SINT Committee Meeting

SUB-COMMITTEE ON INTERNATIONAL TRADE, TRADE DISPUTES AND INVESTMENT OF THE STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

SOUS-COMITÉ DU COMMERCE, DES DIFFÉRENDS COMMERCIAUX ET DES INVESTISSEMENTS INTERNATIONAUX DU COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, October 25, 2001

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[English]

The Chair (Mr. Mac Harb (Ottawa Centre, Lib.)): Good afternoon everyone, and welcome to our committee hearings on the Canada-U.S border and border delays when it comes to trucks and the movement of goods. We have a quorum for the purposes of hearing witnesses.

With us today is Mr. John Bescec, from the Canadian Association of Importers and Exporters. Also with us are Mr. Alexander Lofthouse and Mr. Serge Charette.

My suggestion on the way to proceed is that we will give the opportunity to our presenters to introduce their views and make their presentations. Once they're all done, we will open the floor to questions and comments.

Is that agreeable to everyone?

An hon. member: That sounds good, Mr. Chairman.

The Chair: Great.

We will start with your opening remarks, Mr. Bescec. If you have any written documents, I would suggest you submit them to the secretary, and it will be considered as if you have read them. You don't need to worry about reading them. Just go ahead and give us something straight from the heart. That will also do the trick.

Thank you.

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Mr. John Bescec (Vice-President, Canadian Association of Exporters and Importers): Mr. Chairman, I unfortunately do not have any written submission. I was a last-minute replacement for the president of the association, so I will have to give a verbal presentation.

The Chair: That's even better.

Mr. John Bescec: We all know the importance of trade to Canada, with the United States and with other countries, so there is—

Mr. Gary Lunn (Saanich—Gulf Islands, PC/DR): Excuse me, John, but you're from...?

Mr. John Bescec: I'm with the Canadian Association of Importers and Exporters.

There is no need to explain or go into detail on the importance of trade. Trade at the land border between Canada and the United States has improved significantly since the events of last month. Things are back to somewhere in between 90% and 95% of normal, but those figures can be a little misleading because the volume isn't where it used to be prior to the events of September 11. That's due to a combination of both the economy and the fact that companies are just not exchanging much goods and services right now between Canada and the United States.

Some serious issues need to be looked at or consideration needs to given on a going-forward basis. A lot of potentially serious bills are being introduced in the U.S. They're looking at 100% customs inspections, and they're looking at additional customs charges being applied. Things like these will have an impact on Canadian trade. You could almost look at them as the lull before the storm.

Since there is still so much uncertainty, Canadian industry is concerned about what the possible impacts could be. If the border does get closed again, what plans are in place to ready the Canadian government and Canada Customs for that?

The concern is over the level of cooperation. There has been tremendous cooperation before between the customs authorities on both sides of the border, but their programs are being developed separately. You're looking at the U.S. Customs Service and their new, automated systems, and at Canadian systems. How much collaboration is being done? Are these systems being developed in isolation? We're moving toward an electronic format. Companies are supportive of that, yet it's a tremendous struggle for small and medium-sized businesses. Some sort of program needs to be introduced so that these companies can receive assistance to move to this next stage. Otherwise, small companies will be hurt in the long run.

Looking at importing into Canada, everyone agrees that additional security is needed, as well as additional scrutiny of the goods coming in. For some of these inspection programs that take place, particularly with containers, inspection costs can range between $600 to $900 per container. Many times, this is the profit margin that the companies have on those containers. Something needs to be developed in terms of helping these companies cover these costs. There is currently no solution.

We're looking at possible insurance policies as a potential means to address this issue, but more cooperation needs to be occurring between the CCRA and business so that Customs has a more realistic view of what's happening to the small companies. They're being affected by these additional inspections that are occurring. For larger companies, they do affect their bottom line, but not as drastically.

We're talking about a possible expansion of the CANPASS and NEXUS, addressing the movement of people across borders. Registration for drivers will help to expedite commercial shipments across the border, help them get across more quickly, yet much resistance is being encountered on getting drivers certified.

New immigration cards—the maple leaf ID cards—are being introduced for new immigrants. Perhaps it would be possible to look at something similar for people in general, for Canadian citizens to have some sort of identification. I flew in from Toronto today and tried to pull out my driver's licence. A driver's licence is nice, but is it possible to entertain a standard identification that the Americans can look at and say they know we've done our homework, thus allowing cross-border transit to be effected much more quickly?

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One other thing I want to stress is the communication that takes place. Tremendous communication has occurred with various government bodies in Canada and on the trade side, but more of a partnership is needed. The talk is there, but we need to move to the next step, where work is actually being done toward getting us to where we want to be. Everybody is in agreement on where we have to go, but how do we get to that point? That's what everybody is struggling with. We all have a vested interest in this, and if we can send a unified message to our American counterparts, both on the government side and on the trade side, we will get to our destination much more quickly.

Earlier this week, we had a three-day conference. Former U.S. customs commissioners spoke at this meeting, and they painted a very dark picture. That is of serious concern. They're looking at one-off incidents. They're looking at an individual crossing the border into Washington. The statement was that if one more event like that occurs, the U.S. will shut its border to Canada. Things are being taken out of perspective, so if Canada were to send a unified message from all levels of government, the struggle wouldn't be as significant as it is now.

We need to work on the solutions that we're proposing. The CCRA is proposing very good solutions, such as moving into an electronic environment and getting this information up-front, as soon as possible in the process. However, companies are having extreme difficulty getting information electronically. They support it, yet more work needs to be done on it.

Thank you.

The Chair: Thank you very much.

Next, we will hear from Mr. Charette, the national president for the Customs Excise Union.

Mr. Serge Charette (National President, Customs Excise Union): Yes, I am.

Thank you, Mr. Chairman.

Members of the committee, thank you for accepting to hear our testimony during what we understand is a very busy time for you. We greatly appreciate the opportunity, and we hope you'll find our contribution of benefit as you deliberate on the Canada-U.S. border delays and the commercial implications for trade. We have what I think is a recommendation that you will find particularly useful in tying together nearly all the concerns raised with you to date.

Let me get right to the point. Canada exports nearly $600 billion in trade to the United States, and the Americans in turn send us $500 billion. We are talking about $1 trillion in trade annually, a figure expected to increase by 10% annually, at least until the September 11 events. Unfortunately, we are now seeing that this is not likely, as our concerned American neighbours prepare to make our border much less open in order to increase their border security.

In fact, America is moving to put up barricades at the border—and not any barricade. Announced figures make it sound as though a brick wall is what they intend to erect. The American administration is responding to the September 11 events by investing $609 million U.S.—almost $1 billion Canadian—along our border. Half of that will go toward tripling their border law enforcement personnel by adding 3,546 new officers, while the rest is for new equipment like night-vision goggles and motion detection sensors. Moreover, they are going to implement the entry/exit system that calls for the registration of the names of any and all who enter and leave the United States.

It gives me no pleasure to report this, because I know it will hurt trade and tourism, and also because I know some of you lobbied very hard against the section 110 amendments in the Americans' Border Improvement and Immigration Act in the past.

