What we examined (see Focus of the audit)

This audit focused on whether the Canada Border Services Agency (the Agency) and its key federal partners had the necessary information, practices, and controls at the border to enable the Agency to implement its enforcement priorities, prevent the export of goods that contravened Canada’s export laws, and facilitate legitimate trade.

The audit examined export controls for the commercial shipment of goods. Exports destined for the United States were excluded from the audit scope because the Agency plays little role in controlling them. Exporters generally do not have to submit an export declaration for goods shipped to the United States.

Why we did this audit

Exports are vital to Canada’s economy and prosperity. In 2014, Canada’s export of goods totalled $529 billion, making up 27 percent of Canada’s gross domestic product. The challenge for government is to control exports effectively while facilitating the legitimate trade upon which Canadian prosperity depends.

What we concluded

We concluded that the Canada Border Services Agency did not fully have the necessary authorities, information, practices, and controls to implement its enforcement priorities and prevent the export of goods that contravene Canada’s export laws. As a result, some non-compliant shipments were leaving the country.

The Agency’s key federal partners provided information and assistance to support the Agency in implementing its enforcement priorities and prevent the export of goods that contravene Canada’s export laws.

We further concluded that, overall, the Agency and its key federal partners had the necessary information, practices, and controls to enable the Agency to facilitate legitimate export trade. However, the Agency was sometimes slow to take action on or release held or detained goods.

What we found

Selecting and examining shipments for non-compliance

Overall, we found that the Canada Border Services Agency did not fully have what it needed to carry out its enforcement priorities, due to weaknesses in its export authorities, information, practices, and controls. As a result, some goods that did not comply with Canada’s export control laws were leaving the country.

The Agency did not review all export declarations and did not examine many targeted high-risk shipments. The Agency relied on export declarations as a key source of information to identify high-risk shipments, but we found that it was not able to review all declarations. Where the Agency did review declarations, its efforts to target high-risk shipments for examination had some success. For example, the Agency prevented the illegal export of approximately 700 stolen cars between April 2013 and December 2014. However, during the period of our audit, the Agency did not examine approximately 20 percent of the high-risk shipments that had been identified by its centralized targeting units.

Some exports are exempt from the requirement to be declared to the Agency and the Agency has limited authority to examine undeclared exports. For example, shipments under $2,000 are generally not required to be declared. This hampers the Agency’s ability to assess risks and prevent certain non-compliant exports. For example, illegal drugs were being exported from Canada, but the Agency has not set this as a priority, due in part to authority constraints.

This is important because addressing these weaknesses and limitations would enable the Agency to prevent more non-compliant shipments from being exported, thereby better protecting Canada and its allies, fighting organized crime, and meeting Canada’s international obligations.

• The Canada Border Services Agency could not review all export declarations

  Recommendation. The Canada Border Services Agency should ensure that it can continue to receive the timely export declaration information that it needs for export control, and that system changes at least maintain the current level of review of declarations.

• Not all high-risk shipments were examined

  Recommendation. The Canada Border Services Agency should confirm the causes of targets’ not being examined and should develop an action plan to address the issue.

  Recommendation. The Canada Border Services Agency should develop processes to assess risks, measure its effectiveness in acting on its priorities, and respond to priorities and targets identified through risk assessments by other government departments.

  Recommendation. The Canada Border Services Agency should take steps to ensure that gaps in coverage for export examinations are not predictable.

• The Canada Border Services Agency’s ability to examine non-reported shipments was limited

  Recommendation. The Canada Border Services Agency should develop a consistent process for identifying and examining high-risk, non-reported shipments.

Minimizing the impact on legitimate trade

Overall, we found that the number of export shipments that the Canada Border Services Agency placed on hold or detained was very small compared with total exports. Delays caused by detentions had little overall negative impact on Canadian trade. However, we found that the Agency was sometimes slow to take action on, or to release, held or detained goods. For example, about a quarter of compliant containers were held for examination for longer than a week before being released. While nearly half of the legitimate exporters we surveyed who had had goods temporarily detained reported experiencing little or no impact, 11 percent of exporters whose goods were detained for more than a week reported experiencing a major impact.

We also found that Foreign Affairs, Trade and Development Canada (the Department) issued export permits for strategic and military goods and technology within its established service standards.

This is important because Canada’s export controls are not intended to hamper legitimate trade. Export control activities must, therefore, be administered in a manner that minimizes the impact on legitimate trade.

• Some shipments were delayed longer than necessary

  Recommendation. The Canada Border Services Agency should conduct an assessment of how often and for how long export shipments are placed on hold, and should use the results to determine whether a service standard and notification process for exporters is required, to ensure that it is facilitating the free flow of goods.

• Foreign Affairs, Trade and Development Canada issued most export permits for strategic and military goods and technology within its processing time standards

  Recommendation. We made no recommendations in this area of examination.

Entity Responses to Recommendations

The audited entities agree with our recommendations, and have responded (see List of Recommendations).

Related Information

For more information

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