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DECISIONS 2002: CUSTOMS: Bilateral approach to customs critical to security and econmic growth

Can a proposal to fundamentally rework the way Canada scrutinizes imports across the border with the US survive in the climate of elevated vigilance that follows the September 11 terrorist attacks?Ind...

Can a proposal to fundamentally rework the way Canada scrutinizes imports across the border with the US survive in the climate of elevated vigilance that follows the September 11 terrorist attacks?

Indeed it can. In fact, rather than delaying legislation, the heightened interest in border security seems to have given new impetus to Bill S-23, the bill to amend the Customs Act and pave the way for implementation of Customs Self Assessment (CSA) and the Administrative Monetary Penalties (AMPS) programs.

The CSA program will give approved importers not only streamlined accounting and payment processes but also expedited crossings when their shipments reach the border points. AMPS provides Canada Customs and Revenue Agency (CCRA) with a new schedule of civil penalties and other sanctions for non-compliance.

As president of the Canadian Society of Customs Brokers, Carol West’s immediate reaction to September 11 was that CSA would be a casualty of the terrorist attacks.

“How can we have this expedited system where in fact goods have no real reporting requirement, in terms of the goods themselves coming into the country? My first response was that was an area of risk and vulnerability,” she says. “Only later did I suspect that CCRA was going to say we need this (CSA) more than ever, now.

“And that’s the approach they have taken. They’re saying that they have to move forward with CSA and that they’re committed to move forward with CSA so that they can get the low-risk or no-risk traffic moving more quickly through the border, so that they can focus more on the unknown risk or high-risk shipments.”

The CSA program requires importers, their carriers, and their carriers’ drivers to register with the program. Drivers undergo background checks in order to qualify.

John Bescec, the vice-president of international trade and government relations for The Association of Canadian Importers and Exporters, makes the point that a lot of the initiatives CCRA had put forward turned out to be quite timely in their security measures.

Looking at the CSA program, for example, he says, “The information on who the suppliers are, who the importers are, who the carriers are, drivers, etc., will help actually streamline border crossings. Individuals will be approved ahead of time to participate in this program, so they will be, theoretically, identified as the good guys. So there will be less of a concern regarding those individuals and their shipments crossing the borders.

“It fits in very well with this new world of doing business across borders.”

On the other hand, Bescec counters his own argument by pointing out the impact on border security will be limited at best. “I think there are only about 10 or 11 companies at the moment who are in various stages of being approved for CSA – importers – and I think seven or eight of those companies are our members. A lot of our members are sitting back and waiting to see how it will work. Due to the current economic situation, and further exacerbated by the events of September 11, they have sort of precluded further investment in systems that are required to be able to participate in this program. So they’re waiting for others to sort of blaze the trail and then they’ll follow,” Bescec says.

While most importers have no issue with release times for goods coming into Canada from the US, Bescec speculates that heightened security at border crossings might alter the status quo. Which in turn would make CSA a more attractive option.

“With CSA you’re stating to the government you have something within your possession that you can show customs officers at the border that you’re approved. And that gives them a better sense of security. The customs inspectors will realize you’ve been checked out, and they won’t question you as frequently or as intensively. And from the Association point of view, that will help expedite clearance of the goods,” he says.

That will still leave the issue of actually getting to that border crossing, because of the logistics, the traffic snarls, and so on. Bescec says the Association is looking into a section of Bill S-23, which allows the CCRA to create customs zones at the airports. “If this legislation can be expanded to consider land border crossings, perhaps they could establish these customs zones on the Canadian side of the border and then – working with our US counterparts to create something similar on the US side of the border – have pre-clearance take place. So when a CSA truck pulls in, they don’t even have to be pre-cleared. They would just be allowed to proceed directly to the border crossing. They would use the same lanes, but they would be pulled out from the crowd.”

That border-crossing crowd is comprised of some 14 million trucks a year.

Massimo Bergamini, the vice-president public affairs for the Canadian Trucking Alliance, agrees the government of Canada is intent on moving forward with CSA and AMPS as currently framed. But that doesn’t make the Alliance overwhelmingly happy.

“I think the events of September 11 have really radically changed the landscape,” explains Bergamini. “It made the potential for a much more enforcement-oriented high alert type of border a reality.”

He says Canadians can pursue all sorts of liberalization approaches. “That’s fine. But we run the risk – unless we’re working hand-in-hand with our American friends – of really creating a one-way street. We don’t think that makes a lot of sense.”

Bergamini fears a flexible border northbound, combined with a rigid, high-inspection style of border southbound, will drive manufacturing capacity south of the border.

“As the government grapples with the crisis, its spokespersons are advancing some of these programs such as CSA as being somehow a remedy to the security concerns that arise post-September 11. And they have nothing to do with that at all. We’re moving full steam ahead down some of these avenues simply because, politically, we have to be seen as doing something. And yet that something has absolutely nothing to do with the terrorist threat,” Bergamini says. “We have to re-think things. Not to say that CSA doesn’t make sense. CSA makes a lot of sense. But it makes more sense if we can pursue it bilaterally, if we can get the Americans to buy into that style of border management.”

Bergamini will get no argument from Jim Phillips, president and CEO of the Canadian/American Border Trade Alliance, a Lewiston, NY-based lobby group.

“It’s imperative that there be a ‘zone of confidence’ and that Canada and the US are part of the same circle. It has to be a bipartisan system,” Phillips told fleet managers attending the recent Ontario Trucking Association annual convention in Toronto.

“The two sides have been talking to each other but we don’t have a combined system. Why can’t we have a single computerized system?” he asks adding that while Canada’s CSA program requires three elements of data for border clearance, the US is demanding as many as nine.

The answer to that is simple, according to Allan Cocksedge, associate consultant of Global Public Affairs and also part of the panel of experts addressing border concerns at the recent OTA convention. Canada has had a very difficult time getting on the US radar screen on border issues because the US has traditionally been much more concerned about addressing problems on its border with Mexico. September 11 may change that as US officials are concerned that terrorists are slipping into their country through the Canadian border.

“It’s embarrassing but Americans don’t really know much about Canada at all. They’re interested now because of the terrorist threat,” Cocksedge says. “I would say we’ve got four to six months and if we don’t (get the border issue figured out) in that period we are going to be in trouble.”

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