Mr. Chairman, the Americans are moving to make their borders secure. The initial steps have been implemented, and this is essentially a done deal. As David Bradley said to you on October 18, the optics at the border are being looked at through the glasses of security.

I would say our relationship with the Americans is like a marriage in which one partner is not happy, in which there is distrust. Rightly or wrongly, Americans do not trust our ability to securely enforce our borders. We need to rebuild that trust. In the meantime, they intend to do that job for us, so to speak. To this end, they have taken to inspecting vehicles and questioning travellers leaving the United States.

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How did we respond at the same border and under the same conditions? Aside from more questions, more ID checks, and setting up a command centre in headquarters, we didn't do much. This has required more staff, but none were added. We simply called on the current staff to work long hours of overtime. Actually, little was done to correct our American neighbours' concerns, and now we hope lobbying them will suffice to convince them not to put up their barricades, in order that goods can continue to flow across the border. Why should they? What have we done to demonstrate our commitment to satisfy their need for security?

Let me give you a brief overview of the Canada Customs set-up and how it operates. It will help to situate the suggestion that I wish to bring to your attention. I'm sure you'll appreciate and welcome this.

Canada has 147 land border crossings, 13 international airports, and 15 seaports. Processing at these points is done via a two-tier system. The first tier is the primary inspection line, which we call the PIL. People and goods coming into Canada must go through the PIL. We maintain that it must only be staffed using trained customs inspectors or customs officers. They, and only they, should release commercial goods to secondary inspection—which is the second tier—or refer to secondary those goods found to be questionable or lacking the proper documentation.

Assessment of risk is what a customs officer does at the PIL. Low-risk goods are allowed to proceed. Suspected infractions or known high-risk goods get referred to secondary. The goal is to separate low-risk and high-risk goods and to determine how we deal with each. In a nutshell, that is what the PIL and secondary are all about.

The smart border touted by Customs basically means maximizing the amount of data we can receive and assess before the goods get to the PIL, so that the assessment of risk can be done in advance. The more this happens, the better, since that means fewer delays when the goods hit the border. This should, in theory, free up some time for officers at the PIL, allowing them to focus on assessing the risks relative to shipments that show up unannounced. Also, some of this time should allow for more and better enforcement initiatives at secondary.

Unfortunately, because of staffing shortages and increases in the workload, the freed resources have not been reinvested in high-risk areas. In fact, freed resources were used to cope with increased volumes. As a result, enforcement activities at the border are at an all-time low. This is what concerns the Auditor General, CSIS, and our union members, and this is what has ultimately convinced our American neighbours that their security is at risk. Canada needs to address this legitimate concern. Had we lost thousands of Canadians to a terrorist attack, I have no doubt we would also be reacting in a very similar fashion.

How do we do this? Well, here is what we see as an innovative idea. We believe it would be in both Canadian and American interests to invest in the construction and operation of international customs commercial clearing centres. Obviously, this could not be done at the border, but within a few kilometres of the border. Legislation already provides for U.S. pre-arrival clearance of travellers at Canadian airports.

The centres would be constructed on the Canadian side, and both countries could effect their verification using state of the art facilities and equipment. We're talking here about large facilities that could examine several loads at a time. Currently, a container can be so precisely packaged that opening it becomes a big problem. How do you look inside? If you unpack it, how do you repack it?

Built not too far from the border, these facilities could bring together a number of different experts who could deal with agricultural products, dangerous goods, and many other goods requiring specialized knowledge and training. Obviously, these facilities would not be built at all entry points; however, with about a half a dozen or so, the bulk of commercial shipments could be diverted to these centres with minimal inconvenience and improved processing times. For example, they could be built at Lacolle, Quebec; at Fort Erie and Windsor, Ontario; on the Pacific Highway in B.C.; at Coutts, Alberta; and at St. Stephen, New Brunswick.

This proposal also has other advantages. Border facilities could be expanded to deal with more travellers who must be processed at the border, since they cannot be sent inland under seal. Another benefit is that the flow of commercial traffic would not be impeded while trucks are being searched or while truckers wait for their electronic packages to be submitted via the ACROSS system.

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Mr. Chair, U.S. pre-clearance of travellers already takes place at Pearson International and Vancouver International, to name only two examples. Americans need only expand the concept to commercial traffic and allow commercial clearances, or Canada can consider similar legislation and our officers can do the same job on the American side.

Customs officers at Canadian border points have expressed frustration with their current lack of proper equipment, the antiquated state of some of it, their lack of training, chronic understaffing, and other problems identified in the Auditor General's April 2000 report assessing risk management in the travellers' stream.

By the way, I must tell you that the Auditor General has just completed an audit that is ready for submission to Parliament this December, and we understand it does raise some red flags about how Customs is managing risk in the commercial stream. I strongly urge the committee to get a hold of the audit or to invite the Auditor General or the CCRA to brief you on these findings before you take any final decision and/or actions.

The role of Customs has changed. It is now to protect Canadians against illegal activities such as smuggling of contraband or the unlawful entry of inadmissible people. Mr. Chairman, it is a sad reality that Canada does not have enough Customs inspectors to do the job our members are called upon to perform. As a minimum, Canada needs at least 1,200 more customs officers in the travellers' stream and, in our estimation, at least 400 in the commercial stream. We know this would require a multimillion dollar investment, but it is the price to pay to restore American confidence in the security of our border and a return to the kind of open border we had for commercial goods.

When an American senator holds up an orange, rubber traffic cone at a U.S. congressional committee hearing and says it is the U.S. answer to border security with Canada in some locations, and when we know we do the same on our side, we know things have to change. The time has never been more right. An orange cone is not security. You can't have a secure border unless your entire border is secure.

To conclude, we support going back to a proposal made years ago that would have seen Customs and other enforcement groups regrouped in a single agency or department. Customs has a dual and opposing mandate—security versus facilitation. As I've explained, the current imbalance in favour of facilitation needs to be reviewed in an environment that is more enforcement-oriented, or the Americans will do it for us.

That does not mean facilitation must be ignored. It simply means it needs to be done without compromising security. Of course, proper interdiction requires a greater number of customs officers, or things will slow down and impact our economy. That said, the choice seems clear. Americans—and Canadians, for that matter—want greater security. Business wants and needs more facilitation. Joint, modern facilities and more officers offer at least what we consider to be a great solution that will satisfy both groups.

Thank you.

The Chair: Thank you very much, Mr. Charette.

We will now hear from Mr. Lofthouse, a policy analyst with the Canadian Chamber of Commerce.

Mr. Alexander Lofthouse (Policy Analyst, Canadian Chamber of Commerce): Thank you, Mr. Chair.

Unfortunately, I left my orange cone at home, but I hope I'll still be able to make some worthwhile remarks.

Mr. Chair, ladies and gentlemen, thank you very much for the chance to appear before you this afternoon. It's certainly timely for the subcommittee to examine this critical issue. I'll try not to repeat too much of what either Mr. Charette or Mr. Bescec has said, nor too much of what you heard last week.

