Public Safety Committee on Oct. 19th, 2017

[The Chair, Liberal, John McKay]

You have two minutes, Mr. Paul-Hus.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Mr. Swales, you identified an issue in the continuity of goods movement.

Individuals or small businesses send small packages, while large companies ship containers. Have you identified a bigger problem when small packages are sent individually compared with large shipments?

When large companies are compared with small companies or individuals, is there a major difference in terms of inspection?

[Nicholas Swales]

Mr. Chair, the key difference is that small shipments may not have been declared. So the agency had less authority to develop the necessary risk analysis to determine how involved it should get.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

For example, a business or an individual may send a package to the United States, but they may not file a customs declaration. The package is sent, and no screening is performed. Is that correct?

[Nicholas Swales]

It's not that there is no control at all, but the officers must have reasonable suspicion before opening a package for a thorough analysis.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Don't companies such as Canada Post or FedEx have an obligation to clear a package before it is shipped? Is it not mandatory for those companies to perform screening?

[Nicholas Swales]

One of the issues is knowing whether the declarations are accurate. Screening is performed for mailouts. That said, it is somewhat different because people are not required to declare if the content is worth less than $2,000.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Okay.

[The Chair, Liberal, John McKay]

Thank you, Mr. Paul-Hus.

Mr. Fragiskatos, you have the final five minutes.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

We have heard today that Bill C-21 addresses an important gap as far as exports are concerned, when we're trying to deal with the export of illegal goods in particular. I want to ask about, or even confirm, really, the importance of taking a dynamic approach to this.

Recent CBSA reports indicate that intelligence-led cocaine seizures have increased 49% because of tips and other intelligence that have come in and been utilized by the agency. This intelligence has also led to a rise in large-scale heroin seizures as well. If we can take what's been applied in terms of intelligence to imports and apply it to exports, from an intelligence perspective, I think you would agree that in addition to the changes that would be brought about by Bill C-21, we would have a robust approach to dealing with these sorts of exports, these illegal materials.

[Michael Ferguson]

Mr. Chair, in terms of exports, I'm going to refer to paragraph 2.60 in our audit on controlling exports. In there, we say that the agency had in fact identified illegal drugs as a high-risk area. In fact, during the period of time that was under audit, the agency had in fact made several drug seizures. I'm talking, again, about exports. They were acting on that type of intelligence that they were getting, even on exports, to try to identify if there were illegal drugs being exported. Also, the reason that looking for illegal drugs at export is important is that it's one way of helping to combat organized crime.

What the agency had identified was that they had limits on their authority to examine the non-reported packages, and that reduced their effectiveness in preventing the export of illegal drugs. Because of that, they didn't actually set illegal drugs as one of their examination priorities. What was happening was that they were acting on whatever intelligence they had, whatever suspicions they had, to try to identify whether illegal drugs were being exported. However, they didn't have all of the authority they needed to perhaps have an overall systematic approach to whether illegal drugs were being exported.

Certainly if the bill does give them the authority they need to do those random inspections of all exports, then they should be able to adjust their approach to illegal drugs.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Okay, thank you very much.

I have a final question.

In your report, it states, “...while departments and agencies had implemented many of the commitments for a number of initiatives, they experienced significant challenges, such as delays in implementation and low adoption rates by users.”

I want to ask to what extent this sort of problem is a common phenomenon when it comes to new programs being introduced. We're talking about Beyond the Border. Your report looks at the implementation of a new approach, a new program.

My instinct is to think that these sorts of issues, challenges, are in fact common. Can you comment on best practices that you've seen when it comes to the implementation of a new program to address initial challenges like this?

[Michael Ferguson]

With any new program, in fact with any program, one fundamental management practice is to identify risks. If the risk is that this is a new program and, for example, we may have a risk of not enough uptake, then the organization should have a plan for how they're going to make sure they get the appropriate uptake, the appropriate number of users.

My memory is fuzzy on it, but I think that where we talked about uptake was primarily on the single window for goods.

