Good morning, colleagues.
Pursuant to Standing Order 81(4), we are on the main estimates 2007-08, vote 20, under Canadian International Trade Tribunal, referred to the committee on Tuesday, February 27, 2007.
This morning we're combining both the Canadian International Trade Tribunal and FINTRAC, colleagues, and so we will expedite questions. We will continue until a little after 12:30 because of the later start. I understand we'll have some introductory comments of five minutes each.
I believe Pierre Gosselin will begin.
Sir, you have approximately five minutes.
Over to you, and welcome.
Thank you, Mr. Chairman.
I am pleased to appear before this committee and to answer any questions you may have.
I am the Chair of the Canadian International Trade Tribunal. Accompanying me this morning is Ms. Sandy Greig, Director General of the Research Branch. Before moving on to questions, I would like to give you a brief overview of the tribunal's mandate, and the challenge we are facing.
The tribunal is a quasi-judicial, independent organization that reports to Parliament through the Minister of Finance. The tribunal is currently made up of seven members, who are all appointed by order in council for a specified length of time. The members are supported by 87 employees. Our workload is generated entirely through the number of complaints and cases that are brought to our attention by the governor in council or the . Most of our cases must adhere to very tight statutory deadlines.
Our mandate is to conduct inquiries following the lodging of complaints, and to provide a ruling on economic, trade, tariff or commercial matters that are brought to our attention by the governor in council or the . As a quasi-judicial institution, we carry out inquiries into whether dumping, from all countries, and in particular China, has caused, or is threatening to cause, material injury to a domestic industry.
Under the provisions of the Customs Act, decisions made by the Canada Revenue Agency, and the provisions of the Excise Tax Act, the tribunal hears appeals to rulings made by the Canada Border Services Agency. We conduct inquiries on complaints lodged by potential suppliers for federal contracts covered by NAFTA, the Agreement on INternal Trade or the Agreement on Government Procurement.
In cases of damage inquiries, appeals of CRA rulings and federal contract awards, the tribunal's rulings are binding. In cases of safeguard inquiries, the tribunal may provide a legal assessment of damages, and, upon request, forward recommendations on corrective measures to be taken. The CITT also plays an advisory role to the federal government on general economic and tariff matters.
The tribunal's workload is entirely externally generated. Our main challenge continues to be the allocation of our limited resources in such a way as to ensure that the statutory deadlines are always met and that the quality of the tribunal's findings, determinations, and recommendations is not compromised.
We must also ensure the continuity and renewal of our specialized workforce. Sufficient time must be provided for new staff to develop the required experience and competencies, which in some cases will take a number of years.
The tribunal remains committed to advancing government-wide priorities to improve the accountability and transparency of government operations, and to this end, the tribunal will strive to more fully integrate the principal elements of the management accountability framework.
The tribunal has a single strategic outcome and two activities.
The strategic is fair, timely, and effective disposition of international trade cases and government-mandated inquiries in various areas of the tribunal's jurisdiction. The first activity is the adjudication of trade cases, and the second activity is the general economic inquiries and references. The lion's share of the budget is allocated to the first activity, whereas only around $600,000 is spent on the general economic inquiries and references.
In 2006, the tribunal worked on 19 unfair trade cases. The tribunal finished its work on a textile inquiry referred to it by the and its work on a request to initiate a safeguard with respect to apparel imports from China. We received 52 complaints related to the federal government's procurement practices and 64 appeals of decisions from the CBSA or the CRA. Notably, the volume of work on procurement cases increased in 2006-07 as a greater percentage of the complaints referred to us have been accepted for inquiry.
Throughout the year, the tribunal carried out consultative and outreach activities. First, through the bench and bar committee, the tribunal provides a forum to promote discussion with the bar on issues of importance. The tribunal has also met with representatives from industry, trade associations, and officials from government departments to brief them on our procedures. As well, we have offered training to government agencies in Morocco and Vietnam and participated in technical exchanges with officials from the European community and from Australia.