First off, it's important to note, as has been suggested, that the problems of Canada-U.S. border management predate September 11 by a long way. There were already major staffing and infrastructure problems on both sides of the Canada-U.S. border well before September 11, back when September 11 was just another date on the calendar. We at the chamber identified many of those problems several years ago, as did the Auditor General, as did Mr. Charette's organization. But even though the problems themselves are not new, September 11 obviously rewrote the rules, which is why we're here today.

The short-term challenges of Canada-U.S. border management basically focus on reaction. Immediately after September 11, border crossings were closed, traffic backed up, and just-in-time deliveries were held up. We know all this.

There is a great concern now that the extra resources that were thrown at the Canada-U.S. border, especially from the U.S. side, are going to disappear soon, especially on the human resources side. On top of that, in a sense, the level of “normality” that we have now is a bit of an illusion, because passenger traffic volumes are down anywhere from 30% to 50%, depending on the border crossing. The concern is that once traffic volumes pick up, then, boom, you're back to square one.

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On top of all of this, the situation is variable and unpredictable. You can look at the DFAIT or CCRA websites and see the Detroit-Windsor tunnel has a 15-minute delay today, but it could be two hours by the time you get there. You don't know until you actually arrive. That sort of uncertainty really hurts business. It means you can't move people or goods with confidence.

The Canadian Chamber of Commerce will be meeting tomorrow afternoon with its border working group, which brings together chambers and boards of trade from across Canada that are dealing with border difficulties. I expect to be updated then on their perceptions of the situation. But the fact is that all of our members, both corporate and chamber—not just in border communities, but across Canada—are all telling us that if the border bottlenecks are not addressed and if the border is not opened up more than it was prior to September 11—September 11 is not really what we want to get back to; we want to improve on September 11—significant future investments could very well bypass Canada and locate in the United States. We are hearing rumblings of this. In this respect, the border is a very strategic issue for Canada. To attract overseas investment and to use Canada as a platform for NAFTA activity, we need a border that works, full stop.

You have undoubtedly heard talk about a perimeter system around North America. This is a term that's widely discussed these days, but there's no common definition or understanding of what it means. I acknowledge that. I don't pretend to have the definition, but let me give you a few thoughts about what we think it means from a business perspective and in terms of how we've been discussing it thus far.

As Canadians, we share a continent with the United States. Our economies are inextricably linked. That's a given. We can't turn back the clock, nor should we. But this means their problems are our problems, as Mr. Charette has suggested. But let me also suggest that it's vice versa. It also means solutions to problems must be worked out together, cooperatively.

Making this North American perimeter concept work will require a number of elements. We think one is to enhance the existing level of cooperation between CCRA and the U.S. Customs Service, and between CIC and the U.S. Immigration and Naturalization Service. A lot of that already happens at the working level and behind the scenes. Perhaps what we need is just a better management framework to better enhance what's already being done.

A second aspect, as you may have heard already, is a better system to deal with people and cargo approaching the shores of North America. By better coordinating advance information gathered from overseas, Canada and the U.S. could be in a better position to be alert to potential trouble areas before they arrive.

The third aspect of a perimeter concept, and one that we think is important, involves giving mutual recognition to each other's standards and actions. We already have mutual recognition agreements in various areas, like food safety, industrial standards, and so on. Admittedly, these things are not easy to work out, but they can be done. Why not explore, for example, how Canadian customs inspections could meet U.S. needs and criteria, and vice versa? That's a road we could go down that could address a number of the problems we're facing.

I'm only talking about one model of what the perimeter concept or zone of confidence might be, and I'm aware the term “perimeter” has been a bit contentious. I don't want to let the debate over terminology or labels obstruct the measures that we think are needed, though. The key point is that many of the components that would underpin a broader collaborative framework are already in place. We think putting them within a new management system or format will enhance cross-border cooperation and help the situation significantly. This is not a cure-all, but we think it will help.

These ideas and others are what the Canadian Chamber of Commerce and a coalition of some forty business associations are looking at. Some of you may have heard about the National Coalition for a Secure and Trade Efficient Border. Members of this coalition are collaborating on border issues, and they will be working with the federal government on new ideas and approaches. The organization that I'm with, the Canadian Chamber of Commerce, is heavily involved. As you may be aware, we have three working groups—customs, security and immigration, and transportation—that will be developing specific recommendations on border issues in the weeks to come.

The coalition steering committee met with Ambassador Paul Cellucci of the United States this week. I wasn't there personally because I was in Michigan, but I gather a good exchange of views on the current border situation took place. The ambassador also reiterated his government's concerns about future border arrangements dealing with security, which is the first order of business for the Americans, as Mr. Charette said. It's very important that we understand that.

Our next goal will be a meeting with MPs from border ridings next Tuesday. I understand your colleague Susan Whelan is helping us to put that together, and we're looking forward to it.

Just in short, I'll sum up and then we can get to some questions.

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The Canadian Chamber of Commerce believes our goal should be a smarter and more efficient border, and this works on a number of levels. We think it can work with the perimeter. It can work with better technology. A number of initiatives have to be pursued concurrently. We have to manage and mitigate risk. We have to facilitate trade. We have to allow people to easily cross the border for normal, legitimate purposes. If we can do this, then we enhance the safety and security of every Canadian. We can provide more security for business, and we can continue to ensure that the Canadian-American border remains the longest undefended border in the world.

We don't want a fence between us. In spite of the reactive mode that the United States is in, I truly don't believe the U.S., at heart, really wants a fence all that badly either. But we have to work to ensure that there's never any excuse for that fence to be built.

Thank you, Mr. Chair.

The Chair: Thank you very much.

We'll start the questions. I have Mr. Casson, Mr. Duncan, Monsieur Paquette, Mr. Lunn, and Mrs. Longfield.

Mr. Rick Casson (Lethbridge, Canadian Alliance): Thank you, Mr. Chairman.

Gentlemen, thank you for your presentations. You mentioned Coutts, which is in my riding. I think I have five border crossings. Coutts is the biggest, of course, and it's the most commercial, so I want to get into this commercial pre-screening a little bit, and get some comments from all of you on that.

First, you mentioned that you think you need 1,200 more officers for public traffic and 400 more for commercial. How many do you have now?

Mr. Serge Charette: At this point in time, we have about 2,400 customs inspectors who work the travellers' stream and approximately 1,000 who work the commercial stream.

Mr. Rick Casson: So you're looking for a 50% increase.

Mr. Serge Charette: We're looking for an increase that is far less than what the Americans are suggesting on their side. They're looking at tripling their numbers.

Mr. Rick Casson: Do you have any idea what the annual cost of that would be?

Mr. Serge Charette: We assumed an amount of approximately $50,000 per officer, so if you look at l,600, it's roughly $80 million.

The Chair: It's about $100 million.

Mr. Serge Charette: Yes, about $100 million.

Mr. Rick Casson: On the pre-screening of commercial, in your comments you suggested a separate location or a separate site where these outfits could come in and be sealed or inspected. What about moving this back further, to where they're loaded, to the businesses that do this daily traffic and depend on it? Why not have it done there? I don't know if this has been considered by any of you.