Mr. Dompierre can maybe provide those details.

[Martin Dompierre]

Basically, that initiative was to engage with the trade organizations in order to use a system to allow and facilitate trade to come into Canada. The uptake was low because trade companies had to invest a lot of money in their systems, and there was not a lot of appetite for that. We did make a recommendation in the report that CBSA should design a strategy to engage their partners. In terms of best practices, they should at the forefront try to get as much buy-in as possible from the trade or any organization engaged in a new program, while ensuring that they have the capacity to take on new requests to adopt a new program.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

[The Chair, Liberal, John McKay]

Thank you.

That brings the questioning to a close.

I appreciate your efforts to be here. I also want to compliment you on your French.

The benefit of being around here for about 20 years is that you complete an entire circuit of this table. I've been in the opposition, I've been in a third party, and I've been in government. I've been here and I've been there. In all instances, your reports have been done with complete integrity. They are fact-based. We as parliamentarians appreciate the work of the Auditor General, so thank you very much.

The meeting is suspended.

[The Chair, Liberal, John McKay]

We're back on, and we have our second set of witnesses.

From the Department of Employment and Social Development, we have Elise Boisjoly, assistant deputy minister of the integrity services branch. We also have Cyndee Todgham Cherniak, counsel for LexSage Professional Corporation.

Welcome to you both. I will call on Ms. Boisjoly to speak first, and then Ms. Todgham Cherniak.

Thanks very much.

[Elise Boisjoly, Assistant Deputy Minister, Integrity Services Branch, Department of Employment and Social Development]

Thank you very much, Mr. Chair.

Members of the committee, good morning. Thank you for the opportunity to appear before you this morning.

My name is Elise Boisjoly, and I am the Assistant Deputy Minister of the Integration Services Branch at Employment and Social Development Canada, or ESDC.

Today, I would like to inform you on how ESDC proposes to collect and use information as a result of Bill C-21.

First, I would like to talk about the department I represent.

ESDC's mandate is to improve the standard of living and quality of life for all Canadians. Many Canadians benefit from our old age security and employment insurance programs, which you probably are very familiar with. Let me tell you just a little bit more about these two programs.

Employment insurance, or EI, provides temporary income for people who have become unemployed as a result of specific events, for example, if you've been laid off, if you're on maternity leave, if you're taking care of a new child, These are all instances when you would get EI.

Old age security, you're probably very familiar with as well. Seniors are eligible for this. We have pensions for people over 65, a guaranteed income supplement for people who have low incomes, and also some spousal and survivor allowances for people in receipt of GIS.

It is the responsibility of the department to ensure the integrity of those programs and the stewardship of our funds, and to ensure that only eligible Canadians receive benefits to which they are entitled. It's critical for us to detect errors or abuses in those programs and to ensure that these programs will be sustainable for future generations. That's why I'm here today discussing Bill C-21, because some of those programs have residence eligibility criteria, and that's where the intersection with CBSA becomes very important.

For EI, claimants need to be in Canada because they need to be available for work. If they go outside Canada, they're not eligible for EI. There are some circumstances when you can go outside Canada, for example, to attend a funeral, or for medical reasons. There are specific reasons but they are quite limited. If you go outside Canada and you don't tell us and you continue to receive benefits, there will be overpayments, potential penalties, and we will ensure that the amount is paid back.

Pensions are payable outside Canada in two instances: if you've been in Canada for 20 years since you've been 18 years old, or if we have an agreement with another country that allows for the sharing of the pension. This would apply to most Canadians. Also, you're allowed to leave Canada, even if you don't meet those two obligations, as long as you've been out of Canada for less than six months. Again, the majority of Canadians would fall under that purview. As to the allowances I talked about, and the guaranteed income supplement, you will not be eligible if you're out of the country for more than six months. There are residence requirements related to the eligibility for those programs.

