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Bill S-2 - An Act to amend the Customs Act

 

Honourable senators, border management is an essential element of Canada's national security. Well-functioning borders frame our national strengths and values, defending against threats to our safety and our freedom, while opening us to the prosperity and diversity offered through international relations, trade and immigration.

This is an enormous responsibility and a constant balancing act between security and facilitation that requires vigilance, innovation, cooperation and flexibility.

A critical element for achieving this balance rests on providing border service officers with the authorities, tools and intelligence required to anticipate and assess border risks. The border service officers interdict dangerous people and goods as early as possible in their voyage while facilitating legitimate travel and trade.

In the past five years, the Canada Border Services Agency has developed one of the world's most robust and sophisticated border management regimes with a scientific approach to risk assessment and detection. The approach has led to a smarter, more secure and trade-efficient border.

Over the past three years, the government has made significant investment to improve border cooperation and to tighten border security. We have devoted over $500 million to initiatives that will modernize border security and access. We are confident that our people and processes make Canada's border among the most secure and efficient in the world and our investments will allow us to keep pace with evolving border challenges.

Honourable senators, in November 2007, the Auditor General of Canada issued a report entitled Keeping the Border Open and Secure. In that report, the Auditor General made a number of recommendations relating to threat and risk assessments and we are addressing each of the recommendations.

The provisions of the bill we have before us will help address some of the concerns by strengthening the systems for obtaining advanced data on goods and people arriving in Canada and by better managing the risks that exist at airports and seaports. The legislation is critical to our continuous success in both optimizing border security and facilitating the cross-border flow of persons and goods.

The Canada Border Services Agency administers the Customs Act, which sets out provisions respecting the importation and exportation of goods into and out of Canada. It seeks to modify provisions of the act to support the government's strategy by strengthening border security and enhancing the balance of enforcement and facilitation provisions.

Following 9/11, the Canadian Border Services Agency strengthened border security through risk-based assessment programs. Using sophisticated risk-assessment tools, the Canadian Border Services Agency analyzes advanced cargo, crew, passenger and conveyance information to help detect and intercept threats before they reach Canada.

Operational policy has evolved to the point where two key border security programs — the Advance Commercial Information Program and customs controlled areas — require legislative changes for implementation.

The Advance Commercial Information Program is the centrepiece of the Canada Border Services Agency strategy for commercial shipments. The program provides border services officers with electronic cargo information in advance so that they are equipped with the right information at the right time to identify health, safety and security threats before goods arrive in Canada.

There are three phases to the initiative. Phase 1 was implemented in April 2004 and focused on obtaining electronic pre-arrival information from carriers for marine offshore cargo and conveyance. Phase 2 was implemented in June 2006 and focused on obtaining electronic pre-arrival information from carriers on air cargo and conveyance and marine shipments loaded in the United States. Phase 3 is called " eManifest." Its purpose is to obtain pre-arrival information on crew, cargo and conveyances in the highway and rail modes and additional commercial information from freight forwarders, importers or their brokers in all modes.

Currently, only conveyance owners and operators are required to provide advance information. This is impractical because owners or operators may not possess the detailed information the Canada Border Services Agency needs to perform its risk assessment. Freight forwarders who possess the detailed information provide this information on a voluntary basis but compliance cannot be enforced.

The amendments implement Phase 3, the eManifest component of the program, and will expand this requirement to each link in the chain, from importer to carrier to agent to freight forwarder. This will result in a more complete risk picture.

This amendment will address concerns raised in the Auditor General's report that the border risk management system needs improvement. With this data, the Canada Border Services Agency will increase its risk assessment capacity and will be better able to target high-risk shipments while streamlining the entry of low-risk shipments.

Currently, trade chain partners voluntarily use electronic data interchange reporting for 99 per cent of rail cargo coming into Canada. Therefore, there will be very little or, in some cases, no additional reporting burden for trade chain partners in the rail mode. That number is much lower for highway-mode clients, so eManifest will increase reporting requirements for those who are not already sending electronic data.

