Archived - Evaluation of the Trusted Traders Programs - Final Report

April 2014

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Executive Summary

Background

The Canada Border Services Agency (CBSA) Trusted Traders Programs facilitate the movement of legitimate goods by providing streamlined and efficient border processes for pre-approved, low-risk traders and enhance the security and integrity of the supply chain through partnerships with businesses.Footnote 1 There are two programs through which a company can become a CBSA Trusted Trader: Partners in Protection (PIP) and Customs Self-Assessment (CSA). PIP is the security-based program of the Trusted Traders Programs and contributes to supply chain security. CSA provides expedited release and /or streamlined accounting and reporting benefits to approved importers, carriers and registered drivers. CSA-Platinum is a program enhancement that gives additional benefits to CSA importers who voluntarily demonstrate to the CBSA that their business systems and internal controls are effective and reliable. For Fiscal Year (FY) 2012-2013, the Trusted Traders Programs spending was $9.3 million.

Evaluation Purpose

The purpose of the evaluation was to assess the relevance and performance of the Trusted Traders Programs, in accordance with the Treasury Board Secretariat Policy on Evaluation. The data collected from various methodologies, using both quantitative and qualitative methods, was triangulated to develop the findings. The recommendations presented are based on these findings. The CBSA's Program Evaluation Division carried out the evaluation research between March and October 2013.

Summary of Findings

Relevance

Is there a continued need for the Trusted Traders Programs and are they aligned with Government of Canada roles, responsibilities and priorities and with the CBSA priorities?

There is a continued need for the CBSA to provide efficient border processing. Through the Trusted Traders Programs, the Agency fosters economic growth by enabling streamlined and simplified border processes for pre-approved companies importing low-risk goods. The Programs address the continued and ongoing need of the industry and of the Agency for expedited border clearances, simplified accounting processes and enhanced compliance with CBSA requirements. Furthermore, in partnering with industry to enhance border and trade chain security and applying mandatory security requirements, the programs contribute to meeting the Government of Canada's obligations under the World Customs Organisation SAFE Framework.Footnote 2

With changing global markets, there is a recognized demand to expand the Programs beyond the North-American trade supply chain and while the CBSA has identified areas of development, the growth potential for the Programs has not been clearly identified and articulated.

Performance

To what extent do the benefits offered by the Trusted Traders Programs meet program objectives, and member and Agency needs?

Generally, the benefits meet the current program objectives and those members who were surveyed indicated that overall they were satisfied with the Trusted Traders Programs. Program management acknowledged the need to develop new benefits (e.g. offshore, Other Government Departments requirements, CSA-Platinum and Non-Resident Importers) and is doing so at the same time as the Agency develops tools to modernize trade processing for all importers. As such, some of the new initiatives (e.g. CBSA Assessment and Revenue Management) are expected to offer non-members streamlined reporting requirements comparable to CSA and thereby decrease the value of CSA membership. The Trusted Trader eApplication promises to offer an electronic application form and access to update company information which will reduce members' administrative efforts when it is launched in April 2014. Others initiatives (e.g. eManifest), which require Advance Trade Data, may improve CSA's value and increase membership as companies try to reduce their reporting requirements. The net result of the new Trusted Traders benefits is unknown, which could explain the low membership growth since FY 2011-2012 and the high number of pending CSA applications.

Do the Trusted Traders Programs develop, support and maintain the stakeholder relationships needed to meet program outcomes?

The CBSA has made considerable efforts to integrate and harmonize the Trusted Traders processes with the United States; however, few linkages have been established within the Agency with the commercial and trade streams. Since there is little integration with other areas of subject matter expertise within the Agency, especially at the Program Management Table level, members only enjoy their "trusted" status for the Trusted Traders Programs. As such, the low level of awareness and recognition of members' "trusted" status in other areas of the Agency inhibits increased collaboration and information sharing. As a result, there is a lack of agreement with respect to the efficacy of the risk-assessment conducted on Trusted Trader members and whether or not the risk-assessment and validation processes are sufficient.

Do the Trusted Traders Programs contribute to the Agency's capacity to mitigate risks and to what extent are members compliant with the requirements of the Trusted Traders Programs?

Overall, the Trusted Traders Programs contributes to the Agency's capacity to mitigate risks by enhancing the integrity of the trade chain and by securing and facilitating the cross-border movement of low-risk shipments. PIP offers a level of assurance that risks attached with the security of the supply chain have been reduced while CSA ensures that members' books, records and business systems have the necessary internal controls and procedures to meet the program requirements. The CSA-Platinum enhancement will further strengthen the control mechanisms while ensuring trade programs compliance. However, demonstrating these benefits is challenged by limitations in the current information technology system functionalities, as CSA and PIP members cannot be identified within various systems; and as such, cannot track their compliance levels.

Efficiency and Economy

Are Trusted Traders Programs delivered efficiently and cost-effectively?

