Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 10 - Evidence
OTTAWA, Tuesday, March 18, 2003
The Standing Senate Committee on Foreign Affairs met this day at 5:37 p.m. to examine and report on the Canada-United States of America trade relationship and on the Canada-Mexico trade relationship.
Senator Peter A. Stollery (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I call the meeting to order.
We have a slight change in the program because the Senate sat longer than we anticipated. Mr. Daniel Jean, Acting Assistant Deputy Minister, Policy and Program Development, Citizenship and Immigration Canada, was waiting. He had to leave unexpectedly for a cabinet meeting. We will have him back another time.
We will move now to the second part of our very important agenda on the problems at the Canada-U.S. border. On your agenda, this part is scheduled for 6 p.m. Although we are late starting, we are beginning 20 minutes early with the second section.
I remind honourable senators that the fish issue was brought to our attention when we were in Western Canada. Of course, our witnesses will explain it further.
We have heard rumours about lineups at the border today. Mr. Phillips is very knowledgeable about that.
Mr. Jim Phillips, President and Chief Executive Officer, The Canadian/American Border Trade Alliance: Honourable senators, it is an honour to be with you and I am pleased to participate. The full text of my comments has been copied and handed out to everyone.
I am President and CEO of the Canadian/American Border Trade Alliance, which is the only binational, transcontinental organization that represents the entire U.S.-Canada border from Maine to Washington, 22 states, and the provinces in Canada. We have 60,000 companies and organizations in our network. They represent all walks of border business, from transportation — rail and truck — to shippers to producers to economic development organizations, chambers of commerce and government agencies.
The bottom line of the major trade question today has three parts. The U.S.-Canada economic fundamentals are excellent, despite what you read in some papers. U.S.-Canada trade flows are strong and vigorous relative to the global economy and the situations that are occurring. Most importantly, U.S.-Canada relations are strong, solid and mature. That is critical as an underlying basis or foundation for the focus on the border.
I was last before the committee in October 2000. We talked about the border then. Since that time, as you know, the Smart Border Declaration has been signed together with the 30-point plan. A majority of the testimony given in the committee's findings were in fact included in the 30-point plan. It became a reality in December 2001.
We must always guard against misinformation, rumours and faulty prognostications that cause confusion and unnecessary, counterproductive concern and negativity in these trying times.
There was a sea change on 9/11. Make no mistake; security is a primary necessity. That change is permanent. The key understanding that is missing in a lot of places is in the re-engineering of border management. The objective here is to make the border more efficient than it ever was before September 10 while increasing security at the same time.
I want to call your attention to two recent, critical quotes that will hold sway here. Commissioner Bonner is now in charge of all border protection for the United States. He states that there are twin goals — not two to be looked at separately, but twin goals. He is specifically referring to public security and economic security as twin goals that must be achieved. They are no longer separating them or stressing one over the other.
Homeland Security Secretary Tom Ridge more recently said, critically and specifically, that neither public nor economic security would be approached at the expense of the other. There is a lot of false perception that security will hold sway, the border will close down and low-risk goods and people inhibited. That is the furthest thing from the reality or the intent of the U.S. and Canadian agencies that are working on this.
The facilitation of low-risk goods and people is absolutely critical to the economic security of Canada and the United States. The way we do business at the border is changing; make no mistake about that. The fact is that resistance to change causes an almost immediate negative response to most everything that is happening.
Again, I want to leave two things with you. The key to achieving public security and economic security, which is the facilitation of low-risk goods and people, while reducing congestion and delay to lower levels than ever before in the history between our two countries, lies with two things: enrolment in low-risk processes and pre-arrival information systems that are now being developed.
Low-risk enrolment means NEXUS for people and FAST, which means fast and secure trade, for goods. There is a whole process, a joint system, agreed to by the U.S. and Canada under the 30-point plan. It has been introduced and implemented. It is in its early stages.
The Chairman: Mr. Phillips, you explained this to me before the meeting, but I do not think most people know what NEXUS is.
Mr. Phillips: NEXUS is a joint system for entry into the U.S. or Canada by U.S. or Canadian citizens. You obtain an enrolment form, which you fill out with your background, where you live, your name and so forth. You send it in. It costs Can. $80 or U.S. $50 for five years. The fee is for the processing of your application. It is not for joining NEXUS.
When you apply, you are put through all of the RCMP databases for past criminality. You are put through the FBI on the U.S. side. You go through all the U.S. and Canadian historical databases. If you have no previous history, you are then interviewed by the American and Canadian agencies, Homeland Security and Canada Customs and Immigration. That takes about 15 minutes.
You are then given a proximity card that has your picture on it. When the system is fully operational, there will be a proximity reader overhead as you approach the border. You hold your card up, inside your car, above window level, and it reads that card. Everyone in the car must have that card. Your picture comes up in the booth where the inspector is. If there are five people in the car, five pictures come up. He just does a visual check; does not stop you; does not question you. It takes about six seconds to process a car. There will be dedicated lanes for NEXUS.
Right now, five ports have implemented the NEXUS process. The Niagara area is opening up the process at three bridges in the spring. By the end of 2003, 15 locations will be operational. It is a tremendous system. As I said, it is for entry into either the U.S. or Canada.
FAST is a similar system for goods. The driver is pre-enrolled and checked out. The trucking company is pre- enrolled and checked out. The shipper of the goods is pre-enrolled and checked out. A security routine is performed where security of goods within the plant and in transit to the border is checked. Once that check is approved, the truck is in FAST. I can report to you that both countries are working on what I call ``Mini-FAST.'' It is an alternate commercial inspection process for smaller businesses that do not qualify for FAST. That is yet to come, but it will also be a joint system between the U.S. and Canada.
Pre-arrival information is absolutely critical. There was a big furore recently about that. It simply means that you will identify who and what you are before you reach the border with a commercial shipment. If you are on a ship, you will do it 24 hours before the container is loaded. That is a fact in the United States and will be coming to Canada shortly.
I can report that since the maritime container security system was put in place on February 2, 420,000 containers have been looked at. Seventeen thousand of those were identified for further review — that is four per cent. We have always estimated that three per cent to five per cent of the containers that are moving around are questionable. As it turns out, it is four per cent, to date. Only 40 denial-of-loading orders have been issued. Only 40 out of 420,000 fall into that category, so it is not a major issue. We have, essentially, increased the safety of the global maritime system.
For trucks, as has just been announced, there will be a pre-arrival information process before they reach the border, in as short a time as possible. They will be able to do a risk-analysis targeting before the truck physically arrives at the border.
The benefit of this, in your interest, is that once a container has been checked and X-rayed at its port of origin, it can move on. When it arrives in Canada or in the United States, it moves through the border without further check. It does not have to be checked at the actual border.
Once the pre-arrival information has been received, in 30 seconds they can be cleared at the border, which will eliminate congestion. The benefit is that while we are increasing security and asking people to report earlier, once that occurs, the process at the border will be more efficient. The goods and services that are so important to both economies will move across the border.
