Public Safety Committee on Oct. 19th, 2017

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

In many different places you've really zeroed in on the language of the statute and some issues.

What is your solution to how to deal with the fact that the word “duties” is unconnected? Would you have a recommended change of wording? Would you remove the word “duties”, or is there something else that you would do?

[Cyndee Todgham Cherniak]

My question is the intention of Parliament.

I was listening to the previous witnesses where it seems there appeared to be a gap in Canadian legislation and that's why they needed this, but I'm not sure that gap is there. It should be that any goods that are subject to the controls or licence provisions, you shouldn't export those goods without the proper permits.

I'm not sure if an export smuggling offence within the Customs Act is the right way to go about it, because the Export and Import Permits Act has an offence provision. I'm a little confused by the provision and what they're trying to get at, over and above what's covered by other legislation.

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

You looked at the words “prohibited”, “controlled”, and “regulated” and said that they're undefined.

You seem to be well aware of all the statutes that link up together on this issue. Is there a statute that you believe properly defines those terms that could be linked in to this legislation?

[Cyndee Todgham Cherniak]

Unfortunately, there are so many pieces of legislation within which there are export restrictions and regulations relating to exports.

The first act to look at is the Export and Import Permits Act, and the export control list and the area control list under it.

The second obvious one is the United Nations Act and the Special Economic Measures Act, which in some cases relate to goods, but in many cases relate to listed persons and prohibitions on doing business with particular listed persons. You need a lot more information about a particular good to know whether that good should be restricted in some way or another. Then we have, for rough diamonds, for honey, for maple products, and so on.... There are over a hundred, if not over a thousand, different pieces of legislation that have restrictions on exports in one way or another.

That's why they say “another act of Parliament” as a catch-all basket, but it doesn't really help small to medium-sized businesses or individuals.

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

Can this be resolved through regulations? They can be updated more easily when there are changes to export controls.

Would that be one means of resolving this issue through the regulatory part of this bill?

[Cyndee Todgham Cherniak]

In part.

However, in listening to the previous witnesses, I noted they were talking about the $2,000 Canadian limit and that certain goods don't meet that threshold and they're not being captured. That particular threshold or condition is in the reporting of exported goods regulations. The export control list is another regulation that can be changed, but it is very difficult to manoeuver that piece of legislation. That piece of legislation sends you over to the guide that is on the Global Affairs website. From there, you have to try to interpret words like “intrusion software”, which is on the list. I'm sure there aren't many people in the room who know what intrusion software is, so you'd have to go somewhere else.

The average Canadian and the small to medium-sized business, both trying to comply with Canada's export laws, have another issue to deal with when it comes to the smuggling provision and the reporting of goods requirement in Bill C-21.

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

Have you looked at any models of this type of legislation in other countries that might provide hints as to how to draft it in a way that would respond to some of your concerns?

[Cyndee Todgham Cherniak]

I have not looked at it for the narrow issues in Bill C-21. I have looked at the U.S. export control rules. I have looked at U.K., Australia, and Japan export control rules, but in the creation of a smuggling offence, I have not looked there with a focus on what this particular piece of legislation is doing.

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

Sure, fair enough. If you do come upon an example that you think would be helpful as a comparison model, that would be wonderful.

Thank you.

[Cyndee Todgham Cherniak]

Thank you.

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

You mentioned that it's hard to get a list of prohibited control regulations. Are there lists available? You've pointed us in a few different directions, like going through Global Affairs' website and here and there. Is there a comprehensive list that you are aware of?

[Cyndee Todgham Cherniak]

There isn't, and I'm working on a mini-book right now. In the past few weeks, I've been trying to compile a list for small to medium-sized businesses, and I've already failed miserably. I have some general items—well over 100 of them—on my list, but the list is a lot longer than that, and it's very difficult, even for someone who has experience in export controls, to make a comprehensive list. It would be very nice if the government did that for small to medium-sized businesses and Canadians.

It is something that was raised with the FAAE committee earlier this year in connection with their review of export controls and the freezing of assets of corrupt foreign officials, which I call the “beyond Magnitsky report”. They recognized the exact same issue in the area of export controls, that there aren't consolidated lists.

[The Chair, Liberal, John McKay]

Thank you, Ms. Dabrusin and Ms. Cherniak.

Mr. Paul-Hus, the floor is yours for seven minutes.