At this particular crossing, at Coutts, hundreds of loads of agricultural products go through every day. Probably eighty loads of live cattle go south for slaughter, bulk grain transportation takes place, bulk corn goes through, there's hay.... There's actually no need for it to even slow down to go across the border. Maybe you'd have to bond these people or something like that, but you could seal the trailers at site and let them go. Has that been considered?

Mr. Serge Charette: I'm not sure the agency has considered that. I would suggest that—

Mr. Rick Casson: It probably wouldn't be in your best interests to do it that way.

Mr. Serge Charette: The way we look at it, every Canadian is at risk of losing significantly here. That's why we're here making our presentation today. We believe protecting the economic interests of Canada is paramount, and it overtakes even our concerns.

However, I don't see that as being a major issue for our members, because a great deal of enforcement work can and needs to be done at the border. We don't believe it is being done at this point in time, because we are dealing with several of these loads that need not be scrutinized as closely.

Also, on the commercial side, a great deal of information can be provided to us before the goods come into Canada, and we can do our work prior to the goods coming into Canada. That wouldn't affect the number of customs inspectors. In fact, we'd probably need more. As all of this information is provided to us, we need people to go through the documentation to identify whether or not these are high-risk goods, low-risk goods, or unknown risks.

So I don't see it as a negative for us. It's definitely something the agency could look at and should look at. I don't think you'd see a major negative response on our part, because obviously we feel other areas require our attention as well.

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Mr. Rick Casson: I just have one more, Mr. Chairman, if I may.

The facility at the border crossing at Coutts has been under study for some time, and they've been talking about building a new facility, a shared facility, for years. They can't even agree on where the American customs officers can go, because those officers pack guns. Because there are so many of these irritants and small details, it has taken years to try to work this out—and they're getting to the point at which they're going to start building it.

You commented that the Americans are doing our job by checking people coming out of the States. If they're going to commit to doing that and to tripling the number of people they have, do we still have to do what we're doing? Do we have to do what you're suggesting if they are indeed going to check to that extent? Will we still have to redo that checking when they come across?

Mr. Serge Charette: I think we still do, because the rules they apply on their side and the rules we apply on our side are often very different. I can give you a number of examples, including weapons or firearms. In the American context, firearms are something quite commonplace, and they are quite easily accepted by them. We have a lot of restrictions on our side. In fact, I'd even start calling them prohibitions now.

Also, they wouldn't be looking for cheap liquor, cheap wine, cigarettes, or anything like that, because those would have been purchased in the United States and it's obviously not improper for anybody to have them when they're crossing the Canada-U.S. border. However, on our side, we have to ensure that there's nothing inappropriate in the way these people are conducting themselves, and that they're not bringing back significant amounts of liquor and cigarettes, etc., in a way that would be illegal.

For example, right now we're just starting to impose additional taxes on tobacco products, including a carton of cigarettes. Even if you've been away for 48 hours and you're entitled to bring back your cigarettes duty- and tax-free, we now have to refer you to secondary because we have to collect ten dollars on what used to be a tax-free carton of cigarettes. Everybody who is coming back from vacation and who brings back cigarettes now has to be referred to secondary. We haven't been staffed to do that, so that's a major concern. In fact, in terms of what customs inspectors are doing now, if you only have one carton, they'll often turn a blind eye.

Mr. Rick Casson: Thank you, Mr. Chairman.

The Chair: Thank you.

[Translation]

Mr. Paquette, the floor is yours.

Mr. Pierre Paquette (Joliette, BQ): First, I'd like to apologize to the witnesses because I will have to leave in a few moments. Thank you for having come here today.

I agree completely with Mr. Lofthouse when he says that we should not dwell on terminology when we talk about a security perimeter; for me, it is a question that should be examined very seriously.

I have the feeling that it would be good for Canada to start discussions with our NAFTA partners so they can all agree on security objectives. I'm not saying that we should agree on how to reach those objectives, whether they relate to immigration or refugees policies. We should formulate common objectives that would give us the security we want. We know that things won't change in a day. We should start the process, knowing that there are a number of European countries who have entered into agreements of this type, the Schengen agreements, that could guide us in that direction.

I wonder if you could give us some details on that. Do you think that the Canadian government should immediately sit down with his NAFTA partners and start discussing those aspects or is it too soon? Should we just work for the moment on the implementation of the measures contained in Bill S-23, an act which states objectives we all agree with? I would like to hear you on that.

Mr. Alexander Lofthouse: Thank you, sir. I will answer in English if you don't mind. I feel more at ease in English.

[English]

I'm certainly more articulate in English.

[Translation]

Mr. Pierre Paquette: For me, it's the contrary. I express myself better in French.

[English]

Mr. Alexander Lofthouse: First of all, I want to say I agree with you. The sooner we begin this dialogue, the better. We don't have time to wait. As we've heard, the pressures are ratcheting up, and they're ratcheting up right now. That's the first comment I would make.

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Secondly, I don't think it's necessarily an either/or choice. I don't think you pursue either perimeter security or this. Actually, they complement each other quite well.

There is no reason why we can't proceed on multiple tracks. In fact, we have to proceed on multiple tracks because, as we know, international trade and commerce is extraordinarily complex. My head starts to spin when we talk about the kinds of taxes we have to collect on a carton of cigarettes. Obviously, we have to proceed on a number of tracks simultaneously, particularly since you can do some things now, like hiring more officers or making procedural changes. But other medium- to long-term procedural things can't be resolved right away.

One comment I would make is that we'll be able to do some things trilaterally, amongst all of the NAFTA partners, and some things we won't. The simple reality is that the Canada-U.S. border and the U.S.-Mexico borders are not the same thing. Yes, we do share a common economic space, but the physical distance and the social and economic distance between those two borders is very large. Even then, though, even if we are going to pursue a discussion track amongst our NAFTA partners, we will be able to do some things trilaterally. But when it comes to border management, as in managing procedures at the border, those things would be better done bilaterally because the two borders are just too different.

But should we have a dialogue at the very least with our American partners on future measures? Absolutely.

Mr. John Bescec: To comment on the perimeter discussion, two things we cannot allow are for the Canada-U.S. border to be closed and for trade to slow down. We need to step back and think about what we are preventing or trying to prevent from arriving into Canada from the U.S. We have our regulated goods, our prohibited goods, etc., but in the normal commercial goods that are transiting, what are we seeking protection from? Are we looking at contraband? Yes. But for the most part, we are looking at legitimate goods crossing the border repeatedly, over and over, day in and day out. We are putting many resources into looking at these goods while our externals, our airports, our ocean ports, do not have the resources necessary to look at the shipments coming in via those means.

More collaboration or cooperation needs to take place between Canadian authorities and U.S. authorities so that there is agreement on certain business aspects. Yes, we need to look at things that are required or restricted within Canadian law, but for the vast majority of goods, let's develop a process whereby more rapid transit can take place. There is no need to look at certain things for which our standards are very close to being identical, if they're not already exactly identical.

