ARCHIVED - Customs Self Assessment Program
Evaluation Study

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November 2007

Table of Contents

• Executive Summary
• Introduction and Context
• Description of the Customs Self Assessment Program
  • Program objectives
  • Organization of the CSA program
  • The CSA process
• Evaluation Methodology
  • Evaluation issues and questions
  • Data collection methods
• Key Findings
  • Program Design and Delivery
  • Success
  • Relevance
  • Program Effectiveness and Efficiency
• Key Conclusions and Recommendations
• Management Response

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Executive Summary

Background

The Canada Border Services Agency (CBSA) launched the Customs Self Assessment (CSA) program in December 2001. The program was developed as one of the Customs Action Plan initiatives to enhance the Agency’s effectiveness in processing an increasing volume of goods crossing the border. The CSA program was designed to provide low-risk, pre-approved companies, that have a history of good compliance, with an expedited border clearance option and streamlined accounting and payment processes for imported goods.

The CSA border clearance option is available only to imported goods arriving from the United States. The vast majority of CSA releases take place in the highway mode. Certain goods are currently excluded from the CSA clearance option, including the following: goods that are subject to regulations by other government departments (OGDs), goods imported from offshore [ 1 ] and goods imported by a non-resident importer who does not have a branch office in Canada. To use the CSA clearance option, the goods must be imported by a CSA-approved importer. Goods entering Canada by highway must be transported by a CSA-approved carrier that is using a driver who is registered under the Free and Secure Trade (FAST) Commercial Driver Program (in Canada and the U.S.) and the Commercial Driver Registration Program (in Canada only). CSA clients, who are also approved as part of the FAST program, can also benefit by using designated FAST express lanes upon arrival at the border.

Shipments cleared through the CSA process, like all other shipments, may be subject to examination, although in principle CSA shipments are subject to fewer examinations than non-CSA shipments. CSA clients found to be in contravention of any acts or regulations are subject to penalties under the Administrative Monetary Penalty System, removal from the program or other enforcement actions depending on the severity of the infraction.

Methodology

The plan for this evaluation was finalized in October 2006 and the research was conducted between November 2006 and March 2007. The following methods were used:

• a review and analysis of CSA documents and statistics;
• interviews with CSA program staff at headquarters and in the regions;
• group interviews with two compliance teams and with border services officers;
• site visits to observe program delivery in Mississauga, Hamilton and Windsor; and
• case studies of eight CSA-approved companies.

Summary of Findings and Recommendations

Overall, the CSA program is a beneficial program that provides clients with a means to streamline accounting and payment processes and to expedite border clearances — a means that is well-aligned with the CBSA’s vision for the future with respect to improved border management, including enhanced security, by a better utilization of its resources on higher or unknown risk cases. The number of CSA participants, the number of CSA releases and the proportion of the total dollar value of imports represented by CSA clients continue to grow. The evaluation found that the CSA program benefits both clients and the CBSA. However, due to restrictions on the types of goods that can be imported under the CSA program and a lack of CSA-approved importers, there are also benefits that are not realized by CSA clients. Similarly, because the volumes of CSA shipments are not yet large enough in most ports of entry, the CBSA has only seen some impact on the way it allocates its resources in high-traffic ports. Interviewees have a high level of confidence in the CSA program and believe that there are opportunities to improve the effectiveness of the program, particularly through the elimination of certain program restrictions (e.g. OGD-regulated and offshore goods), where feasible.

The CSA program is well managed, although since its inception, functional and reporting responsibilities have been split between two branches of the Agency. This instability does not seem to have had an impact on the success of operations but it has led to some confusion for CBSA staff outside the CSA program concerning where program responsibilities lie and it may have contributed to delays in key areas of decision making and to delays in permanently staffing the compliance management teams. The evaluation also found that the policy documents for clients (D-memoranda) are not finalized (although draft versions were shared with clients), there is a lack of a performance monitoring system for the CSA program and the CSA program could be better communicated to front-line staff.

The functional and reporting components of the CSA program have recently been merged under the Admissibility Branch and that should further facilitate the management of the program. It is important to note that some interviewees question the appropriateness of the current structure and feel that the operation of the program would be better positioned within the Operations Branch.

Recommendation 1 — Strengthen the CSA program by completing the transition of the program and solidifying its governance structure:

1. Formally define the roles and responsibilities of CSA program staff (and other staff involved in serving CSA clients) and communicate them fully to CBSA staff.
2. Finalize the D-memoranda and circulate them to CSA clients.
3. Communicate CSA-related issues/changes to front-line staff in a timely fashion.
4. Develop a general CSA training package that could be delivered to front-line staff.
5. Develop an ongoing performance measurement framework for the CSA program to allow for regular reporting of outcomes and identification of program improvements.
6. Develop an automated approach to process CSA duty and tax revenue payments.

Each year, the number of CSA clients continues to grow. In 2006, CSA imports represented 18% of all value for duty of imports in Canada and a third ($218 billion) of total non-offshore imports (i.e. imports only from the U.S.). The proportion of CSA releases over all releases has continued to increase each year, from 1% in 2002 to 5% in 2006. However, the evaluation findings show that the CSA program has not yet reached its full potential and this is mainly due to low importer participation rates. The restrictions related to OGD-regulated and offshore goods are the key reason for the low participation levels. Imports of offshore goods represented approximately 35% of the total value of imported goods in 2006. [ 2 ] This means that unless certain restrictions are eased, the CSA program will reach a limit to the volume of imports it can assume.

The CSA program has been able to attract the largest importers. The automobile sector dominated the membership initially and in terms of all CSA releases [ 3 ] made since the program’s start, 98% have been made by this industry. With the addition of 35 new importers between December 2002 and 2006, the value of imports by CSA clients only increased by 2% (from 16% to 18%).

CSA clients are receiving some benefits, including more expedited border clearances and reduced reporting requirements; however, a lack of CSA participants (either importers or carriers) does not always allow companies to take advantage of the CSA option. The biggest benefit of the program to date for importers appears to be improved accounting and payment processes, including the option to report and remit payment on duties and taxes once a month at their own financial institution. Companies view the CSA program as a beneficial one, particularly because they believe that their participation provides them with a competitive advantage over other companies and they use their CSA status as a marketing tool. This benefit was seen by case study organizations to outweigh the costs of participation. Companies believe that as more clients become CSA-approved and the infrastructure for the FAST lanes is improved, the benefits of the CSA program will be greater.

The CSA program is viewed as being unique because it incorporates all aspects of the commercial process under one umbrella: border arrival and clearance, release of goods and accounting for goods. Two other release options represent some duplication and may in fact be discouraging participation in the CSA program: FIRST (Frequent Importer Release System) and Form A49 (Automotive Report and Release Document). The CBSA stopped taking FIRST applications in January 2007 and this release option will no longer be available to importers after January 31, 2008, when it will be phased out. In addition to duplication issues, allowing expedited clearance to companies that are not CSA-approved also raises issues of fairness (companies invest substantially to become CSA-approved) and security (these companies and drivers may not have been risk assessed in advance as have those that are CSA-approved).

Recommendation 2 — Explore ways to maximize the effectiveness of the CSA program:

1. Work with OGDs to determine whether other options are available to meet their requirements, thereby allowing goods currently restricted due to these OGD requirements to be included under the CSA program.
2. Determine whether the CSA program could be open to offshore goods, keeping in mind the challenges that would be associated with conducting the risk assessments.
3. Explore whether the FAST program would benefit from allowing importers and carriers who are only approved under the Partners in Protection program to enroll, thus removing the requirement of being CSA-approved to become FAST-approved (the evaluation of the FAST program currently underway will also explore this issue and allow management to further consider this).
4. Should the Partners in Compliance (PIC) program (currently a pilot project) become a permanent program, consider combining its delivery with that of the CSA, thereby giving CSA members an option to participate in the PIC program.
5. Eliminate duplicate release options, such as FIRST and Form A49, and streamline available release options, recognizing that eManifest (the next phase of the Advance Commercial Information program) will have an impact on the processing of goods at land border crossings in the longer term.

1.0 Introduction and Context

This report presents the evaluation findings of the Customs Self Assessment (CSA) program. The evaluation of this program was identified as a priority for 2006–2007 in the Canada Border Services Agency’s (CBSA) Risk-Based Multi-Year Evaluation Plan, 2005–2008, which wasapproved by the Internal Audit and Evaluation Committee in June 2005.