I would like to mention some initiatives the tribunal is taking to try to improve our accessibility and reduce the administrative burden to the public. We publish and archive all our decisions and statements of reasons on our website. We also issue press releases to inform the public at the time these are made. All notices are placed on our website and subscribers are advised what's new through e-mail. Our questionnaires are available on our website, and parties will soon be able to use a secure electronic channel to file them with the tribunal.
We will shortly be making public case files available to parties electronically. That file will also be searchable and constantly updated throughout a case.
Finally, I would like to talk about the variation in our main estimates from 2006-07 to 2007-08, a net increase being $677,000 in operating expenditures under code 20, and it's primarily attributable to a $620,000 increase in funding to cover the replacement of our audio system in two of our hearing rooms.
Other amounts are a $97,000 increase in collective agreements signed in 2006-07, a $20,000 decrease in contributions to employee benefit plans, and finally a $20,000 decrease due to public works procurement savings.
Those, Mr. Chairman, are my opening comments.
Good morning, Mr. Chairman and committee members. We are pleased to appear before this committee again, to provide an update on FINTRAC's operations and our main estimates.
My name is Mark Potter. I'm the acting deputy director of strategies and partnerships for FINTRAC. Joining me today are my colleagues Alfred Tsang, our assistant director of finance and administration; and Janet Di Francesco, our assistant director of macroanalysis and integration.
I would like to make a brief opening statement.
FINTRAC was created in 2000 to facilitate the detection and deterrence of money laundering and terrorist activity financing in Canada and around the world. FINTRAC is an independent agency reporting to the Minister of Finance, who is accountable to Parliament for the activities of the centre.
We are Canada's financial intelligence unit, or FIU. Our mandate is to receive financial transactions and other information, analyze it, and when appropriate, provide financial intelligence to law enforcement and other investigative agencies, as well as foreign financial intelligence units.
FINTRAC produces financial intelligence that assists the investigation and prosecution of money laundering and terrorist activity financing offences and other threats to the security of Canada. These investigations are carried out by national, provincial, and municipal law enforcement agencies and the Canadian Security Intelligence Service. FINTRAC is an analytic, not an investigative body. FINTRAC sits at the front end of the process, making a contribution of intelligence that assists investigators.
FINTRAC has been very active in the production of case disclosures of financial intelligence, producing 168 such cases in 2005-06, with a total value of just over $5 billion. This financial intelligence is providing value to a growing number of investigations. With each successive year, we have increased our output of these disclosures of suspected money laundering and terrorist activity financing cases.
Our governing legislation, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, places obligations on certain individuals and entities to keep records, identify their clients, and report certain financial transactions to us.
These reporting entities, as we call them, include banks, credit unions, accountants, casinos, money services businesses, foreign exchange dealers, securities dealers, life insurance companies, and real estate brokers and agents.
Recently, as you know, Parliament amended the Proceeds of Crime (Money Laundering) and Terrorist Financing Act through From FINTRAC's perspective, there are three key thrusts to the legislative amendments. Bill C-25 brings additional business sectors under the ambit of the legislation and regulations, such as lawyers and dealers in precious metals and stones. Their inclusion broadens and strengthens Canada's efforts to combat money laundering and terrorist activity financing.
Secondly, the amendments will augment the deterrence component of the regime by creating a registry, requiring money service businesses to register with FINTRAC and establishing a graduated system of administrative monetary penalties. This will greatly strengthen both compliance with the law and the general deterrence of money laundering and terrorist activity financing.
Third, Bill will make it possible to enrich the intelligence product that FINTRAC can disclose to law enforcement and national security agencies by including some additional information in our disclosures while scrupulously protecting the privacy rights of Canadians. This responds to the needs of law enforcement to make FINTRAC's core product even more useful to them.
Adjusting to these legislative changes and successfully implementing them will remain a focus for FINTRAC for the year ahead and beyond.