It is important to note that the information being collected through entry-exit is information that we're already asking from our beneficiaries. It's part of our act. We already have the right to request this information. Beneficiaries are asked to provide that information to Service Canada when they leave the country. It applies to all beneficiaries. We are trying to be extremely transparent and clear about those requirements. When people are entitled to those benefits, we give them that information. It's on our website. We continue communication with recipients to make sure they understand their rights and obligations.

That being said, ESDC doesn't have the means to verify the information provided to us by beneficiaries. We think most beneficiaries are legitimate. However, sometimes errors can happen, and sometimes fraud can happen. This will allow us to ensure that we can validate the information received from beneficiaries.

By amending the Customs Act to provide entry and exit information, we'll be able to use that information to verify requirements for EI and OAS.

Just so you know, we already receive EI information through customs form E311, the form people fill out when they come back into the country. Bill C-21 would expand the information to people leaving the country by air and also land travellers entering and exiting the country.

Getting this information is important for us because we have had good success identifying errors or potential abuse of the program in the past using the information we had. We were able to recover between $15 million to $20 million in overpayments with the information we had in the past, and we think that, with the information we'll get from entry-exit, we'll be able to save probably an additional $5 million in overpayments. These are conservative estimates, but again, this is about the integrity of the program and ensuring that people who are entitled are receiving the benefits.

In addition, as I've mentioned, we could only use this information for employment insurance. Now we will be able to use this information for old age security, OAS. It will allow us to use that information to look at eligibility under that program as well. Conservative estimates look at up to $47 million in overpayments that could be potentially identified. It's quite significant in terms of the potential for us to improve the integrity of our programs with that information.

There are a few things I would like to add. This bill, if approved, would not have any impact on people who are supposed to receive their benefits or are entitled to the benefit. It would have no impact on the rules of the existing program. It's already part of our legislation. It's already something that we clearly indicate and communicate to recipients. Obviously, if the bill passes, we would add information that this information is shared between our two departments, and it would be communicated to recipients.

Also, we don't anticipate that it will impact a lot of OAS recipients. As I've mentioned, a lot of the recipients of OAS fall into the category of having pensions that can be transferred even if they are not still living in Canada, and so it could represent maybe 0.01% of the 5.7 million people who are crossing the border, although, as I mentioned before, the overpayment could still be substantial, and it's important for us to ensure the integrity of our programs for future generations.

In terms of additional burden on beneficiaries, we don't expect any. We already ask for this information, and the information is already provided by Canadians, and it will ensure the highest level of integrity for our program.

One thing I want to ensure that people on the committee understand is that we will not stop any benefits just because we receive that information. Beneficiaries will always have the opportunity to come to us if some anomalies are detected, and they will be able to provide substantiating documentation. It's only as a last resort that we would come to overpayment if the beneficiary is not entitled to the claim.

Something I think that is dear to this committee is privacy of personal information, and how we protect that information. We're a steward of public funds, but at ESDC we're also stewards of private personal information, as you can imagine, and we take that very seriously. First, the department would do a privacy impact assessment. They would share the results with the Privacy Commissioner, obviously, and they would take all the recommendations seriously and look at implementation.

We will also establish an agreement between ourselves and CBSA to ensure the rules on how we share the information and the responsibilities are clearly established. That's a common practice, and that's something we already have in place for E311 information exchange. The exchange of information will be done through technology, and we'll ensure that security measures are put in place. Also, we'll only receive personal information that is directly relevant to our programs. The information is going to be matched with our system, so if there's no match, the information is purged. Only people who are authorized to access the information will have access to the information. We're not going to share the information with other departments.

In closing, our main concerns are about protecting the integrity of our program and providing great service to Canadians, and we need a robust system to ensure that we have the right information to give the right benefits to the right person at the right time.

Thank you again.

Thank you again for allowing me to appear before the committee today.

I look forward to answering your questions.

[The Chair, Liberal, John McKay]

Thank you, Ms. Boisjoly.

Ms. Cyndee Todgham Cherniak, you have 10 minutes, please.

[Cyndee Todgham Cherniak, Counsel, LexSage Professional Corporation, As an Individual]

Thank you, Mr. Chairman.