Traffic streaming and perimeter clearance strategy are two other items. I brought with me today for your edification a set of handouts of a PowerPoint presentation. It describes exactly what the perimeter clearance strategy, which is being embodied into the Smart Border in parts, is. I know that in some areas, perimeter clearance did not take on a good meaning. We have given you a definition of ``perimeter clearance strategy,'' which is not a customs union. It does not do away with the U.S.-Canada border and Canada does not have to do everything in the same way as the United States. With that understanding, perimeter clearance is much more intelligible.
Referring to the booklet that I gave you, I will show you the economic and environmental impact of traffic streaming and perimeter clearance. I will also leave you with a compact disc that is a model of an actual experience at the Peace Bridge, which is the second-busiest crossing. If we were to put NEXUS in — which we have — and if we were able to do some pre-review of truckers before they crossed the bridge, we could reduce the environmental discharge at the bridge by more than 50 per cent per year. In total discharge, that is thousands of pounds of carbon monoxide, nitrous oxide and hydrocarbons, which are of interest in respect of the Kyoto Protocol here in Canada.
Essentially, the PowerPoint presentation will allow you to see the benefits of what is happening at the borders and what could happen. The bottom line is that we have to achieve economic security and public security, and not one at the expense of the other.
I want to go through four or five critical things that are included in detail in the text. While many personnel have been added since September 11, particularly on the U.S. side, there are still a number of toll booths that are not open at peak periods. We need additional staff and they are in the process of being hired and trained. By the end of this year, that problem should have been minimized.
It is also critical to shift the first point of arrival. That will be dealt with by the perimeter clearance strategy. We want to interdict people offshore. If passengers are visiting Canada or the United States, immigration officials will look at them at the airport of their embarkation. If they were not admissible to Canada or to the United States, they would not be allowed to board the plane. That is called ``offshore interdiction'' and is preferred to having them land in Toronto or New York and dealing with them onshore. Officials are moving in that direction, I am glad to say.
Concerning the first point of origin on goods, we have targeters for containers coming into the three ports: Halifax, Vancouver and Montreal. U.S. targeters are doing risk management in Canadian ports and Canadian targeters are doing the same in some American ports. That harmonized process is working well.
There are two points within the 30-point Smart Border Plan that likely will not be achieved in the near term unless something is done. The first problem is off-border inspection — processing zones — whereby U.S. customs agents work on Canadian soil and Canadian agents work on U.S. soil. It involves the Charter of Rights, the Bill of Rights and many sovereignty issues. A change in Canadian legislation is needed to allow land border assessment to be done efficiently at land borders, much like the Canadian airport pre-clearance agreement. That problem has to be dealt with and we are not making much progress.
The second problem is with joint facilities at the border. The grand plan was to build a single facility where U.S. and Canadian inspectors could operate. However, until we solve the first problem I mentioned — operating on each other's soil — they will remain joint or common facilities where the border has to go through the building. Rather, it should be on one side or the other. At the Thousand Islands facility, Canada needs to come to the U.S. at the American span of the bridge and the U.S. needs to come to Canada at the Canadian span of the bridge. We need to deal with that issue and it is not moving forward in the way that it ought.
I have made some recommendations, such that Canadian customs inspectors actually do some pre-reviews. It is in the interests of Canada, with 87 per cent of exports going to the United States, to move goods into the United States as efficiently as possible. I suggest that there may be some pre-reviews that Canadian inspectors could do to eliminate some of the congestion that we have now. That congestion is mainly caused by the small number of trucks — I would say less than 10 per cent — that are not prepared when they come to the border.
Last but not least is the modelling technique, the details of which are in the material that I provided to you. This is a model of the actual Peace Bridge. It is quite enlightening. Spend 20 minutes with it and you will learn some interesting things about the reality of the border.
In closing, I would say, in representing both Canadian and U.S. constituents on the border, that we need to have a seamless border between Canada and the United States for legal, low-risk activity. It should be as easy as going from province to province or from state to state. There will be a border, different laws and different regulations, but the ability of low-risk and legal people and goods to cross it should be as simple as we can make it. We need a technically Smart Border and we need intelligence to handle the other, unknown activities. Intelligence and risk management are critical. Identify the good guys and gals, let them go and then look at everyone else, rather than trying to find the bad guy by looking for a needle in a haystack.
Shortly, you will hear specific things about perishable goods and seafood that have not yet been dealt with to the extent that they should. Remember, the economic vitality of Canada and of the United States are totally interdependent and that strength is the power that a country commands in the world. It is critical to both countries that we maintain the economic activity as effectively as we can.
Everyone throws out numbers, such that 87 per cent of Canadian exports go to the U.S. and 23 per cent of U.S. exports go to Canada. However, keep in mind that the U.S. economy is quite a bit larger than Canada's, so 23 per cent of a bigger number is as significant as 87 per cent of a smaller number. We are much more in balance than just the numbers suggest. This is important to both countries and we have to keep it as a high priority. I leave you my testimony in detail and I ask that you put that on the record.
Mr. Ronald W. Bulmer, President, Fisheries Council of Canada: I will make a short presentation on the fishery issues on behalf of the industry and Mr. Morrow will take your questions.
I appreciate Mr. Phillips's remarks. They represent some broad goals and programs that are operating in specific places at this point. Unfortunately, I represent an industry that probably is not quite as positive as we take a short-term look at the border issues.
I passed out a fact sheet on the fishery, and I will mention a couple of numbers to put it in perspective. World fish production has grown from 20 million tons in 1950 up to 120 million tons in 2000. All of the growth since 1985 has come from Third World countries or aquaculture, which means the Canadian fishery has to compete against low-cost producers in most cases.
The landings in Canada have actually decreased in the last decade, from 1.6 million tons down to 1 million tons. However, the value of landings has grown from $1.4 million to $2.1 million. Canadian exports last year were worth $4.7 billion, and over 70 per cent of that went to the United States. The top four exports species were: lobster, which tends to be sold live; crab; farmed Atlantic salmon, which again tends to be a fresh product; and shrimp, which is a mix of fresh and frozen. The Canadian market represents 14 per cent of U.S. seafood exports. Unlike that gross number that Mr. Phillips gave you, their export business is not much bigger than ours. It is a 70 to 14 in similar-size industries.
The bottom line is that the Canadian industry has moved to high-value shellfish. That is what has replaced the high- volume finfish, of which we have a lot less, as many people know. The fact is that Canada must compete in a global market, and the U.S. is our key market by far. Border issues are absolutely critical to our being competitive in that market.
Mr. Phillips covered quite a few of the programs, so I will give you the list only since 19/11, when the Homeland Security Act went through. That put 22 federal agencies and departments together into one, with cabinet representation; it was the biggest shake-up in the U.S. government in 50 years. Canada, in its 2002 budget, set aside significant funds for security and border infrastructure. At this point, in spite of the 30-point plan, we have not made progress. Mr. Phillips mentioned some of the areas where we would like to do so. Certainly, the Atlantic has been a low priority and we would like to see that change.