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

Thank you, Mr. Chair.

Ladies, thank you for your reports, which are very comprehensive and informative.

I will first turn to you, Ms. Boisjoly. You did a really good job of analyzing the impact of Bill C-21 on ESDC. You determined that you could potentially save $5.5 million. So you already have a good idea of the number of people who commit employment insurance fraud.

I assume that the amount was obtained based on a percentage of cases you know about and over which you have no control. Is that correct?

[Elise Boisjoly]

Thank you for the question.

That is correct. For us, what is important during investigations is the level of existing risk. We build analytical models. We try to determine the sources of potential errors, which can be very legitimate. For example, someone may put down the wrong date for the end of their employment, and that makes it seem like the individual left their job after more than six months. Then they tell us that they did not leave on that date. So we really look into errors and fraud, and we use analytical models. That gives us an opportunity to identify overpayments we could recover.

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

My other question is about the information that will be collected once Bill C-21 has been passed. Proposed subclause 92(1)(a) talks about the surname, first name, date of birth, citizenship or nationality and sex. How can you obtain reliable information if you have my surname, for example, but there are four other people named Pierre Paul-Hus in Canada. You don't have my social insurance number. How can reliability be ensured?

[Elise Boisjoly]

That is an excellent question.

The important thing to point out is that this is only one of the tools we will use. All the corresponding elements that will arise are not necessarily subject to investigation because we look at other factors. At that point, if other factors show that there could be issues, investigations could be launched.

So once again, the important thing to point out is that in cases where we note an anomaly, the claimant can always come back to see us to obtain certain information. We can also establish connections with a passport number, for instance.

I think it is important to point out that the claimant has an opportunity to say that they are not the person we have identified.

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

So for you, that information will be added to a database you already have, and it will be an additional red flag that will help you identify system fraudsters.

[Elise Boisjoly]

Exactly.

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

Have you calculated how much your department could save once Bill C-21 has been passed? Have you determined that savings may be made in terms of labour or resources?

[Elise Boisjoly]

That's an excellent question.

Unfortunately, I can't say that we have done the exhaustive work of using quantitative data to determine how much we will save. There can be several effects. Analytical models are only good once they have been tested. There may be more cases, and that could generate more work. Currently, some of the work is done manually, but we are doing less of it. Will the list raise more red flags?

It would be difficult to say right now what the quantitative savings might be in terms of work. There's no doubt that some things will help us be much more efficient and more specific in our assessments. Will that generate more work? It remains to be seen.

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

Thank you.

Ms. Todgham Cherniak, in your blog, at www.canada-usblog.com, you talk about your concern over the thickening of the U.S. border. You list eight ways to reduce those problems.

Are the problems you listed earlier part of your summary? Do you have another document to submit to the committee?

[Cyndee Todgham Cherniak]

Normally, when we talk about thickening the border, we're talking about imports and the Canadian regulations on imports. This is going to be a new thickening of the border for exports, because goods are going to be heading outside of Canada to the United States and overseas. They are currently being detained from time to time, and there is a requirement to provide an export declaration for any goods being shipped outside of Canada that are valued at over $2,000.

We already have some mechanisms in place, but if we now have to look at each and every good and, on top of that, to look at goods at airports and border crossings that individuals are taking across the border, there's going to be considerable new thickening at the border. If we take away that $2,000 threshold—that's something the previous witnesses seemed to be concerned about—then we are really going to have some delays on goods leaving Canada, and we may not be seen as a desirable party to persons overseas who need the goods quickly. They might pick some other country that doesn't have these problems.

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

In your presentation, you said that non-resident Canadians were not subject to the same rules as confirmed Canadians, so to speak. Does your data contain information on aboriginal communities such as the Mohawk community?

This week, we met with the Mohawk Grand Chief. He talked about border issues. From an economic or business point of view, is the Mohawk reserve part of your analyses?

[Cyndee Todgham Cherniak]

I don't have any information on that but it goes back to the Export and Import Permits Act. The minister of foreign affairs can only issue export permits to residents of Canada. It has to be a person who's a resident of Canada and it wouldn't matter whether or not the individual is in the aboriginal community. If they're a resident of Canada, they can get an export permit. I was referring more to foreigners who come to Canada to do business and to travel. They would have that reporting requirement, and they wouldn't be able to get export permits if they are taking controlled goods out of the country.