I'll now turn to our main estimates. In our main estimates, FINTRAC is requesting $44.9 million for 2007-08. This represents a substantial increase of $13.8 million over last year's main estimates. The increase for the next few years is required primarily for three reasons: workload pressures; the implementation of changes; and contributions to the Egmont Group.
Our work has steadily increased since we began our operations about six years ago. This is evident in the significant year-over-year growth in transaction reports received, in our output of financial intelligence, and in the demand from law enforcement and CSIS for our product.
Law enforcement agencies in Canada and financial intelligence agencies in other countries are looking to FINTRAC for more and better financial intelligence to augment their work. FINTRAC is responding to this demand with the production of case disclosures of financial intelligence that assists individual investigations, as well as strategic financial intelligence that takes a longer-term view of areas that may have vulnerability to money laundering and terrorist activity financing.
The implementation of changes will also expand our workload and require the development and implementation of significant new functions, such as a registry of money services businesses, as well as an administrative monetary penalty system. The operation of these two elements is still being defined in greater detail through regulations, based on ongoing research and consultation. We will keep parliamentarians abreast of our progress in implementing these and other elements of Bill C-25 through our regular reporting documents such as our annual report, and through future committee appearances.
Money laundering and terrorist activity financing are transnational phenomena, and cooperation internationally is essential to any successful effort to curb them. The Egmont Group is an international body comprising the financial intelligence units of more than a hundred countries. In 2006, the Egmont Group selected Toronto as the site of its permanent secretariat for its global operations. This is an achievement for Canada, and an opportunity to help lead the global fight against money laundering and terrorist activity financing. It is the funding of this permanent secretariat that is identified in these main estimates for a contribution of $1.8 million in 2007-08.
As for FINTRAC's overall budget, it is relatively straightforward. It largely comprises two main elements: staff costs and other expenditures in support of our operations, which are very technology-intensive.
FINTRAC currently employs 230 staff, located here in Ottawa as well as in three small regional offices--one in Montreal, one in Toronto, and one in Vancouver. That figure is expected to rise to about 270 staff next year. In terms of other expenditures, they are mainly for information technology, security, and accommodation.
We believe FINTRAC has made and will continue to make a significant contribution, along with our partners in law enforcement and national security, to combating money laundering and terrorist activity financing. This investment in FINTRAC is an investment in the safety and security of Canadians.
I will conclude my presentation here, and we will be pleased to answer any questions you may have.
Thank you, Mr. Chairman.
Thank you for your presentations.
I will only address the trade tribunal, and my colleague Mr. St-Cyr will ask you further questions later.
As members of the Canadian International Trade Tribunal, you provided a good presentation of your activities. I met with representatives of the Quebec furniture industry, who, after having lodged a complaint, were told by the tribunal to do their homework. They are reluctant to push further, because on the barbecue issue, for example, despite your positive ruling—you recommended that the Minister of Finance impose import duties on barbecues manufactured in Southeast Asia; I do not recall exactly which country these barbecues were produced in—but the government did not follow up on your recommendation.
What do we say to people who are wondering if they should spend between $200,000 and $250,000 to prepare proceedings regarding possible safeguard measures, when, to my knowledge, the government did not act upon one single one of your recommendations regarding safeguard measures as sanctioned by the World Trade Organization?
They are two different things, yes.
I also wanted to bring up something else, since you are here. I have introduced a bill that would also allow unions to file complaints with the Canadian International Trade Tribunal. Currently, only industry or employers may lodge complaints, whereas now, there are large industrial groups, even Canadian ones... Take for example Gildan, which yesterday announced the closure of two Montreal factories and the opening of a new one in Central America. It is quite possible that this company—and I'm not saying that it is the case—is not interested in lodging a complaint, regarding either safeguard measures, anti-dumping measures, or subsidies, because generally speaking, the group is benefiting from the situation.
Haven't we reached the point where we should allow workers, or their union representatives, to file complaints in order to protect jobs that may be threatened not by their inability to compete, but by the fact that the interests of their industrial group are better served by unfair competition?