One program he did not mention is the Customs-Trade Partnership Against Terrorism. That is a voluntary program of U.S. Customs. You register your security, manufacturing and shipping programs, et cetera, with the idea that you would get improved border crossing procedures such as special lanes. However, because we have not spent the money in the Atlantic, we do not have the special lanes.
He talked about FAST, free and secure trade. Again, that is a voluntary program of U.S. Customs and Immigration and Naturalization. It pre-approves your carriers so they do not slow down the crossing of the border. Currently, it is only in place in Blaine, Washington; Sarnia, Windsor and Fort Erie; again, we are disadvantaged in the Atlantic. Some 49,000 drivers are approved under that program.
The equivalent in Canada for trucks coming north is called Partners in Protection. That is in place through Canada Customs and Revenue Agency. It is our equivalent of FAST. If you are going to sign up and go through all the security clearances for U.S. FAST, it makes sense to do the same thing for Partners in Protection so your truck can return to Canada with equal facility.
He talked about NEXUS to move people. Air-NEXUS is under development. He mentioned the U.S. trade act of 2002. That is for prior notice — 4 hours for highway shipments, 12 hours for air and 24 hours for rail and vessels. That does not apply to our industry because we are inspected by the Food and Drug Administration, FDA, and we have our own rules.
That brings us to the biggest change we are facing as an industry, and that is the Public Health Security and Bioterrorism Preparedness Response Act of 2002, which will be administered by the FDA at the border. They are increasing their staff by about 50 per cent. A place like Calais, Maine, where you used to only deal with the customs officer, will now have six FDA security officers permanently posted to that particular border point.
FDA covers all inspection for fish and seafood, eggs, alcohol, grains, snack food, fruits, vegetables — basically all the products in the food category not covered by the U.S. Department of Agriculture.
New regulations, now in draft form, will implement the actual act. The two we are focused on, because they have been put out, are plant registration requirements and prior notice. The two that are still to come that we are also focused on — and we have not seen what they will be — are the FDA employee empowerment rules at the border and the required record-keeping for seafood products crossing the border.
We have a problem with plant registration, and we have told the FDA this is an area where we would hope to see some changes. For instance, you cannot register your facility until October 12 and yet you must be registered by December 12. In that 60-day period, the FDA expects to handle 400,000 food plant registrations. A farm, including an aquaculture farm, or a restaurant or retail store or other facility regulated by FDA is exempt. However, any kind of facility that manufactures, processes, packs or holds food — including fishing vessels, if you sell off the vessel to the U.S. but not to a registered plant — has to register with the FDA. That registration will have to include a U.S.- domiciled, U.S. agent.
That is new. Right now, our industry is almost entirely a self-exporter. It maintains control of the product as it crosses the border. However, you will have to have a U.S. agent at this point for plant registration. I think that is probably because they want to be able to reach out and touch somebody who is actually domiciled in the U.S.
The second regulation that we are focused on is prior notice. For FDA-regulated products, the way it reads now in the draft regulation is that you will have to give notice by noon the day before the truck hits the point of entry on the border. At 12:01 midnight, had you notified them the day before at 12 noon, the proper paperwork could be there; or if they decide that is a truck they want to check, the FDA food and security officer could be at the right border point to meet the truck.
The notice itself is not a minor piece of work. It has 13 required fields for every shipment: the common name, the brand name, every pack size on the truck, the lot or code number, the originating country shipper, your anticipated arrival time at the border — and there is a four-hour window of opportunity — and the actual point of entry. Right now, if a truck were heading toward Buffalo, it could choose a border point. Now you will have to give the exact point so they know that is where the truck will cross if they want to check it.
As of December 12, when the final regulations become the rule, if you have not given prior notice, your product will be refused entry. This means you will sit at the border point and file again; 24 hours later, if you have done it right this time, the FDA will allow you to cross.
Mr. Phillips mentioned some of the problems we see that could affect our seafood industry, and they concern most of the perishables and live lobster. We do not load a truck 12 to 15 hours before it reaches a border point. We have no idea what will be on it. One of the rules states that, if you give notice of intent to amend the information in the original filing, you can amend the actual quantity you ship up to two hours before you hit the border, but you cannot change the mix.
If you have 100 cases of lobster, you can change it to 95 cases of lobster; however, you cannot substitute five cases of crab.
The originating country rules will give us heartburn, because for seafood, the rule is that they want to know the originating country based on the flag of the vessel that caught it. If I am in the groundfish business in Newfoundland and I am cutting fillets from Norwegian, Icelandic and Russian cod, I will have to control my inventory so that when I fill in my paperwork, I will be able to tell which box came from a fish from Russia. It can be done, but it will add a level of sophistication to inventory keeping and truck loading to be sure you get it right. That is inconsistent with customs rules, so you will have to have one set of paperwork for U.S. customs based on their country of origin rules and then a second set for the FDA based on the originating country of the raw material.
A U.S.-based firm that is your importer, your purchaser, or their agent — not yours — must file the prior notice. Somebody who has a place of business in the U.S. or is domiciled there must file it. Big companies will use their U.S. arms and export to themselves, put it in a warehouse and redistribute it. Smaller companies that do not yet have a U.S. operation will have to figure out a system or pay a customer for that kind of service on a shipment-by-shipment basis.
The industry will have to reorganize to figure out how to work with their customers to meet this ``importer, purchaser or their agent'' regulation and do this filing by noon the day before.
A real business issue, but not a border regulation, is we have not started to figure out the liabilities in all of this. We should not deal in hearsay, but we are hearing about people who have had their Canadian insurance cancelled as the product crosses the border, leaving them to find someone to insure for product liability on the U.S. side, because a Canadian firm will not want to carry the unknown risk. If a truck with $200,000 or $300,000 worth of lobster is held up for a day or two, you have to work out who is responsible. Did you file correctly, or did your agent file incorrectly?
I already mentioned that we will need to look at draft record-keeping rules. We do not know what they are. We assume they will be similar to the country of origin labelling program under the U.S. Department of Agriculture, which calls for you to maintain your records for every shipment for two years in a form that is auditable by a third party. Self- auditing would not be allowed. Holding on to this information in some form that can be traced for some time after the product goes across the border becomes a new cost.
As you know from yesterday's television announcement, the U.S. has gone to Code Orange. They instituted Operation Liberty Shield, which in itself has new recommendations for food security. It is aimed at things like feedlots, stockyards, food processing plants and storage areas. They want people to beef up inspection of trucks and cars that might enter their property, institute programs where you escort your visitors, et cetera. There are short-term programs coming down the line. I was mentioning to Mr. Phillips that somebody in my industry asked, ``Should I put extra product on the U.S. side, in case something happens over the next few weeks and they go to Code Red?'' I said I did not know what that meant. Mr. Phillips was explaining how it is managed at the border. I contacted the embassy to see if the FDA would implement Code Red in terms of imported food products. As of today, nobody in Ottawa knew, but they were going to ask Washington and let me know by tomorrow what the rules would be so I could give specific advice on whether to increase inventories in the U.S. in the short term. My point is that it will never be the same. There are practical realities for our industry that will cost money and that will force some of the smaller companies with less sophisticated systems to decide how they will meet all of these things. As we said earlier, NEXUS, FAST and C-TPAT are not in operation in the Atlantic and investment in the security infrastructure, such as special lanes, is not there. If you are an Atlantic trucker, the closest point to register is Champlain, New York. Anything that can be done to have the Atlantic considered a fairly critical border crossing point and to move some of these programs out from just the key points south of B.C. and Ontario would be appreciated.