1.1 Description of the Customs Self Assessment Program

Program objectives

The CSA program was announced in April 2000 as one of the Customs Action Plan initiatives and launched in December 2001. It was developed by the CBSA to enhance the Agency’s effectiveness in processing an increasing volume of goods crossing the border into Canada. The CSA program focuses on enhanced compliance and is based on the principles of risk management and self-assessment. The program provides approved importers with streamlined accounting and payment processes for imported goods. CSA clients use their own business systems to self-assess their customs obligations. The program also provides approved clients with a streamlined border clearance option: upon the presentation of identification showing that the importer, carrier and driver have been approved for participation in the program, CSA-eligible goods may enter Canada and information about the imported goods or the conveyance does need to be provided at that time.

Organization of the CSA program

The CSA program began as a project and was managed by the Innovation, Science and Technology (IS&T) Branch. The Enforcement Branch is functionally responsible for the risk assessment of applicants (the risk assessments are performed in the Northern Ontario region). At the outset of the program, a compliance team located in Mississauga was responsible for administering the program, which involved liaising with clients, processing applications and monitoring approved clients. In 2003, the team was spilt in two, creating one carrier-specific and one importer-specific team. The importer compliance team remained in Mississauga and the carrier compliance team was managed from an office in Hamilton. Each team was headed by a manager, who reported to the Director of the Commercial Programs Division in the IS&T Branch at headquarters (HQ).

In July 2005, the functional authority for the program was transferred to the Admissibility Branch. The managers of the two compliance teams continued to report to the Director of the Commercial Programs Division until February 2007. They now report to the Director of the Commercial Border Policy Division in the Admissibility Branch. The CSA program has an annual operating budget (2005–2006) of $3.1 million; this includes salaries and benefits for about 50 CBSA staff. In addition, three full-time equivalents (FTEs) are dedicated to CSA risk assessments.

The CSA process

To qualify for the CSA program, companies must apply and meet program eligibility criteria. During the application process, the CBSA conducts checks to ensure that applicants are low risk (i.e. have a good compliance history) and completes a review of their accounting and payment systems to ensure that applicants meet program requirements. [ 4 ] If they do not, the CBSA identifies necessary system modifications. The CSA border clearance option is available only to imported goods arriving from the United States. The vast majority of CSA releases take place in the highway mode. Participants may not use the CSA clearance option to import goods that are subject to regulations by other government departments (OGDs), goods imported from offshore,[ 5 ] goods imported by a non-resident importer who does not have a branch office in Canada, or goods not being imported by a CSA-approved importer.

For goods entering Canada by highway mode, CSA-approved importers and carriers must use drivers who are registered under the Commercial Driver Registration Program (CDRP) or the Free and Secure Trade (FAST) Commercial Driver Program.[ 6 ] The FAST Commercial Driver Program is available to drivers who are citizens or permanent residents of Canada and to citizens or legal aliens of the U.S. who meet specified requirements. FAST/CDRP drivers have access to designated FAST express lanes upon arrival at the border and to the dedicated FAST primary inspection line (PIL). At all automated ports of entry (POEs), FAST/CDRP drivers hauling CSA-approved goods can benefit from the CSA expedited release process in any lane (FAST and non-FAST).

When a driver arrives at the PIL, border services officers (BSOs) scan the driver’s FAST/CDRP card and other bar codes into the Accelerated Commercial Release Operations Support System (ACROSS) to validate the status of the CSA-approved importer, the CSA-approved carrier and the FAST/CDRP registered driver. The shipment is then designated as “authorized to deliver” (i.e. cleared).[ 7 ] Shipments cleared through the CSA process, like all other shipments, may be subject to examination; although, in principle, CSA shipments are subject to fewer examinations than non-CSA shipments. CSA clients found to be in contravention of any acts or regulations are subject to penalties under the Administrative Monetary Penalty System (AMPS).

Once the goods are cleared for entry, the driver delivers the goods to the importer, who provides proof of transfer via a delivery receipt to the carrier. Upon receipt of the goods, the importer assumes liability for the shipment. At this point, the goods are considered released and the time frame for accounting to the CBSA commences. As part of the CBSA’s efforts to streamline customs reporting, importers pay duties and taxes using a monthly revenue summary form to summarize adjustment amounts and interest owing. After the amounts owing (debits) and amounts refunded (credits) are calculated, the importer will send the net amount to the Receiver General for Canada through a financial institution on the last day of each month.

1.2 Evaluation Methodology

The evaluation was based on the CSA Evaluation Plan, which was prepared by the CBSA’s Evaluation Division in the Strategy and Coordination Branch. Government Consulting Services conducted the evaluation of the CSA program under the Evaluation Division’s guidance and with its participation and support. The evaluation was conducted between November 1, 2006, and March 30, 2007. The main objective of the evaluation was to assess the progress the CSA program has made in achieving its expected results, as well as the effectiveness and efficiency of program design, delivery and management.

Evaluation issues and questions

The evaluation was designed to address four key issues: program design and delivery, success, relevance, and program effectiveness and efficiency. A total of 14 evaluation questions were explored, as shown in Table 1.

Table 1: Summary of CSA evaluation questions

Evaluation Issue	Evaluation Question
Program design and delivery	1.1   To what extent is the governance/management structure of the Customs Self Assessment (CSA) program effective/appropriate?
	1.2   How effectively is the CSA program monitored/managed for continual improvement?
	1.3   How effective are internal and external communication mechanisms?
	1.4   To what extent are CSA program guides and training appropriate/adequate?
	1.5   To what extent are sufficient resources available for the CSA program?
Success	2.1   What has been the impact of the design of the program on its success?
	2.2   To what extent has the CSA program contributed to improved compliance of participating importers and carriers?
	2.3   To what extent has the CSA program enhanced the CBSA’s risk management including refocusing of resources from low risk to high and unknown risk processing?
	2.4   To what extent has the CSA program streamlined and simplified the import process, thereby increasing the competitiveness of Canadian industry?
Relevance	3.1   How well is the CSA program aligned with the CBSA’s strategic outcomes?
	3.2   To what extent are CSA border clearance option restrictions concerning commodities, modes of transportation and countries of origin still valid?
	3.3   To what extent is it beneficial to link the CSA and FAST programs?
Program effectiveness and efficiency	4.1   To what extent is the CSA program delivered cost effectively?
	4.2   Are there more efficient and effective alternative delivery methods?

Data collection methods

The evaluation was designed to use multiple lines of evidence that were both qualitative and quantitative in nature. A brief description of each of these lines of evidence follows.

Document Review

The following documents were reviewed and analyzed to obtain an understanding of the CSA program:

• background documents related to the CSA program, including fact sheets, transition documents, the business case and the CSA outreach plan;
• program operational documents, including standard operating procedures, D‑memoranda and statistical reports; and
• other general documents, including documents about the Customs Action Plan and other CBSA programs (e.g. FAST, Partners in Compliance (PIC), Partners in Protection [PIP]).

One-on-One Interviews

Interviews were conducted at HQ with representatives from the Admissibility, Comptrollership, Enforcement, IS&T and Operations branches. Interviews were also held with regional staff including directors general (or their representatives) from four regions (Niagara–Fort Erie, Greater Toronto Area [GTA], Quebec and Windsor–St. Clair), the managers of the compliance teams and representatives of commercial operations and intelligence in Windsor. Representatives of four large industry associations were also interviewed. Interviews were conducted either by telephone or in person. A breakdown of the interviews is provided in Table 2.

Table 2: Number of interviews conducted (by interview category)

Interview Category	Number of Interviews
CBSA HQ staff	10
CBSA regional staff	11
Industry representatives	4
Total	25

Group Interviews

A total of 23 CBSA staff participated in group interviews. Group interviews were held with 5 members of the carrier compliance team, 13 members of the importer compliance team and 5 BSOs at the Ambassador Bridge in Windsor.

Site Visits

Four site visits were conducted to gather information on and observe CSA program delivery. Visits included Mississauga and Hamilton where individual and group interviews were held with the compliance management teams. A visit was conducted in Windsor to observe the border clearance process at the Ambassador Bridge, to conduct interviews and to hold a group interview with BSOs. A fourth site visit was conducted at the Northern Ontario regional office in Ottawa to interview representatives of the risk-assessment unit.

Case Studies

Case studies were completed on eight CSA-approved companies. The Evaluation Division selected five carriers and three importers from a list provided by the compliance teams and ensured that the companies were of various sizes and from different geographic areas of the country. The case studies were conducted using a structured case study methodology, which was designed to gather information on participants’ experiences with the program and determine the level of benefit to the organization as a result of the CSA program. The case studies were based on telephone interviews with representatives of the companies and Internet research. Information from the case studies was then analyzed according to the evaluation indicators. In addition to the case studies, seven CSA-approved importers that were not FAST-approved at that time were contacted to gauge the perceived benefits of the CSA program without being FAST-approved. Of the seven, five responded to a short questionnaire.