Put more of an onus on business. The concept of putting a seal on a trailer, at a company's back door, makes sense. The risk factor, though, remains with the driver. What's to prohibit the driver from making a detour somewhere, as opposed to proceeding directly to the border? We need to concentrate on that aspect.

Businesses have a vested interest in making sure their goods do not contain contraband. The CCRA is beginning to better understand how businesses operate, and it is gaining a level of confidence in them. They will become approved, they will be recognized as good corporate citizens, and benefits should correspond with being able to reach this level. They should receive the benefit of expedited clearance for both in- and outbound, and similarly on the U.S. side.

If something happens to business and business slows down, there are going to be serious consequences for Canada. All of the discussions we will have will be in vain, because we'll be looking at trying to find more jobs for Canadian citizens, rather than trying to create more secure borders.

[Translation]

The Chair: We'll go to Mr. Charette.

Mr. Serge Charette: Thank you very much.

Mr. Paquette, the members I represent are not against the idea of a security perimeter. In fact, I think the main goal of that is to avoid doing the same work twice. I think that in the present situation, it's impossible to deny that some work is being done twice, even though, there isn't all that much.

• 1615

In terms of goods in transit, when goods arrive in Halifax and are going to the U.S. for example, they are unloaded but they are not checked in Halifax. The container is sealed and then sent to the U.S. It is checked only when it reaches the American side. It's the same thing for goods that arrive in New York and that are going for example, to Montreal.

There is some duplication, but not quite as much as you might think. We are not at all opposed to that. But we would be opposed to the elimination of the Canadian border, because if you eliminated the Canadian border, you would eliminate as well a lot of the controls which have to be made by the Canadian customs agents.

As I was mentioning it earlier, we have to look for firearms, for weapons in general. In Canada, 50% of the firearms which are used in certain criminal acts come from the U.S. We do have a certain problem with firearms coming from the U.S. It's so easy to get a firearm on the American side and so difficult to get one on the Canadian side, especially since those arms have to be registered, so we expect an increase in the importation of firearms.

We now arrest at the border people who have been drinking, something we didn't do before 1998, and people who try to leave Canada with children they don't have custody of. There are many legitimate reasons to keep the Canadian customs and the U.S. customs. I am convinced that the Americans would not want to eliminate the Canada-U.S. border.

I would however suggest, and I already mentioned it before another committee, to set up special counters for people who enter Canada, counters which would be reserved for Canadians and North American residents and others for people who come from other countries. We could deal more quickly with people who come back to Canada and who are Canadian or North American residents, so we can focus more on people who have passports, etc.

We could adopt good working methods. They haven't been contemplated yet, but I think they would be very appropriate now because of the incidents we have known.

Mr. Pierre Paquette: The examples you gave us are very interesting. I think we should start negotiating with the Americans so that they realize they are not as perfect as they are telling us.

I've got family that live in New York now. There is a lot of propaganda about the fact that it's too easy to enter Canada. They are in fact looking for a scapegoat.

You are right when you talk about firearms, but we should think as well of refugees. Forty to fifty pour cent of the refugees arriving in Canada coming from the U.S. choose that route because the tourist visa is easier to get in the U.S. that in Canada.

In those discussions, the Americans should look at themselves and recognize that they too have weaknesses as far as security is concerned. We will perhaps have to make some adjustments as well. Where we don't agree, we'll stick with the Customs inspections. On the other hand, if we succeed in harmonizing some objectives... I'm talking about objectives because objectives can be implemented in various ways. It's for that reason too that I think it would be important to include at some point the Mexicans in our discussions, because the objectives will be one day North American objectives not only Canadian and U.S. objectives.

I really liked you comments. Once more, I apologize but I have to leave.

The Chair: Before you go, Mr. Paquette, you might remember that we have a motion about another meeting to discuss Costa Rica. Mr. Lunn will probably move that we adopt the third report of the subcommittee on sugar. We will first present this report to the standing committee and then, to Parliament.

Mr. Pierre Paquette: Do we have a quorum?

The Chair: Yes, I see a quorum.

Mr. Pierre Paquette: Thanks to us.

The Chair: I see six members. We still have a few members.

[English]

Monsieur Lunn, do you want to move the...?

Mr. Gary Lunn: I so move.

(Motion agreed to)

The Chair: Okay, you can go now.

Mr. Pierre Paquette: The chair will be reporting to the main committee?

• 1620

The Chair: I will report on your behalf to the main committee, and hopefully we'll be able to report to the House soon.

I apologize to the witnesses for this.

Mr. Lunn.

Mr. Gary Lunn: Thank you, Mr. Chairman.

Listening to all your presentations is interesting.

All the other committees are dealing with this, Mr. Chairman, as are all of our colleagues. If there's one common thread or theme that we hear, whether it's in the House, in committee, or out in our constituencies, it's that it is imperative that we keep the flow of both people and goods between Canada and the United States. That is the challenge in front of us. Of course, we seem to be living in a different world now.

I'll just throw a few things out, and then I'll ask for comments from all three of you.

First, I think Mr. Lofthouse hit the nail on the head when he said we have to proceed on both perimeter security and border security simultaneously.

I'd like your thoughts on this, but I'll just share with you some of the feedback that I'm getting. I live in a border town, albeit a seaport. It's very important....

I don't think anybody believes our land borders are going to disappear. What I do sense is that they'd like to see us increase our security. I specifically want you to comment on what we need to do to increase our security at our international airports and our seaports, so that our land border between Canada and the United States can become a point where things can actually move even more easily than they did before September 11, so that we get to the point at which it's just more a case of spot checks.

Mr. Casson commented on the cattle trucks going through. Those trucks are going through on a regular basis. A system is in place whereby they can almost be pre-checked, pre-cleared, or bonded, although there might be the odd spot check that we need to get through that. But we can gain confidence, and our other NAFTA partners will likewise gain confidence that we're in a system moving in that direction. I think that's the challenge, and where we need to be going.

The topic we're talking about today, looking at the agenda, is U.S.-Canada border delays. I'd like to stand corrected—I'm not the expert on this—but I don't sense that our seaports are a major challenge. They don't see a large volume of people, they're more on the commodities or goods side.

Mr. Serge Charette: During the summertime, we do get a lot of cruise ships.

Mr. Gary Lunn: That's interesting.

Our airports are more on the people side, as compared to our seaports, although obviously commodities come through our airports as well.

I liked your thoughts on technology. What would you recommend we should be looking at specifically, even unilaterally, on our own, to start increasing or changing our procedures at our seaports and our airports, in order that people will gain more confidence down the road and allow for a more open border between Canada and the U.S.? In order for goods and people to move much more freely than they did even prior to September 11, what are some specific suggestions that you think we should be pursuing at our seaports and our airports to eliminate the lineups at our border between Canada and the U.S.?

Mr. Serge Charette: Certainly, Bill S-23 is a step in the right direction. We said that in front of the committee examining Bill S-23. It will provide for new equipment, and we're certainly hoping it's going to be more than just new electronic equipment and new gadgets. Hopefully, it will provide equipment that we can use to actually look at goods.