With only one year of financial data available, it could not be determined whether the Programs are being delivered efficiently. In FY 2012-2013, the CBSA spent approximately $9.3 million to deliver the Trusted Traders Programs that have facilitated the movement of low-risk goods of an estimated value of over $81 billion in FY 2011-2012. Between FY 2007-2008 and Q2 FY 2012-2013, CSA imports as a percentage of Value for DutyFootnote 3 were fairly constant with an average of 17.9%. The limited performance data available was used to estimate the efficiencies and economies enjoyed by CSA members and the Agency. For example, in 2012, the estimated savings for industry were $43.7 million for accounting adjustments and $5.6 million for fewer examinations.Footnote 4

Recommendations, Management Response and Action Plan

Trusted Traders Programs are limited in their ability to expand to other industry sectors and other modes of transportation. Though membership growth is a stated objective of the Programs, the net CSA membership growth has been slow and the overall volumes of new memberships have been low. Furthermore, the development of new initiatives such as eManifest and the CBSA Assessment and Revenue Management (CARM) will likely impact some of the current benefits afforded to members.

In light of these findings it is recommended that:

Recommendation 1:

The Programs Branch re-assess the program objective of membership growth, identify areas for modernization of the Programs and develop a strategic plan.

Management Response

Programs Branch agrees with this recommendation. The program area will re-assess the objectives of the current trusted trader program to ensure appropriate indicators of program success are identified.

Programs Branch will also work with Program Partners to identify areas of program modernization that will support modernized objectives and delivery of the program in the context of emerging technology and border processes (E-manifest, CARM, etc.).

Initial analysis will ensure the continued relevance of the program as well as identify areas where the efficacy of its delivery needs to be improved.

The program area has already implemented many of the Beyond the Border initiatives which have played a key role in modernizing Trusted Traders Programs and ensuring its continued relevance.

Management Action Plan Completion date
Program success indicators are re-assessed, and options for potential new program indicators are identified and defined. November 2014
Analysis of the current Program to identify priority areas for program modernization is completed. October 2014
The Strategic Plan is developed. March 2015

There is a lack of integration of the Trusted Traders Programs within the CBSA commercial and trade streams. There is a low level of awareness and recognition of members' "trusted" status which constrains internal collaboration. Member benefits need to be considered when the CBSA is undertaking new initiatives to modernize the trade processes to maintain the value proposition of the Trusted Traders benefits.

In light of these findings it is recommended that:

Recommendation 2

The Programs Branch ensure the optimal integration of the Trusted Traders Programs within the larger CBSA trade and commercial areas so that Trusted Traders Programs and member benefits are considered when developing mainstream trade initiatives.

Management Response

Programs Branch agrees with this recommendation. The Programs Branch will evaluate and expand membership as necessary on the Trusted Traders Membership Committee and the Programs Management Table to foster more strategic and focused discussion on the Trusted Trader Programs within the broader CBSA commercial and trade areas.

The Programs Branch will also determine the feasibility of developing a reporting mechanism for assessing the performance of the Trusted Trader Programs and increase awareness of the programs through the development and implementation of tools and products, including the CBSA Wiki. These actions will be completed by November 2014.

Management Action Plan Completion date
Trusted Traders Division will expand membership of the Trusted Traders Membership Committee (a forum to review and validate decisions made about Trusted Trader membership) to integrate other program and operational areas into the membership decision-making process to enhance program integrity and information sharing. April 2014
Programs Branch will also evaluate the PMT membership and recommend key internal stakeholders from the Operations and Programs Branches be appointed to PMTs relevant to the commercial stream in order to achieve focused strategic decisions and discussions relevant to Trusted Traders Programs within the larger CBSA trade and commercial areas. PMT members will be responsible for providing input into policy and program performance decisions and for sharing information throughout the regions.
April 2014
In order to better identify and assess performance related to benefits of Trusted Traders Programs, Programs Branch will work with ISTB to establish timeframes, costs and business requirements for the integration of trusted trader membership identifiers within CBSA IT systems.
September 2014
Trusted Traders Division will work with Communications and other program areas including Operations to design tools and products that create awareness of and confidence in Trusted Traders Programs throughout the CBSA and with external stakeholders. The division will also leverage various information sources such as the CBSA Wiki to showcase the program and its policies and procedures. November 2014
Other commercial and trade program areas within Programs Branch will integrate trusted traders membership status into the development of commercial policy and identify new benefits for trusted members within their area of responsibility. March 2015

1. Introduction and Context

The Canada Border Services Agency (CBSA) has two programs that currently come under the umbrella of the Trusted Traders Programs: Partners in Protection (PIP) and Customs Self Assessment (CSA). The PIP program was introduced in 1994 with a primary focus on promoting awareness of and compliance with customs regulations among members. However, since the events of 9/11, the program has shifted to place greater emphasis on trade chain security through security enhancements to members' infrastructure and processes. Under the 2007 Security and Prosperity Partnership of North America, the Government of Canada committed "to strengthen the PIP program in order to achieve mutual recognition and compatibility with the United States Customs-Trade Partnership Against Terrorism (U.S. C-TPAT) program".Footnote 5 The modernized PIP program was introduced in June 2008 and featured changes to ensure compatibility with the U.S. C-TPAT, as well as with the World Customs Organization (WCO) Standards to Secure and Facilitate Global Trade (SAFE) Framework minimum security requirements.Footnote 6