Data Analysis

The Consolidated Management Reporting System (CMRS) was the primary source of quantitative information for the evaluation. The CMRS pulls together information from various CBSA systems and provided CSA data on the number of releases, examinations and AMPS penalties issued. The Integrated Customs Enforcement System, which is a repository for enforcement data, was used to obtain statistics on any seizures associated with CSA clients. Data on import values was obtained from the Facility for Information Retrieval Management (FIRM).

Quantitative data was also obtained from the managers of the compliance teams. A database, developed and managed by the carrier team, provided data related to application volumes, processing times and client demographics. Similar information for CSA-approved importers was provided by the importer team.

2.0 Key Findings

2.1 Program Design and Delivery

To what extent is the governance/management structure of the CSA program effective/appropriate?

All relevant legislation and regulations are currently in place, although key policy documents for clients (D-memoranda) are not yet finalized.

All relevant legislation and regulations are in place for the CSA program, as outlined in the Customs Act, particularly in amendments to Bill S-23 that came into force in 2001. Regulatory amendments were proposed in Customs Notice N-414, Proposed Regulatory Changes in Support of the CANPASS Programs and the Customs Self-Assessment (CSA) Initiative,and are now in effect.

Memoranda D17-1-7, Customs Self Assessment Program for Importers, and D3-1-7, Customs Self Assessment Program for Carriers, have been developed to explain CSA policy and procedures and the application process to CSA clients. These documents have yet to be finalized but are currently in the stages of publishing. Various iterations of the draft memoranda have been shared with clients since around 2001. In the absence of formalized guidance, clients are more likely to contact compliance managers for clarification. There is no evidence, however, that the level of compliance has suffered as a result.

While the governance structure for the CSA program has been unstable, program management has been effective.

In July 2005, the functional authority for the program was transferred to the Admissibility Branch. The compliance teams only started reporting to this branch in February 2007. Under the previous structure, policy and program issues were dealt with informally through discussions between the CSA program manager and the compliance teams. Program management has been effective even with the changes in the program’s governance structure, but it also highly dependent on the good working relationships of those involved. This new structure may stabilize the program and allow for greater flexibility when making decisions on key program issues. For example, having the CSA program housed in one branch means that decisions on policy issues are not made in isolation of the people who implement the policy, which was a risk in the previous structure.

There are mixed views on whether CSA compliance managers and their teams should be reporting to the regional head rather than to HQ.

Program management is aware that this reporting structure and other issues have created some friction. The source of this friction relates to the CSA program being a national program that is managed out of the GTA but reports to HQ, and employees spread across the regions report to HQ managers located in the GTA, not to a regional manager in the region where they work. This program delivery structure has created confusion in the regions as to who is responsible for what aspect of the program and has impeded CSA-related communications in the regions (e.g. client services staff are not always aware that there is a CSA compliance manager in their region that they can contact with questions). While locating all aspects of the program in the Admissibility Branch should facilitate a nationally coordinated and consistent approach to program delivery, the above-mentioned issue has yet to be addressed.

While roles and responsibilities are not clearly defined for all groups in the CSA program, they are generally understood.

The CSA program has many linkages to other programs located in other CBSA branches. The functional authority for the PIP program and the risk assessments conducted by the Northern Ontario region is within the Enforcement Branch. The functional authority for the FAST program is within the Admissibility Branch, and for the PIC program it is within the IS&T Branch. The Operations Branch is accountable for program delivery and the Comptrollership Branch is responsible for processing CSA clients’ payments of duties and taxes. There is no complete management framework defining the roles and responsibilities of all delivery partners. Putting in place a management framework would allow the parties to improve their ability to set common priorities.

The roles and responsibilities of CSA HQ staff are not formally defined, although staff appear to be comfortable in fulfilling their roles and responsibilities without such formal definition. From a regional perspective, the lines of reporting have been unclear because compliance managers report to a HQ branch as opposed to regional management. Compliance managers are guided in their day-to-day work by standard operating procedures and performance agreements, which outline their roles and responsibilities. Compliance managers are the main point of contact for CSA clients and should questions arise that extend beyond their scope of responsibility, they know who to contact for clarification.

How effectively is the CSA program monitored/managed for continual improvement?

There is no formal strategy in place to measure and report on the performance of the CSA program on an ongoing basis. There are some concerns about data availability and integrity.

The CMRS is the main system that provides data on the CSA program, such as the number of releases, examinations and AMPS penalties issued. However, CMRS data, extracted from a number of CBSA databases, do not include key CSA output and outcome measures. For example, it is not possible to determine the ratio of CSA releases to non-CSA releases, nor is it possible to ascertain the number of trucks transporting CSA-approved goods into Canada versus the number of trucks transporting other goods in FAST or regular lanes. Value for duty (VFD) was selected as the best measure of volume of CSA clients; however, the database does not make a distinction between the goods CSA clients imported under the CSA program and those that were not. The managers of the compliance teams maintain output-based information for the CSA program (e.g. statistics on application volumes) and provide weekly reports with these statistics to the CSA program manager. There are also data-quality issues, e.g. data maintenance and front-line data entry, particularly with the carriers, that impede the ability to measure program outputs, outcomes and ultimately, results.

How effective are internal and external communication mechanisms?

When the CSA program was launched, a solid communications strategy was implemented. Since then, the level of communications has declined.

Internal to the CBSA, the Customs Action Planwas widely distributed to make employees aware of the broad vision for CBSA programs and how the CBSA was moving into the “electronic age.” The CSA program was also promoted internally through the intranet, presentations to staff and formal briefings and memos. Communications on CSA-related issues are currently done on an ad hoc basic. CSA front-line staff in the regions are not always kept apprised of CSA-related issues. BSOs have a good understanding of CSA procedures and how to process CSA shipments, but lack information regarding the general theory and objectives of the CSA program. The level of BSOs’ understanding of what the CSA program tries to achieve is related to their perception of CSA clients (i.e. are they really low risk?), which could influence decisions to examine CSA shipments. BSOs in the group interview agreed that a better general knowledge of the CSA program would be useful in helping them gain confidence in the CSA process and treat CSA clients accordingly.

Front-line staff in Windsor experienced a number of challenges when the CSA program began (e.g. what should be done if an error message appears on the screen when trying to scan bar codes?). Windsor currently funds a program services officer position and that person is responsible for troubleshooting any issues related to the CBSA’s commercial releases, including CSA releases. This officer is the main liaison between that region and CSA program staff, although there is little to no interaction between this officer and the compliance managers and compliance teams. Greater interaction and communications between compliance management teams and the front line would benefit the program, the staff delivering the program and the program’s clients.

Communications between HQ and the compliance teams are excellent. Regular conference calls are held between the CSA manager and the managers of the compliance teams. HQ and the compliance teams also maintain contact via frequent telephone conversations, e-mail, teleconferences and bi-annual conferences.

The CBSA has adequately promoted the CSA program externally and as a result there is a good level of awareness of the program.

Initial external communications about the CSA program were in line with the communications plan of the Customs Action Plan and included outreach activities to potential clients: Web sites, information sessions and packages, bulletins and fact sheets. The CBSA’s client service units (CSUs) provide information and outreach on the CBSA’s programs, including the CSA program. These units give presentations to interested companies and then refer the companies to the appropriate compliance team should the company want to obtain more detailed information on the program. Regional interviewees believe that the CSUs play an appropriate and important role in promoting the program. Program promotion has resulted in a good understanding of the CSA program although it is possible that smaller import companies may not be as aware of the program as the larger ones, which is likely a result of the CSA program actively targeting larger companies (i.e. the top 100 importers). Industry representative indicated that most of the outreach and communications for the CSA program was done at the outset and little program promotion has taken place recently.

Commercial stakeholders provide both program and policy input, particularly through the Border Commercial Consultative Committee.[ 8 ]

By meeting at least twice a year, trade organizations are provided with an opportunity to speak on behalf of their members and the CBSA has an opportunity to receive input into strategies, policies and operational programs that might affect the processing of commercial goods at Canada’s border. In addition, the CBSA meets with industry on an as-needed basis and makes presentations to industry on the CSA program. Several of the organizations interviewed were of the opinion that the CBSA is listening but not really responding to their concerns and often makes decisions contrary to their input.

To what extent are CSA program guides and training appropriate/adequate?

Formal training has been made available to compliance managers but has been limited and more informal for BSOs.