We are working closely with industry and stakeholders to develop tools and strategies to ensure a smooth, cost-efficient transition to the new reporting requirements.

Honourable senators, the eManifest initiative will improve the agency's ability to detect shipments that pose an unknown or high risk prior to their arrival in Canada. The proposed amendments will therefore help to combat crime and strengthen the security of Canadians. The result will be an improved import process that rewards compliance with predictable and expedited processing while reducing delays and congestion at the border. Resources will be focused on those people, goods and conveyances posing the greatest risk to the security and prosperity of our nation.

The second key program element of this amendment is the customs controlled area. The concept was developed primarily to combat internal conspiracies and organized crime at ports of entry. However, their implementation has been impractical due to legislative constraints.

These areas are zones in which uncleared goods and travelers encounter domestic workers. These zones include areas such as the airport tarmac, a dock in the marine mode, warehouses, cruise ship terminals, rail yards, et cetera.

The risk occurs when organized criminal elements pay or pressure persons working at air, land or marine ports to remove concealed drugs or other contraband before officers examine the shipment, container or vessel. Under the current law, officers can examine goods and search persons only at customs controlled area exit points. The amendments will allow them to do so within the designated areas, where most conspiracy crimes occur.

As well, while people exiting a customs controlled areas must currently present themselves and report goods to an officer, this is both operationally and economically impractical since domestic workers may enter and exit continually during their shift. While intended primarily for airports and marine terminals, customs controlled areas may also be used at rail terminals and warehouses where containers and cargo that have not been released by the agency are unloaded.

Honourable senators, the proposed changes to the Customs Act will allow officers to question people on their right to be present in the area and to conduct non-intrusive examination of goods in the possession of persons within or leaving the area — for example, using X-ray technology. Further examination of goods or search of persons will only be conducted upon reasonable grounds and in accordance with the regulations.

Canadians' rights and freedoms will be protected under these amendments. Although travellers are obligated to present themselves and truthfully answer questions posed by an officer, the requirement for officers to reach reasonable grounds prior to questioning further, examining goods or searching people will help safeguard a person's rights and freedoms.

(1510)

Honourable senators, organized crime's growing influence is a recurring theme in the Standing Senate Committee on National Security and Defence's annual report on security at Canada's airports and marine terminals. Strengthening the customs controlled areas will address some of these concerns.

Additional amendments to the Customs Act are proposed which will further strengthen border security. The Advance Passenger Information/Passenger Name Record Program collects and analyzes information in advance of air travellers coming into Canada in order to identify persons who may pose a safety and security risk.

Advance passenger information includes the traveller's name, date of birth, citizenship or nationality, and passport or other travel-related data. The personal name record data includes travel itinerary, address and check-in information. This information is gathered by the airlines in their reservation, check-in and departure control systems.

Currently, the Advance Passenger Information Program requires carriers to provide passenger data prior to arrival in Canada "or within a reasonable time after that arrival." An amendment will remove this "after arrival" term, clarifying program requirements to all carriers by requiring that passenger and crew data be provided to the agency before a conveyance arrives in Canada. While compliance is generally strong in this area, the provision will ensure timely risk assessment and close a legal gap identified in the November 2007 Auditor General's report to Parliament.

Honourable senators, as carriers are already required to submit advance passenger information and personal name record data to the Canada Border Services Agency, the legislative changes will not have an operational impact on them. In fact, the information they provide to the agency is the same information they already collect for their own business purposes. This data is protected under the Privacy Act and the Canadian Charter of Rights and Freedoms. The CBSA has consulted the Privacy Commissioner and has implemented strict administrative policies and guidelines to protect the privacy of personal information. including the number, collection, access, retention and use of the data.

Honourable senators, Bill S-2 also proposes housekeeping amendments that will align the Customs Act with Canada's obligations as a signatory to the 1994 Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade. These amendments will improve the alignment of the Customs Act with the World Trade Organization Valuation Agreement by which the value of imported goods is determined.

