In broad terms we will have met our expected outcome if:

• we provide enhanced enforcement that identifies and responds to threats;

• we understand compliance issues across the Customs Program and have in place a functional plan to manage the associated risks;

• we have in place responsible services that encourage voluntary compliance without compromising security; and

• we promote a more stable and certain environment for trade transactions.

• 102 million travellers processed (a decline of 8% owing to the decrease in international travel following September 11)

• 4.6 million customs examinations (31% increase in rate over 2000-2001, owing to increased vigilance after September 11)

• 10.8 million commercial releases processed

• 165,441 commercial importers served; $3.3 billion in gross import duties collected

• $21 billion in GST/HST collected; $343 billion in imports processed

• Seizures with an estimated value of $460 million

• Enforcement of 47 Special Imports Measures Act (SIMA) findings, providing protection to $13.9 billion of Canadian production

Current-Year Performance: We assess threats to the security, health, and safety of society and to Canada's economy on a continuous basis and on a variety of levels. We continue to combat the smuggling of contraband such as drugs, firearms, pornography, alcohol, and tobacco through the use of intelligence, contraband detection equipment, and most importantly, the skills and abilities of our customs officers. Our drug seizures, valued at $426 million, accounted for roughly 50% of all drugs seized in Canada last year by all enforcement agencies (Fig. 1-3 provides highlights for some volume changes in contraband interdictions over the past two years). Aided by our Officer Powers Program, our efforts at the border also resulted in the return of 93 children to their families, the arrest or detention of 1,285 impaired drivers, the apprehension of 705 individuals wanted on outstanding warrants, and the interdiction of 247 stolen vehicles during 2001-2002.

An existing international threat related to terrorism took on new significance on September 11, 2001. As a result of the attacks on the United States and the potential threat to Canada, we immediately increased our screening of passengers and goods to detect any movement related to terrorism (Fig. 1-2 presents trends in volumes and enforcement actions over the past two years). Within hours of the terrorist attacks, our ports of entry across the country were placed on high alert, and our customs officers were mobilized to process the many U.S. destined planes diverted to Canada while maintaining the highest level of vigilance (Fig. 1-1).

After September 11, we received an immediate infusion of $6 million to acquire contraband detection technology to help identify contraband and terrorist-related goods. With this new funding and a previous allocation of $8.5 million in June 2001, the Customs Program continued to research and acquire new equipment to address ongoing and new threats. Further, in recognition of our role as a key player in the Government's security agenda, $433 million was set aside for the CCRA over six years, as part of the Public Security Anti-Terrorism funding.

Through our on-going collaborative efforts, we continued to negotiate umbrella memoranda of understanding with several other government departments to strengthen our ability to identify and respond to external threats of all kinds. However, this is taking longer than we had hoped (Fig. 1-4 provides an overview of ongoing negotiations).

We helped protect Canadian producers from unfairly dumped or subsidized goods. In response to Canadian industry complaints, we completed eight investigations involving a number of countries and commodities, for a total of 41 country-specific actions.

Year-to-Year Change: Our extraordinary execution in response to the events of September 11 highlighted our ability to identify and respond to threats. We have made a significant investment in new contraband detection equipment to improve our effectiveness in interdicting non-compliance at Canadian ports of entry. The total dollar value of seizures decreased from $679 million in 2000-2001 to $460 million. We believe that this result is at least partly due to the deterrent effect of our increased security efforts following September 11. Although the number of dumping and subsidy investigations declined from 11 in 2000-2001 to 8, the number of country-specific actions resulting from these investigations increased from 20 to 41.

Note: Enhanced enforcement was reported mid-way through our performance report last year and is now reported as our first anticipated result in recognition of the shift in priorities following September 11.

Current-Year Performance: Understanding compliance remains a challenging but critical task for effective risk management. We are evolving from a risk management system based largely on experience and judgement to one that is also supported by more rigorous assessments of compliance. In 2001-2002, we completed the second year of a three-year random sampling cycle in an effort to measure the overall rates of compliance at the border, by mode. Different border points are targeted in each year of the cycle, and results for individual years may vary for several reasons, including differences between sites or limited coverage. However, when viewed together, the results for the first two years provide at least some indication of compliance by mode. Our judgement based on these figures (Fig. 2-1) and other information is that travellers and traders generally comply with border legislation. Next year, when the three-year cycle is completed, we expect to have a better sense of overall border compliance levels.

