Public Safety Committee on April 27th, 2010

[Mark Holland, Liberal, Ajax—Pickering, ON]

If I could, I understand I can pose questions to the Canada Border Services Agency as well.

One of the areas that causes me some concern is obviously the border crossing at Cornwall and the ongoing situation with Akwesasne. Again, I'll look to the RCMP to verify this, but the RCMP estimates that at least 90% of the illegal tobacco that makes it into Canada is smuggled from the U.S. side of the Akwesasne reserve near Cornwall. Clearly, whether or not it's that order of magnitude or it's some other order, it is a large part of the problem.

One of the things that we've been hearing is that the border disruption at Cornwall and the temporary displacement of that border crossing has caused some problems, in a good way, for supply. I'm wondering if this isn't an opportunity to address that issue. It also gives me an opportunity to ask you what's going on there right now, because the community is in the dark in terms of what's happening with their crossing.

Could you give us (a) an update on what's happening with that border crossing, and (b), what specific plans you have in place to deal with an area that seems to be one of the largest parts of the problem?

[Steve Sloan, Acting Director General, Post Border Programs Directorate, Programs Branch, Canada Border Services Agency]

There are several questions there.

In relation to Cornwall, as you know, a number of options are being explored, and the agency is committed to finding a viable long-term solution. We remain committed to ongoing discussions with the stakeholders. Certainly maintaining the presence at Cornwall is one of the options.

In terms of describing that in more detail, I think the issues about the details on the options is really more a matter of advice to a minister.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Sorry, I didn't catch it. There are options in terms of details...and then you dropped off.

[Steve Sloan]

Right. I don't think I can go into a lot of detail about the plans in terms of the Cornwall situation, other than to say we are exploring several options, one of which would include staying at the port of Cornwall.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Okay, but perhaps in a broad sense, because people in Cornwall generally, and I think those interested in contraband tobacco specifically, are concerned that we don't have any timelines, that we don't know exactly what options are even being considered. There are huge economic impacts, obviously, to the municipality of Cornwall. We're going to hear today, I imagine, from a lot of stakeholders who have come forward with very specific proposals about things that could be done at that location to help this problem.

So can you talk to me specifically about how you're engaging the stakeholders, those who are in Cornwall, and more specifically those who are involved with contraband, and ensuring that their ideas are brought to the fore? How are you considering them? Lastly, when can we expect a decision on what's going to be happening with this border?

[Steve Sloan]

A task force has been set up. They're involved in discussions with a number of stakeholders, including the city council in Cornwall and the Mohawk community on the reserve. As I said, they're exploring a number of options. The options have been in the media. The options would include staying at the port of Cornwall, returning to the island, or considering moving to the U.S. side. A fourth option would be relocating altogether.

[Mark Holland, Liberal, Ajax—Pickering, ON]

When can we expect to have a determination of what direction the government is moving on this?

[Steve Sloan]

That I can't say. I know that in the short term the plan is to stay at the interim port in Cornwall. I don't think there are any plans, certainly in the short term, at least until the fall. There's no plan to change in the short term.

[Mark Holland, Liberal, Ajax—Pickering, ON]

I'll go back to the RCMP, if I could.

There have been no annual updates on the RCMP contraband strategy over the last two years. I'm just wondering why.

[C/Supt Joe Oliver]

Actually, it was posted on the web on Friday. It was distributed and I believe everybody has a copy. It's a first report. In fact, the statistics and some of the detail are in here up to October 2009.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Is it normal that it would only be done every two years?

[C/Supt Joe Oliver]

No, this was essentially year one of execution. We are writing year two of execution now. And that will be the May 2009 issue, so it will take time to collect the data, formulate it into a report, have it edited, translated, and go through the approval process. It can take quite some time.

[Mark Holland, Liberal, Ajax—Pickering, ON]

I'll have to take a look at that. I'm sorry, that is the first I am aware of it--right now.

If the seizures are only up 1%, what are we doing wrong here? This is obviously growing in a huge way. If the seizures are up 1%, one would expect the overall market is up a lot more than 1%, so we're losing ground. In your opinion, what do we need to be doing differently?

[C/Supt Joe Oliver]

Actually, if I could turn to some of my colleagues, I think there are some positive indications that the market may be in a state of change.

[The Chair, Conservative, Garry Breitkreuz]

Go ahead.

[Brenda Paine, Director, Office of Policy and Strategic Planning, Controlled Substances and Tobacco Directorate, Department of Health]

Certainly, there are some indications that wholesale cigarette sales have actually been up for the legal sales of tobacco from last year. We don't know, it's only one point of reference we have, so we would have to monitor it over the next couple of years to see if that stays the same. It coincided with the move from the border that cigarette sales, legal ones, are up about 30-something percent for companies. We don't know if that is a long-term effect or whether there is simply a disruption, and once again that may be that the supply chains have moved around a bit. Also, we have one of the tobacco companies reporting wholesale profits up again for the first quarter, so in the legal market there is some movement back into it, but we don't know if that is a long-term impact or a short-term impact at this stage.

