International Trade Committee on Feb. 8th, 2024

[Jennifer Lutfallah]

Excuse me.

Those are constantly monitored, but I understand you're referring to an actual report. I'm not aware of that report, so I'm not able to provide you with a response to that question.

In terms of looking at the measures we have put in place at the border over the years, yes, those are under constant, continuous examination. We monitor them based on feedback that may come from partners as well as the public with respect to the impact of those rules.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

What I gather is that Transport Canada held a summit at which participants criticized CBSA, but that Transport Canada never passed that criticism on to you. That is what you are telling us.

[Jennifer Lutfallah]

We're going to have to get back to you on this one. I'm sorry.

[The Chair, Liberal, Judy Sgro]

Yes, if you could see whether you can find the report Mr. Savard-Tremblay is referring to and supply it to the committee, it would be appreciated. Thank you.

Mr. Cannings, go ahead for two and a half minutes, please.

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

Thank you.

I'm not sure who to direct this to.

There is perhaps a general problem that is full of specific different examples when it comes to supply chains crossing borders. It's a lack of harmonization about regulations.

I heard one example from my riding recently. There is a major lead acid battery recycling plant in my riding. All lead acid batteries in cars, trucks and all of that are pretty much 100% recycled and made into new batteries. It's actually quite a wonderful system. The trouble is that when those batteries are being transported within North America, each individual one is tracked. It's quite an operation and adds cost to the companies doing this. However, if they are shipping them out of Canada to, say, Asia, they just list them as auto parts and it's much cheaper. It's cheaper for companies with used batteries to send them to Asia for recycling. We lose all that material and we lose the jobs. Also, it's an environmental risk.

I'm wondering whether there's part of the government somewhere—I don't know if it's CBSA or Transport Canada—looking at those bits of harmonization that are lacking, the things that make things difficult for Canadian companies and the economy in general.

[Sheryl Groeneweg]

Thank you very much for the question.

One of the areas of responsibility I have at ISED is critical minerals, working with NRCan. I believe I know who you're talking about in the situation you're describing. We are pursuing, in a very concerted way, how Canada can become a global, relevant player in critical minerals, including in the recycling component. Mining and processing the minerals is one thing, but there's also recycling, which will become a very important input to the entire system. We are live to this issue, and it's one area where we are trying to figure out the policy direction process to try to address that.

You're absolutely right. We're getting into a market situation more and more in which carbon—high carbon and low carbon—will become a market access issue. Countries are navigating their way through keeping resources to themselves, resources that might be better off being traded so all boats can float higher. There is market inefficiency, and the carbon-decarbonization component is playing into that. Then there are the costs of decarbonizing and dealing with that. Companies want to have a cheaper end result in how they deal with batteries. It's one of the market failures that I would say we have to address in the system.

I'm sorry if that wasn't very direct, but we're absolutely live to it and we understand the problem.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Baldinelli, you have five tight minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

I'd like to thank the witnesses for being here today.

I'd like to thank everyone for your discussions on supply chains, which are hugely important to us and to my community in Niagara. I am from a border community, and trade with the U.S. is vitally important. For example, 75% of our trade with the U.S. by truck goes through four main points of entry, those being Windsor, Fort Erie, Sarnia and Queenston, and two of those four are in my riding alone.

Here are some statistics with regard to the importance of our trade: 25% of what the U.S. exports to Canada comes from Canada; 40% of what Canada sells to the U.S. comes from the U.S., and 60% of what the U.S. buys from Canada ends up in U.S. products, which are sold throughout the world.

Ms. Lutfallah and Mr. Dick, you spoke about supporting the supply chain and creating resiliency there. Ms. Lutfallah, you spoke about the need for modernization to support efforts.

There is one project I'm keenly aware of. In December at the Peace Bridge in particular, there was support from the national transportation corridors fund of $5 million from the federal government and $5 million was put in by the Peace Bridge itself. About $20 million of U.S. customs and border protection technology is being established and put on the Canadian side to scan each truck and collect all pertinent shipment and driver information. This is done in Canada while the truck is still in process, so by the time the truck enters the United States, it simply shows up at the booth and gets a go or no-go signal. This will save tremendous amounts of time. That was all done in terms of the U.S. legislation called Securing America's Ports Act. I believe it's the only bridge in Canada that has that technology at this time.

