Mr. Chair, thank you for this opportunity to discuss Bill , pertaining to the Customs Act. Joining me at the table are Martin Dompierre and Nicholas Swales, the principals responsible for our two recent audits that touched on the subject matter of this bill.
In 2016, we issued a report on the Beyond the Border Action Plan, and in 2015, we issued a report on controlling exports at the border.
Mr. Chair, I'll summarize for the committee our relevant audit findings related to the Customs Act. However, it's important to note that our audit work on the Beyond the Border action plan was completed in September 2016 and our audit work on controlling exports was completed in August 2015. We haven't conducted further work on these topics since then.
In December 2011, Canada and the United States released the perimeter security and economic competitiveness action plan, better known as the Beyond the Border action plan. The action plan consisted of 34 initiatives aimed at establishing a long-term partnership between the two countries to enhance security and accelerate the legitimate flow of people, goods, and services across the border.
We estimated that these initiatives had a total planned spending of over $1.1 billion, of which approximately $585 million had been spent as of March 2016. The audit examined the progress made by departments and agencies in meeting the commitments set out in the action plan and in achieving results toward the intended benefits. We also looked at how Public Safety Canada reported on progress, performance, and costs in its annual reports.
The action plan had several initiatives that focused on enhancing security. Of the $700 million that departments and agencies had planned to spend on them, approximately $410 million was spent as of March 2016. However, departments and agencies faced challenges in completing a number of the initiatives and they couldn't demonstrate that they had improved security at Canada's borders. Even when departments and agencies met their commitments for certain initiatives under the action plan, they achieved limited results toward the intended benefits. They also had few performance indicators to use to assess results.
One of the security initiatives that wasn't completed was the entry-exit initiative. The initiative, which had a budget of $121 million, is intended to allow the Canada Border Services Agency to track who enters and leaves the country. It was initially planned to be completed by June 2014. As of March 2016, $53 million had been spent, but the initiative couldn't be fully implemented under current legislation that doesn't allow the exit information of Canadian citizens to be collected, used, or disclosed.
Without new legal authority, the Canada Border Services Agency cannot achieve the initiative's security benefits. For example, the ability of the agency and law enforcement to identify and prevent high risk travellers from leaving or attempting to leave Canada is currently limited.
Let me turn now to the issues of controlling exports.
Exports are vital to Canada's economy, but some are controlled to achieve a range of policy objectives, such as protecting Canadians' safety and security. Although several federal entities play a role in controlling exports, the Canada Border Services Agency is the last line of defence to prevent goods that contravene Canada's export laws from leaving the country.
Our audit focused on whether the agency had the necessary information, practices, and controls at the border to enable it to implement its enforcement priorities, prevent the export of goods that contravened Canada's export laws, and facilitate legitimate trade.
We found weaknesses in the information, practices, and authorities the agency applied to assess export risks, assign its resources, and act on its priorities. As a result, the agency missed opportunities to stop some goods that did not comply with Canada's export control laws from leaving the country.
Limitations on its authorities posed a particular challenge for the agency in examining shipments that were not reported on export declarations. The agency could not open such parcels at random as it could for imports or exports reported on declarations. Agency officials believed this reduced their effectiveness in preventing the export of illegal drugs. The inability to open shipments at random also meant the agency could not assess the level of compliance for non-reported shipments.
The bill before you today includes provisions about the two legislative limitations we raised in our reports.
Mr. Chair, this concludes my opening remarks.
I hope our audit findings will be of assistance to the committee in its current review.
We would be pleased to answer any questions the committee may have.
I just have a few short questions, and then I'm going to pass it on to Monsieur Paul-Hus, if I could, after I'm finished.
I first want to echo what my colleague said. I think I was serving in finance at the time, Mr. Ferguson, and nobody doubted your credentials, but there was some real criticism about your inability to speak French. Anybody that was born in the same decade we were born in knows how difficult it is to learn another language, and I want to commend you. I think you've accomplished something that's quite extraordinary.
There was a question raised, and I don't know if we got clarification on it, at least not in my mind. I googled “marijuana order in Canada” just now, and I had 10 sites that popped up. An example is Ganja Express, “a Canadian company based in BC that provides legal, safe access to high quality...Marijuana” for medical and recreational use across Canada. This is an advertisement at a time when we have not yet legalized marijuana.
I'm wondering with the complications we have at the border, where you see that in another.... Well if the Liberals do legalize marijuana by July 1, as they've said they're going to do, what do you foresee in the future as far as that legislation is concerned in regard to this legislation?
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 .
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 , 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 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.
Thank you, Mr. Chairman.
Thank you for inviting me to provide comments on Bill , 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 amends the Customs Act to implement the Beyond the Border initiative between Canada and the United States. It has three main parts.
Bill 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 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 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 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.