International Trade Committee on March 19th, 2024

[Maninder Sidhu, Liberal, Brampton East, ON]

Okay, so June 17 is the actual date. If somebody submits a shipment after June 17, does that mean it could get stuck at the border?

[Jennifer Lutfallah]

There would be an issue with respect to the accounting.

[Maninder Sidhu, Liberal, Brampton East, ON]

Then it could get stuck.

Okay, so ACROSS would release it and the accounting would be afterwards.

[Mike Leahy]

Let me explain, if you don't mind.

The measures we call transition rules on the use of a broker's business number will be in effect as of May 13. If I release goods into the Canadian economy and I don't have a CARM account, I can use, as I do today, my broker's business account to reconcile and make the payment. That process is available for a year.

The big concern we hear from industry is that the border is going to shut down because they won't be able to bring goods into Canada because they don't have a CARM account. The transition rules say you can do what you do today—use your broker's business number to represent you—and the goods will move. The accounting will be effected by your broker. In some cases, that is exactly what happens today.

We encourage importers to get their accounts. If you have your own account, you're going to start using it as of May 13. If you don't have your account, you'll fall back onto a transition rule that allows you to use your customs broker, like you do today.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you.

I'll turn the floor over to MP Fortier.

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

Thank you, dear colleague.

As you can see, there are fears. We are trying to anticipate how the transition will unfold.

Mr. Leahy and Mr. Gallivan, you provided a number of examples of support and assistance measures. You talked about exceptions that could be made or exemptions that could be granted in a given situation.

We are afraid of lengthy delays. We want to make sure there are no barriers during the transition.

Do you have anything else to add, something you might not have had the time to mention regarding those concerns?

[Mike Leahy]

The first concern is the scenario we just talked about. If someone does not have an account in the agency's CARM system, they will have to stop at the border and pay cash. That will block the bridges. It will cause problems at the borders. On the other hand, transition rules have been established to overcome that particular problem.

[Ted Gallivan]

We invited our own employees to take part in the planning process. I am referring to border officers. Quebec has the lead role on this for all regions.

Frontline employees who will have to deal with the delays affecting businesses have been using CARM for months. They are establishing procedures. We also have 80 additional employees who can be assigned to other duties in response to specific needs.

I referred to contingency plans. One of them involves hiring those 80 additional employees. We are not too optimistic, but we are preparing for situations that might arise. The fact that our frontline employees, who will have to deal with the businesses and truckers, say they are ready gives us some confidence in the measures in place.

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

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move on to Mr. Savard-Tremblay for two and a half minutes, please.

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

Thank you, Madam Chair.

I thought we were moving on to committee business at 5:15 p.m.

[The Chair, Liberal, Judy Sgro]

We're going until 5:30 to complete the round of questions, and then at 5:30 we will have a few minutes to discuss the possible travel.

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

So we have not allocated any time for that. It will take a few minutes at most.

I would also ask that this not be counted as part of my speaking time.

[The Chair, Liberal, Judy Sgro]

At the request of the vice-chair, rather than stopping at 5:15, we're going until 5:30 on this and then we'll do 15 minutes of committee business.

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

Okay.

Mr. Gallivan, my question is about the transition plans. Initially, just one plan was mentioned. The documents we received referred to a single plan called “big bang”, as though everything would disappear. Now you are saying there are other transition plans.

How do you come up with those plans and how does it work? Why is there more than one transition plan and why would one plan be chosen over another?

[Ted Gallivan]

Thank you for the question.

To begin, we tried to minimize the scope of the change by using a number of existing modules. There were five phases. Later on, new models will be forthcoming.

As to the contingency plans, some of the concerns raised might materialize during the transition. There will be a 16-day transition period during which we will make a copy of the old system and deactivate it, and then activate the new system.

One scenario is that it could take too long to transfer the data and we could exceed our one-day deadline. In that case, our contingency plan is to inform all parties that if it is not done on May 13, it will be done on May 14. That's okay.

A second possibility is that a module might not work. We also have a contingency plan for that. So let's say we have only been able to transfer 5% of the data after 10 days, which would be a major problem, our contingency plan would be to reactivate the old system. So we are prepared for a range of possibilities.

We also have contingency plans for situations that might arise after the system has been launched, specifically confusion at the border. We have said that we will not be changing the current processing system at the border, only the accounting system. If people have questions, we will have employees on site to answer them.

In short, we have several levels of contingency plans to respond to various potential scenarios.

[The Chair, Liberal, Judy Sgro]

Mr. Cannings, you have two and a half minutes, please.

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

Thank you.

You mentioned that the U.S. has brought in a system that cost $5 billion. I assume that Canadian exporters are confronted with that system. Are these often the same companies that are importing things back in? I'm wondering what feedback you've heard from them.

[Ted Gallivan]

It's true the global multinationals.... I would mention the auto sector in particular. There are auto parts in Canada that can cross the border multiple times per day. Part of our bilateral discussion with the Americans—with the department of finance and Treasury in the U.S.—is about harmonization. I think the key message we get globally is around whether tax authorities can get their act together and consolidate the rule set.

An American was actually recently elected to a leadership role in the World Customs Organization. We're hopeful that during his five-year term, we can push global standards around trade. The global multinationals are definitely interested in a common global rule set. The Canada-U.S. aspect is particularly important. We're in regular conversation with the Americans.

I would say that e-commerce is a particular area where the rule set is still catching up with the reality on the ground. I mentioned that courier shipments had more than doubled, to over 100 million a year. That's a place where as recently as January we had a briefing on the Americans about regulatory reform.

To go back to the mandate of this committee, with colleagues in Finance and elsewhere, we're very active on having the rule sets be the same, which would allow the IT systems to be the same, to reduce friction at the border.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Seeback, go ahead, please.

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

Thank you very much.

How many of the 60,000 registered CARM users saw the new CARM functionality and were the subject of the last two rounds of updates, which will be the version used on May 13? My information from industry stakeholders is that it's 350 out of 60,000. Do you consider that to be sufficient for the latest version on May 13?

[Ted Gallivan]

Well, I confess to not being a lawyer—I'm not a statistician either—but we took great pains to have a representative sample of businesses in Canada to make sure that small businesses, medium-sized businesses, brokers, express couriers and multinationals were covered.

My testimony would be that we took great care to make sure it was a representative sample.

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

I'm running out of time. Your position today to the committee and to Canadians is that will be a success on May 13.

[Ted Gallivan]

My earlier testimony was that I took comfort in our ability to detect and correct problems. My testimony would be that we have contingency plans. We have extra resources available. We've tested our ability to detect and correct problems. That's the real test of an IT system.

Those of you who have been involved in large-scale IT systems know that even after five years you're detecting issues. Our test, our barometer, is our ability to manage, detect, prioritize and correct dozens of problems in real time, with input from stakeholders, managed through a service product.