Extensive training has been made available to compliance managers, including a one-week training course, regular conferences, presentations, consultation with subject matter experts and a CD training package. Compliance managers also receive on-the-job training through job shadowing. Compliance managers are very satisfied with the availability of these opportunities.

Training for BSOs is informal and is delivered in the form of information packages, presentations and staff briefings. With no formal training to keep themselves updated on CSA procedures, BSOs focus their learning efforts on job shadowing. BSOs indicated that these methods teach them about CSA procedures, but suggested that it would be helpful to have more general training on the CSA program.

To what extent are sufficient resources available for the CSA program?

With current volumes, risk-assessment officers complete the risk assessments within established time frames.

There are currently three FTEs dedicated to conducting CSA risk assessments, which is viewed as insufficient and having an impact on the time it takes to complete the process, although, on average, the risk assessments are being completed in a time frame that is below the established benchmark (see Table 3). The risk-assessment unit also indicated that the volume of files being received from the compliance teams for re-risking is growing and in fact there are times when the number of files for re-risking is higher than the number of new files. Importers are re-risked every three to four years, while carriers are re-risked during the monitoring process that is established for each carrier, as per CSA policy.[ 9 ]

Compliance managers currently have a higher volume of cases than is thought to be ideal, resulting in the processing of applications taking longer than established benchmarks.

The current caseload volume for compliance managers extends beyond what is thought to be ideal according to HQ guidelines. For the importer compliance team, the ideal workload is set at 10–12 cases per compliance manager. As of January 2007, there were 17 importer compliance managers handling a total of 322 cases, for an average of 19 cases per manager.[ 10 ] On the carrier side, the ideal caseload per compliance manager is 50 files. As of the same time period, there were 18 carrier compliance managers handling a total of 1,700 files, for an average of 73 files per manager.[ 11 ] Because an applicant is assigned to a compliance manager that is within the applicant’s geographic region, the distribution of caseloads is not equal.

The current caseload volume is having an impact on the length of time it is taking to process applications. If actual processing times are compared to benchmarks (where they exist), it is taking longer than expected to process the applications (see Table 3). Excluding the time it takes companies to complete Part II of the application process,[ 12 ] it is taking almost twice as long to process an application than expected — 154 days compared to the benchmark of 80 days for carriers and 140 days compared to the benchmark of 75 days for importers. These delays can be attributed to the amount of time it is currently taking to complete the client profile section of Part I — 63 days longer than expected for carriers and 71 days longer than expected for importers.

Table 3: Case processing times

Part of Application	Carriers		Importers
	Benchmark (business days)	Actual (business days)	Benchmark (business days)	Actual (business days)
Part I (client profile)	15	78	10	81
Part I (risk assessment) [ 13 ]	60	57	60	42
Part II (approval)	n/a	170	n/a	417
Part III (signing)[ 14 ]	5	19	5	17
Total business days	n/a	324	n/a	557
Total months	n/a	13.2	n/a	24.1

Source: Information compiled by compliance management teams using internal systems.

2.2 Success

What has been the impact of the design of the program on its success?

While the number of CSA clients continues to grow, participation on the importer side has been lower than expected.

Between the program’s inception and December 2006, a total of 1,734 carrier applications and 322 importer applications were received.[ 15 ] The biggest growth in applications received was in the second year of the program (2002), when there was a 74% increase in the number of carrier applications and a 204% increase in the number of importer applications received. As of December 2006, 728 carriers and 40 importers were approved for the CSA program. The number of applicants that have been denied program approval is fairly low. Only two importer applications and 299 carrier applications have been denied. The importers were denied because they did not meet CSA prerequisites and the carriers were denied because they failed to provide the information requested (57%), they were not bonded (33%) or they did not meet eligibility requirements (7%).

The CSA program has been able to attract the largest importers and the automobile sector dominates the membership (since 2003, 98% of CSA-approved importer releases are related to this industry). With the addition of 35 new importers between December 2002 and 2006, the value of imports by CSA clients only increased by 2% (from 16% to 18%).

A substantial number of CSA-approved companies have their HQ located in Ontario, representing more than 40% of CSA-approved carriers (another 9.1% are located in Quebec, between 0.3% and 6.7% are spread across the other provinces, and 23.5% are U.S.-based). Few importers (10%) have been approved outside Ontario and Quebec. There are no CSA-approved importers in any of the Atlantic provinces or in Saskatchewan. Data provided on the location of current CSA applicants show that 12 applications are in progress for companies located in the Atlantic provinces. Almost all CSA releases (99%) are recorded in southern Ontario: Windsor Ambassador Bridge (66%), Sarnia Blue Water Bridge (24%), Fort Erie Peace Bridge (5%) and Queenston Lewiston Bridge (4%).

Carrier participation is largely driven by importer participation because without CSA-approved importers, carriers would not have CSA-approved goods to haul.

Given that, the carrier compliance team believes the total number of approved carriers is significant and it expects that the number of CSA-approved carriers may cap out at around 3,000. From the importer perspective, the objective of the importer team is to target the top 100 importers and as of December 2005, 48 of the top 100 had a CSA application in progress or approved.

The CSA-approved importers’ proportion of total VFD has grown since the program was implemented and currently represents a significant proportion of the total VFD of all Canadian imports. In the first year of the program (2002), five importers (mainly automotive companies) represented 16.4% of the total VFD ($57 billion of $349 billion). By the end of 2006, that proportion had grown to 17.9% ($70 billion of $396 billion) with the addition of 35 new CSA clients (see Table 4). Since 2002, the CSA imports related to the automotive industry account for 94% of VFD and 76% of duty for CSA importations. The 2006 figure for imports of automotive products was $120.5 billion, representing 30% of all goods imported in that year.[ 16 ]

Table 4: Total VFD by importers (CSA-approved[ 17 ] and non-CSA-approved)

Change in VFD Represented by CSA
Year	# of importer	Total	VFD CSA	CSA Proportion Total
2002	5	$ 348,957,000,0	$ 57,215,786,5	16.4
2003	8	$ 336,141,000,0	$ 59,807,518,8	17,8
2004	18	$ 355,799,000,0	$ 62,511,176,6	17,6
2005	25	$ 380,810,000,0	$ 61,095,210,5	16,0
2006	40	$ 396,443,000,0	$ 70,966,691,6	17,9

Source: Information compiled with data from Strategis and FIRM.

It is difficult to estimate the potential growth of the CSA program for a number of reasons.

There are no data available to determine the VFD on CSA-imported goods separate from all goods that CSA-approved importers bring into Canada. In addition, there are no data on the magnitude of offshore goods destined for Canada that transit through the U.S. and that arrive by highway or rail. The proportion of goods imported by CSA-approved importers that are subject to OGD regulations and thus cannot be cleared using the CSA release process is also not known.

Using overall import volumes and the number of top 100 importers currently members of the CSA program as indicators of potential, of the 43 CSA-approved importers as of April 19, 2007, 20 are among the top 100 importers (in terms of total value of imports).[ 18 ] The top 100 importers account for approximately 45% or $180.3 billion of the total VFD ($380.7 billion). The VFD of the 20 CSA-approved importers is $80.6 billion or 44.7% of the VFD of these 100 companies. Thus, the program has been able to attract the largest importers.

Of the 80 non-CSA-approved top 100 importers, 28 have applied to the CSA program with approval pending (52 have not yet applied). Should these 80 companies become CSA-approved, an estimated 40% of the VFD of their imports could potentially be covered under the CSA program.[ 19 ] Of note is the fact that the CSA clients on the top 100 list are more likely to import goods that are not restricted by OGD regulations compared to non-CSA importers.

Another limitation to the growth of the CSA program relates to the CBSA’s processing of tax revenues. At this time, the Comptrollership Branch does not have an automated system for processing. The revenue summary forms provided by CSA clients are printed out, balanced according to the accompanying payment and entered manually into the revenue ledger. Comptrollership Branch management has indicated that under the current process, with the current number of CSA-approved companies, their capacity is stretched to the limit. Reviewing and vetting tax revenue from additional CSA clients will have an impact on the quality and timelines of the information submitted to the Department of Finance.

The restriction of certain goods and costs for program participation are having an impact on importer participation.

Case study importers made an investment of anywhere between $20,000 and hundreds of thousands of dollars for system upgrades before becoming CSA-approved.[ 20 ] While cost appears to be a factor affecting participation levels, particularly for smaller importers, the current restrictions related to offshore goods and goods regulated by OGDs are an equally important factor.

