International Trade Committee on Feb. 1st, 2024

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

Thank you.

I'm going to start with Mr. Whelan this time.

In talking about supply chains, it seems that over the past decades supply chains have been moving to the just-in-time model, and now that seems to be getting increasingly disrupted by storms, fires, rail issues and whatever. Someone here, and I'm not sure who it was, said of those disruptions—I guess it was the chamber—that 60% of their members feel that it is not going to improve.

I'm just wondering if your members have any sense of how they are going to adapt to this, especially with how integrated Canada-U.S. supply chains are. How does that work?

[Michael Whelan]

From our perspective when looking at just-in-time, it's certainly a model that was well in play whenever it ran like clockwork. I think you saw a prime example of how clockwork goes aside when you have something like the pandemic that struck in 2020. Health care supplies, which always had been been planned out for just so long—because you could plan that very well—all of a sudden had a huge increase in demand.

Something like that can throw a monkey wrench and destruction into any supply chain quite quickly. When things are flowing fine, just-in-time works. When it's not, we see the need to have additional flows available to us and additional people ready to deal with those flows and the supply chain issues that come around it.

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

Ms. Campbell, would you like to comment on that?

[Kim Campbell]

Yes, I would like to jump in.

I think our members have certainly done a lot of great contingency planning over the last couple of years and continue to do so. I think there's still a lot of opportunity for government and the private sector to work together in terms of disruption and how that might look and feel as we move forward.

I think we were really good at dealing with a very stressful situation across many fronts, but we've not been good at doing desktop or tabletop exercises since then, so that when these happen we know in our DNA exactly what sheet to go to and what policy to follow. That still is an opportunity for us with business and government.

As well, I can tell you right now that, on the U.S. side, I think there is an opportunity to make sure we work collectively. When the B.C. floods happened, we had to go to U.S. Customs. They were very gracious, and they reacted very quickly and made those changes. We don't have that same reciprocal program here on the Canadian side if they should be in the same position.

[The Vice-Chair, Bloc, Simon-Pierre Savard-Tremblay]

Thank you, Mr. Cannings. Unfortunately, your time is up.

I now give the floor to Mr. Baldinelli for five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here today.

As did my previous colleagues, I reviewed the national supply chain task force report. It said, “In 2020, road transport accounted for 50% of Canada's merchandise trade (imports and exports combined)”. In my riding alone, I have four international boarder crossings, two of the top four in Canada in terms of commercial traffic. I think the Peace Bridge alone is number two, with 40 billion dollars' worth of trade going over that one bridge alone. It's kind of timely that we're undertaking this study. Part of the study talks about identifying programs, tools and measures that support growth.

Ms. Campbell, the national transportation study talks about digitization. In your presentation you talked about the CARM program. I worry sometimes that government programs can be an impediment rather than a help. I think it's important that you speak to some of the concerns from your organization of importers and exporters regarding the implementation of CARM and this drop-dead date of implementation and what that could mean for our supply chains and our trade.

[Kim Campbell]

Thank you very much for the question. That surely is our number one concern right now, as May 13 is fast approaching.

Based on what we know right now—and I did submit some stats to the clerk—according to CBSA's numbers submitted to this committee back in May, there are 200,000 registered importers. As of yesterday, they shared with us that just under 50,000 importers are registered today, and they are expecting 100% to be by May 13. The goods of those importers that aren't registered will not be allowed across the border.

Initially one would think that those people who didn't register wouldn't be allowed across the border, but the implication is that those trucks will be turned around and those goods will have to be off-loaded into warehouses. That is the biggest concern for us right now—this mandatory drop-dead and the implications of this requirement that everyone be registered.

The other big overarching issue for us is that this technology has not been tested. For six years this project has been on the table. Many times it has been said that the big bang is too risky, yet they've doubled down and they continue down that path. On May 13 not only will we be having all these requirements, but we will be testing technology that we've never touched before.

The other very scary part about this story is that there are only a few people who are actually testing. Out of those 200,000 importers, only 47 companies are actually testing the system. When we go live on May 13, all of us will be seeing it for the first time.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Wow. That's quite concerning.

Given the government's track record and success at programs such as the Phoenix pay system, you would hope they would try to run maybe a parallel system, say for a month or two, just to ensure that it works. Then they could drop the other system and go forward, but that doesn't seem to be the case and they do this at their peril.

Have they shared any of the test results with your organization?

