International Trade Committee on March 19th, 2024

[Ted Gallivan]

There is.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

That's the point. Industry stakeholders are saying they aren't aware of any of these other contingency plans. You say they'll go back to the old system. Look, I'm not going to debate it with you.

I understand that the data security for this is going to be outsourced. It's not going to be done by the Government of Canada. I'm out of time, but if so, who is that contract with? Produce a copy of that contract. How much was that contract? Explain how you can guarantee the security of everyone's data.

[Ted Gallivan]

The DG of cybersecurity at the CBSA has been leading the efforts to ensure the cybersecurity of CARM.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I understand that, but I want you to confirm that you're going to answer my questions.

If there's a contract for that outside data security, who is that contract with and how much is that contract for? Produce all the contracts and subcontracts that relate to that.

Can I get a yes to that, please?

[Ted Gallivan]

I'm sorry, I didn't—

[The Chair, Liberal, Judy Sgro]

For the things that Mr. Seeback has asked for, could you do your best to provide them?

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Confirm that you will provide that.

[Ted Gallivan]

I just want to make sure I understand. Will it be captured in the blues?

[The Chair, Liberal, Judy Sgro]

The blues will be very specific on what Mr. Seeback is asking for.

[Ted Gallivan]

Thank you. I just don't want confusion over what the request is.

[The Chair, Liberal, Judy Sgro]

Exactly. We don't want that either.

[Ted Gallivan]

Understood.

[The Chair, Liberal, Judy Sgro]

Okay.

Mr. Sidhu, go ahead for five minutes, please.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thanks, Madam Chair.

Having spent 13 years in international trade consulting, I have a few scenarios to throw out to few of the witnesses. I just want to hear your feedback.

A customs broker, for example, submits a shipment for clearance using ACROSS. After May 17—I think that's the date—does that shipment get automatically rejected by customs? If it does get accepted by customs, on the back end—the accounting side—the importer of record, which is the business, is not set up on CARM. How would the accounting, with the duties and taxes, be sent to the broker? Would it be over the existing system? On CARM, the importer of record is not set up. How does that come together?

[Jennifer Lutfallah]

As to the first part of your question, ACROSS will continue to be used as a means of clearing and entry into Canada. It's the back end of the system that is changing, which is the accounting side.

There are two different transactions, if you will, when it comes to a commercial conveyance coming into Canada. There's the release and the accounting. The accounting is the back end and that's what we're talking about today. Regarding release, there are no changes across eManifest. We'll continue to risk—

[Maninder Sidhu, Liberal, Brampton East, ON]

How do you get the accounting to the importer of record if they're not set up on CARM?

[Jennifer Lutfallah]

We have a transition rule that is the broker BN. For one year, brokers will continue to be able to use their business numbers for their client importers as a means of clearing for accounting.

[Maninder Sidhu, Liberal, Brampton East, ON]

Coming back to using the broker BN, I understand that when a broker clears a shipment under their own BN, they're responsible for that importation now. If there's an audit by CBSA, the broker would then bear that responsibility. Many people in the industry do not want to bear that responsibility because they are not the ones buying that product or importing that product.

There has to be some clarification around that, because that's a huge concern from the industry.

[Ted Gallivan]

The first point is the coming into force of that legislation is January 2025. We've been on the record that it won't be retroactive, and for after January 2025, we're working on documented procedures to explain how there will be a progressive system of notices, a nudge. Then when we have an issue, it's not our intent to bankrupt a brokerage because of one client who failed to follow the rules.

The first point, for absolute clarity, is there's no retroactive application of the importer of record, and second, there's a process of nudging. We call it a culpability framework. We really want to enforce financial hardship only when necessary.

[Maninder Sidhu, Liberal, Brampton East, ON]

Wouldn't it be feasible to leave it as is, as the importer of record clearing under their own BN until December 2024? Then the broker is not taking on this responsibility of an importer perhaps misclassifying their goods or bringing in goods where there's an error or there are some issues.

[Ted Gallivan]

We've left the option open. If a broker wants to insist that all their clients have a BN so the business takes the risk, that's open, or there's the model where the broker continues with the status quo. That's us not wanting to interfere with the private sector and their business models.

[Maninder Sidhu, Liberal, Brampton East, ON]

Then the only way for the client or the importer of record to use their BN is to be on CARM. Otherwise, it would go on the broker's BN because the CARM accounting wouldn't show up otherwise.

[Ted Gallivan]

That's correct.

There are roughly 275 to 300 major brokers in Canada, so it's not a huge number, and that's not where we're experiencing issues with registration.

[Maninder Sidhu, Liberal, Brampton East, ON]

Okay.

Quickly—I have less than a minute left—can we know the number of companies testing the software of this new CARM iteration? Also, what is CBSA doing directly to reach out to importers of record?

I know you're at the border, but from my experience of 13 years in international trade, most businesses are not hand carrying their goods at the border; they're hiring transport companies. Can CBSA not work with CRA and say, “If you've used your RM0001 account, your importer account, you have likely imported in 2023, so here's your letter to let you know to register on CARM.” Has CBSA done that?

[Ted Gallivan]

In terms of businesses, there were 44 or 45 main players represented—a bit skewed towards the major players but across all sectors and sizes—that tested thousands of transactions.

In terms of the outreach, yes, we contemplated the CRA. We contemplated mail-outs. To got back to the testimony, we're at 86% now. May 13 isn't our drop dead date, so as we move through the summer months, mail-outs and collaboration with the CRA are definitely options we would use.