First, I should distinguish between the initial contribution by Canada only toward the establishment of the secretariat--and that's $5 million over five years and it's $1.8 million next year. This was a proposal brought forward by the Minister of Finance to the Egmont Group. Other jurisdictions brought forward proposals to host the secretariat, and part of ours included that level of financial support. We, in effect, won the competition to have the permanent secretariat located in Canada--not just for that reason. There were a number of other considerations that the committee reviewed and took into account.
So there's cost to establish the secretariat, and Canada only is paying for that.
Starting next year, in July 2008, the secretariat of the Egmont will collect member dues from its 100 members, and those 100 members will pay based on their GDP and GDP per capita. So a formula has been developed. Clearly, G7 and G8 countries like us will pay proportionally more than countries that are still developing. We can certainly provide those figures to you to give you a sense of the specific numbers.
Overall, the annual operating budget of the secretariat is expected to be in the range of a little over $1 million Canadian each year. So you have a little over $1 million divided by 100 members.
I think that's an extremely fair and pertinent question, that we should be assessed on our results, and I'll highlight two key areas. We have a dual mandate, for detection and for deterrence.
On the detection side, it's really about our core product, which is a case disclosure, an intelligence product. So you look there at the volume, the value of the transactions. You also look at the feedback we get from our partners, from law enforcement and from CSIS. Do they consider it a high-quality product, a timely product that contributes to their investigation and ultimately leads to results for Canadians—being charges, convictions, and reduced money laundering and terrorist financing in Canada and the associated criminality? So that's a key front for us.
The second is deterrence. Do we have a system in Canada of financial intermediaries that are aware of their obligations, respect their obligations, and provide high-quality reports to us? We receive over 15 million reports a year from reporting entities. These are a key part of our analytical work, and these create a deterrence regime that makes it difficult to use Canada for these purposes, for money laundering and terrorist financing.
So those are two key areas where we're very cognizant of generating concrete results, having them measured and having them contribute directly to the well-being of Canadians.
Thank you, Mr. Chairman, for your kindness.
I actually agree with Mr. Pacetti--I know, I'm not feeling well--in terms of more information when it comes to estimates, or “budgets”, as I like to call them. The book with the main estimates has been tabled--we all get it, or we all have access to it--and it actually has categories that everybody adheres to, strategic outcomes and program descriptions.
In my previous life as a city councillor, the departments would give us budgets. If there was a change, they would give us what that change was and what the potential outcome might be. It might all be included.
Now, I don't know the process here that well. I know it's from Treasury Board. You submit for Treasury Board approval and it ends up getting printed in here. Is it possible, from a timing perspective, that if you knew, for example, that you needed a new audio system and you were going to build that into your capital side...?
I also would like to see capital separated from operating. We don't do that here. I would prefer to see this so that a capital change doesn't necessarily increase staffing levels. And in actual fact, your staffing levels look like they're going down, based on the number you've provided.
At any rate, is there time for you as an organization to provide in your submissions to Treasury Board what the changes are going to be, with a brief description? As members of Parliament, when we're reviewing estimates, we could actually look it up and see, for instance, that part of the change was an audio system.
Could you explain to me the timing? Is that an actual possibility?
It's just to go over what I'm asking for in the main estimates. That book is fine. Our job is to study just one or two aspects. In this case, we're studying the estimates that the Canadian International Trade Tribunal and FINTRAC are requesting. That's fine, but they have to come before us and give us the details that they gave Treasury Board.
It's not up to Treasury Board to reprint them. They have to provide us with that. I know FINTRAC provides us with a detailed analysis in their annual report. The Canadian tribunal is not as detailed, if I'm not mistaken.
The other thing, too, is that there's a weakness on our part, because we haven't seen your annual report. But we saw FINTRAC's, because when we were studying Bill , we went over the whole system. That's why I didn't pick on you guys, but the next time around, if we haven't seen you in a year, I'm going to.
So that's part of the weakness, but the idea is that when you come before these committees, you should be prepared. At least with FINTRAC we got speaking notes. With the Canadian tribunal, we didn't get any speaking notes.