You mentioned seaports. A lot of the containers that come through seaports—and I mentioned this in my presentation—are packed using computers. They're so tightly packed that every inch of space in a container is being used in some way. If you unpack a container, it's a major puzzle. You can't really put it back together unless it's done in a very—how should I say this?—organized fashion. You need the right equipment to do that. A lot of the equipment that we have does not provide that capacity.

• 1625

We need to invest in more equipment and in better facilities in order to look at these commercial goods when there's a need to look at them. Obviously, there's no need to look at all of them, but those that we do look at should not be looked at at the border. If we look at them at the border, we're basically slowing down everybody else while inspectors are looking at what's in a particular truck. We can probably do one or two, but that's the most we can do in most of the facilities.

What we're saying is that we need larger facilities, and those facilities should not be on the border. They should be either on the American side or on the Canadian side, somewhat removed from the border, so that they won't impede the flow of other commercial goods coming in.

We need the equipment to unload them quickly, to reload them quickly, and to send them on their way. Customs cannot afford to be an impediment. We realize that, and customs inspectors realize that. If we have the equipment and we have the personnel we need in order to look at the massive amounts....

Listen, $1.3 billion worth of commercial goods move across the border per day. That's a massive amount of television sets, stoves, cattle, etc. The amount of goods we have to deal with in one day is incredible. With the equipment we have now, we can only look at a very small portion, and we're looking haphazardly under the best of circumstances. That's what the Americans don't like.

If we had the equipment and we had the personnel, the Americans would be convinced we're doing the proper job, and I don't think they would be reacting the way they are now. In fact, they could never have used us as a scapegoat—and I do agree that they did use us as a very convenient scapegoat.

Mr. Alexander Lofthouse: If I may, I'll pick up on a couple of Monsieur Charette's comments, and a couple of the member's comments as well.

You're right. When we talk about the perimeter, it's important that we be clear here. We are not talking about the Canada-U.S. border disappearing. I want to go on the record to say that isn't what we mean.

What we're really looking at are multiple lines of defence. Admittedly, we're still talking on a conceptual level, but we would see this North American perimeter or these common requirements and procedures as the first line of defence, and the existing Canada-U.S. border would be our next line of defence where it's needed. That's really the way we're thinking, and I think it's along the line of what you're getting at.

In terms of what we can specifically do, I'm going to throw out a couple of ideas. Mr. Charette is far more of a technical expert in these areas than I am, but we have also been having these discussions internally within the chamber.

First off, I think it's important that we recognize—and the Americans are going to have to realize this, too; if you ever go to a port like Los Angeles and see the amount of traffic that comes in in a day, they're dealing with exactly the same traffic problems as our customs officers—it's important to recognize that you can never achieve 100% screening of every passenger or every piece of cargo. It just not going to happen. Logically, then, what you have to do is concentrate your resources on the higher-traffic and higher-risk areas in particular, and come up with an appropriate risk management strategy. That's really what we have to do.

My boss is a bit of an Australiaphile. He spent a number of years in Australia, and he was telling me about a system that the New Zealand Customs Service uses, I believe. He got to know that system while he was going back and forth between Australia and New Zealand.

They have an electronic manifest system. Before a container ship even enters New Zealand territorial waters, a manifest has to be filed in advance. When the ship comes in, New Zealand customs officers have already had a chance to look at the manifest ahead of time to see if something is amiss. When the ship gets into port, they can say they want to see container 1, container 4, and container 10. The more advanced knowledge you have, the better you can make decisions about what resources you will need to throw at a specific problem.

The other idea that might be worth exploring is another one Mr. Charette suggested earlier, and that's the idea of specific airport lines for Canadian or U.S. citizens. It's already done in Europe. If you've ever been into a European airport, that's exactly what they do. If you have an EU passport, you go in one line. In some airports, if you're in transit to another European destination, you go in one line and everybody else goes in another. Unfortunately, I get stuck in the everybody else line every time.

• 1630

That system is a way for the Europeans to manage the flow a little better. They can look at a specific flight and know that if it's a flight from Montreal, then depending on the airport, it's probably going to have a mixture of EU and non-EU citizens, some in transit, some not. But they do know which officers they need to put where and how many they need to have on at a given time, as opposed to just having 300 people coming off a plane and all going in the same line. Admittedly, we do some of that now, but we could probably move toward some sort of common system like that and still protect the integrity of this North American economic space that we're looking at.

Anyway, I think those are two ideas worth exploring.

Mr. John Bescec: I'll just add a little to the comments on the containers arriving at ports.

I don't know whether the success rate for Customs' targeting of containers is in the public domain or not. I know the intelligence that has been gathered from other customs authorities around the world has to remain confidential, but how effective is current targeting? We're looking at increasing rates of targeting on containers, and at moving more containers off-site to third-party sites where these inspections can be conducted. Please keep in mind the high cost of doing this.

With increased technology, is it not possible to do more targeting or more examinations right at the front lines? Of course we're not looking at 100% inspection, but more targeting can be done with greater investment in technology, like gamma ray scanners, X-ray scanners, or whatever the proper technical term is. As the containers are being unloaded, something can be done.

We're not proposing to do away with the Canada-U.S. border, but we need to have a smart border, a border that is more reliant on technology. As business is moving to higher technology, so should our border. We can't continue throwing resources at it, both human and financial, and still maintain the same infrastructure and the same kinds of equipment that are being used.

We need to look at pre-screening or pre-clearance, whereby a driver can simply swipe a card and transmit his information electronically to customs in the U.S., to customs in Canada, and the freight can then move across the border. It is doable. The technology exists, and the resources can be more effectively redeployed to where higher risk exists, based on historical records.

Things can be done. Nobody's disagreeing with any major initiative. It's actually getting together and working out the operational issues, because that's where everything bogs down, both within Canada and across the border.

The Chair: Thank you very much, Mr. Lunn.

Mr. Gary Lunn: Thank you, Mr. Chair.

The Chair: Judi.

Mrs. Judi Longfield (Whitby—Ajax, Lib.): Thank you.

When you come near the end of the questioning, a lot of your questions have already been raised.

Mr. Charette, on these customs clearance centres, they are a long-term solution. They are not going to help the short-term solution, but we have an immediate need to clear things up. If we don't clear things up in the short term, long-term solutions will not be needed. As the other two witnesses have suggested, the companies are just going to pick up, move south, and we won't have to do it.

How long do you think it would take to get these customs clearance centres up and running? How much would they cost? And wouldn't we just be putting the backlog a little further back from the border? Are we really expediting the flow of goods across the border?

I live outside of metropolitan Toronto, and things used to be backed up for an hour and a half at Pickering. Well, they've expanded things to four lanes, but now I'm backed up an hour and a half at Ajax instead of Pickering. Sometimes, it doesn't really clear up the problems. I'd like your comments on that.

I'm going to place all my comments on the floor, and then just let you go.

Mr. Lofthouse, you talked about working smarter, with better management, with facilitation, and all of that. I'm wondering where rail and greater use of ferry service—particularly on the Great Lakes—fits in, because I think customs inspectors could be on board the ferries, and a lot of the clearance could be done there. It's the same with rail. But there seems to be a great resistance.