Mr. Anthony Campbell, Consultant, Nova Scotia Fish Packers Association, As an individual: If you have the patience, I would like to say a few words. Let me tell you where I am coming from, so that you perhaps understand why a consultant was invited. Before doing that, I would like to mention that Mr. Bulmer, from whom you have been hearing, is about to retire. In the 34 years I spent in the Canadian government, I had the pleasure of working fairly closely with the fishing industry for four years and I never met a better Canadian. It gives me pleasure to see Mr. Bulmer in front of a group like this.
I retired two years ago from the Canadian government and became a consultant and a teacher. I am senior fellow at Carleton's school of international affairs. I teach in the Royal Roads University Human Security and Peacebuilding MA program and I teach change management at the University of Victoria.
I am the president of the Canadian Association for Security and Intelligence Studies, an institution whose purpose is to bring together people in the security, intelligence and enforcement fields. As you will hear in my comments, that it is an institution that never had anything to do with trade before, but it does now. That is one of the new facts of life and it is one reason I am here today.
In anticipation of today's session, I sent the clerk a copy of a chapter of a book called Canada Among Nations. You have seen it. It is produced by Carleton University every year, and this year, the subtitle is Coping With The Colossus. I pass it to you for reasons that I will try to link to the subject that you are discussing. If you looked at it before the meeting, you may have wondered whether it is the wrong committee.
In addressing where I am coming from, I should start at ground zero, which is that I have children and grandchildren and am concerned about their future, and in particular, their future as Canadians. The fact of Canadian trade dependence on the United States should be a matter of alarm — not because it is alarming to have a good customer; I sell my services in the U.S. market. I do not want to be a hypocrite. They are extremely good clients. However, the alarm is for obvious reasons. How do you maintain an adequately sovereign country in the face of such high dependence? With 9/11, the arrival of the security states in the United States and Hillary Rodham Clinton's dictum that security trumps economics, we have entered into a completely new experience in terms of the security relationship with the United States. Together with the trade dependence, this leaves almost no space in which we can delude ourselves about the degree of independence we actually have.
Managing the relationship with the United States starts with those two facts of life. We are trade dependent, and we are now dependent on U.S. security. We might say we have our own security system and our own capacity, but as long as the United States does not accept our level of security, our level of intelligence, our level of enforcement and our level of regulatory concept, then we will have to bend. In that environment, do we risk becoming second-class citizens, people who do not vote but are, in fact, run by the United States? We need to ask some fairly hard questions about that, and that is one reason I am happy to see this committee addressing the issues that it is.
There is a trade dependency and a growing security dependency, and there is no way around either of those or the linkage between them. What has intelligence and information got to do with, and perhaps contribute to, alleviation of or solutions to that situation? That is what I wanted to come to talk to you about. I see three ways in which the issues of information and knowledge, which is just a definition of the word ``intelligence,'' would apply to our trade relationship with the United States and, for that matter, with Mexico.
The first point is that Canada has had an extremely intense information relationship or intelligence — I will use the words interchangeably — with the United States ever since the Second World War. This was because of the Cold War, and the level and intensity of the intelligence relationship was such that there was no daylight. We relied and still rely very heavily on U.S. sources of intelligence for our understanding of what is going on in the world.
I spent seven years in that field in the Privy Council Office, and I learned there that you can be extremely integrated with the Americans and still maintain a high level of autonomy. In that sense, I am not frightened by near integration itself. I have seen how Canada, working smart with the United States, can do well in those kinds of relationships.
The point, I would suggest to you, is that to the degree there are new areas in which we are becoming more integrated with the Americans and losing the sovereignty we may previously have had, we perhaps should be looking for a compensatory strategy in which there might be one or several elements designed to counterbalance and therefore strengthen the maintenance of the sense of a Canadian autonomy. I have seen many of the senators at this table in various parts of the country, and it is hard to imagine the degree to which our arm can be twisted because there is a feisty, good Canadian spirit everywhere. Maybe I should not be too alarmed.
The point I want to make is this: To the degree that we have to accept a security and trade dependency, could we not try to create a greater degree of independence in our understanding of the world, in our information sovereignty? I want to suggest that there is room for Canada to move to a more sovereign information and knowledge capacity than it has had since the Second World War. The Cold War is over. The relationship with the United States is our number one international issue, and we do not have the knowledge or the information or the intelligence for dealing with that reality. We can strengthen our information autonomy, and by strengthening it we may be able to give ourselves some compensation for the degrees of security and trade dependency that we are entering into.
The second point I want to make is the one I have already touched on, but it may not be adequately understood. For the Americans, if there is a flaw in our security, we have a major trade problem. That means that we have to avoid those flaws in security, and that calls for an extremely high order of intelligence. Intelligence is the capacity to pre-empt or to anticipate activity. In looking at the trade relationship with the United States, you have to ask: What is the intelligence relationship with the United States, and is our capacity in intelligence adequate for dealing with it? My answer is no, it is not adequate, and it is only a matter of time until we have a trade problem because of an inadequacy of intelligence.
The third and last point is that I believe our machinery for coping with the United States, coping with the colossus, is in need of a complete upgrade. That is even too weak a word. It needs rethinking. We have been evolving new machinery, and maybe that is the old Canadian way. We have what amounts to a minister of continental affairs in the Privy Council Office, or now in the Department of Finance. However, I think in some part of the Canadian thinking and leadership structure, we need to rethink the way we go about structuring the management of the relationship with the United States.
The Department of Homeland Security is one immense challenge, and we have heard it touched on in the discussion so far. Do we have the capacity to manage an institution of that sort? Do we have the capacity to deal with a U.S. government that is reflecting a public that is completely panic-stricken over weapons of mass destruction? Do we have the necessary decision-making, accountabilities and linkages? My answer to all those questions is no.
Senator Graham: I have a question for you, Mr. Chairman, because you mentioned that there were reports of long lineups at the borders. Could you tell us which way they are going?
The Chairman: I cannot tell you. Mr. Phillips is the expert.
Senator Graham: Are they going south or coming north?
Mr. Phillips: They are essentially entering the U.S., so that is north in Detroit and south everywhere else. The reports this morning were of a two-hour delay at the Peace Bridge, which is usually an hour-and-one-quarter. I crossed the Lewiston/Queenstown Bridge in New York at 6:30 this morning, and there were approximately 70 trucks backed up, which is about normal. Reports were the Ambassador Bridge was backed up for about an hour, which is not too abnormal. While the wait was a little longer, I would not say it was in any manner or form a crisis.