The CSA program was announced in April 2000 as one of the Customs Action Plan initiatives, and launched in December 2001 in order to enhance the Agency's effectiveness in processing an increasing volume of goods crossing the border into Canada.Footnote 7 CSA provides an expedited clearance process for approved importersFootnote 8 and carriersFootnote 9 involved in the shipping of eligible goods from the United Sates (U.S.) and Mexico. CSA eligible goods may enter Canada on the presentation of identification showing that the importer and carrier have been approved for participation in the program and that the driver is registered in one of the CBSA registered driver programs.Footnote 10 This negates the need to provide information about the imported goods or the conveyance before or at the time of entry into Canada.Footnote 11

CSA-Platinum was introduced in January 2014 as a program enhancement for CSA importers whose membership is in good standing. Additional benefits are afforded to members who demonstrate complete and accurate reporting and overall good trade compliance. CSA-Platinum members will be subject to reduced trade compliance verifications by the CBSA, allowing the Agency to focus resources in areas of higher or unknown risk.

These Programs are currently delivered separately; moving forward, the vision is that they be further integrated in support of a tiered system.

Evaluation Purpose and Scope

The evaluation of the CBSA's Trusted Traders Programs was identified for completion in FY 2013-2014 in the FY 2013-2018 CBSA Five-Year Program Evaluation Plan which wasapproved by the Executive Evaluation Committee in July 2013.

The purpose of the evaluation was to examine the relevance, performance, efficiency and economy of the CBSA's Trusted Traders Programs in accordance with the Treasury Board Secretariat Policy on Evaluation.Footnote 12 In addition, outcomes and indicators of the Trusted Traders Programs performance measurement and management frameworks developed as part of the Beyond the Border initiative were integrated in the evaluation study framework that provides the foundation for this evaluation's lines of inquiry.

An evaluation plan and framework were developed based on the activities, outputs and expected outcomes identified in the program logic model that was developed in consultation with program management. The program logic model is provided in Appendix C. Exhibit 1 below lists the evaluation questions that were used to assess program relevance and performance.

Exhibit 1: Evaluation Questions

  • Is there a continued and on-going need for the program?
    • Evaluation Issue: Relevance
    • Evaluation Questions:
      • Is there a continued need for the Trusted Traders Programs?
      • Are the Trusted Traders Programs aligned with Government of Canada roles, responsibilities and priorities and with the CBSA priorities?
  • Are the activities achieving the expected results?
    • Evaluation Issue: Performance - Achievement of Expected Outcomes
    • Evaluation Questions:
      • To what extent do the benefits offered by the Trusted Traders Programs meet program objectives, and member and Agency needs?
      • Does the Trusted Traders Programs develop, support and maintain the stakeholder relationships needed to meet program outcomes?
      • Do the Trusted Traders Programs contribute to the Agency's capacity to mitigate risks, and to what extent are members compliant with the requirements of the Trusted Traders Programs?
  • Demonstration of Efficiency and Economy
    • Evaluation Issue: Efficiency and Economy
    • Evaluation Question:
      • Are Trusted Traders Programs delivered efficiently and cost-effectively?

Calibration

The Internal Audit and Secretariat Division recently conducted an audit to determine whether the controls in place to manage the compliance of participants of the Trusted Traders Programs, and related self-assessed revenues, were well designed and operated effectively.Footnote 13 Consequently, the evaluation did not examine this aspect of the Program delivery; however, the findings from the audit were considered for this evaluation.

Furthermore, elements of the PIP Program were examined in a program evaluation conducted in January 2011.Footnote 14 As such, in order to reduce evaluation resource requirements and to minimize disruption to stakeholders, evidence and findings contained in the previous evaluation study has been incorporated in the current evaluation.

The CBSA Program Evaluation Division carried out the evaluation research between March and October 2013. Details of the research methodologies are provided in Appendix D.

Evaluation Research Limitations

The evaluation methodology was designed to provide multiple lines of evidence. The data and information were collected to respond to the evaluation questions and issues. The following data limitations were noted:

  • There are quarter–to-quarter and month-to-month inconsistencies in the collection of performance data which limited the ability to identify trends. Also, 29 of 61 measures on the Beyond the Border performance measurement framework are dependent on systems/tools (e.g. the web portal) that have not yet been developed/implemented, so data collection has yet to begin. Of the remaining measures, partial data was available for 20 of 32 of the performance measurement framework components.
  • There is no unique identifier in the information technology systems to identify Trusted Traders members (i.e. PIP, CSA and CSA-Platinum). As a result, members of one Trusted Traders Program cannot be readily differentiated from another (i.e. PIP from CSA) or from non-program members (i.e. CSA vs. non-CSA) for key data elements such as the number and value of shipments, examinations, resultant examinations, compliance and accounting.
  • Due to changes in the financial structure of the Trusted Traders Programs, only one year of financial data were available, thus only limited analysis was possible, and assessing the allocation of resources was constrained.

2. Key Findings – Relevance

Is there a continued need for the Trusted Traders Programs?

There is a continued need to provide streamlined and efficient border processing of goods into Canada. The Trusted Traders Programs contribute to this objective by pre-approving companies that import low-risk goods.