I don't want to in any way disparage the truckers, but when I mention that there may be an easier way of getting goods and services across, the first thing I hear is that the truckers will give great resistance to that. I know that when companies like General Motors and others like them start doing something like that, they have a problem with the people who are already making their deliveries.

I want to know if there's a way in which we can make better use of rail service and ferry service, and particularly ferry service on the Great Lakes.

• 1635

My final questions is to you, Mr. Bescec. You said several times that we have to send a unified message, a clear message. What is the message that you suggest? It's easy to say that, but I think we're all trying to find out what that message is. From the Canadian perspective, we have obviously been trying to say the movement of goods and services across the border is absolutely critical to our economy.

My final comment has to do with the fact that, in all of this talk about borders, we have to make certain that we distinguish between the two different groups. There's the cargo, the freight, and then there's the passenger. As a result of September 11, that passenger...it's a question of who's coming across the border. Who are they? What nationality are they? Do they belong here? Do they have a legitimate reason to be in our country? Is there a place for exit visas for persons, and ones that are different from...? I don't think the Americans are making a distinction. I think they're asking for exit visas both for passengers and on goods and services. Should we not be distinguishing between the two?

Those are my questions.

The Chair: Why don't we start with Mr. Charette and move to John?

Mr. Serge Charette: With regard to the facilities we're suggesting, they are definitely a more medium- to long-term solution than they are a short-term one. However, I see major short-term benefits in the sense that we can go to the Americans and show them that we are thinking not only short-term, but medium- and long-term, and that we recognize or acknowledge the fact that some of their concerns may be legitimate. We can show them we're looking at finding solutions. That may be what is required to predispose them to looking at favourable short-term solutions. I think it's definitely something that would be of immediate benefit as long as it is conveyed properly to the Americans, and as long as they acknowledge and recognize the benefits long-term.

One of the other benefits is the fact that we're suggesting we could do this side by side. They would have officers in place who are working for the American government and who could validate or verify that we Canadians are in fact doing what we said we were going to do.

So I think there are short-term benefits, obviously, but the impacts are going to be medium- and long-term. And I say medium- and long-term because I don't see this as starting construction on six sites or twelve sites tomorrow morning. I think we would have to start with one site. It would probably be one of the major ones—Windsor comes to mind—and basically we would learn from what we do there.

First of all, a major congestion problem exists in Windsor right now. I know it has been suggested that we should move our facilities to the American side while the Americans take over our facilities on the Canadian side. This would be done to ensure that we don't cause any kind of traffic backup that would provide terrorists, for example, with the opportunity to run toward the middle and explode a bomb in the middle of the bridge or the tunnel. Well, if that's their intention, that's what they're going to do whether there's traffic or not, so I don't see that as a major solution.

We do have a bit of a problem with the other suggestion that you made about ferries and rail. When I first joined Customs, we had customs inspectors who boarded Amtrak in New York and cleared people on their way to Montreal. Over the years, that disappeared, and I think it was because of legislative changes. I think we are now prevented from applying Canadian legislation outside of the confines of Canada for some reason, but I don't know if it's as a result of the Canadian legislation being modified in some way. I know we used to do it and that we stopped doing it, but I'm not 100% sure I know why. There may be a legal impediment.

• 1640

Mrs. Judi Longfield: But if it's just a legislative thing, did it work in practice?

Mr. Serge Charette: It worked very well in practice.

Mrs. Judi Longfield: If it's legislative and we know past practices worked well, then that may be a place where we start to bargain with our American neighbours.

Thank you. I appreciate that.

Mr. Alexander Lofthouse: If I can just pick up quickly on that point that was just raised—that it worked well in the past—you can again take a look at what they do in Europe. I'm not going to say Europe is a total model for everything we need to do in North America—obviously there are enormous differences—but, again, if you take the Chunnel from London to Paris, French border police come right on the train before you even enter France. Provided that the right legislative tools are in place, something like that can work very well. In France, it means you get to Paris, you hop off the train, and that's it, you're done.

In terms of the different modes of transport that you were discussing, I'd make a couple of comments.

Tuesday night, when I was trying to catch my flight from Windsor back to Toronto, I almost missed my flight because I got stuck behind the wrong side of a great big train just south of Windsor airport. There are trains all over the place in Windsor. You can't walk ten feet in downtown Vancouver without hearing the whistle of a train. So is there a role for rail? Certainly. There already is. In fact, a real renaissance has occurred in rail in the last ten years, but I think it's because the market conditions have allowed for that.

That leads me to my second point, which is that a lot of freight is already carried intermodally. Anything that goes any great distance will probably move between a number of modes, depending on how the carriers or the multiplicity of carriers can do it most efficiently. That's why the intermodal system has developed. So can multiple modes of transportation play a role? Sure. The market has already indicated that this is the case.

On your final point, we do need to distinguish between goods and people to a certain extent. Down in Windsor recently, I heard a number of people say it's tough to get across the Ambassador Bridge if you're in a car because of all the trucks there, and vice versa. The truckers find the Ambassador Bridge very frustrating because of all the cars.

But I would be very cautious about seeing some sort of exit visa. Canadians really get their backs up whenever the Americans start talking about section 110, because the moment you start making people...the moment you add an extra procedure at the border, you have to stand in a line in order to go through that procedure. I say this just as a caution. The more controls of that type that you put in place, the more barriers you add to the process.

Anyhow, those are just some observations.

Mr. John Bescec: I'd like to comment on a statement made earlier about the unified message.

Canada is making tremendous inroads and is putting out considerable effort in addressing the issues. Unfortunately, the way in which some of these efforts is perceived by our U.S. counterparts isn't necessarily very accurate. You have the media impact, of course, so things may get changed from how they were originally stated.

What I was getting at was more along the lines of one clear message coming from Parliament, stating what Canada is doing and what our initiatives are, and having that message in some sort of an executive summary format. That's a very simplistic view, but it's something the Americans can put their hands on. They can then say, here it is, so we don't need to concern ourselves that the Canadians are not doing anything, because they are doing something in all these different areas.

At the more operational level, you have various government departments interacting with their counterparts. When things get rolled up to the higher levels, things get lost. There is a very amicable relationship when you look at things at the prime ministerial level and the presidential level, and a few levels below. But where the decisions are being made, there's so much muddle taking place that the media picks up on the little things—and it's the American interpretation that really affects what is being discussed.

From the business standpoint, having a message that Canadian business is supportive of the government's initiatives is important. Various associations are represented through the coalitions that are forming. We have to send a unified message that business is onside and that we are taking steps. This is the message we want to send to the Americans. Make this clear, as opposed to having various initiatives broadcast all over the place. It's all good, but let's bring this all together. I think that will have a much greater impact.

• 1645

Mrs. Judi Longfield: It's also much more difficult when people are frightened because they've had something happen to them in the way that they have, when you have the media spinning things on both sides, and when all of us are concerned about certain things.

Thank you very much, gentlemen. I enjoyed all three presentations.

The Chair: Thank you, Judi.