There will be further delays, because under Code Orange they do a 75-per-cent trunk check on cars. Three out of four cars are looked at. Under Red Alert, they do 100 per cent trunk checks. Every car has to have a check of the trunk, and in some cases under the hood.
I might mention that the Red Alert will not be a national alert. It is for specific threats. It could be Chicago airport or the Ambassador Bridge. It is not a general state of security like orange and yellow.
The Chairman: May I put on the record, Senator Graham, that the committee has heard, and I believe I am right, that in order for us to maintain this enormous export of our goods to the U.S., and I am not certain if this includes the other way, although I suppose it does, that a truck must cross the Canada-U.S. frontier every second-and-one-half. This is the information the committee has heard.
Mr. Phillips: It is about two-and-one-half seconds.
The Chairman: Thank you for correcting that. The committee is conscious of the fact that if it becomes five or ten seconds, this has a huge economic impact on the country, and I suppose on the parts of the U.S. where this is very important. I wanted to put that context on the record.
Senator Graham: Mr. Phillips, in your verbal as well as your written presentation, you talked about high-level Canadian and U.S. government officials telling you that U.S.-Canada economic fundamentals are excellent, that U.S.- Canada trade flows are strong and vigorous, and that U.S.-Canada relations are mature and solid.
Is your position today the same as it would have been yesterday or last week?
Mr. Phillips: Yes.
Senator Graham: I am glad to hear you say that. Because of Canada's position on the much-publicized potential war in Iraq, some people have been wringing their hands and saying it will hurt us economically, diplomatically and so on. In spite of the President's statement last night, your view is that the fundamentals will continue to be excellent and that we will have a strong, vigorous, mature and solid relationship?
Mr. Phillips: Yes. A couple of weeks ago, Ambassador Cellucci and I were briefing a coalition. He went out of his way to say specifically that not only were they strong and mature, but that he thought that U.S.-Canada relations had never been better. I was in Ottawa several weeks ago when certain inappropriate remarks were made about not liking Americans. Statements have been made. We have to ignore that.
Ambassador Cellucci said that certain people were making a big issue about the President not liking the Prime Minister because he would not be staying overnight when he makes his state visit on May 5, which is ridiculous. He went out of his way to say that he is with these two gentlemen both privately and publicly and that they are fine together. Again, this is a question of perceptions. Canadians and Americans are both very strong.
I disagree a little with Mr. Campbell. Americans right now are not panicking, they are angry. We have worked on this since September 12. It is important, as Paul Cellucci says, that there be a zone of confidence around the U.S. and Canada. If it is just around the United States, it will change a lot of things.
John Manley is trusted in the United States. When John Manley shakes hands, the United States trusts him. Tom Ridge is of the same calibre. Those two gentlemen have a tremendous personal relationship, which is important to U.S.-Canada stable relationships in terms of not losing focus.
Rob Wright, your Commissioner of Customs, and Bob Bonner have a personal relationship that is critically important to this whole issue.
I am confident that the relationship and the deep feeling are as strong as ever. Yes, there are bumps in the road and so on. Softwood lumber is causing some angst. It used to be salmon. At one time, it was beer. For the main part, our trade and relationship are solid.
I am American. We recognize the sovereignty of Canada. There is no one in the United States who wants to take over Canada. It is not an issue. The issue here seems to be that we are a colossus and that we will do this, that and the other thing. I think it is distinct and separate. You are highly respected by the Americans.
We ought to avoid inappropriate comments. This idea about the President not staying overnight because he is angry is ridiculous. It is in the press and people comment on it. We should ignore it.
Senator Graham: An advance team of some 25 or 30 people from the State Department came to Canada recently to make preparations for the President's visit. I travelled on a sad mission to Belgrade with some distinguished Americans on the weekend to attend the funeral of the late Prime Minister of Serbia. We had a wonderful relationship and many talks about the current issues. Hopefully, these isolated comments will remain as such and we can eliminate them. For that, to you as an American, and to the extent possible, we apologize.
Senator Di Nino: I have one question for Mr. Bulmer that deals with a comment that we heard during our trip to Western Canada. I am wondering if he can shed some light on it through his experience. At times, it seems as if the trade relationship between Canada and the U.S. is more sectoral or regional. It has been suggested that a more pan- Canadian, united front would be a better way of accomplishing the goals of good trade relations. How do you find your situation vis-à-vis those from the other coast? Do you agree? Do you support each other, et cetera?
Mr. Bulmer: The Fisheries Council of Canada represents the industry in the Atlantic and the Pacific and the freshwater fishery in Ontario. From that point of view, I work for them all.
The advantage for the people on the West Coast relative to these border issues is that many of these programs we mentioned are focused south of Vancouver. That is their route. To a large degree, they tend to service California with groundfish, et cetera. Thus, they are able to take advantage of some of those arrangements, whereas the Atlantic product tends to cross into Maine. The key distribution point is then from Boston into the rest of America. Freshwater fish tends to go directly into those states south of Winnipeg and Michigan. I am referring to the product out of Lake Erie, et cetera. While I work for everyone, there are differences within the industry.
In the British Columbia industry, where salmon is still king, there tends to be a more diversified market that is less dependent on the U.S. There are big markets in the U.K., Australia and New Zealand for canned salmon.
In the case of the Atlantic, the people for whom Mr. Morrow works tend to like live lobster. With the exception of some seasonal air shipments to Europe, et cetera, you either sell it in the United States or you are in big financial trouble. In that sense, Mr. Campbell's comments about being totally dependent on the U.S. reflect the facts in the live lobster trade.
Mr. Denny Morrow, Executive Director, Nova Scotia Fish Packers Association: Nova Scotia is the number one province in terms of seafood exports, which amounted to about $1.2 billion worth last year. In the wintertime, the area in which I live, Southwest Nova Scotia, is totally dependent on fisheries exports for income. That is when our big Christmas shipments of lobster take place.
When the bio-terrorism act takes effect next December, we will have truckload after truckload of lobster headed down to Boston and New York. Some of that lobster will be transhipped. That presents a concern about how this will work.
In the handout that I circulated, I ran through a best-case scenario and also a problem scenario. There are many scenarios that fall in between those two. At a recent Boston seafood show, I spoke to some of our American buyers. By and large, they are ignorant of the issues and what their responsibilities will be under the bio-terrorism legislation. We are in the situation of having to educate them, and at the same time, trying to lobby the U.S. FDA and politicians while there is still some flexibility to change these regulations so that there is a less negative impact on our business.
I hate to think of what could happen in the community I live in, where $100 million worth of lobster essentially goes to the United States during the month of December. We have trucks lined up at the border point. Lobster does not survive long in the wintertime out of the water. We have a critical period in which to get them into the market. We have a big job ahead of us, trying to make these regulations more liveable for the seafood industry; otherwise, the economy in my region will really suffer.