An estimated $1.9 billion worth of goods and services cross the U.S.-Canada border every day.Footnote 15 Trade represents one in every five jobs in Canada and accounts for more than 60.0% of the country's annual income.Footnote 16 The CBSA has seen this translated into an increase in commercial releases at the border of 22.0% over the last four years.Footnote 17 In FY 2012-2013, the CBSA conducted 193,653 commercial examinationsFootnote 18 resulting in over 86,837 enforcement actions, including 7,305 related to prohibited goods, and 10,624 drug seizures.Footnote 19 The need to make the border not only secure but also more efficient is more important than ever.Footnote 20

It is within this context that the Agency identified the need to target high-risk goods as early as possible in the supply chain continuum and to move risk mitigation activities away from the actual border, to the extent possible. The Trusted Traders Programs facilitate the Agency's ability to realize these objectives by identifying low-risk companies for expedited border clearance and by ensuring that these same companies have the processes in place to secure their individual supply chains, within the pre- and post-border environments. Similarly, CSA ensures that members' books, records and business systems have the necessary internal controls and procedures to meet the program requirements.

The Trusted Traders Programs continue to address the expressed needs of industry for expedited border clearance, and simplified post-border accounting and compliance verification processes.

The Trusted Traders Programs respond to industry's expressed needs and supports economic growth by enabling streamlined and simplified border processes including accounting and reporting processes. In exchange, these companies provide the CBSA with access to detailed information on their security processes, physical security infrastructure and accounting information. All of these factors have resulted in a reduction in importing expenses for some companies, as CSA accounting procedures and systems have, in some cases, lessened importers' reliance on outside service fees such as those paid to customs brokers or third party service providers. As well, better accounting procedures and improved trade compliance lead to fewer monetary penalties for member companies. CSA-Platinum is expected to further support the economic prosperity and competitiveness of industry by allowing approved companies to conduct their own self-testing of trade compliance, further simplifying the post-border accounting and compliance verification processes for these members.

Growth in these programs as measured by membership and VFD has been slow since the end of FY 2011-2012.

Increasing Trusted Traders Programs membership is cited as a mechanism to improve the Agency's ability to mitigate risks at the border.Footnote 21 With the modernization of the PIP program in 2008, which required all members re-apply to the PIP program, Trusted Trader membership initially grew quickly, though by FY 2011-2012 the growth rate had tapered off.Footnote 22 As of October 2013, there were 95 CSA importers, a net increase of nine members over the nearly three year period from FY 2010-2011.Footnote 23 Some companies belong to both Programs. Furthermore, currently about three quarters of CSA Carriers (640, 74.9%) and CSA Importers (71, 74.7%) are Free and Secure Trade (FAST) approved.

As of October 2013, 52 CSA importer applications were pending which is down from the 180 pending CSA importer applications a year earlier. In the Spring of 2013, Trusted Traders Programs removed 121 inactive CSA importer applications after verifying the companies' continued interest in pursuing membership. It is not clear why these companies had applied to CSA but had not completed the application process.

In addition, Value for Duty (VFD)Footnote 24 is a key performance indicator to measure the growth of the program. Between FY 2007-2008 and Q2 FY 2011-2013, CSA releases represented an average of 17.9% of VFD, with minimal fluctuation or growth.Footnote 25 (Exhibit 2) Between 2007 and 2012, imports overall grew 14.1%.Footnote 26

Exhibit 2: CSA VFD as a Percentage of Total VFD
FY 2007-2008 to Q2 FY 2012-2013

Quarter Total VFD (in $ billions) CSA VFD (in $ billions) CSA % of Total VFD
2007-2008 - Q1 104.8 21.8 20.8%
2007-2008 - Q2 100.3 17.9 17.9%
2007-2008 - Q3 100.2 19.4 19.4%
2007-2008 - Q4 100.1 17.2 17.1%
2008-2009 - Q1 111.5 18.9 17.0%
2008-2009 - Q2 111.5 18.0 16.2%
2008-2009 - Q3 110.9 18.5 16.6%
2008-2009 - Q4 90.9 14.2 15.6%
2009-2010 - Q1 89.0 14.7 16.6%
2009-2010 - Q2 91.7 15.7 17.1%
2009-2010 - Q3 93.8 17.8 19.0%
2009-2010 - Q4 93.2 18.7 20.1%
2010-2011 - Q1 102.1 20.3 19.8%
2010-2011 - Q2 104.3 17.7 17.0%
2010-2011 - Q3 104.1 18.3 17.6%
2010-2011 - Q4 104.7 19.8 18.9%
2011-2012 - Q1 112.2 20.0 17.9%
2011-2012 - Q2 113.4 19.1 16.8%
2011-2012 - Q3 115.6 19.9 17.2%
2011-2012 - Q4 113.4 22.1 19.5%
2012-2013 - Q1 119.1 22.8 19.1%
2012-2013 - Q2 114.7 20.0 17.4%

Source: Performance data. Data for FY 2012-2013 only includes Q1 and Q2 compiled from FY 2012-2013 Q2 Agency Performance Report.

While the original rationale for the Trusted Traders Programs remains valid, the current and future relevant markets for the programs, and the impact of such growth on program resources, have not been clearly identified and articulated.

The global context within which the Agency delivers the Trusted Traders Programs has changed over the last 20 years. Not only has the nature of Canadian supply chains gone from primarily a North American focus to an extended global focus, new and planned trade agreements have changed the trading landscape. The Trusted Traders Programs have been responsive to the changes that this context has brought to Canadian importers.