Case study carriers, on the other hand, indicated that while there are minimal direct costs required to participate in the CSA program, the application process was time-consuming and lengthy. The largest limiting factor for carrier participation has been the small number of CSA-approved importers (cited by four of the five carriers). Carriers also mentioned that they do not have enough CSA-approved goods to haul and there are not enough drivers to accommodate the demand.

There were also indications that companies may be taking a “wait and see” attitude before making any investments in CSA to be certain that their investment is going to be worthwhile and to see how the program will evolve (e.g. new requirements, links to other programs).

To what extent has the CSA program contributed to improved compliance of participating importers and carriers?

The CSA program has helped improve awareness of compliance issues.

The CSA program has improved client awareness of compliance issues, primarily through the application process itself. During that process, companies have a dedicated compliance manager that focuses on helping the company review its current accounting processes and identify where modifications are required for CSA participation. During this process, minor compliance issues are identified, which companies correct during the program approval process. This was consistent with information from the case studies: six of the eight participants believe that the CSA program has made them more aware of compliance issues. The remaining two companies stated that there has been no change in their level of awareness because they have always kept aware of compliance issues.

CSA clients receive a small proportion of AMPS penalties. Since CSA clients are likely to have good compliance records before participating in the program, the extent to which the CSA program has improved compliance is difficult to measure.

In order to examine whether the CSA program has improved the compliance rates of its clients, the history of each client would have to be examined and compared to the number of AMPS penalties assigned to the number of releases. Given the volume of clients and the potential volume of data on each client, a calculation of compliance rates was infeasible. Instead, the evaluation team reviewed a study completed by the manager of the carrier compliance team in 2004 and analyzed CMRS data for validation and examined the number of releases in proportion to the number of penalties assigned to CSA-approved carriers. The data show that rates of compliance of CSA clients have improved marginally and that clients have high levels of compliance (a compliance rate of 99% or higher). Compliance managers have also seen an increase in voluntary disclosures made by CSA-approved companies (i.e. concerning compliance issues) and see this as an indication that the CSA program is helping to improve compliance.[ 21 ]

As Table 5 shows, the proportion of AMPS penalties issued to CSA clients is slightly higher for carriers (0.20%) than for importers (0.15%). The percentage of AMPS penalties has decreased slightly over the five years for carriers and stable for importers, with the exception of 2003 for carriers (0.35%) and of 2004 for importers (0.65%).[ 22 ] For the 2003–2006 period, the value of AMPS penalties for CSA-approved companies reached a total of $170,190 for importers and $4.3 million for carriers. The proportion of the value of AMPS penalties issued to CSA clients over all AMPS penalties is 1% for CSA-approved importers and 38% for CSA-approved carriers

Table 5: Number of AMPS penalties issued to CSA clients and proportion of AMPS penalties by CSA releases

Year	Carrier	Importer	Total	# release	Carrier %	Importer %	Total %
2002	176	0	176	94,20	0.19	0.00	0.19
2003	1166	2	1,16	330,88	0.35	0.00	0.35
2004	846	3,07	3,91	474,11	0.18	0.65	0.83
2005	1002	19	1,02	586,06	0.17	0.00	0.17
2006	939	10	949	601,36	0.16	0.00	0.16
Total	4,129	3,104	7,233	2,086.63	0.20	0.15	0.35

Source: CMRS

In looking just at CSA-specific penalties, [ 23 ] the majority of AMPS penalties issued to CSA-approved importers are for late accounting [ 24 ] (3,067 in total over five years) and the majority of AMPS penalties issued to CSA-approved carriers are for using a non-registered driver (a total of 692 over five years) and failing to keep updated lists of authorized transporters (92 penalties over five years). Virtually all (99%) penalties given to CSA-approved importers are CSA-specific, compared to only 20.4% for CSA-approved carriers.

There has been an increase in duty and tax revenue collection for CSA clients.

A key objective of the CSA program is to improve compliance with respect to the proper accounting of imported goods, which is expected to increase the revenue generated through the payment of duties and taxes by CSA clients. An internal CBSA document reported that there has been an increase in duty and tax revenue collection for 33 importers participating in the CSA program. For the analysis, the total revenues and VFD for each of these importers were calculated for the 12 months prior to and the 12 months after program participation. During year one of CSA participation for the first 33 importers, there was a net increase of 19.4% in accounted VFD, which is an increase of $12.5 billion. There was also a net increase in revenues of $788 million or 16.4%. While these increases may be a result of improved accounting processes related to CSA participation, they could also be attributed to other unknown factors, such as changes in the economy, exchange rates, business volumes and the company business (e.g. corporate changes).

To what extent has the CSA program enhanced the CBSA’s risk management, including refocusing of resources from low risk to high and unknown risk processing?

The number of CSA releases has gradually increased since the program’s inception (multiplied by six).

Determining the proportion of CSA releases to total releases was not possible due to two data limitations. For non-CSA service options, a release represents a shipment. A CSA service option, on the other hand, represents a release of goods, which could be more than one shipment. [ 25 ] Therefore, the total number of CSA releases is under-represented when comparing them to the total number of shipments. Keeping this limitation in mind, the data show that CSA releases over time represent a small proportion of total releases, although the proportion has grown larger each year. In 2002, CSA releases represented 0.9% of total releases, whereas, in 2006, this proportion had increased to 4.9%. [ 26 ] The proportion of CSA releases for highway POEs to all highway releases went from 1.7% in 2002 to 7.7% in 2006.

At the PIL, BSOs use ACROSS to capture release information according to the service option used to clear the imported goods. There are numerous service options available, one of which is the CSA Highway Paper (service option 497), the primary release option used by CSA clients more than 90% of the time. When a driver arrives at the PIL, BSOs scan the driver’s FAST/CDRP identity card and the bar codes from a sheet provided by the driver into ACROSS. This check validates the status of the CSA-approved importer, the CSA-approved carrier and the FAST/CDRP registered driver. The shipment is then designated as “authorized to deliver” (i.e. cleared). This release option was introduced in 2001 and in that year, there were only a few CSA releases. Three other CSA service release options became available to CSA clients the following year: CSA EDI (electronic data interchange), CSA EDI rail and CSA non-highway. The use of these other CSA release options has grown over the years (see Table 6), although the number of CSA non-highway releases is very small. The number of CSA releases (all four types) grew each year from 1,004 in 2001 to 330,889 in 2003, to reach 601,369 in 2006.

Table 6: CSA Releases

Year	CSA Service Option
	CSA Highway Paper (497)	CSA EDI Rail (505)	CSA-EDI (531)	CSA Non-Highway (521)	CSA Total
2001	1004	0	0	0	1004
2002	92,529	1,610	61	5	94,205
2003	310,367	20,290	232	0	330,889
2004	449,730	19,029	5,347	8	474,114
2005	537,700	20,244	28,118	0	586,062
2006	527,972	24,332	48,971	94	601,369
Total	1,919,302	85,505	82,729	107	2,087,643

Source : Information generated using data obtained from the CMRS.

CSA participants are examined less than non-CSA participants and they have not been implicated in any seizures as a result of the examinations.

The assessment of whether CSA clients acquire the potential benefit of lower examination rates associated with the program was done by comparing the number of examinations conducted on CSA and non-CSA clients using the CSA Highway Paper release option only because of data limitations with respect to how release data are captured (i.e. shipments versus releases). The examination rate for CSA clients has decreased over the years and has been generally lower than the rate applied to non-CSA-approved importers and carriers.

There is a perception among companies, according to industry representatives, that CSA-approved companies get inspected more often than before they were CSA-approved. However, the case study carriers and importers indicated that they have not seen major changes in their overall rates of examination, with one carrier noting a significant decrease in examinations. This may therefore have been an issue earlier in the life of the program, but as the program is maturing, this benefit has materialized.

Of the 2,902 commercial seizures made between 2002 and 2006, none of them involved CSA-approved importers or carriers.

Two of the importer case study participants shared that the CSA program has reduced delays at the border for them because of the reduced paperwork required.

A third importer indicated that there have been limited benefits to date because of the number of carriers with less-than-truckload (LTL). CSA-approved carrier case study participants indicated that while there has been little impact to date on the time it takes to clear the border, which can be attributed to LTL shipments or the small number of CSA shipments, as more shipments are CSA-approved, clearance times will become quicker. Other factors that are having an impact on the time it takes to clear the border pertain to the infrastructure both at the border (e.g. dedicated FAST lanes) and the roads leading to the border from connecting highways.

While there are no data to quantify that the CBSA has refocused its resources as a result of the CSA program, it is reasonable to assume that this has occurred to some extent.