Senator Di Nino: The involvement of the Canadian bureaucracy and the Canadian political system in helping you to achieve the objective of changing some of these regulations or lessening their impact on your business is one element. However, Mr. Bulmer also suggested that the dedication of government resources could make that transition a little easier. I am not trying to put words in your mouth, but is that what I heard you say?
Mr. Bulmer: I would certainly agree with that. In the short term, all of these test programs and pilots and even the rollout of the ones that have worked have all been in Central Canada and the West. That is why I am saying the B.C. industry has something of an advantage there. From the Canadian side, we are not able to take advantage of any of this — FAST lanes, improved lanes and trucks and carriers being registered. If you are in Newfoundland, you have to go to New York State to find the closest point where you can actually stand in front of the computer and the camera. We need the government activity and those funds that were put in place to be spread out on a far more adequate basis to represent all of Canada.
Mr. Phillips: Mr. Bulmer is absolutely correct when he says that the government must ensure that services are rendered across the entire border. The FAST commercial process is rolling out at six locations. That is where the truck volume will qualify for a separate set-up. NEXUS is the same; it will be at all crossings. They will be introduced in Calais, Maine, before the year is out. NEXUS will be at the points where people actually cross. Low volume, unfortunately, does not merit that.
I agree with Mr. Bulmer that we cannot ignore any segment of the border. I suggest that other programs that Canadian customs use, or pre-arrival processing when going to the United States, will work just as well as FAST in these locations that do not have it. That process must be rolled out and operational at all border crossings.
We must not only get FAST to the Atlantic Provinces; we must have an efficient commercial crossing there. That is the key. I did not want to only highlight FAST. We must make these processes effective and efficient at all border crossings from the West to the East.
Mr. Morrow: There are several companies in the Atlantic region, McCain Foods and Highliner, for example, and four or five companies in the association that I work for, that have spent a fair amount of money on becoming a partner in the Customs-Trade Partnership Against Terrorism, the C-TPAT program. In return for spending that money and resources, there are many companies from the Atlantic region queued up in Washington waiting to be approved. We have been told by U.S. Customs that we can expect expedited service at the border.
Our contacts with U.S. Customs in Maine tell us that one of the key components is that the truck drivers must have the FAST card. I have a brother-in-law in the trucking business. He tells me it takes two days to send a driver to Champlain, New York. With the expenses and the turnover that you have with that type of trucking, it is a constant cost for these firms and an impediment.
We have our manufacturers, our food suppliers, investing money and time in this program, but a key component is missing.
Senator Austin: I wish to express my appreciation for the high quality of the presentations we are receiving this afternoon. There are so many questions to ask and so little time.
One thing I would like to try to put on the record of our evidence is probably the most difficult thing to ask. Mr. Phillips, you say that economics and security should be balanced, but economics will pay for security. That is the reality that we see here. Would you comment on that?
Clearly, the two governments will have much higher direct costs for security provisions. Commerce is paying a parallel cost to meet the legislative tests that are being put in place. Having said that, do you have any idea from your own experience as to how much more costly the security system will be for U.S. and Canadian exporters in percentage terms?
We have a two-way trade today of almost $400 billion U.S. Are we looking at $40 billion, 10 per cent, or $20 billion of additional costs to consumers in each of our countries? When I ask that question, I am not complaining about security; I am simply trying to understand what is happening to the economics of trade between our two countries.
Mr. Phillips: No definitive dollar amount has been calculated, but I would be cautious on this point. The average border crossing costs versus sales for an efficient company, given all the logistics involved, is somewhere around five per cent. For an inefficient company, it can run as high as 13 per cent. These are the orders of magnitude.
Studies are showing that while security measures, like signing up for C-TPAT, or PIP in Canada, do have costs attached, you have to fix problems that you find, if your property is not protected, or whatever, for your own sake. I think you will find in the end that the increase in the costs of doing business as it was prior to September 11, that is the 5 per cent to 13 per cent, will go down. I predict that by the end of 2005, moving across the border will be more efficient for the low-risk traffic.
Since low-risk will tend to be about 85 to 90 per cent of the shipments, I would submit to you that while we will pay more for security to prepare for that, the ultimate outcome will be more efficiency and less lost time. You will see in some of the perimeter strategy material the billions of dollars that have been identified if we do certain things.
There is a balance here. There is a front-end cost that is higher, no question, but in the end, I believe there will be a trade-off in more efficiency. Literally, the intent of the United States is to move low-risk goods and people more efficiently than ever before and to have the higher security.
Mr. Bulmer: I want to make the point that with something like prior notice, the people in the IT business tell me that each time you have to make a list of a product, their best guess is it would cost U.S. $60 to U.S. $70. If you have to fill that in for 8 or 10 different products, you are looking at $400 or $500 permanently added to your trucking costs; for example, to the cost of getting that truck from Southern Nova Scotia to Boston.
Again, you can say this will all balance out from a national perspective, but I can tell that you if the rules go through the way they are drafted, you could be looking at multiple increases in costs to truck fish from Southwest Nova Scotia to Boston, and unless the rule changes — and we would not expect it to — that is a cost you will bear 10 years from now, if you are still in the business.
Mr. Phillips: I agree. I would comment on two things. Just think about this — this is very critical for Canada. Once the zone of confidence and the perimeter strategy are in place and we protect the perimeter, it will change all the dynamics between the U.S. and Canada.
I would submit to Mr. Bulmer that if we shift to a perimeter strategy, moving a truck from Nova Scotia to Boston ought to be as easy as moving it from Nova Scotia to Quebec. We have to think about that.
If we institute offshore interdiction, where all containers are looked at before they arrive, so that we are able to internalize the threats and stop the external ones, I submit then we have to take a new look at the dynamics of what it is like to go from Toronto to New York. It is critical to look at that benefit.
Second, the rules will change a little. On January 17, U.S. Customs put out a straw man on trucks, four hours before lading. It was to get everyone's attention. They admitted that ahead of time. Today you will find that pre-arrival means 15 to 30 minutes before a truck arrives, and that is reasonable.
Mr. Bulmer: That would not be for food.
Mr. Phillips: No. Hopefully the FDA proposals that you are dealing with now, which have all been posted, will change, and there are a lot of Americans trying to help you change that as well as Canadians. We have to wait and see. I do not know how it will turn out.
Mr. Morrow: One of the problems we have is in engaging the Americans. Whom do you engage? We have tried that at the agency level, and I do not think it has been terribly effective. I think what we really need is engagement at the political level. There are two senators who are key; Senator Collins, I understand, in Maine, is the Chairperson of the Security Committee in the Senate. Maine ships 40 million to 50 million pounds of lobster to Canada. We buy those to process in New Brunswick and Prince Edward Island during the late summer and the fall, and that provides a floor price for their lobster when they have a glut. There is reason to go both ways here, but we are putting forward perfectly reasonable positions to balance this trade or to make it workable, and we are lacking engagement with the proper people, in my estimation. At the agency level, I just do not think we are getting anywhere.
