Customs Services

Expected Outcome

Performance Summary – We have mostly met this Anticipated Result as demonstrated by the following performance against expectations:

• overall compliance with customs requirements remains high
• we implemented the Administrative Monetary Penalty System in the commercial stream
• our take-up rates for pre-approval programs continue to grow
• we made progress in the analysis of existing trade data; however, we recognize the need to continue to analyze and report on this data on a more regular basis

Risk-based processing is fundamental to the re-engineering of our customs processes. To this end, we have a number of ongoing strategies in place to monitor and report on compliance trends and risks across the customs programs. These help to form our Compliance Improvement Plan, which sets out the yearly goals and priorities of the Customs program. Our aggressive innovation strategy, described throughout our performance story, and more particularly in Anticipated Result 5, builds on the principles of effective compliance management to streamline processes for pre-approved low-risk travellers and traders and target areas of non-compliance. The full implementation of the Administrative Monetary Penalty System (AMPS) in the commercial stream in the fall of 2002 supports effective compliance management by offering a graduated penalty system to address instances of non-compliance.

In 2002-2003, we completed the final year of a 3-year sampling cycle for measuring compliance at the border. The results (Fig. 2-1) show a consistently high overall degree of compliance with border requirements over the period. For travellers, compliance averaged over 97% for those crossing at land border points and over 95% for those arriving by air. For commercial shipments, compliance ranged from an average of 87.3% for the marine mode to 95.4% for highway shipments.

2-1 Compliance Rates at the Border

* Postal and courier were not measured for compliance levels in 2002-2003 owing to budget restraints and competing priorities.

Customs aims to devote a large share of available border examination resources to high-risk entries. Results for 2002-2003 indicate that some element of non-compliance was identified on 17.7% of all targeted commercial examinations compared with the 11.3% rate on random commercial examinations, suggesting that the examination program is generally effective at targeting higher-risk entries for verification and enforcement.

In addition to developing measures of compliance with border requirements, we regularly verify the books and records of a sample of importers (Post-Release Verification) to gauge the degree of compliance with trade legislation; including the valuation, classification and payment of duties and taxes for imported goods. The 2001-2002 Annual Report provided a preliminary assessment of the results from our 2000-2001 samples for three priority commodity areas: textiles/apparel, footwear, and steel. Fig. 2-2 presents the results of a more thorough review of these samples.

2-2 Post-Release Verification Results 2000-2001

Overall, import values appear to be accurately stated. However, accuracy seems to be more of an issue with respect to the classification of some of these commodities. Although our estimates are not precise, they provide an approximate indication of overall compliance in the sampled commodity areas. They suggest high overall levels of compliance with duty requirements (well over 90%), which is key to achieving the legislated protection for Canadian business. Payment of duties and accurate trade data are important because government and businesses rely on both as a guide to decision-making.

2-3 The Compliance Improvement Plan

Our Compliance Improvement Plan is designed to:

• influence the variables that may have a positive impact on compliance (through client service, discussed in greater detail in Anticipated Result 3);
• establish strategies to target threats (Border Management Plan, reflected in the approach and results articulated in Anticipated Result 1); and,
• verify improvement in compliance trends or alert us to continued or emerging trade issues (through Post-Release Verification as discussed above).

Some elements of this plan have not evolved as quickly as we had anticipated. In particular, further work is needed to assess our compliance results and more fully integrate the findings into our risk assessment and targeting programs.

The Administrative Monetary Penalty System (AMPS) was fully implemented on October 7, 2002, for the commercial stream. This followed a 10-month transition period during which only warnings were issued, with no dollar values attached. The transition allowed time for the members of the commercial community to assess their level of compliance and make improvements to their Customs information systems, if required. From October 7, 2002 to March 31, 2003 over 7,500 AMPS penalties were issued. Comparatively speaking, this is somewhat less than the number of infractions in previous years; however, owing to adjustments in the system and changes to policy over the implementation period further analysis is required to assess the impact on compliance trends. We continue to consult extensively with the trade community, adjusting contraventions where appropriate and clarifying compliance measures. To further assist the community, where the reason for non-compliance stems from members' Customs information systems, the amount of any resulting penalties may, in some instances, be used to correct the systems.

Take-up rates for pre-approval programs (as discussed in Anticipated Result 5) continue to increase, allowing us to manage compliance based on past compliance history.

Date modified:

2003-10-29