A key objective of the CSA program is to provide low-risk companies with a more expedited border clearance option, thus allowing the CBSA to focus more resources on higher-risk clients. While the number of CSA clients and the number of CSA releases have been increasing and the examination rates on CSA clients have been decreasing, no data show that there have been changes to how resources are allocated. However, regional management believes that the CSA program, as designed, has the potential to allow for a reallocation of resources, particularly if the program continues to grow. In 2006, CSA imports represented 18% of all VFD on imports in Canada. Projecting past CSA VFD increases, the proportion of CSA-approved importers’ VFD could reach between 23% and 26% of all VFD in Canada by 2011.[ 27 ]

Given the estimated time saved in conducting examinations and the quicker clearance times for CSA releases, there is, at this time, minimal room to shift resources. For example, if 14 seconds are saved for each CSA clearance at the Windsor Ambassador Bridge, given the volume of commercial traffic (approximately 1,000 trucks with CSA shipments per day), 3.88 hours are saved every day.

Expansion of the program could result in increased workloads for the CBSA.

Easing restrictions on goods eligible under the CSA program could have an impact on the volume of applications received, thus increasing the workload for the application risk-assessment unit and the compliance teams. These changes would also have an impact on the risk-assessment process, because it would be more difficult and time-consuming to undertake risk assessments of companies that are outside Canada (i.e. for offshore goods) in an effort to do an efficient trade chain security assessment. Similarly, more time would be needed at the back end for processing tax revenue. Still, in keeping with the expected results of the CSA program, an expansion of the number of participants in the program could allow the CBSA to further streamline the movement of low-risk goods, thereby enabling the possibility of shifting resources towards high-risk cases.

To what extent has the CSA program streamlined and simplified the import process, thereby increasing the competitiveness of Canadian industry?

The CSA program has simplified the import process, primarily by reducing reporting requirements and eliminating the need for transactional accounting

The CBSA and industry interviewees were confident that the CSA program has streamlined and simplified the import process. From a border clearance perspective, the CSA program has resulted in reduced paperwork and time savings: with the three bar-code systems, CSA clients are no longer required to produce paperwork for each shipment contained in their load. Based on saving 14 seconds per transaction, and carriers with trucks charged out at $120 per hour, this represents a weekly (35 hours) savings for the industry of over $16,000.

The CSA program has also contributed to more streamlined accounting and payment processes since companies no longer have to do transactional accounting (i.e. remit payment at the time of each shipment). With the CSA process, companies report and remit payment on duties and taxes once a month at their own financial institution. Delaying duty payment for a month is equivalent to approximately $647,500 in yearly savings since the inception of the program. Delaying GST payments on CSA imports (around $5 billion in 2006) represents an annual savings of $18.5 million for CSA-approved importers, giving them cash flow flexibility.[ 28 

Importer case study participants believe that the CSA program’s streamlined accounting process has resulted in more accurate trade reporting, lower broker fees and financial benefits. CSA participants’ business systems have improved, thereby allowing them to better measure, monitor and analyze business results.

The costs for becoming CSA-approved are different for carriers than for importers and vary from company to company.

Carriers were required to make a time commitment (versus cost) to participate in the CSA program and they noted that it was a “very time-consuming” process. Carriers did not identify any ongoing costs for program participation

Importers made a more significant investment than carriers, although this also varies depending on the magnitude of the company’s operations. Importers suggested that there are minimal ongoing costs for companies to continue their participation in the CSA program, although one case study importer that made major information technology (IT) systems changes has yearly IT support costs as a result

There are mixed views on whether the CSA program has resulted in any cost savings

One carrier noted that quicker movement through the border has led to significant cost savings of over $37,000 each month.[ 29 ] The four remaining carriers have not realized any significant cost savings, which they attribute to the small number of CSA-approved importers and shipments. In fact, for one LTL carrier, the need to distinguish between CSA-approved goods and non-CSA-approved goods within the same shipment has resulted in additional administrative costs for the company.

When a carrier cannot obtain a full shipment of CSA-approved goods, they will often fill the truck with non-CSA-approved goods, which means that the carrier loses the benefit of accessing FAST lanes and the FAST PIL. They can still clear the CSA-approved goods at any other non-FAST lane with the CSA clearance option, but non-CSA-approved goods must be cleared using non-CSA processes, which often require having to use a broker.

Two of the three importers that implemented in-house systems to manage the customs process have reduced their broker fees. For one of these importers, there has also been some cost savings as a result of the extension of payment terms granted under the CSA program. The third importer has not realized cost savings as a result of the CSA program, which the importer attributed to the lack of infrastructure for FAST lanes. This importer believes that once the northbound lanes are operational, time savings will be realized at the border, which should translate into cost savings.

The perceived benefits of the CSA program, in terms of competitive advantage, seem to outweigh any participation costs

CSA clients see the CSA program as a way to become more competitive and use their CSA status to market and promote themselves to the industry. In fact, five of the eight case study companies mentioned competitive advantage as the biggest benefit of the program. One carrier company reported that participating in the CSA program has had a major impact on the company’s client base and ultimately on revenues. The carrier has experienced an increase in business and has increased its truck fleet fourfold.

From the importers’ perspective, the restrictions relating to offshore imports and goods regulated by OGDs are the main barriers to participation. Case study participants also suggested that high start-up costs and the time it takes to undergo the application process could also discourage program participation. Lack of infrastructure for FAST lanes was also noted, on occasion, as a barrier to participation.

2.3 Relevance

How well is the CSA program aligned with the CBSA’s strategic outcomes?

The expected outcomes of the CSA program are well aligned with the CBSA’s strategic outcomes.

The expected outcomes of the CSA program contribute to the CBSA’s strategic outcome of “effective and efficient border management that contributes to the security and prosperity of Canada.” [ 30 ] The program aims to enhance the CBSA’s effectiveness in processing an increasing volume of goods crossing the border by streamlining the movement of goods that pose little or no threat to Canadian society, thereby allowing the Agency to better utilize its resources in areas of higher or unknown risk. [ 31 ] This, in turn, is expected to help the CBSA provide better service to its commercial clients while at the same time facilitate border protection efforts. The CSA program also improves accounting processes and, by extension, duty and tax revenue collection.

The CSA program addresses an actual need for the trade community.

The evaluation identified two principal needs of the trade community that are addressed by the CSA program and demonstrate a continuing need for the program. First, there is the need for expedited border clearances. This was also identified by importers as being one of the main reasons why they joined the CSA program and was echoed by one of the carriers. The CSA program aims to expedite border clearances by requiring less paperwork at the border and by allowing access to FAST lanes, where these are available. The CSA program has led to a reduction in importing expenses for some companies because CSA accounting procedures and systems have, in some cases, lessened importers’ reliance on outside service fees. As well, better accounting procedures and improved trade compliance lead to fewer monetary penalties.

To what extent are CSA border clearance option restrictions concerning commodities, modes of transportation and countries of origin still valid?

Many of the current CSA restrictions may no longer be valid.

Restrictions such as those pertaining to OGD regulations and mode of transportation were initially put in place to further limit risk, especially as the program was still in its early stages, and to expedite program implementation. However, now that the program has been in place for a number of years, these restrictions may no longer be valid. The CBSA is currently looking at ways to ease some of the restrictions, in particular by building more collaborative relationships with OGDs to help broaden the acceptance of CSA and electronic processing. Although there are certain risks (e.g. health and safety) involved in easing restrictions for CSA-approved goods, these risks could be managed through current processes and through better cooperation between the CBSA and OGDs. The issue with respect to many OGD-regulated goods is that they require paper permits.

Easing restrictions under the CSA program could make it more attractive to importers.

If a larger percentage of companies’ imports would be eligible for the CSA clearance option, the investment of enrolling would be more worthwhile. Two of the three case study importers believe they would benefit from eased restrictions on offshore goods. Because these goods must currently be imported under another release option, — and using a customs broker — the benefits of the CSA program (i.e. streamlined clearance option and increased compliance) are currently limited to only a percentage of all goods imported by the company. To provide an order of magnitude of the potential increase in participation, imports of offshore goods represented approximately 35% ($140 billion) of the total dollar value of all goods imported into Canada in 2006.[ 32 ] In 2006, CSA imports represented 18% of all VFD of imports into Canada but around 40% of the total non-offshore imports ($265 billion), i.e. imports only from the U.S.

To what extent is it beneficial to link the CSA and FAST programs?

Access to FAST lanes seems to be a motivating factor for companies to join the CSA program; however, CSA accounting benefits have also encouraged companies to enroll.