Thank you for inviting me to provide comments on Bill C-21, an act to amend the Customs Act. My name is Cyndee Todgham Cherniak. I am a Canadian international trade lawyer, and I specialize in the areas of customs law and export controls and economic sanctions.

Bill C-21 amends the Customs Act to implement the Beyond the Border initiative between Canada and the United States. It has three main parts.

Bill C-21 starts with the provision to authorize the CBSA to collect limited information about persons and conveyances that are leaving or exiting Canada. Then, Bill C-21 adds proposed new section 94 of the Customs Act, which requires that, if requested, every person who is leaving Canada present themselves to the CBSA and answer questions truthfully. Bill C-21also amends section 95 of the Customs Act, which puts a positive obligation on persons to report all goods that are exported. Finally, Bill C-21 adds a new export smuggling offence in subsection 159(2) of the Customs Act.

Whenever a new offence provision is created, the government needs to be careful. When interpreting a statutory provision, we must ask what the intention of Parliament was when they passed this provision. The rules for an export smuggling offence need to be very clear. It's not fair to Canadians and travellers to Canada for there to be punishable export-related smuggling rules and only be told when the rule has been broken. Proposed new subsection 159(2) of the Customs Act provides:

Every person commits an offence who smuggles or attempts to smuggle out of Canada, whether clandestinely or not, any goods that are subject to duties, or any goods the exportation of which is prohibited, controlled or regulated under this or any other act of Parliament.

What does smuggle mean? This term is not defined in Bill C-21 or the Customs Act.

Proposed subsection 159(2) of the Customs Act tells us what can't be smuggled out of Canada: one, “goods that are subject to duties”, and, two, goods that “the exportation of which is prohibited, controlled or regulated” under the Customs Act or any other act of Parliament.

Let's start with goods that are subject to duties. The term “duties” is defined in section 2 of the Customs Act with reference to imported goods. There is no definition of duties in the context of exported goods. Bill C-21 does not amend the statutory definition of the word “duties” in the Customs Act.

The words “subject to duties” must have meaning. Is it the intended result that all goods that are not duty-free when imported into Canada are covered by the new export smuggling provision when they are exported? Or, is the intended result, by virtue of amended subsection 95(1) of the Customs Act, which requires all goods to be reported, that all goods will be considered to be regulated and therefore all goods must be reported, and if the goods in your luggage or my luggage are not reported, they will be considered to be smuggled?

What is envisioned? Will there be export clearance at Canadian airports for all passengers, so that they must report the goods in their luggage? Will there be a new export checkpoint staffed by the CBSA? When travellers pre-clear U.S. customs, do they also have to go through a CBSA export checkpoint, or this going to be like the requirement in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which puts a positive obligation on persons to report all exports of more than $10,000? Are travellers supposed to find the small CBSA office in the airport and complete some paperwork before leaving Canada?

With respect to the second category of goods to be covered by the export smuggling offence, do any of you know what are “goods the exportation of which is prohibited, controlled, or regulated” under the thousands of acts and regulations that we have? What does this even mean? The terms “prohibited”, “controlled” and “regulated” are not defined in Bill C-21 or the current Customs Act. I can tell you from experience in my practice that most people do not know how many restrictions there are under Canadian laws and regulations relating to exports.

This is not just the Export and Import Permits Act and the export control list that place restrictions on exports. There are hundreds of restrictions that are not obvious, and there are hundreds of different disconnected statutes and regulations. Do you have a complete list? Does a complete list even exit?

The export control list is only one list, and not an easy list for the average person or even a business person at a small to medium-sized business to use. Dual-use goods, miscellaneous goods, U.S.-made goods, computers, encryption software—the export control list is really complicated. In addition, the export control list does not contain or include many other export-regulated items, such as, rough diamonds, hazardous materials, fireworks, live animals, cultural property, fish, seafood, health products, regulated drugs, precursor chemicals, and the list goes on.