Senator Austin: Those were helpful answers and I appreciate them. The concern certainly here in Canada is that the costs of security can be one of the most difficult and important national issues. The theory is that costs rise equally in both markets, and therefore are fungible. The consumer will pay more for the package, but there will be no distortion of the trade balances. That sounds like an assertion, but it is a question.
Maybe you can deal with that, Mr. Phillips. I am looking for signs of brightness or hope here in our future trade processes, and I am wondering whether you see technology as adding to efficiency in bringing down costs. For example, you talked about containers. Do you know how many containers come through the ports of Vancouver or Halifax or Montreal from abroad, destined for the United States? How do you secure them against tampering, for example?
Mr. Phillips: Vancouver receives about 1.4 million and Montreal about 250,000, and somewhere in the range of 50 per cent to 60 per cent of those containers will be transhipped to the United States. That is why it is so critical that you have the targeters working in your ports right now.
In regard to security, I would submit to you that the whole strategy of Commissioner Bonner, when he envisioned this program — and I give him personal credit — with the trade community was that if we turned it around, X-rayed and controlled all containers at the point of origin, in fact you now have made the sea lanes safe for the supply chain and you are not doing any more work than before.
We used to check all of the containers arriving and right now we are checking on arriving and leaving, but the intent is that if every port checks containers leaving then they do not have to check the containers arriving. Therefore, in the end, we have done the same amount of work but we have made the sea lanes safe.
Senator Austin: Can you load a container in Hong Kong, seal it somehow, and then know where it is and that it has not been tampered with?
Mr. Phillips: I will explain. They are going to use layers of electronic seals. There are three layers. When that container is loaded in Hong Kong, the first is an electronic seal on the door. No one will take the door off if it has been tampered with. The second is a global positioning seal, which is a unit on the container that registers whenever it moves. If that container goes to the dock at two o'clock in the morning and someone hires the crane operator to move that container in the dark and do something with it while he is doing everything else, the GPS positioning instrument will indicate that an unscheduled move was made.
The third layer is to develop a light-sensitive seal, so that if you drill a small hole in the side of a container and light gets inside, an alarm goes off. That is critical because biological and chemical agents are inserted in small amounts and they do not need to take the doors off to do that.
The other one I am hearing about, which I have yet to see but I will in the near future, is an interior paint for a container. There is something about the static surface of the paint that sets off an alarm if it is pierced.
Keep in mind that September 11 changed one thing. The bad things used to be drugs, money, and other nefarious items, and people put things in the shipment but they always had to get them out before it got to its final destination. They did not want drugs to go to the General Motors plant.
On September 11 the bad guys had one interest. They wanted to get it in the shipment, and they would love it to stay in the shipment and blow up when it gets to the destination.
That is a quite different thing for security and law enforcement.
There are three levels of seals being looked at. The idea of CSI, or container security initiative, is to X-ray and VACIS them in Hong Kong. After they are sealed that way, they are monitored all the way here. When they get to Vancouver or Montreal, they can go on to Chicago on a truck or by rail and out through the port. That is the key.
Senator Austin: The reason for my question is that the container business is one of the most important parts of the Canadian transport economy, through Vancouver, Montreal and Halifax. Our transshipment of international containers into the U.S. market is a significant part of the business, so this issue is important to our study.
The Chairman: I notice these containers, because I move around ports a little. One is astounded by the piles of containers in Cologne or Buenos Aires. There may be 5,000 of them in one port. I understand that you can use paint or you can fit them with a device to allow them to be followed by satellite. Who watches? I can think of many ways myself to make something secure, but there has to be someone actually keeping track. Is there someone doing that? I do not want to pursue this very far, but one cannot help but ask that question. The terrorists who blew up the World Trade Center were people of whom no one had kept track.
Mr. Phillips: The U.S. and Canada are currently working on a pilot project called ``Operation Safe Cargo,'' and it is working very nicely. The intent is that making things more efficient and effective is the trade-off. Security is a reality. There are people in this world who would hurt both of our countries. It is very fortunate that Canada was not a target, and I hope you never are, but be ready. That is what security is all about. They are watching those monitors. All the things that are found in containers are not reported in the newspapers, but they would scare the living daylights out of you. That is our most vulnerable spot. As Senator Austin said, it is very important to both countries that the container trade is taken care of so that we do not have any incidents.
Senator Grafstein: I would like to commend the witnesses. The information you have given us is very important. In a way, you have given us information overload, in that we have to sort through these problems, and I can see that you are all suffering from the same thing.
I want to commend Mr. Phillips. I have been observing him in my position as Co-Chair of the Canada-U.S. Inter- Parliamentary Group for some years. He knows that until a year or two ago we could not get anyone on the political side interested in dealing with the border. Perhaps in this crisis we will be able to sort out some problems. In part, I share his optimism, but in the short run we could all be dead. I want to deal with the pessimism of Mr. Bulmer and Mr. Morrow and talk about how we can sort out some of these issues.
I am very sensitive to what they have said, that it is one thing to have a problem and another to have someone at the end of the line to solve it. To whom do you go now with the United States virtually transforming its domestic economy and trying to come to grips with it? Senator Snowe is now the chairman of the oversight committee. I know that there was a huge political fight over that committee. There are huge political battles going on and the Americans, quite fairly, are self-absorbed in trying to solve these problems before they will look beyond the borders to us.
If we want to solve some problems, where is our best point of leverage? We are dealing with a multi-faceted government. There is the executive; there are the bureaucracies; and then there is the contest between the two houses of Congress. If we are to make a recommendation, where should we focus our activity for the maximum leverage in pursuing Canadian interests?
The Chairman: Whom should we be visiting when we go Washington?
Mr. Phillips: I would be remiss if I did not say that Senator Grafstein is a very effective force in this U.S.-Canada relationship. I have commended him and Joe Comuzzi highly for their work on the inter-parliamentary group. Senator Grafstein also had a lot to do with the tremendous outpouring of Canadian support after September 11. That will never be forgotten.
Congressman LaFalce was Co-Chair of the Northern Border Caucus. When BTA became a reality in 1992, I asked Congressman LaFalce, whom I had known for many years, if he would form an official caucus in the House, and he did. With Congressman LaFalce's retirement, we reorganized the caucus. There are now four co-chairs; Bart Stupak from Michigan, Earl Pomeroy from North Dakota, George Nethercutt from Washington and Jack Quinn from New York. I suggest that you deal with that official caucus. They have now increased the membership in the Northern Border Caucus to nearly 60 congressmen. Jack Quinn is from New York. If there is an issue that needs support, he can get the other New York congressmen together. We do not ask them to join the caucus; we only ask the congressmen who are on the border. With 50 or 60 congressmen, we have representation from all 22 states.
That is the group with which I would urge you to deal. It is an official caucus. On the front page of our Web site, which is in my presentation, you will see a link to that caucus.