To gauge the degree of compliance with trade legislation, we verify the books and records of a random sample of importers to ensure that they have met all trade requirements. However, our current methodology is not sufficiently robust to draw firm conclusions. A preliminary assessment of 74 post-release verifications in three priority commodity areas (textiles/apparel, steel, and footwear) suggests a high error rate with respect to the classification of commodities and the valuation of commercial transactions for these commodities in 2000-2001. Error rates in the sample group range from 19% to 31% (Fig. 2-2). Further analysis will assess the reliability of these results as well as the degree of compliance in other priority trade areas, with the objective of identifying and addressing sources of non-compliance with trade legislation. We are currently developing a long-term system solution for analyzing the results of these post-release verifications.

To promote high levels of border and trade compliance, we provide client service and education to our clients through trade shows and outreach activities (Fig. 2-3). We have also invested heavily in technology to help compliant individuals and traders identify themselves to us. At the other end of the compliance continuum, we began implementing the first phase of a new penalty regime—the Administrative Monetary Penalty System (AMPS)—that authorizes graduated penalties for violations of customs laws. This first phase focused on the commercial sector and will expand to incorporate travellers in the future.

We recognize that we have to develop clearer measures of our performance. We have not progressed as quickly as we had anticipated with our Compliance Improvement Plan. As we move forward, we will be developing improved measures of compliance, establishing priorities for post-release verification based on trade risk, and introducing performance standards to serve as benchmarks for the continuous improvement of our programs and services. We are also working with other government departments and agencies to assess the viability of using post-release verification to supplement border examinations and to ensure compliance with their programs.

Year-to-Year Change: While not yet statistically valid, the results of our random border examinations continue to suggest high overall levels of compliance by travellers and traders with border and initial release requirements. Although we are not yet able to make firm conclusions about levels of compliance with overall trade requirements, we are concerned, in light of our preliminary analysis of importer books and records, that these levels may not be as high as we had expected. We initiated the development of methodologies and processes that will allow us to better capture and report results under the Compliance Improvement Plan.

Current-Year Performance: Providing responsible customs service means fullfilling our dual mandate to protect and facilitate, without compromise to either. This was brought into sharp relief following the attacks of September 11, as our front line maintained the intense vigilance required and at the same time processed travellers and goods as quickly as possible to minimize any negative impacts on the Canadian and American economies. We reviewed on an urgent basis the programs and scope of services offered at our service locations across Canada. By the end of the fiscal year, customs service was resumed at 121 airports and 53 permit sites, and we had refined our land border permit programs (i.e., NEXUS and CANPASS) to include heightened security screening before we re-introduced them (Fig. 3-2 shows the suspension in the NEXUS program during October and November 2001).

While wait times for travellers entering Canada through major points of entry mostly met our service standard before September 11, these times increased significantly as a result of the enhanced security verifications in the days immediately following that date. To assist travellers and traders in planning their route into Canada and travel time, we published regular updates on the Internet. Our Web page received in excess of 8,000 hits a day.

Year-to-Year Change: Beyond working to address the security concerns heightened by the events of September 11, we continued our efforts to encourage voluntary compliance through Customs Self- Assessment, a streamlined accounting and payment process for approved importers (Fig. 3-1 provides a brief summary of similar initiatives which are aimed at improving security and facilitating border travel and trade). We reviewed our programs and services to ensure that levels of service did not compromise security. Client satisfaction in customs has remained stable relative to our 2000-2001 benchmark, with 77% of respondents to our Annual Survey rating our performance as good or very good.

Current-Year Performance: Fundamental to promoting a more stable and certain environment for trade transactions is negotiating international customs rules, requirements, and definitions and promoting customs harmonization and simplification of standards. We continued to demonstrate leadership at international forums such as Asia-Pacific Economic Cooperation (APEC) and the World Customs Organization, where the CCRA recently played a prominent role in promoting initiatives that will enhance the security of the trade chain and capacity building in developing countries. We actively supported Canada's negotiations for several free trade agreements (Fig. 4-1 illustrates the scope of international involvement). Following the events of September 11, we have worked even more closely with the U.S. to ensure the economic well-being of both countries through a more secure border that is open to legitimate trade and travel. The 30-Point Action Plan under the December 2001 Smart Border Declaration is a key priority. It outlines our shared commitment to a border that securely facilitates the free flow of people and commerce.

