% increase in our call volumes. I think we've been bent but not broken. We have 55 staff on strength, and we're bringing another 75 surging. There has been a rush because people left their registration to the last minute, and we're scaling up to address it.

[Maninder Sidhu, Liberal, Brampton East, ON]

What is the response time now when someone raises a ticket?

[Ted Gallivan]

Last week, for people asking for a four-hour service, they got in within four hours, 80% of the time.

[The Chair, Liberal, Judy Sgro]

Thank you very much

Mr. Barsalou-Duval is subbing in.

You have five minutes, please.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Madam Chair.

I thank the witnesses for joining us.

At the committee's meetings on March 19 and 21, a motion was moved asking the Canada Border Services Agency, or CBSA, to provide us with a list of documents. We did receive documents, but the agency did not necessarily send them to us. We received them through Deloitte.

Did the agency coordinate with Deloitte at all concerning the documents that were sent?

[Ted Gallivan]

I wouldn't say there was coordination. The agency received nine separate information requests and three information orders, totalling 37,000 pages of documentation.

We have responded to seven of the nine requests. What's taking a bit longer is the 31,000 technical documents. I can confirm that all the requested documents have been sent to the Translation Bureau. As soon as they are available in both official languages, we will send them to the committee.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Okay.

We have received so many documents that it's becoming a bit difficult to make sense of everything. Has the list of detailed technical specifications been provided to us?

What about all of the CBSA's comments with respect to those specifications?

[Ted Gallivan]

Madam Chair, in each draft in April, when we provided the requested documents, we opened the door to prioritizing any of the documents. We would be happy to do so for any document. We actually sent a written request to the committee about that.

We acknowledge that it takes a long time to respond to requests for information, but that delay is due to the volume of documents requested.

That said, we will be happy prioritize the documents that were just mentioned.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

If I understand correctly, these documents were not part of the list you submitted.

Is that correct?

[Ted Gallivan]

I'm not in a position to answer your question, but perhaps Mr. Leahy can confirm that.

[Mike Leahy, Director General, Commercial Projects, Canada Border Services Agency]

I don't know if the documents have been sent, but they are on the list.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

I guess it's the same thing in terms of deliverables linking the detailed technical functional specifications of the system to the needs of the organization.

Is that correct?

[Ted Gallivan]

Madam Chair, since we sent our first response to the committee, we have made a request for prioritization. We would be happy to prioritize the documents based on the wishes of committee members and provide any information requested in a timely manner.

As has already been mentioned, all the documents are already at the translation stage, and all that remains to be done is to put them on top of the pile.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Okay.

I would like to discuss something else.

I would like to talk about two other documents—the documents that show which organizational needs of the agency's scope of work are considered to be met by the current solution.

Although we have received some information on the needs that have not yet been met, there was no mention of the scope of work. So I'm not sure it was a complete list.

[Ted Gallivan]

We've had a number of reports done by third parties, which should properly document this issue of needs and value added for Canadians. One of the reports was done by our independent internal audit team. If this document has not already been provided to the committee, I think that's because it was produced by an independent group. That would be one of the best documents to answer your question.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

The last document I want to talk to you about is the internal final report of the most recent experience simulation, last spring. We received a document, but it does not contain the participants' comments.

Did you document the participants' comments?

[Ted Gallivan]

I think these numbers and data bring us back to an issue we were just talking about. In the experience simulation, we heard concerns from the private sector. A lot of those concerns were deliberately aimed at getting us to reject a certain calculation or a certain bid.

In this regard, I think the difference in opinion between the agency, which enforces the act, and some private sector companies can be explained by one of the findings of the Auditor General's 2017 report on customs duties. The Auditor General indicated at that time that there was a 20% error rate—

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Since I don't have a lot of time left, I just want to—

[The Chair, Liberal, Judy Sgro]

Mr. Barsalou-Duval, I'm sorry, but your time is up.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

It would have been interesting to hear the participants' comments.

[The Chair, Liberal, Judy Sgro]

We'll go to Mr. Cannings for five minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I wanted to go to these differences, I guess, in opinion—you might want to say what CARM says and what the importers and exporters are saying. I'm assuming you feel that CARM is always right.

How are these differences of opinion dealt with at the moment and over the course of time? How does that affect the numbers that you report in terms of savings?

[Ted Gallivan]

I'll use a couple of quick examples.

The first is that a large retailer may import flowers and trees and code them as groceries, and just because those things are sold in a grocery store doesn't make them sales tax-exempt.

A second example might be marshmallows. Marshmallows are basic groceries. You might think they're exempt from GST, or, as a snack, that they are subject to GST. There are actually details around the chemical ingredients that will decide that.

Our approach has been consultative and educational. We have been reaching out to the businesses where we flag those discrepancies and telling them what we think is wrong. We've been open to dialogue. In the examples I gave you, there has been a dialogue and, in the marshmallow case, representation the other way.

Our plan is to nudge businesses into what we believe to be compliance, with open ears to feedback from the private sector. We're not trying to tie up or gum up Canada's trade, but we are trying to move people into compliance. We have something called the culpability framework. I guess the root of my answer is we're leading with education and asking questions as opposed to issuing bills.