Honourable senators, inconsistencies will be fixed between the French and English versions of the act, which is also a problem.

These amendments support programs previously approved by Parliament. Funding for eManifest was provided in the federal budget of May 2006. Funding for customs controlled areas was provided through the government's Public Safety and Anti-terrorism Initiative in 2001. Previous amendments providing for customs controlled areas were included as part of Bill S-23, which received Royal Assent in October 2001.

Honourable senators, the Canada Border Services Agency has consulted trade and transportation associations such as the Canadian Association of Importers and Exporters, the Canadian Society of Customs Brokers, the Association of International Customs and Border Agencies, and the Canadian/American Border Trade Alliance. These organizations support the proposed amendments to implement the eManifest because of the overall efficiency of electronic reporting compared to paper-based reporting. The agency has also consulted with its Border Commercial Consultative Committee, a forum of truckers, importers, exporters, freight forwarders, brokers and warehouse operators, to discuss eManifest.

Federal partners including the RCMP, CSIS and Transport Canada welcome the customs controlled area amendments as a key upgrade in the fight against organized crime at Canada's ports of entry. Airport authorities view customs controlled areas as sensible security measures. Marine port authorities recognize and support the need for customs controlled areas around commercial vessels and arriving cruise ships to counter rising border-related criminal activities and internal conspiracies.

Honourable senators, there is no role more fundamental for government than the protection of its citizens, and that protection includes but extends beyond their physical safety. It encompasses the security of our economy and society at large and the preservation of citizens' rights and liberties. New and emerging security threats, as well as the current economic environment, make protecting our borders and facilitating movement across them both a challenge and a national priority.

With these amendments, the Government of Canada is obtaining more and better information to enhance risk assessment, gaining more authority to detect and combat illegal activities and organized crime, and enhancing the security and efficiency of international trade.

Honourable senators, this legislation is critical to our ability to meet the challenges of securing Canada's safety and prosperity in the rapidly changing world in which we live. I urge you to speedily pass this legislation.

Honourable senators, border management is an essential element of Canada's national security. Well-functioning borders frame our national strengths and values, defending against threats to our safety and our freedom, while opening us to the prosperity and diversity offered through international relations, trade and immigration.

This is an enormous responsibility and a constant balancing act between security and facilitation that requires vigilance, innovation, cooperation and flexibility.

A critical element for achieving this balance rests on providing border service officers with the authorities, tools and intelligence required to anticipate and assess border risks. The border service officers interdict dangerous people and goods as early as possible in their voyage while facilitating legitimate travel and trade.

In the past five years, the Canada Border Services Agency has developed one of the world's most robust and sophisticated border management regimes with a scientific approach to risk assessment and detection. The approach has led to a smarter, more secure and trade-efficient border.

Over the past three years, the government has made significant investment to improve border cooperation and to tighten border security. We have devoted over $500 million to initiatives that will modernize border security and access. We are confident that our people and processes make Canada's border among the most secure and efficient in the world and our investments will allow us to keep pace with evolving border challenges.

Honourable senators, in November 2007, the Auditor General of Canada issued a report entitled Keeping the Border Open and Secure. In that report, the Auditor General made a number of recommendations relating to threat and risk assessments and we are addressing each of the recommendations.

The provisions of the bill we have before us will help address some of the concerns by strengthening the systems for obtaining advanced data on goods and people arriving in Canada and by better managing the risks that exist at airports and seaports. The legislation is critical to our continuous success in both optimizing border security and facilitating the cross-border flow of persons and goods.

The Canada Border Services Agency administers the Customs Act, which sets out provisions respecting the importation and exportation of goods into and out of Canada. It seeks to modify provisions of the act to support the government's strategy by strengthening border security and enhancing the balance of enforcement and facilitation provisions.

Following 9/11, the Canadian Border Services Agency strengthened border security through risk-based assessment programs. Using sophisticated risk-assessment tools, the Canadian Border Services Agency analyzes advanced cargo, crew, passenger and conveyance information to help detect and intercept threats before they reach Canada.