However, with every new technology that we have that works—this is American technology that is being installed, I might add—there are also concerns. One of those concerns is the implementation on May 13 of the new CARM project.

This Liberal government, to be quite frank, does not have a great track record when it comes to implementing new IT projects, be it Phoenix pay or ArriveCAN. For example, there's ArriveCAN. I'm from a tourism community. Forty thousand people in my community work in the tourism sector. At one time ArriveCAN ordered thousands of people into quarantine who had no issues or had crossed the border. It cost $54 million. To me, ultimately it destroyed any chance of a tourism recovery in 2022.

Concerns have been expressed by organizations such as the Canadian Association of Importers and Exporters with this May 13 implementation date. We're hearing that perhaps only 25% of industry is registered.

Can you tell us what you're seeing in terms of registration for the implementation of CARM?

[Jennifer Lutfallah]

Thank you for that question.

With respect to CARM, as I pointed out in my opening remarks, CARM will replace a system that is at very high risk of outage. We have no choice, and I want to underscore that message. We have to modernize that system with respect to duties and taxes.

Now—

[Tony Baldinelli, Conservative, Niagara Falls, ON]

I am not questioning that. I am just asking what's preventing people from registering. I'm hearing there are low registration numbers at present.

[Jennifer Lutfallah]

I will get to that.

I believe last week you had a witness who indicated that we were at only 25% in terms of registration. That was an incorrect number that was provided to the committee. We are at about 57%, and that 57% represents 80% of the importers or transactions into the country, so we are doing well with respect to registration.

We're doing more. We have officers who are doing cold calls to individuals who are importers into our country. We have sessions happening at the ports of entry so that individuals can get registered and so forth. We are pulling out all the stops to get people, the importers, registered in time for May 13.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Could I ask this one last question?

Have you tested the system with some of those who have pre-registered? Are there tests that have been completed, and what are those test results?

[Jennifer Lutfallah]

There have been tests that have been completed, but I am going to turn it over to Mike because he is the technical expert.

[The Chair, Liberal, Judy Sgro]

Could we have a quick answer, please?

[Mike Leahy]

Yes, there is testing. There is certification. I think that last time it was mentioned that the software providers go through a certification. There are 25 of them, and one of them is through it, and there are clients testing right now. We have clients in a CARM environment that are doing their thing right now.

[The Chair, Liberal, Judy Sgro]

Thank you.

We'll go to Ms. Fortier, please, for the last three minutes.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Thank you, Madam Chair. I will be quick.

Something I'm concerned about is making sure that small and medium-sized enterprises, or SMEs, have the tools they need to import and export products. Some of the answers we've heard today pertain to the regulatory process. I think the red tape and administrative processes are cumbersome, and we can always do better. Reviews are under way, in fact.

Ms. Groeneweg, how do you think we can help SMEs quickly? If you could change two things today, what would they be?

[Sheryl Groeneweg]

Thank you.

In some ways, the regulatory question is a product-by-product or sector-by-sector question, so it's a very big thing to deal with.

The domain of life sciences and health products gets very specific in terms of how those two regulatory bodies work—or all regulatory bodies, like Canada-European Union, Canada-United States, etc.

Food, similarly—

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Are we on the right track? Do we have the right regulations to help SMEs, or do we need to really focus on those changes?

[Sheryl Groeneweg]

Those are definitely questions that are better placed to other departments. The Treasury Board deals with that. I'm definitely not in a regulatory function where I am.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

I was there before. That's why I'm asking through your department.

[Sheryl Groeneweg]

Can we do better? Always. In part, it's because things keep changing. It's how to keep up and be modern as we continue to—

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Maybe the agriculture folks have some examples.

[Tom Rosser]

Madam Chair, I can provide a very quick answer.

I'll give you an example in agri-food. In 2018, a regulatory review was carried out, and two additional processes focused on other sectors were conducted. As Ms. Groeneweg mentioned, we've made progress on certain regulations.

The efficient administration of regulations will help SMEs, but there is still work to do. We now have a regulatory process based on supply chains, as Mr. Dick mentioned.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Mr. Dick, do you have anything to add regarding the process you were talking about earlier? I'm interested in whether it will help businesses, because they are really the ones we want to see thriving.