[The Chair, Conservative, Garry Breitkreuz]

Thank you very much.

Ms. Mourani.

[Maria Mourani, Bloc, Ahuntsic, QC]

Thank you, Mr. Chair.

Thank you for being here today at the committee.

My question will be for Mr. Oliver and Mr. MacKillop.

I have read a lot of documents about this, I've met with people, and it seems that we are coming to a kind of consensus, that the biggest part of contraband tobacco trafficking is concentrated in about four or five reserves in Quebec and Ontario. It involves about 80 to 90% of the illegal market. I have been told of about 100 factories that don't even have licences.

I would like to know, in concrete terms, why you don't close those plants down. Why are factories that do not have licences allowed to keep blithely operating? How is it that laws that are enforced everywhere in Canada by convenience stores and other stores are not enforced on reserves? For example, an article in the Journal de Montréal says that a young teenager can go and buy flavoured cigarillos—products made for kids—when it is now illegal to sell them in convenience stores.

Are we living in a country with a double standard—when you live on a reserve, you do what you want, and the RCMP and the Department of Public Safety can't do anything, and when you live somewhere else in Canada, if you sell flavoured cigarillos to minors, you can be caught and punished?

[C/Supt Joe Oliver]

One point of clarification. I believe you indicated that there were 100 unlicensed factories. Our information indicates that it fluctuates constantly, and these could be small operations that could be mobile. But our indication and estimates are that there's about 50 in Canada. There is also the presence of manufacturing facilities in the United States, and that is smuggled from the United States into Canada across the border.

With respect to a double standard, I would not say there is a double standard. The RCMP enforcement priority is to target the highest levels in the organized crime groups. As I have mentioned already, there are 175 organized crime groups that are orchestrating and creating these networks. When it comes to targeting and enforcement operations, we put our effort where we think we are going to get the biggest bang for the buck and where we are going to have the greatest impact, and that is focusing on the larger groups that are overseeing the operations. It takes as much effort sometimes to target small operations as it does for a large organized crime operation. You require the same burden of proof, the same reasonable and probable grounds to execute search warrants, the same paperwork and process. So where we view our greatest bang for the buck is to target the criminal organizations that are orchestrating this.

When it comes to the manufacturers themselves, again it is the organized crime groups that we target and not necessarily the specific facility. The goal is to disrupt the criminal network; that will have an impact on the manufacturing operations as well.

[Maria Mourani, Bloc, Ahuntsic, QC]

Unless I'm mistaken, tobacco factories have to have licences, both federal and provincial. If the plants don't have licences, they are illegal. How can the RCMP tell us not to take action against the factories? I have to admit I don't understand.

[C/Supt Joe Oliver]

There are a number of questions that have to be answered first. Do we have the intelligence and the location of the manufacturing facility, and enough to obtain a warrant to execute that?

Whenever we do a police operation, there are always officer safety and public safety considerations that are taken into account. Is there another way to achieve an objective without putting anybody at risk and creating a public safety situation?

[Maria Mourani, Bloc, Ahuntsic, QC]

What do you mean by the term "public safety"? What are you afraid of? That the Mohawks will decide to blockade a bridge, or a road? Is that what you mean by public safety?

[C/Supt Joe Oliver]

Not speaking of any individuals, there are always considerations when police operations take place in areas that are politically sensitive. You may be familiar with what happened last week. There was a marine enforcement operation that occurred in the Cornwall region on the St. Lawrence River that actually resulted in a community confrontation with law enforcement authorities. So when developing police enforcement operations, we must always consider whether there is another way, without putting safety of individuals, not only police officers but the public, at risk. Can we achieve the enforcement outcome through a different enforcement effort?

[Maria Mourani, Bloc, Ahuntsic, QC]

I understand what you mean.

Because you have answered nearly all my questions, Mr. Oliver, this next question will be for Mr. MacKillop.

When the Federal Tobacco Control Strategy was launched, Mr. Day, who was the minister at that time, announced a $20 million investment over four years in addition to a Contraband Tobacco Enforcement Strategy.

There have been various cases heard between Her Majesty the Queen in right of Canada and two different companies: Imperial Tobacco Canada Ltd. and Rothmans, Benson & Hedges Inc., RBH, if I am not mistaken. For those two companies alone, there are some $100 million should be used to combat contraband tobacco, if memory serves me. That is what it says here. So that money should be used to eliminate contraband. I am trying to assume that the $20 million comes out of the $100 million.

Why is the other $80 million not being invested precisely to give the RCMP some extra resources so it can wage this war on contraband tobacco? Why, until now, has the Department of Public Security still not started a public awareness campaign about contraband? Because all the surveys show that...

[The Chair, Conservative, Garry Breitkreuz]

We have less than half a minute for the answer. Leave some time for the answer.