To participate in the FAST program, a company must be CSA- and PIP-approved. The FAST program was linked with the CSA program to provide CSA clients with the added benefit of access to FAST lanes. From a border management perspective, this linking of programs is logical because, in theory, the streamlined CSA border clearance option in combination with access to dedicated FAST lanes would minimize the time spent at the border both from a wait time and a clearance time perspective.

A slightly higher proportion of CSA-approved carriers (90%, or 659 of 728) than CSA-approved importers (83%, or 35 of 42) are also FAST-approved. Carriers were generally interested in becoming CSA-approved to gain access to the FAST lanes, although two carriers interviewed indicated that there are other benefits to the CSA program, mainly related to the border clearance process. Two of the three case study importers indicated that the accounting benefits and eliminating the need for service providers were important factors in joining the CSA program, although access to the FAST lanes was seen as an important secondary benefit. In a sense, this confirms that CSA benefits are substantial enough to stand on their own. This is consistent with information acquired from five CSA-approved importers that are not FAST-approved, which showed that the motivation for participating in the CSA program was related to accounting benefits, although access to FAST lanes also was a perceived benefit, as four of the five companies are considering applying to the FAST program.

To date, the added benefits of the FAST program for CSA clients have been minimal.

The intended benefits of the FAST program are not currently being realized by CSA clients. This is due, in part, to a lack of infrastructure for FAST lanes at a number of POEs. There are currently only two POEs that have dedicated FAST lanes at the PIL:[ 33 ] the Windsor Ambassador Bridge and the Sarnia Blue Water Bridge. Only the Blue Water Bridge has a dedicated lane (on the bridge) leading up to the FAST lane. At the Ambassador Bridge, all trucks (CSA-approved and non-CSA-approved) use the same lane on the bridge and on the road leading to the PIL. Therefore, the advantage of being FAST-approved is minimal since everyone has to wait their turn to cross the border. This is an issue for the program since two thirds of CSA releases occur in this location.

Another limitation to being able to take advantage of the FAST lanes is the availability of CSA-approved goods to carry (i.e. a company can only use the FAST lane if it has a full shipment of CSA-approved goods). It is interesting to note that while some companies are not able to take advantage of the FAST lanes, they believe they are still benefiting from expedited border clearances due to the CSA clearance process (three bar-code systems).

There would be advantages to removing the link between the CSA and FAST programs.

The relationship between the CSA and FAST programs is such that having a CSA membership as a prerequisite for FAST might have a negative impact on FAST membership and diminish the overall streamlining effect for the Agency. Offering companies a FAST option that provides them with streamlined border release but with less onerous accounting requirements (without CSA requirements) may make the program more attractive to importers and increase participation. It is noteworthy that the U.S. FAST program does not have a specific accounting component. Like the Canadian FAST program, applicants for the U.S. program must be assessed as low risk for border criminality and border security, and are required to participate in the Customs-Trade Partnership Against Terrorism — the U.S. equivalent of the PIP program. A previous CBSA evaluation study[ 34 ] recommended the development of a second CSA/FAST option that would provide participants with border streaming privileges by only being PIP-approved. Under this scenario, delinking the CSA and FAST programs would not change anything for existent CSA-approved importers and carriers since their affiliation to the PIP program would already give them access to FAST lanes.

2.4 Program Effectiveness and Efficiency

To what extent is the CSA program delivered cost effectively?

The CSA program is seen to be a unique model of program delivery that does not overlap with other programs, except from a release perspective.

The CSA program is unlike any other CBSA commercial program in that it incorporates all aspects of the commercial process under one umbrella: border arrival and clearance, release of goods, and accounting for goods. There is no overlap between the CSA program and the CBSA’s other commercial programs, except from a release perspective. There are two other programs/processes that duplicate the CSA clearance option, although one of these, the Frequent Importer Release System (FIRST), will be phased out by January 2008. FIRST provides a release option for companies that are low risk and carry low-revenue shipments on a regular basis. The other option, Form A49 (Automotive Report and Release Document), is used by a limited number of automotive companies to release automotive production and service goods arriving by highway. Representatives of the automotive industry indicated that this release option is still needed because it can be used in “emergency situations.” For example, an importer may use this option when a shipment is required quickly and a CSA-approved carrier or driver cannot be located.

Program staff saw the continued existence of these options to be problematic and suggested that because they are easier options, they may be discouraging companies from participating in the CSA program. In addition, allowing companies that have not made any investments and that may not be low risk (many of the companies and drivers may not have undergone a full risk assessment) to use these release options is problematic for fairness and security reasons. The future implementation of eManifest, the next phase of the Advance Commercial Information (ACI) program, may address these issues in part because this new initiative will likely change release options and reporting processes. However, in the interim, the existence of FIRST and Form A49 pose a potential security risk.

The PIC pilot project builds on the principles of the CSA program and risk management. Under the PIC project, CSA participants invest further in their internal controls and business systems. Companies take greater responsibility for ensuring the accuracy of their compliance with trade programs (valuation, origin, tariff classification, etc). PIC participants and the CBSA benefit from the fact that participants are not subject to routine post-release trade program verifications. In addition, imposing AMPS penalties for issues is not the primary solution. At this time, two CSA-approved importers are participating in the pilot project, although it is currently being expanded to include five. Since the PIC pilot project promotes enhanced compliance and contributes to improved trade information, should it become a permanent program, there may be benefits to the CBSA of combining the two programs and to CSA-approved importers that would like to take a step further in ensuring accurate trade reporting.

The CSA program represents an important proportion of the total VFD in relation to the cost to administer it.

Program efficiency (i.e. cost per program output) can be assessed in two ways: cost per application approved and cost per the total VFD that CSA clients represent. The total budget for the CSA program in fiscal year 2005–2006 was $3.1 million. In 2005, there was a total of 168 companies approved for the CSA program, which means that the CBSA spent approximately $17,600 per client.

In 2005, the total VFD for CSA-approved importers (38 approved at that time) was $73 billion. Again, using the CSA program budget for fiscal year 2005–2006, it can be said that for every dollar spent on the program in 2005–2006, $2.4 million was included in the total VFD by CSA clients.

Are there more efficient and effective alternative delivery methods?

Program effectiveness (i.e. cost per program outcome) is difficult to determine, as there is little data available. Ideally, program effectiveness would be measured by examining program costs in relation to a refocusing of resources to high-risk clients. As mentioned earlier, the volume of CSA shipments is not high enough to achieve a refocusing of resources. Since the CSA program is a program unique to Canada, there are no international comparisons available to assess effectiveness.

3.0 Key Conclusions and Recommendations

Overall, the CSA program is a beneficial program that provides clients with a means to streamline accounting and payment processes and to expedite border clearances — a means that is well-aligned with the CBSA’s vision for the future with respect to improved border management, including enhanced security, by a better utilization of its resources on higher or unknown risk cases. The number of CSA participants, the number of CSA releases and the proportion of the total dollar value of imports represented by CSA clients continue to grow. The evaluation found that the CSA program benefits both clients and the CBSA. However, due to restrictions on the types of goods that can be imported under the CSA program and a lack of CSA-approved importers, there are also benefits that are not realized by CSA clients. Similarly, because the volumes of CSA shipments are not yet large enough in most ports of entry, the CBSA has only seen some impact on the way it allocates its resources in high-traffic ports. Interviewees have a high level of confidence in the CSA program and believe that there are opportunities to improve the effectiveness of the program, particularly through the elimination of certain program restrictions (e.g. OGD-regulated and offshore goods), where feasible.

The CSA program is well managed, although since its inception, functional and reporting responsibilities have been split between two branches of the Agency. This instability does not seem to have had an impact on the success of operations but it has led to some confusion for CBSA staff outside the CSA program concerning where program responsibilities lie and it may have contributed to delays in key areas of decision making and to delays in permanently staffing the compliance management teams. The evaluation also found that the policy documents for clients (D-memoranda) are not finalized (although draft versions were shared with clients), there is a lack of a performance monitoring system for the CSA program and the CSA program could be better communicated to front-line staff.

The functional and reporting components of the CSA program have recently been merged under the Admissibility Branch and that should further facilitate the management of the program. It is important to note that some interviewees question the appropriateness of the current structure and feel that the operation of the program would be better positioned within the Operations Branch. Still, the new structure that is in place does provide for opportunities to improve the management of the program.

Recommendation 1 — Strengthen the CSA program by completing the transition of the program and solidifying its governance structure:

1. Formally define the roles and responsibilities of CSA program staff (and other staff involved in serving CSA clients) and communicate them fully to CBSA staff.
2. Finalize the D-memoranda and circulate them to CSA clients.
3. Communicate CSA-related issues/changes to front-line staff in a timely fashion.
4. Develop a general CSA training package that could be delivered to front-line staff.
5. Develop an ongoing performance measurement framework for the CSA program to allow for regular reporting of outcomes and identification of program improvements.
6. Develop an automated approach to process CSA duty and tax revenue payments.