I am not in politics, but I would like to say for the record that Mr. Martin is very respected in the United States.
It is critical that you deal with Tom Ridge. Mr. Ridge is the Governor of Pennsylvania. He understands what it means to make a payroll; he understands what it means to run a business; and he understands the importance of Canada because Pennsylvania has been one of the highest-trading states with Canada for many years.
Unfortunately, with Senator Moynahan 's retirement, senators on our side are taking positions depending on what party they are with and where their constituencies are. It is, therefore, hard for me to point out anyone in particular, but I would go to the Northern Border Caucus for an exchange.
Senator Grafstein: I learned today that the new Co-Chair of the Canada-U.S. Inter-Parliamentary Group is Senator Crapo from Idaho. He is a very intelligent man and, although he has not been involved on the Canada-U.S. issue, we will obviously deal with him.
Could I hear from Mr. Bulmer and Mr. Morrow on this issue? They must be very concerned in the short run about the survival of some of their businesses.
Mr. Bulmer: I absolutely agree with Mr. Phillips on the political process. Border politicians who really understand this and the impact on them are one of our best levers. I am not sure that people from Nevada are as focused on seaport imports. Ambassador Cellucci, coming from Massachusetts, knows how much seafood goes through Massachusetts, even though it may be eaten in San Francisco or Los Angeles. From a political point of view, that is key to getting the job done.
The U.S. food industry is like any political process — it tends to respond to the domestic industry rather than people from offshore. We are frustrated with that. Wal-Mart is the biggest retailer of food in America today — it is bigger than any individual food chain. Costco is the single biggest outlet for farmed salmon in the United States. They do not see this as their issue. They will tell you flatly: ``I want it delivered to my warehouse at a certain price and at a certain time. Other than that — you figure it out. I am not setting up a business to get into dealing with prior notice to the FDA. You figure out whether you will hire a permanent agent.'' With that attitude, we are not making much progress with industry.
The third thing is the bureaucracy itself, which I want to put into the context of this perimeter argument. That works for goods coming from offshore into Canada and going to the United States. The food business in Canada starts inside that perimeter — with grain, fish, hogs out of Manitoba, et cetera. Unless you get the U.S. to recognize our domestic systems, it will not work. We have been arguing with the FDA about a mutual recognition of our inspection system for seafood — that is, the Canadian Food Inspection Agency — for five years, and we have not been able to progress at all.
Senator Grafstein: You said that your industry has little leverage with the bureaucracy, which is a major player in this game. You do not have any suggestions for us.
Mr. Bulmer: We will have to sort that out. Two of the three steps that you would want to take are not focused on the implications for the seafood industry of Canada.
Mr. Morrow: Mr. Bulmer mentioned Ambassador Cellucci. I have contacts, for example, at U.S. customs, who have said that it is critical to engage Mr. Cellucci in this to ensure that he knows about the issues in Atlantic Canada. My bias is the Atlantic region, and when we look at industry issues, it is usually General Motors or Ford that are the focus. Those companies are taken care of because there is so much at stake, whereas the Atlantic region is ignored. The U.S. FDA estimates that U.S. $1.8 billion in fresh seafood will be affected by this bio-terrorism. A high percentage of that will be in the Atlantic region. They also estimate that about U.S. $3.6 billion in produce from Mexico will be affected. There will be issues there as well. Ambassador Cellucci, Senators Collins and Snowe from Maine and the New England governors must be aware of these issues.
Our provincial governments in Atlantic Canada have ties with the New England governors. I have been encouraging politicians in the Nova Scotia government to become involved in this issue. Premier John Hamm and the Minister of Agriculture and Fisheries, Gordon Balser, are making every attempt to engage politicians in New England in discussions on this issue.
Senator Grafstein: I have one brief question for Mr. Campbell, whose paper we read, because I think he has raised an important issue.
Your work is well known, Mr. Campbell, and I am delighted that you continue to lend your expertise in Canada's national interests. I want to share a concern that I have about security in Canada. I have said this to other witnesses and Mr. Phillips will understand this: I find it tragic, in a way, that Canadian parliamentarians do not have any access to intelligence. When we have a debate such as we had last night, there is an absence of any intelligence based on the conclusions of members of Parliament. You have raised the issue that we have a difficulty with respect to intelligence sovereignty because we are heavily dependent, as many countries are, on American intelligence. My concern is that Parliament does not have the ability to act as a counterweight to the government with respect to intelligence. In effect, our role as parliamentarians is diminished because we do not have access to intelligence.
Having said that, I want to put something on the record. If I choose to go to the United States tomorrow, I could receive a senior briefing from a member of a congressional committee based on the fact that I have had a longstanding relationship with members of Congress, both in the Senate and in the House of Representatives. As a senator, I cannot get that same information in Canada. You have not raised this point in your paper, Mr. Campbell. Are you concerned about that?
Mr. Campbell: Thank you for an interesting question. I have not raised it in the paper directly, but I have indirectly. How can senators and parliamentarians generally evaluate even the comments I have made if they have never seen much of what so-called ``intelligence'' is? You do not see much of the security apparatus because it too is mostly hidden. Neither of those realities pertains to the United States, where there are congressional committees that are sworn in and have access to information.
I raised earlier the issue of our machinery for dealing with the United States, and it makes no sense that senators from Canada would go to the United States and have to admit that they have never seen any intelligence and that they are not involved in the systems that underlie security.
There were reasons for that, probably, during the Cold War. It is fair to note that the United States is the ``leakiest'' country I know of, from a security point of view, and most of it comes from Congress. That is a big problem but it could be avoided.
Senator Grafstein: In the U.K., there is a committee of Parliament that is highly selective and is given access to information. They can then participate in Parliament as a proper check and balance on the executive.
The United States has the same thing in both Houses. There may be ``leakiness'' on one side, but on the other side there is absence of information, which to my mind is the larger deficit. How do we correct that?
Mr. Campbell: Let me make the point that I think the leakiness, to the degree that it exists in Washington, is still worth it in terms of having a highly informed parliamentary organization capable of contributing to insight and debates, as opposed to the situation that we have here in Canada. It is not only Parliament, but it is also Canadians in general.
What information are we using to arrive at our conclusions about Iraq, for example? What is the origin of the information? To what extent are we vulnerable to information manipulation? The only antidote to that is a high order of autonomous information.
Sometimes the word ``intelligence'' connotes a series of spooky ideas, but 90 per cent of an intelligence briefing in Washington or in Canada will be from open-source information. I see no reason at all why senators should not be involved in the process of evaluating how good that information is. It should be part of your work.
The Chairman: Mr. Campbell, I would like to point out that we are the Foreign Affairs Committee, dealing with, at this point, foreign trade. The Defence and Security Committee that Senator Kenny chairs has actually heard from — and I was at the meeting — the adviser to the Privy Council on security. It was an interesting meeting. They have been holding extensive hearings on security, but that is not our mandate at the moment.
I thank our witnesses for appearing before the committee this evening.
The committee adjourned.