Canada has many strengths that increase our competitiveness as a nation. We are politically and economically stable, we have an educated workforce and high standard of living, and we are an attractive source for business and trade investment. Yet our competitive position, when ranked against other nations, does not reflect our potential.
Canada has significant room for improvement when it comes to understanding global supply chains and implementing policies and procedures that make it easy for companies to do business in and with Canada. The biggest issue is that Canadian policy makers fail to consider the impact importation procedures have after the goods have cleared customs- I.E.Canada has coined this the supply chain echo®.
Current thinking in Canadian trade policy leads us to believe that the supply chain ends at customs clearance. This is not accurate, and our economy suffers because of it.
The supply chain echo® refers to the fact that imports continue to be regulated and can be affected by our trade policies, procedures and penalties long after the goods have crossed the border and been released. Current customs regulations demonstrate that the supply chain echo® remains for up to five years after the customs clearance occurs. An import file is touched many times after import and often by multiple parties other than the importer. Years after the import has cleared customs, audits may be conducted, refund claims submitted, and requests for further information made to name only a few actions. In fact, a review of Canada Border Services Agency’s guidelines to importing outlines the fact that CBSA can verify and adjust commercial importations for up to four years after importation and that all records pertaining to the import must be kept for six years. Accounting and filing errors discovered by the importer can be corrected at any time, but monies owing must be submitted within 90 days of discovering the error. Failure to report errors will result in penalties.
Despite the fact that CBSA guidelines outline that the import is still subject to regulations past the border, there is currently no tracking of imports ‘behind the border’ and therefore, no trade facilitation measures aimed at this entire segment of the global value chain. The measures in place today focus primarily on punitive measures for companies that fail to comply with the customs legislation.
Our government should also consider that our transportation policies and infrastructure can contribute to the supply chain echo®. Port labour disputes, rail issues (such as the movement of grain), CBSA ‘creative’ auditing and multiple appeals to the CITT all contribute negatively to our global ranking, yet no thought is given to ways in which processes ‘behind the border’ can be streamlined and directed to enhance the competitiveness of Canadian companies.
I.E.Canada believes that Canada should uncouple the security aspects of our border from the commercial aspects. These are two very different functions, and by combining them under one ministry, Canada is trying to join two opposing functions; creating and growing business requires very different supports and regulations than does security. CBSA currently falls under the Minister of Public Safety; I.E.Canada recommends that the security aspects of the border be left with public safety, and that customs be moved to either the International Trade or National Revenue portfolios. That would then allow our government to develop an import policy that is relative to commercial trade and that is not concerned with the security aspects of the border.
By not considering imports beyond the customs clearance process, we are missing an entire section of the global value chain continuum. Post importation administration is a competitive factor that could improve Canadian competitiveness, yet it never seems to be tracked.