Currently, the CSA expedited clearance option is only available for those goods that are imported from the U.S. or Mexico and that are not subject to Other Government Departments (OGD), provincial or territorial regulations.Footnote 27 Non-CSA goods imported by a CSA importer are, however, eligible for the post-border simplified trade data and revenue reporting. Although these programs are open to all modes of transportation, the reality is that current CSA memberships consist primarily of those importers whose supply chain is within North America and who have those goods shipped via the highway mode of transportation. Because offshore goods currently do not qualify for CSA expedited clearance,Footnote 28 there is little CSA movement of goods via the air or marine modes of transportation. Consequently, the Trusted Traders Programs are limited in their ability to expand the Programs to other modes of transportation and in turn, facilitate low-risk shipments and shift resources to focus on those of high or unknown risk within other modes.

The data from FY 2008-2009 to FY 2012-2013 shows that, on average, 30.4% of commercial releases are conducted in other modes than the highway mode of transportation. Overall commercial releases went from just over 12.5 million in FY 2008-2009 to just over 14.2 million in FY 2012-2013. The impact of this increased workload was most notable in the highway mode of transportation which saw the number of commercial releases go from 8.7 million in FY 2008-2009 to over 9.8 million in FY 2012-2013. (Exhibit 3)

Exhibit 3: Total Number of Commercial Releases by Mode of Transportation
FY 2008-2009 to FY 2012-2013

ReleasesFootnote 29 by Mode of Transportation FY 2008-2009 FY 2009-2010 FY 2010-2011 FY 2011-2012 FY 2012-2013
Air 3,014,554 2,812,313 3,122,948 3,365,027 3,435,578
Highway 8,728,316 8,301,504 9,201,461 9,535,605 9,854,749
Marine 463,236 428,124 448,887 445,061 552,108
Rail 363,566 324,481 366,600 374,942 378,678
Grand Total 12,569,672 11,866,422 13,139,896 13,720,635 14,221,113

Source: CMRS, Commercial Operations, Updated December 4, 2013.

The number of CSA releases as a percentage of total releases between FY 2007-2008 and Q2 FY 2012-2013 showed modest growth from 7.4% to 8.6% with an average of 7.3%.Footnote 30,Footnote 31

Expansion of CSA eligible goods into the offshore environment has the potential to increase Trusted Traders membership, thereby increasing the benefits realized by both industry and the CBSA. Industry representatives indicated that a percentage of their importer members who are currently not CSA members are waiting for the implementation of eManifest in order to make a full determination of the resource and workload implications of its pre-border data requirements before deciding whether to undergo the financial commitment necessary for CSA membership in the current program context.

The full extent of the potential growth that could be realized and the potential implication that this growth may have on program resources is not clear. An analysis to define the market segments (e.g. the percentage of goods imported that qualify for CSA) and the company parameters (e.g. volume and source of CSA goods imported, company size) would be valuable for program strategic planning, could validate the on-going need for the Programs and facilitate identifying additional benefits.

In light of these findings it is recommended that:

Recommendation 1:

The Programs Branch re-assess the program objective of membership growth, identify areas for modernization of the Programs and develop a strategic plan.

Are the Trusted Traders Programs aligned with Government of Canada roles, responsibilities and priorities and with the CBSA priorities?

The objective and outcomes of the Trusted Traders Programs align with federal priorities and the CBSA's strategic priorities to streamline and simplify the border experience and advance global border management.Footnote 32

The Trusted Traders Programs support the broader Government of Canada priority of A safe and secure world through international engagementFootnote 33by facilitating international trade through the provision of streamlined and simplified border processes. In addition, concluding Mutual Recognition Agreements and establishing members as Authorized Economic Operators not only supports this priority but also furthers the Agency's ability to improve supply chain security and reducing barriers to trade.

By positioning PIP as the entry level into the Trusted Traders Programs, the Agency will strengthen the Government of Canada's ability to meet its obligations under the WCO SAFE Framework.

The Government of Canada is committed to supporting implementation of the WCO SAFE Framework.Footnote 34 As the CBSA looks to expand the Trusted Traders Program beyond its current scope (i.e. offshore and OGD), it will be necessary to also manage the risk associated with expanded global supply chains. The PIP mandatory security requirements have been aligned with the SAFE supply chain security standards. A requirement of PIP membership is that members must meet or exceed minimum security standards established by the CBSA, and that they "condition business dealings with entities that agree to ensure that their minimum security measures and systems meet or exceed the minimum security criteria established by the CBSA".Footnote 35 Therefore, with PIP, the CBSA is better positioned to mitigate the risks associated with expanded global supply chains and strengthen its ability to meet its WCO SAFE framework obligations.

3. Key Findings – Performance

To what extent do the benefits offered by the Trusted Traders Programs meet program objectives, and member and Agency needs?

Members' benefits are consistent with current program objectives. However, new benefit options (e.g. offshore, OGD, Trusted Trader eApplication) are being developed for members at the same time that the CBSA is undertaking new initiatives (e.g. eManifest and CARM) to modernize the trade processes for industry as a whole. As such, the future value proposition of the current Trusted Traders benefits is uncertain.