Operational policy has evolved to the point where two key border security programs — the Advance Commercial Information Program and customs controlled areas — require legislative changes for implementation.

The Advance Commercial Information Program is the centrepiece of the Canada Border Services Agency strategy for commercial shipments. The program provides border services officers with electronic cargo information in advance so that they are equipped with the right information at the right time to identify health, safety and security threats before goods arrive in Canada.

There are three phases to the initiative. Phase 1 was implemented in April 2004 and focused on obtaining electronic pre-arrival information from carriers for marine offshore cargo and conveyance. Phase 2 was implemented in June 2006 and focused on obtaining electronic pre-arrival information from carriers on air cargo and conveyance and marine shipments loaded in the United States. Phase 3 is called " eManifest." Its purpose is to obtain pre-arrival information on crew, cargo and conveyances in the highway and rail modes and additional commercial information from freight forwarders, importers or their brokers in all modes.

Currently, only conveyance owners and operators are required to provide advance information. This is impractical because owners or operators may not possess the detailed information the Canada Border Services Agency needs to perform its risk assessment. Freight forwarders who possess the detailed information provide this information on a voluntary basis but compliance cannot be enforced.

The amendments implement Phase 3, the eManifest component of the program, and will expand this requirement to each link in the chain, from importer to carrier to agent to freight forwarder. This will result in a more complete risk picture.

This amendment will address concerns raised in the Auditor General's report that the border risk management system needs improvement. With this data, the Canada Border Services Agency will increase its risk assessment capacity and will be better able to target high-risk shipments while streamlining the entry of low-risk shipments.

Currently, trade chain partners voluntarily use electronic data interchange reporting for 99 per cent of rail cargo coming into Canada. Therefore, there will be very little or, in some cases, no additional reporting burden for trade chain partners in the rail mode. That number is much lower for highway-mode clients, so eManifest will increase reporting requirements for those who are not already sending electronic data.

We are working closely with industry and stakeholders to develop tools and strategies to ensure a smooth, cost-efficient transition to the new reporting requirements.

Honourable senators, the eManifest initiative will improve the agency's ability to detect shipments that pose an unknown or high risk prior to their arrival in Canada. The proposed amendments will therefore help to combat crime and strengthen the security of Canadians. The result will be an improved import process that rewards compliance with predictable and expedited processing while reducing delays and congestion at the border. Resources will be focused on those people, goods and conveyances posing the greatest risk to the security and prosperity of our nation.

The second key program element of this amendment is the customs controlled area. The concept was developed primarily to combat internal conspiracies and organized crime at ports of entry. However, their implementation has been impractical due to legislative constraints.

These areas are zones in which uncleared goods and travelers encounter domestic workers. These zones include areas such as the airport tarmac, a dock in the marine mode, warehouses, cruise ship terminals, rail yards, et cetera.

The risk occurs when organized criminal elements pay or pressure persons working at air, land or marine ports to remove concealed drugs or other contraband before officers examine the shipment, container or vessel. Under the current law, officers can examine goods and search persons only at customs controlled area exit points. The amendments will allow them to do so within the designated areas, where most conspiracy crimes occur.

As well, while people exiting a customs controlled areas must currently present themselves and report goods to an officer, this is both operationally and economically impractical since domestic workers may enter and exit continually during their shift. While intended primarily for airports and marine terminals, customs controlled areas may also be used at rail terminals and warehouses where containers and cargo that have not been released by the agency are unloaded.

Honourable senators, the proposed changes to the Customs Act will allow officers to question people on their right to be present in the area and to conduct non-intrusive examination of goods in the possession of persons within or leaving the area — for example, using X-ray technology. Further examination of goods or search of persons will only be conducted upon reasonable grounds and in accordance with the regulations.

Canadians' rights and freedoms will be protected under these amendments. Although travellers are obligated to present themselves and truthfully answer questions posed by an officer, the requirement for officers to reach reasonable grounds prior to questioning further, examining goods or searching people will help safeguard a person's rights and freedoms.

