Good afternoon. Thank you so much for the invitation to speak in front of the standing committee on the CBSA's CARM project.
My name is Tammy Bilodeau, and I'm the vice-president of customs brokerage and compliance for UPS Canada. I'm here with my colleague, Anna Barrera.
UPS Canada is a part of the express carrier coalition, which also includes DHL International, FB Canada Express, Federal Express Canada, FedEx Logistics and Purolator. Collectively, we employ thousands of Canadian workers, and we import and export millions of commercial shipments each and every year.
To begin with, we certainly support the federal government's objectives to modernize its systems to collect dues and taxes. That is why, as you've heard many of my colleagues say, we've been engaged with the CBSA in the development of CARM over several years, investing time and resources to provide our input, to conduct systems testing and to spend our own capital to build new internal systems to synchronize with CARM. We value our partnerships and our working relationships with the CBSA, and we certainly appreciate and acknowledge the transition measures that it's recently announced: the extension of the release prior to payment for 180 days and the use of the broker BN for a one-year period.
Although these short-term concessions will mitigate the immediate risk to border fluidity, they do not address the long-term implications that these requirements are going to have on Canada's trade regime. UPS and the express carrier coalition have raised three mission-critical issues that will adversely impact the fluidity of legitimate shipments at the border. Without resolution, we expect that CARM will deter cross-border activity and result in abandoned shipments, which will lead to warehouse capacity constraints. Over time, the complexity of CARM will add friction to the Canada-U.S. border that will put Canada's reputation as a viable global trading partner at risk. I think we heard testimony from Ms. Pohlmann regarding small businesses, and that's exactly what they're saying and experiencing.
First, as we've heard, CARM creates an unrealistic expectation for businesses to participate in requirements for importing into Canada that are unprecedented around the world, including the need to register on the CARM client portal and post financial security. This has affected and will continue to disproportionately affect small business, since the CARM registration, as you've heard many times, is difficult to navigate. In fact, even after two years of phase 1 implementation, less than 30% of all commercial importers, including low-value commercial importers, have registered on CARM, despite significant investment by industry to encourage customer registration.
Second, the CBSA has not provided clear or timely policy guidance or a transition plan to manage real-world risks to business and trade. With only 35 days before release 2, CARM has introduced an overwhelming amount of new information. For example, as you heard Ms. Campbell mention, with only a two-week consultation period, the CBSA is seeking feedback on 19 D-memoranda updates. It was only on February 28 that the CBSA communicated the CARM transition plan, which includes a surprising cutover period of 13 to 16 days, during which we as an industry cannot account for or remit duties and taxes. Hence, we cannot bill our customers. Overall, the volume and complexity of new information and an incomplete transition plan make it extremely difficult for industry partners to execute and manage this change.
Third, the CBSA has not demonstrated the readiness of the new CARM system. Many documented systems issues have been raised, with no known resolutions. A contingency plan has not yet been shared with industry.
In conclusion, we believe that these concerns will impact the government's ability to successfully complete a transition to CARM on May 13, and we recommend four practical actions for the CBSA's smooth implementation.
First, limit the scope of release 2 and shift to an opt-in importer registration system. Second, provide at least 30 days' notice for public consultation on the proposed policy changes related to CARM. Third, develop an adequate transition and contingency plan with industry before moving to release 2, and finally, demonstrate that the new CARM system meets a reasonable standard of performance before full implementation.
Thank you very much, and I look forward to your questions.