Current benefits available to members are consistent with program objectives though they were often not quantifiable. Since there are minimal tangible benefits for PIP,Footnote 36 CSA members see more value in CSA than in PIP (e.g. expedited processes/monthly accounting vs. being considered a secure low-risk trader). Although intangible, external stakeholders mentioned that members value their relationship with the CBSA as a tool to identify and correct errors, and to provide input into program developments.

The Trusted Traders Programs are evolving to meet members' needs by developing new benefits (e.g. offshore, CSA-Platinum and OGD) at the same time as the Agency develops tools to modernize trade processing for all companies. However, without a clearly articulated vision, estimating the future value of members' benefits is difficult. The offshore option is expected to facilitate the processing for imports from non-North American Free Trade Agreement countries, while agreements with OGDs are expected to streamline the procedures to import goods subject to OGD controls. The Trusted Trader eApplication is expected to enable new members to apply online and allow existing members to update their corporate information. It also offers the potential of replacing paper processes and databases.

To explore the feasibility of new benefits, the Trusted Traders program initiated two pilot projects under the Beyond the Border Action Plan. One pilot expanded access to the Free and Secure Trade (FAST) lanes/booths to current PIP-only and CSA-only companies. The other pilot was conducted with Canadian Food Inspection Agency (CFIA) and assessed the feasibility of allowing CSA importers to clear non-federally registered food products through the CSA program. While the FAST pilot had low up-take, it found that participants' border wait time was cut in half.Footnote 37 The CFIA pilot was deemed successful, though very resource intensive, making continuation dependent on securing additional resources.Footnote 38

Internal changes could also impact benefits as the CBSA is modernizing its trade systems. Examples include eManifest, and CBSA's Assessment and Revenue Management (CARM). However, no evidence was found that the program area had explored the potential impact of these changes on the future value proposition of Trusted Traders benefits. For example, eManifest requires importers of non-CSA eligible loads to submit Advance Trade Data for all goods being imported into Canada. This additional pre-border requirement is seen as burdensome by importers and in turn, could improve CSA's value and thereby increase membership as companies try to lessen the work associated with submitting additional data by demonstrating that their goods are low-risk.

CARM is expected to offer monthly reporting and e-payments to all companies complete with the ability to submit one net payment (i.e. duties owed less drawbacks and refunds). While the scope of CARM may change, this initiative could be a potential erosion of CSA benefits, especially since members invested to build the capacity to interface with the CBSA and currently cannot make e-payments. Whether e-payments would be made available to CSA members in the future could not be confirmed.

Does the Trusted Traders Programs develop, support and maintain the stakeholder relationships needed to meet program outcomes?

There is a lack of integration of Trusted Traders Programs within the broader CBSA commercial and trade streams.

Through the Beyond the Border Action Plan, the CBSA has made considerable efforts to integrate and harmonize the Trusted Traders processes with the U.S. However, the level of integration of the Trusted Traders Programs within the CBSA commercial and trade streams is low. The Pre-Border Program Management Table Risk ProfileFootnote 39 recognized that, with increasing volumes of cross-border trade, there is a risk that public demand for Trusted Traders Programs may exceed the Agency's capacity to adequately deliver these programs. Since similar risks are identified in other border continuums, Trusted Traders Programs would benefit from increased collaboration and sharing of information with other streams within the Agency.

There are no representatives from Commercial Border Programs or Trade Programs on the Trusted Programs Pre-Border Program Management Table, nor are there members of Trusted Traders Programs on the Trade Program Management Table. Furthermore, Trusted Traders Programs noted that there was little integration of Trusted Trader activities within other commercial activities of the Agency. Moving forward there is a general agreement by the Trusted Traders Programs and other areas within the CBSA that Trusted Trader processes should be better integrated into the policy development and decision-making regarding commercial and trade facilitation.

There is no consistent understanding of the value and meaning of "trusted" within the context of Trusted Traders Programs leading to a lack of "buy-in" from other areas of the Agency.

A risk-assessment during the application process is essential in identifying low-risk participants so their shipments qualify for expedited processing at the border. Although assessments are conducted for all applicants, over time there has been some duplication between the PIP and CSA programs as companies who were members of both programs were risk assessed twice and on the same or similar indicators. Trusted Traders Programs has completed preliminary work on developing a model and have been looking at options to streamline the processes; however, an integrated risk assessment model has yet to be disseminated. This has resulted in a lack of understanding by members and within the Agency of how member applications are assessed and against which criteria, for the various Programs. Consequently, there is a lack of agreement with respect to the efficacy of the risk-assessment conducted on Trusted Trader members and whether or not the risk-assessment process is sufficient and validated on a regular basis. Furthermore, Trusted Traders Programs recently modified the assessment process without involving other subject matter experts within the Agency (e.g. Intelligence Operations and Analysis and Risk Management and Foresight) to validate the process.

There is a lack of awareness and recognition within the Agency of the "trusted" status of a member outside the Trusted Trader Programs resulting in different interpretations both in Headquarters and in the Regions as to what being a member of a Trusted Trader Program actually means. For example, while the Trusted Traders Programs measure compliance during the risk assessment process, current performance measures collected do not weigh members from an Agency compliance perspective. Hence, the Agency is unable to demonstrate the level of "trustedness" of members.

