Evidence of meeting #98 for International Trade in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cbsa.
A recording is available from Parliament.
Liberal
Maninder Sidhu Liberal Brampton East, ON
Thank you, Madam Chair, and thanks to our witnesses for being here today.
As we know, CARM has been in development through various different governments. It's important to ensure that duties and taxes are collected appropriately, and we know that CARM will assist with the collection of duties and taxes.
Ms. Pohlmann, you mentioned that roughly 25% of your member businesses are aware of CARM. What can be done by the CBSA to raise more awareness and get more importers to sign up?
Executive Vice-President, Advocacy, Canadian Federation of Independent Business
First and foremost, as I mentioned, there needs to be an education-first approach. I think there has to be an assumption that the small business that is importing—especially one that doesn't do it on a daily basis, for example, and maybe does it only three or four times a year—isn't necessarily going to know it exists.
Even if it's post the 180 days or the amount of time they want to give for a transition, there should be an education-first approach to say, “Actually, this is how you do it. This is what it looks like,” and then work them through the process, with no fines and no penalties. Something along those lines, I think, is really important.
Secondly, I think there need to be better tools available that are very much in plain language. The customs and importing processes are complex to begin with, and now you're adding a layer that they may never have seen before, which is going to make it even more so. While there have been some tools developed, they're not easy to find, and they're not always easy to understand, so plain language will be important.
We're trying to help where we can. We'll be doing a webinar very soon, for example, to explain what this is and what it looks like. We've already done one. Certainly, we'll continue to do that to try to spread the word, but it's very difficult to get small businesses that only do this occasionally to understand what this process looks like.
The best solution really, in the long run, is to make sure that it's an education-first approach.
Liberal
Maninder Sidhu Liberal Brampton East, ON
Thank you.
I'm going to turn over to Ms. Sider.
You mentioned that you tried testing CARM with incorrect duty rates, and the system didn't pick them up. What does that mean, and what could this amount to in lost revenue for the federal treasury?
Vice-Chair, Board of Directors, Canadian Society of Customs Brokers
Actually, what it means is that incorrect calculations of duties and taxes are a cause of revenue leakage for the CBSA and the receiver general at the month's end. It's a simple functionality.
To Ms. Pohlmann's point, customs are complex. Adhering to the policies that we have to go by under the Customs Act is not easy by any stretch, but the duty remissions.... There are a number of different ones that are in place. They're there for very specific reasons and for specific importers. Some of them remit duties, and some of them remit duties and taxes.
Sometimes, even with simple calculations, the system is challenged in appropriately assessing the proper amount of duties and taxes.
Liberal
Maninder Sidhu Liberal Brampton East, ON
Thank you.
I am going to turn now to Ms. Jalbert.
You mentioned that the CBSA now requires your importer business clients to obtain their own release bond. What does that mean? Is that going to add to the cost of doing business and bringing goods into Canada?
Managing Director, Regulatory Affairs, Federal Express Canada Ltd.
Yes, because the requirement, as it stands today with CARM, is that it's mandatory for an importer to register and post their own security. In today's environment, an importer can use a broker's bond and security, and they delegate that responsibility to the broker. The broker pays the duties and taxes to the government and bills the customer.
The focus now is to mandate that every single importer—small, medium, large or micro—must register and post their own security, which creates a very complicated environment for—
Managing Director, Regulatory Affairs, Federal Express Canada Ltd.
I don't have the numbers off the top of my head, but it ranges based on the amount of security you post.
Liberal
Maninder Sidhu Liberal Brampton East, ON
Ms. Bilodeau, you mentioned financial security as well.
Do you know if other countries require this and make it mandatory?
Vice President, Customs Brokerage and Compliance, UPS Canada
My understanding is that many other countries do not make it mandatory. There are countries that require customers to have their own bond, but they continue to allow customers to use their broker's bond as well.
Liberal
Maninder Sidhu Liberal Brampton East, ON
Among your thousands of clients importing into Canada, what percentage are registered on CARM right now?
Vice President, Customs Brokerage and Compliance, UPS Canada
Among our clients specifically, it's only 10%.
Vice President, Customs Brokerage and Compliance, UPS Canada
That's after an incredible amount of time in terms of our trying to encourage them. We've also held several webinars on CARM. We've done email, mail and telephone outreach.
After extensive outreach over two years, we're still only at 10%.
Liberal
Maninder Sidhu Liberal Brampton East, ON
What's the hesitancy among Canadian businesses to register on CARM, after all this effort from your company?
Vice President, Customs Brokerage and Compliance, UPS Canada
As we talked about, it's difficult to navigate. Many customers cannot go and self-serve. Among those who have registered, typically what will happen is they respond to an email process we set up. It requires one-on-one hand-holding to get them registered, which is an incredible time investment. Walking them through that process is investment not only on behalf of the customer but also on behalf of the trade chain partner.
That's the biggest challenge for these small businesses. They're trying to run their business. Any small business owners in the room—or if you have friends or family who run a small business—are just trying to get through their day-to-day.... They're not customs experts. That's why I think there needs to be an opt-in model for those who want to see the benefits of CARM and serve themselves. However, those who want to continue to use their customs broker can use their time to run their business. That is what is required for the long term.
Liberal
Maninder Sidhu Liberal Brampton East, ON
I have only a few more seconds left.
I'm curious to know whether any of your clients, those sitting on the panel today, are on the test system or piloting CARM. Do you know if any of your clients are testing CARM?
Vice President, Customs Brokerage and Compliance, UPS Canada
I don't know that any of my direct importers are testing. We are testing, but my specific clients are not, no.
Past Chair, Canadian Association of Importers and Exporters
We definitely have members testing.
Liberal
The Chair Liberal Judy Sgro
Please ensure you have your earpiece available for translation.
Mr. Savard-Tremblay, go ahead, please.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Thank you, Madam Chair.
I thank all the witnesses for their suggestions.
Ms. Upton, my first question is for you.
As a partner at Deloitte, what role do you play in the digital initiative known as CARM?
Partner, Deloitte
I've been on the CARM project since 2020, as the executive leader of the project.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Okay, thank you.
Have all the business needs, as described in the statement of work, been met?
Partner, Deloitte
They continue to be fulfilled. The project itself is quite complex. As you know, it's not complete yet.