Year-to-Year Change: We added both human resources and equipment to enhance border security and management as a consequence of the terrorist attacks of September 11, 2001. We have worked very closely with the U.S. to realize the Smart Border Declaration. Nonetheless, we continue to contribute at the international level to the standardization of import and export processes.

Current-Year Performance: Underpinning all of our strategies and plans is the knowledgeable and skilled work force we depend on to deliver our mandate. Estimates based on the 2001 CCRA Annual Survey indicate that about 90% of all Canadians who had dealings with customs in 2001-2002 agree that our customs staff is knowledgeable and competent. Our ongoing training, as shown in Fig. 5-1, and aggressive transformation plan, as described in the next anticipated result, contribute to ensuring that this benchmark is maintained. Looking forward, we completed the first phase of the Customs Human Resources Plan to evaluate and plan for the work force we need by 2005-2006, and we completed an analysis of our current requirements for compliance verification officer, client services officer, and customs inspector jobs.

We inducted 396 recruits to our new customs inspector training program, somewhat short of our capacity of 435 due to a shortage of accommodations available at the CCRA College. An external expert found that the new training program demonstrated a high rate of learner success.

As a short-run response to the events of September 11, customs officers worked hard to move commercial shipments in an environment of uncertain risk and to process anxious and worried travellers.

Year-to-Year Change: Estimates based on the Annual Survey indicate that most Canadians (about 90%) who have dealings with customs, continue to agree that our staff is knowledgeable and competent. Our progress against our human resource training and planning goals for the year was solid for the most part. New training challenges will continue to emerge, including training required to accommodate new tools and technology resulting from the implementation of the Customs Action Plan and the Smart Border Declaration, which will stretch our resource capacity even further.

Current-Year Performance (Year 2 of 5): The Customs Action Plan (CAP)—the focus of our efforts to transform the way we perform our core business operations—took on even greater importance in 2001-2002. In particular, those elements of the plan that provide for greater security and protection through enhanced screening of goods and travellers were revised and accelerated in response to the events of September 11. Examples include Advanced Passenger Information, Expedited Passenger Processing System, and NEXUS, a permit program for pre-screened travellers (Fig. 6-1 provides highlights of the Customs Action Plan for 2001-2002). The Manley-Ridge Smart Border Declaration served as a key enabler of the accelerated schedule for these initiatives. Business transformation was also facilitated by setting aside $433 million of Public Security and Anti-Terrorism funding for the CCRA over six years.

Year-to-Year Change: We successfully met our key program commitments for innovation for 2001-2002, incorporating enhancements or revisions as required to address changed circumstances.

The Road Ahead – 2002 and Beyond

1. Delivering on Customs Action Plan Initiatives as the result of enabling legislation passed in the fall of 2001 as detailed in the following examples (Anticipated Result 6):

2. Address weaknesses in compliance measures and advance the Compliance Improvement Plan including (Anticipated Result 2):

3. Develop a national core curriculum and a long-term learning plan for beginner, intermediate and senior compliance verification officers, which will be adaptable for Customs client services officers and appeals officers (Anticipated Result 5).

4. Continue implementation of the Balanced Scorecard to provide more effective and unbiased reporting of our successes and performance gaps for decision-making purposes (For the entire business line).

5. Continue to be a member of the World Customs Organization (WCO) Policy Commission for the next two years, allowing the CCRA to effectively manage our WCO issues. The CCRA is also a member of the WCO Finance Committee and will participate in other key WCO Committees (Anticipated Result 4).

6. Continue to chair the WCO's Working Party to the Permanent Technical Committee. We will play a leading role in the Task Force that was established to develop and implement the measures contemplated in the Resolution on Security and Facilitation of the International Trade Supply Chain, which was adopted by the WCO members in June 2002 (Anticipated Result 4).