In light of these findings and those under the previous evaluation question (To what extent do the benefits offered by the Trusted Traders Programs meet program objectives, and member and Agency needs?), it is recommended that:

Recommendation 2:

Programs Branch ensure the optimal integration of the Trusted Traders Programs within the larger CBSA trade and commercial areas so that Trusted Traders Programs and member benefits are considered when developing mainstream trade initiatives.

Do the Trusted Traders Programs contribute to the Agency's capacity to mitigate risks and to what extent are members compliant with the requirements of the Trusted Traders Programs?

PIP contributes to improved risk management by enhancing the integrity of the trade chain by securing and facilitating the cross-border movement of low-risk shipments.

As identified in the 2011 Partners in Protection program evaluation study,Footnote 40 PIP program activities have contributed to enhancing members' skills in detecting security issues and threats. Furthermore, CBSA officers conduct security reviews and assessments to ensure that members meet the minimum security requirements. Members are recognized as being "trusted" as their security of the supply chain offers a level of assurance that risks have been lessened. PIP's primary focus is on supply-chain security which may lead to the collection of intelligence. A business case recommending a redesign of the PIP delivery model was developed in January 2012; however, no decisions have been made to date.Footnote 41

With the CSA program, the Agency gains insights into a company's operations to identify possible risks. Regional program officers work with the member to ensure that member's books, records and business systems have the necessary internal controls and procedures to support the CSA program requirements. CSA-Platinum further strengthens control mechanisms as members voluntarily demonstrate to the CBSA that their business systems, internal controls and self-testing processes are effective and reliable at ensuring trade programs compliance.

Though there is evidence to suggest that members are compliant with Trusted Traders Programs requirements, there is little evidence (e.g. program performance data such as Administrative Monetary Penalties ((AMP) and resultant exams) to demonstrate their level of compliance overall with all other CBSA requirements.

During the CSA importer application process, regional program officers work closely with applicants in reviewing accounting processes and identifying areas of improvement required for CSA participation. During this process, compliance issues are identified which members correct during the program approval process. Once the client is CSA approved, Program officers monitor and review these on a continual cycle ensuring that members' processes are aligned with program requirements. Should compliance issues arise, regional program officers may issue an action plan. However, a recent audit of the Trusted Traders ProgramsFootnote 42 identified some weaknesses in the effectiveness of these monitoring processes and controls.

In addition, information gaps limit regional program officers in the monitoring of members against non-Trusted Traders compliance (e.g. seizures, trade compliance, and other commercial requirements). For example, regional compliance verification units are unable to report on trade compliance from CSA and non-CSA perspective though this is expected to change when the new Trade Modernization system is implemented. Data limitations in the AMP database make it is difficult to determine if a non-CSA AMP was administered to a member for a CSA shipment or if a CSA AMP was administered for a non-CSA shipment. The reported CSA data on AMPs shows that CSA importers receive a fraction of the AMPs that non-Trusted Traders receive, and that CSA carriers receive about one fifth of the number of AMPs as their non-Trusted Traders counterparts.Footnote 43 (Exhibit 4)

Exhibit 4: Average Administrative Monetary Penalties for
Trusted Traders and non-Trusted Traders, June 2012 to October 2013

  Trusted TradersFootnote 44
# of AMPs
Trusted Traders
$ Value of AMPs
Non Trusted Traders
# of AMPs
Non Trusted Traders
$ Value of AMPs
Importer 8 $8,433 375 $236,416
Carrier 26 $50,421 118 $108,823

Source: Compiled from Trusted Traders dashboards.

4. Demonstration of Efficiency and Economy

Are Trusted Traders Programs delivered efficiently and cost-effectively?

Only one year of financial data was available for the Trusted Traders Programs, as such it could not be determined whether the program was delivered efficiently or cost-effectively.

In FY 2012-2013, the CBSA spent approximately $9.3 million to deliver the Trusted Traders Programs. The FY 2013-2014 total annual forecast of $9.5 millionFootnote 45 is in line the FY 2012-2013 budget (Exhibit 4). Over one third (35.8%) of the budget is attributed to the regions ($3.4 million) for the delivery of the Trusted Traders Programs. Within this funding envelope, the Programs facilitated the movement of low-risk goods of an estimated value of over $81 billion or 17.9% of overall VFD.Footnote 46

Exhibit 5: Trusted Traders Programs, Budget vs. Expenditures, FY 2012-2013

Salaries

Name Budget Actual
(including Commitment)
Variance
(budget vs. actual)
Total Programs Branch 4,597,020 7,349,536 -2,752,516
Total Operations Branch 46,761 47,367 -606
Total Regions 1,874,713 1,166,499 708,214
Total HR Branch 0 20,312 -20,312
Total Corporate Requirements 1,158,075 0 1,158,075
Total Comptrollership 0 0 0
Total All Votes 7,676,569 8,583,714 -907,145

Operations and Maintenance

Name Budget Actual Variance
(budget vs. actual)
Total Programs Branch 649,391 464,228 185,163
Total Operations Branch 26,880 28,591 -1,711
Total Regions 779,258 202,149 577,109
Total HR Branch 0 0 0
Total Corporate Requirements 3,985,539 -21 3,985,560
Total Comptrollership 0 64,912 -64,912
Total All Votes 5,441,068 759,860 4,681,208

Total

Name Total Budget Total Actuals Total Variance
Total Programs Branch 5,246,411 7,813,764 -2,567,353
Total Operations Branch 73,641 75,958 -2,317
Total Regions 2,653,971 1,368,648 1,285,323
Total HR Branch 0 20,312 -20,312
Total Corporate Requirements 5,143,614Footnote 47 -21 5,143,635
Total Comptrollership 0 64,912 -64,912
Total All Votes 13,117,637 9,343,574 3,774,063

Source: CAS MSA Free Balance Report – Lite, Trusted Traders Programs PMT, Data provided by Comptrollership Branch.