Did you know that there are restrictions on exports of honey, maple syrup products, and peanut butter under different and disconnected regulations? These and other goods are covered by other laws and other regulations.

My recommendation would be that there needs to be some clarity with respect to which goods must be reported and will be considered to be smuggled out of Canada if they're not reported. There needs to be a consolidated list of goods that are subject to export restrictions, and if there isn't a single, consolidated, searchable database of export restrictions and regulations, good Canadians will make mistakes.

There are inconsistencies between the regulatory schemes. A second recommendation I'd like to give you is that there needs to be some consistency. As you know, the minister of foreign affairs does not have the authority to issue export permits to non-residents, but non-residents of Canada leave by air, ship, and rail. How is this new smuggling offence provision going to be applied to the millions of foreign visitors to Canada who can't obtain export permits? As you know, when a Canadian resident uses a general export permit to export controlled goods under the Export and Import Permits Act, they must refer to the general export permit number on the export documentation. How will the CBSA enforce this general export permit requirement in respect of the individual traveller who does not use export documentation when leaving with goods in their luggage?

While I can understand that the Government of Canada would like to be able to charge individuals who try to break export control rules by personally exporting the goods, this proposed provision is going to capture a whole lot of other people. Further, the Export and Import Permits Act and other statutes contain punishment for not obtaining export permits and export licences when required. Ask what the export smuggling provision is really supposed to accomplish. We may already have this covered in our law.

What about information on electronic devices? On September 27, 2017, Mr. Martin Bolduc of the CBSA testified before the ETHI committee that the CBSA's position is that, pursuant to the Customs Act, the word “goods” includes electronic records on electronic devices. He took the position that the CBSA may examine all electronic documents that are being imported. The CBSA's analysis on imported goods would also apply to exported goods.

Based on the proposed amended subsection 95(1) of the Customs Act, all electronic documents on your computer, my computer, or our electronic devices must be reported. There have to be regulations promulgated to support proposed subsection 95(1). I would hope that, in those regulations, electronic records would be specifically addressed and an exception cover electronic records. Laptops contain hundreds of thousands of emails and documents, and it would take a long time to report these goods at the airport before leaving Canada, and it's not even feasible to report all the goods.

Anyone, including all of us, could commit a smuggling offence if every electronic record on our computer must be reported to the CBSA, and anyone with a NEXUS card would be at risk of losing their NEXUS card if they failed to recall one document.

We should also protect solicitor-client privilege at the border. Solicitor-client privilege is fundamental to the proper functioning of the Canadian legal system. As a result, steps must be taken to ensure that solicitor-client privilege is protected at Canadian airports and Canadian ports of exit when lawyers and clients are leaving Canada. It is essential that the CBSA maintain a transparent policy and process to address solicitor-client privilege when questioning persons leaving Canada.

Finally, on the issue of privacy and the sharing of information, the CBSA's information can be wrong. We need to have a mechanism so that travellers can correct the information relating to answers they've provided to the CBSA and when they've left.

I'd be happy to answer any of your questions.

[The Chair, Liberal, John McKay]

Thank you, Ms. Cherniak.

Our first questioner is Ms. Dabrusin.

You have seven minutes, please.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Thank you to both of you for your presentations. I have a pile of notes because you gave us a lot to ask questions about.

I'd like to start with you, Ms. Cherniak. You mentioned that there is no definition of “duties” in the Customs Act for exports. Is that right?

[Cyndee Todgham Cherniak]

That's correct.

There is a definition in section 2, but it only focuses on imports. There is not an element of that definition relating to exports.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Would that problem be solved if there were an amendment to have that cover “exports” as well, in the same definition? Would that be your recommendation?

[Cyndee Todgham Cherniak]

I'm not sure, because there aren't duties on many exports beyond softwood lumber, which has export charges under a different statute.

We don't charge on goods leaving Canada. We charge on goods entering Canada, so that those goods are put on a higher level and Canadian goods can be more competitive. It kind of goes against the principle of duties to have a definition. However, the smuggling provision makes reference to “duties”, so it's confusing.