(1510)

Honourable senators, organized crime's growing influence is a recurring theme in the Standing Senate Committee on National Security and Defence's annual report on security at Canada's airports and marine terminals. Strengthening the customs controlled areas will address some of these concerns.

Additional amendments to the Customs Act are proposed which will further strengthen border security. The Advance Passenger Information/Passenger Name Record Program collects and analyzes information in advance of air travellers coming into Canada in order to identify persons who may pose a safety and security risk.

Advance passenger information includes the traveller's name, date of birth, citizenship or nationality, and passport or other travel-related data. The personal name record data includes travel itinerary, address and check-in information. This information is gathered by the airlines in their reservation, check-in and departure control systems.

Currently, the Advance Passenger Information Program requires carriers to provide passenger data prior to arrival in Canada "or within a reasonable time after that arrival." An amendment will remove this "after arrival" term, clarifying program requirements to all carriers by requiring that passenger and crew data be provided to the agency before a conveyance arrives in Canada. While compliance is generally strong in this area, the provision will ensure timely risk assessment and close a legal gap identified in the November 2007 Auditor General's report to Parliament.

Honourable senators, as carriers are already required to submit advance passenger information and personal name record data to the Canada Border Services Agency, the legislative changes will not have an operational impact on them. In fact, the information they provide to the agency is the same information they already collect for their own business purposes. This data is protected under the Privacy Act and the Canadian Charter of Rights and Freedoms. The CBSA has consulted the Privacy Commissioner and has implemented strict administrative policies and guidelines to protect the privacy of personal information. including the number, collection, access, retention and use of the data.

Honourable senators, Bill S-2 also proposes housekeeping amendments that will align the Customs Act with Canada's obligations as a signatory to the 1994 Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade. These amendments will improve the alignment of the Customs Act with the World Trade Organization Valuation Agreement by which the value of imported goods is determined.

Honourable senators, inconsistencies will be fixed between the French and English versions of the act, which is also a problem.

These amendments support programs previously approved by Parliament. Funding for eManifest was provided in the federal budget of May 2006. Funding for customs controlled areas was provided through the government's Public Safety and Anti-terrorism Initiative in 2001. Previous amendments providing for customs controlled areas were included as part of Bill S-23, which received Royal Assent in October 2001.

Honourable senators, the Canada Border Services Agency has consulted trade and transportation associations such as the Canadian Association of Importers and Exporters, the Canadian Society of Customs Brokers, the Association of International Customs and Border Agencies, and the Canadian/American Border Trade Alliance. These organizations support the proposed amendments to implement the eManifest because of the overall efficiency of electronic reporting compared to paper-based reporting. The agency has also consulted with its Border Commercial Consultative Committee, a forum of truckers, importers, exporters, freight forwarders, brokers and warehouse operators, to discuss eManifest.

Federal partners including the RCMP, CSIS and Transport Canada welcome the customs controlled area amendments as a key upgrade in the fight against organized crime at Canada's ports of entry. Airport authorities view customs controlled areas as sensible security measures. Marine port authorities recognize and support the need for customs controlled areas around commercial vessels and arriving cruise ships to counter rising border-related criminal activities and internal conspiracies.

Honourable senators, there is no role more fundamental for government than the protection of its citizens, and that protection includes but extends beyond their physical safety. It encompasses the security of our economy and society at large and the preservation of citizens' rights and liberties. New and emerging security threats, as well as the current economic environment, make protecting our borders and facilitating movement across them both a challenge and a national priority.

With these amendments, the Government of Canada is obtaining more and better information to enhance risk assessment, gaining more authority to detect and combat illegal activities and organized crime, and enhancing the security and efficiency of international trade.

Honourable senators, this legislation is critical to our ability to meet the challenges of securing Canada's safety and prosperity in the rapidly changing world in which we live. I urge you to speedily pass this legislation.