Mr. Duncan.

Mr. John Duncan (Vancouver Island North, Canadian Alliance): What I've been saying all along on border issues is that unless we got in front of the curve, or if we got into seeing a reactionary response from the Americans, we would have lost the battle. I think that's what we have already. As a consequence, we need to do something to get in front of the curve.

What Serge Charette has brought to the table today, with the commercial pre-clearance concept, is something that gets us out in front of the curve. I did see the press reports today, and I did ask a question in the House today that was basically boosting that concept. Yet what I got in response from the Minister of Revenue was something that I thought seemed like a defence of the status quo.

I didn't know which minister was going to stand up, to be honest. I didn't know if it would be Mr. Manley, I didn't know if it would be Mr. Cauchon, and I didn't know if it would be Minister Pettigrew. That's probably part of the problem, especially since Mr. Bescec said one message would be rather good.

I didn't like the fact that the minister's response had no apparent sense of urgency, nor did I think any strong direction was given to do anything other than defend the status quo. Well, the status quo is simply not working.

I wanted to say all that, and I wanted to thank you for your proposal. I hope this committee will adopt that proposal as a recommendation.

I just finished reading about the building of the Alaska Highway. I think they built the Alaska Highway to a driveable state in sixteen months. If we can't build beneficial pre-clearance commercial systems in a couple of spots in Canada in fairly short order, I think something is definitely wrong with how we do business, particularly if we can get buy-in from the U.S. I can't see why we would not, though—not with the right kind of approach, and not as long as the financial resources are in place.

I have some specific questions that are really short snappers. First, I understand that the CANPASS system basically only operates in a south-to-north direction now. It has been cancelled north-to-south. Is that accurate across the country, or is that just in some jurisdictions? Does anybody know? Serge, you probably would know, although I may not be describing it quite right.

Mr. Serge Charette: My understanding of CANPASS—which was suspended on September 11 for all modes except for marine—is that it is still not reactivated, but that it will be reactivated from the Canadian perspective in the very near future. The Americans apparently have no intention of reactivating CANPASS or NEXUS for some time yet, if they ever do. Their concern is that, with all the falsified passports and other documents identified as a result of the ongoing investigations, it might be easy to falsify a CANPASS as well. But I really can't comment any further than that, because I'm not sure.

• 1650

Mr. John Duncan: John, you gave some testimony about resistance on the issue of driver registration. What wasn't clear to me was where the resistance was coming from. Was it from the potential drivers, or from officials on either side of the border?

Mr. John Bescec: A lot of difficulty has been encountered in getting drivers qualified or certified. The issue of past criminal records or police records has arisen. When you have even minor offences, they're registered against the individual. When screening took place, initially these individuals were disqualified even if they had received pardons. Citizenship and Immigration Canada has revisited this, and if proof of pardon is submitted, they can now be considered.

When you're looking at the vast amount of drivers required to convey the goods across the border, there is difficulty in getting people to submit themselves. Carriers are having difficulty getting their employees to submit to these historical investigations of any prior records that they may have had. That's one of the primary issues that the carriers face. And if you're looking at whether U.S. carriers will submit their drivers to something like this so that they can cross the Canadian border in the future, well, they already have free access now.

Mr. John Duncan: I think I follow that.

Serge, you were talking about Bill S-23.

Mr. Serge Charette: I think I mentioned it.

Mr. John Duncan: You said it is a step in the right direction.

Mr. Serge Charette: Not specifically.

Mr. John Duncan: You were saying you need equipment that can actually look at the goods. Does the United States have that equipment that you're referring to?

Mr. Serge Charette: When I talk about equipment that we would need to do our job, basically I'm referring to something as basic as loaders that we can use to unload a container or to unload whatever is in a van. We feel there are basic pieces of equipment that would be required in order to increase enforcement to the level at which security would be improved. We would then meet the level that would satisfy the Americans.

I have to admit that the Americans' sense that our security was compromised wasn't pulled out of thin air. They got the Auditor General's reports, they got reports from CSIS, they got reports from the RCMP, and they've heard the Canadian Police Association saying we're understaffed and don't have enough people at the border. Many sources have been decrying the lack of resources at the border, and that has obviously created an indelible impression in the minds of American legislators and the American public. That's why we need to convey at this point in time that we have acknowledged those concerns and are trying to deal with them—and not only that we're trying, but that we will deal with them. If we can get that across very quickly, we have a good chance of reversing some of the decisions the Americans are contemplating right now.

Mr. John Duncan: Does there not exist somewhere in the world...don't some of the big Asian ports like Hong Kong or Singapore—although I'm not sure about Singapore—have the kinds of equipment that can look at the entire contents of a container without opening that container, for example? Is that kind of technology something you were also contemplating?

• 1655

Mr. Serge Charette: I think that goes a little bit beyond what we were contemplating, because there are very few of those in the world right now. Maybe half a dozen seaports around the world have that type of equipment. I seem to recall seeing a brochure from Hong Kong—I think that's where it was from, but I'm not 100% sure—showing this huge X-ray machine that could basically X-ray the contents of containers. I'm not sure how they did it. They couldn't really be X-rays, because metal would block X-rays. But I know what you're talking about, and I know there are very few and that they are very expensive.

Mr. Alexander Lofthouse: Just as a point of information, I think the Port Authority of New York and New Jersey has one, and John seems to think the Port of Miami might have some sort of enormous scanner, as well, but I'd stand to be corrected on that. But as Mr. Charette has suggested, you'd probably only find those at ports where you have enormous volumes, as well as enormous containers.

Mr. John Duncan: I think we do have to think a little bit outside the box here—

Mr. Alexander Lofthouse: Absolutely.

Mr. John Duncan: —no pun intended—because we do have 44,000 trucks a day—I think that's the figure—going across the Ambassador Bridge.

Mr. Alexander Lofthouse: And that figure is growing.

Mr. John Duncan: Our country depends on trade. If the Americans are willing to spend billions in order to put up a brick wall, we have no choice but to try to avoid that brick wall. We're going to have to spend some real money, and I think we have to have a sense of urgency and be very smart about how we do it.

That answers my question and takes us in the direction I wanted to go. In summary, we probably don't want to see it, but part of my concern is that the more this goes on, the more convenient the border becomes as a non-tariff barrier. I'm sure you all share that concern.

Mr. Alexander Lofthouse: Absolutely.

Mr. John Duncan: We don't want to go there.

The Chair: With this, on behalf of the committee, I want to thank you very much for your excellent presentations, for your frankness, for being forthcoming, for your foresight, and for some of the very tangible and practical suggestions that you have made to our committee.

We will be having one more hearing, next Wednesday at 3:30 p.m., and we want to complete the report as quickly as possible because of the urgency of this matter. Our hope is that we will submit a report to Parliament prior to the end of November. What you have done today has enlightened us. You have given us some necessary tools that will help us in the writing of this report, as well as in helping us to make recommendations to the House of Commons and ultimately to the government.

On behalf of my colleagues, I want to again thank you very much. Have a wonderful evening.

With this colleagues, we will adjourn.