Each year, the number of CSA clients continues to grow. In 2006, CSA imports represented 18% of all VFD of imports in Canada and a third ($218 billion) of total non-offshore imports (i.e. imports only from the U.S.). The proportion of CSA releases over all releases has continued to increase each year, from 1% in 2002 to 5% in 2006. However, the evaluation findings show that the CSA program has not yet reached its full potential and this is mainly due to low importer participation rates. The restrictions related to OGD-regulated and offshore goods are the key reason for the low participation levels. Imports of offshore goods represented approximately 35% of the total value of imported goods in 2006 [ 35 ] (note that similar data could not be obtained to determine what proportion of goods imported from the U.S. are subject to OGD regulations). This means that unless certain restrictions are eased, the CSA program will reach a limit to the volume of imports it can assume.

The CSA program has been able to attract the largest importers. The automobile sector dominated the membership initially and in terms of all CSA releases [ 36 ] made since the program’s start, 98% have been made by this industry. With the addition of 35 new importers between December 2002 and 2006, the value of imports by CSA clients only increased by 2% (from 16% to 18%).

CSA clients are receiving some benefits, including more expedited border clearances and reduced reporting requirements; however, a lack of CSA participants (either importers or carriers) does not always allow companies to take advantage of the CSA option. The biggest benefit of the program to date for importers appears to be improved accounting and payment processes, including the option to report and remit payment on duties and taxes once a month at their own financial institution. Companies view the CSA program as a beneficial one, particularly because they believe that their participation provides them with a competitive advantage over other companies and they use their CSA status as a marketing tool. This benefit was seen by case study organizations to outweigh the costs of participation. Companies believe that as more clients become CSA-approved and the infrastructure for the FAST lanes is improved, the benefits of the CSA program will be greater.

The CSA program is viewed as being unique because it incorporates all aspects of the commercial process under one umbrella: border arrival and clearance, release of goods and accounting for goods. Two other release options represent some duplication and may in fact be discouraging participation in the CSA program: FIRST and Form A49. The CBSA stopped taking FIRST applications in January 2007 and this release option will no longer be available to importers after January 31, 2008, when it will be phased out. In addition to duplication issues, allowing expedited clearance to companies that are not CSA-approved also raises issues of fairness (companies invest substantially to become CSA-approved) and security (these companies and drivers may not have been risk assessed in advance as have those that are CSA-approved).

Recommendation 2 — Explore ways to maximize the effectiveness of the CSA program:

1. Work with OGDs to determine whether alternatives would be available to meet their requirements, thereby allowing goods currently restricted due to these OGD requirements to be included under the CSA program.
2. Determine whether the CSA program could be open to offshore goods, keeping in mind the challenges that would be associated with conducting the risk assessments.
3. Explore whether the FAST program would benefit from allowing importers and carriers who are PIP-approved only to enroll, thus removing the requirement of being CSA-approved to become FAST-approved (the evaluation of the FAST program currently underway will also explore this issue and allow management to further consider this).
4. Should the PIC program (currently a pilot project) become a permanent program, consider combining its delivery with that of the CSA program, thereby giving CSA members an option to participate in the PIC program.
5. Eliminate duplicate release options, such as FIRST and Form A49, and streamline available release options, recognizing that eManifest (the next phase of the ACI program) will have an impact on the processing of goods at land border crossings in the longer term.

4.0 Management Response

Recommendation 1 — Strengthen the CSA program by completing the transition of the program and solidifying its governance structure:

1. Formally define the roles and responsibilities of CSA program staff (and other staff involved in serving CSA clients) and communicate them fully to CBSA staff.

   The CBSA is in the process of formally defining the roles and responsibilities of CSA program staff and these will be communicated to CBSA staff by March 31, 2009. Program management will also put in place enhanced ongoing processes to inform CBSA staff, including front-line staff, of their roles and responsibilities in regard to the CSA program and keep them apprised of new developments.

2. Finalize the D-memoranda and circulate them to CSA clients

   The process of finalizing the D-memoranda is complete. The D-memoranda are currently with the CBSA’s Publishing Division and will be distributed to CSA clients by the end of 2007.

3. Communicate CSA-related issues/changes to front-line staff in a timely fashion.

   CSA-related issues are communicated, as required, to the Operations Branch, which is responsible for relaying the information to front-line and regional staff. CSA program management will work with the Operations Branch to improve communications to front-line staff, thereby ensuring their full understanding of program processes and objectives.

4. Develop a general CSA training package that could be delivered to front-line staff.

   There is an existing training package on how to process CSA-approved importations and how to navigate the ACROSS IT system. Program management are also doing training at border sites that request it. Program management will work with the Operations Branch to improve this package and communicate its existence and usefulness to front-line staff. This is expected to be complete by the end of the 2007–2008 fiscal year.

5. Develop an ongoing performance measurement framework for the CSA program to allow for regular reporting of outcomes and identification of program improvements.

   The CSA team conducts on-going client monitoring, puts the clients through re-risking and holds a log of passage history, all of which allow for monitoring the flow of lawful people and goods and compliance with border legislation/regulations. While these elements are useful in monitoring some aspects of the program, program management will explore developing a comprehensive performance measurement framework to collect data on key outcome and results indicators, building on the program logic model developed at the outset of the evaluation. It is also anticipated that the CBSA’s Performance Measurement Task Force, which is developing an Agency-wide performance management framework, will contribute to the CSA program’s regular reporting and identification of program improvements.

6. Develop an automated approach to process CSA duty and tax revenue payments.

   The CSA program currently sends an electronic feed of revenue summary form (RSF) information to the revenue ledger (RL) system. However, due to the way this information is transmitted to the RL, the Comptrollership Branch is unable to produce its necessary central agency reports without significant manual intervention. Also, since the CSA program is unable to provide the Comptrollership Branch with an electronic file identifying each RSF by line object code, the Comptrollership Branch is required to manually print each RSF and then re-enter this information into a spreadsheet format in order to produce its necessary external reports. The Comptrollership Branch is currently working with the IS&T Branch (Corporate Systems and Solutions) and CSA management to develop a viable solution, and it expects the changes to be in place by the end of April 2008.

Recommendation 2 — Explore ways to maximize the effectiveness of the CSA program:

1. Work with OGDs to determine whether alternatives are available to meet their requirements, thereby allowing goods currently restricted due to these OGD requirements to be included under the CSA program.

   Program management has started this work. Currently, the CBSA has entered into an arrangement with Natural Resources Canada for the importation of airbags and seat belt pretensioners. Similarly, there is an agreement in place with the Canadian Food Inspection Agency, which allows CSA-approved importers to use the CSA clearance option to import corn for the purpose of producing ethanol and for animal feed. The IS&T and Admissibility branches have begun a detailed analysis of all the OGD requirements and will start negotiating with other key departments within the next six months.

2. Determine whether the CSA program could be open to offshore goods, keeping in mind the challenges that would be associated with conducting the risk assessments.

   CSA program management is currently looking at the expansion of the CSA program to also include various offshore goods, and it will be in a position to determine the feasibility of including such goods within a year.

3. Explore whether the FAST program would benefit from allowing importers and carriers who are PIP-approved only to enroll, thus removing the requirement of being CSA-approved to become FAST-approved (the evaluation of the FAST program currently underway will also explore this issue and allow management to further consider this).

   Program management will explore the advantages and disadvantages of delinking the CSA and FAST programs. The results of the FAST evaluation, to be available in the early part of 2008, will contribute to these considerations.

4. Should the PIC program (currently a pilot project) become a permanent program, consider combining its delivery with that of the CSA, thereby giving CSA members an option to participate in the PIC program.

   The PIC program is still a pilot project. While it is only open to CSA-approved importers, the PIC program’s objectives are independent of those of the CSA program. However, should a decision be made to adopt the PIC program as a permanent CBSA program, CSBA management will explore options and determine whether to combine the delivery of the two programs.

5. Eliminate duplicate release options, such as FIRST and Form A49, and streamline available release options, recognizing that eManifest (the next phase of the ACI program) will have an impact on the processing of goods at land border crossings in the longer term.

   The continuation of these options restricts participation in the CSA program, raises questions of fairness vis-à-vis other trade entities and compromises border security. FIRST will be eliminated by January 31, 2008. All services options are being reviewed in light of eManifest and this will include Form A49.