[Kim Campbell]

They have most definitely. We had an update yesterday. The numbers change all the time. Based on what they told us yesterday, there are 25 entities. They expect that represents 90% of importers in terms of the software interface. Every single one of these will have to be recertified under this new program. As of yesterday, only one has been certified.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

My understanding is that, as part of this program, there is the concern among small operators with their having to obtain their own surety bonds. There's some confusion out there as to whether or not they will even be able to obtain surety bonds instead of using the regular brokerage industry for such things. Is that a concern you're hearing as well?

[Kim Campbell]

It's a massively big concern and it's a very bona fide concern.

Right now, today, most of those things transpire under a customs' broker bond. That probably involves 300 companies in total. We are now forcing 200,000 importers to get their own bonds. Again, magically on one day, May 13, it's supposed to be in place. In all fairness to them, they have given a grace period, but we've recently learned that the grace period will be extended only to those that have signed on to the portal. There are still 150,000 that haven't.

The bigger part of this story, in my opinion, is that right now small and medium-sized enterprises can carry a $5,000 bond. That exists today. For some reason not known to really anyone, they have now increased that minimum to $25,000. A lot of people will not be able to get that surety, as you pointed out, because the surety companies doing that are going to put them in a category that's too risky and won't provide the bond.

Somehow we've done a big $20,000 jump there. Customs will say, “They can put down a cash bond”, but the ones that don't meet the surety will have to do 100%. That's not feasible either.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

For the Canadian chamber, your members would have some concerns on that. Is that right? In terms of CBSA staffing, your experience—

[The Vice-Chair, Bloc, Simon-Pierre Savard-Tremblay]

We're out of time, Mr. Baldinelli. I'm sorry.

I now give the floor to Mr. Sidhu for five minutes.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thanks to our witnesses for joining us here today.

As you guys all know, I am in the city of Brampton. It's a supply chain hub of Canada with many different industries. Trade has an impact on so many of my constituents, our residents in Brampton. One in five jobs is impacted directly or indirectly by trade, whether that's in Brampton or across Canada.

This government is making the critical investments, whether you're talking about the CPTPP or that we signed CETA, and we signed the new CUSMA and many other initiatives. In terms of infrastructure investments, we can speak about the Gordie Howe bridge, which is a very important corridor, as we all know. Trade with the U.S. is at an all-time high of, I think, $1.3 trillion now, so that's a record. We'll continue investing in infrastructure. Out in B.C., we've approved the expansion of the port in Delta, which will help increase trade by about 60% at that port alone. These are very important issues that our government remains focused on, especially those in my riding and across Canada.

I really want to turn this over to some of my recent travels to Calgary, Kelowna and Montreal, where I met with representatives from the regional airport, the municipality, the chamber of commerce and business owners.

I would like to know, because you guys represent members across the country, are there certain trends or challenges in certain parts of the country that you're not seeing in the other parts of the country?

Maybe we can start with Mr. Holmes.

[Matthew Holmes]

My colleague, actually, may be more appropriate to this one, given his speciality.

Thank you.

[Robin Guy]

Yes. From a western Canadian perspective, I think very much the issues that we're hearing are transportation, just being able to get goods to market reliably. There's natural resources, again, not only getting the resources but actually being able to get the permitting to start mining the critical minerals, and also getting the value chain pieces up and running so that we're not just necessarily shipping our critical minerals out of the country, but we're actually building them in here.

It's the agriculture. I think the agriculture piece, from a western Canadian perspective, is a massive piece that has a lot of potential to grow the economy, especially if we were to look at things like that value chain and building the pieces here in Canada.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you.

Ms. Campbell.

[Kim Campbell]

I don't have much more to add in terms of what was just stated, other than that we continue to be challenged with the onslaught of regulation and pending border disruption.

[Maninder Sidhu, Liberal, Brampton East, ON]

You mentioned there is a grace period for importers. I don't know if that's if you register by March, then it's six months, so you don't have to get a bond and you can still continue on the custom broker's bond.

[Kim Campbell]

That's a great question.

May 13 is drop dead, so everyone will have to face that May 13. The only exception is that they won't necessarily have to have their financial security in place for six months if they've signed on to the portal.

[Maninder Sidhu, Liberal, Brampton East, ON]

What date is that?

[Kim Campbell]

May 13.

[Maninder Sidhu, Liberal, Brampton East, ON]

As long as they've signed on by May 13, they have a six-month grace period where they don't have to get the final security and they can continue working with their broker.

[Kim Campbell]

Right.

[Maninder Sidhu, Liberal, Brampton East, ON]

So you have an additional six months of flexibility.