As identified previously, capacity and resourcing have been identified as potential risks to the delivery of the Trusted Traders Programs moving forward in the Pre-Border PMT Risk Profile.Footnote 48 The initiatives being developed to increase membership (e.g. offshore, OGD) could put additional pressures on the program. An example of the impact of the resourcing issue can be seen in the recent transfer of the CSA operations to the Greater Toronto Region in which 51 Full-Time Equivalents have been transferred. A‑Base funding was received for only 38 Full-Time Equivalents; it is expected that resources will normalize through attrition.

Trusted Traders Programs provide members with benefits and savings that cannot be accurately quantified due to limited performance data.

The efficiencies and economies enjoyed by CSA members are difficult to quantify because there is little performance data. For example, between FY 2010-2011 and FY 2012-2013, CSA importers had a lower examination rate (0.2%) than non-CSA importers (1.7%).Footnote 49 The lower examination rate was estimated to save $6.4 million for Trusted Traders members and $11.4 million for the CBSA.Footnote 50 Combined with estimated savings of $60.3 million from accounting adjustments and approximately $21 million by avoiding other fees, Footnote 51 Trusted Traders members saved an estimated $87.7 million in 2011.Footnote 52 The estimated savings from FAST lane usage over the same period was $14.0 million for members and $0.5 million for the CBSA.Footnote 53 Another key measure of savings to industry is average wait time at the border, but this data is not captured. In 2012, the estimated savings were $43.7 million for accounting adjustments and $5.6 million for fewer examinations.Footnote 54

A low percentage of survey respondents indicated that they were examined less at the border.Footnote 55 The majority of CSA and PIP members surveyedFootnote 56 identified streamlined border processes as a benefit that they expected and realized from their Trusted Traders membership.

5. Conclusion

The findings of this evaluation are generally positive, indicating that the Trusted Traders Programs have been effective in achieving their core objectives. The programs play an important role in identifying low-risk carriers and importers while facilitating low-risk shipments so that they can be processed more quickly and efficiently at the border, saving businesses time and money. Moving forward, the Trusted Traders Programs would benefit from a strategy with a deeper understanding of the areas for potential growth in the program in the current configuration as well as in the future with options such as offshore and OGD-regulated goods. This understanding would enable the Programs to strengthen their ability to attract companies to join, thereby increasing the amount of commercial traffic identified as low-risk entering Canada and increasing the realization of benefits for industry as well as the CBSA.

A more detailed discussion of the key findings, recommendations, and management response and action plan resulting from this evaluation can be found in the Executive Summary.

Appendix A – Acronyms and Abbreviations

AMP
Administrative Monetary Penalty
CARM
CBSA Assessment and Revenue Management
CBSA
Canada Border Services Agency
CSA
Customs Self Assessment
FAST
Free and Secure Trade
FTE
Full-time Equivalent
FY
Fiscal Year
GTA
Greater Toronto Area
OGD
Other Government Department
PIP
Partners in Protection
PMT
Program Management Table
POE
Port of Entry
SAFE
Framework of Standards to Secure and Facilitate Global Trade
VFD
Value for Duty
WCO
World Customs Organization

Appendix B – Program Overview

The purpose of Trusted Traders Programs are to facilitate the movement of legitimate goods by providing streamlined and efficient border processes for pre-approved, low-risk traders; and to enhance the security and integrity of the supply chain through partnerships with businesses.Footnote 57 Currently, the Trusted Traders Programs Division in the Pre-Border Programs Directorate of the Programs Branch oversees the Trusted Traders Programs which are linked, but operate independently from one another, and include: Partners in Protection (PIP), Customs Self Assessment (CSA) and CSA-Platinum.

PIP
The PIP Program is a voluntary government-to-business initiative designed to enlist the cooperation of companies to ensure their goods are secured from point of origin to final destination. PIP enlists the cooperation of private industry to enhance border and trade chain security, combat organized crime and terrorism, and help detect and prevent smuggling.Footnote 58 The CBSA has signed Mutual Recognition Agreements with the United States (U.S.), Japan, Singapore and South Korea.
CSA
The CSA Program provides an expedited clearance process for approved importersFootnote 59 and carriersFootnote 60 importing eligible goods being shipped from the U.S. and Mexico. CSA eligible goods may enter Canada on the presentation of identification showing that the importer and carrier have been approved for participation in the Program and that the driver is registered in one of the CBSA driver programs.Footnote 61 This negates the need to provide information about the imported goods or the conveyance at the time of entry into Canada.Footnote 62 CSA members who are also members of the PIP Program and are FAST approved have the option of utilizing the FAST lanes/booths at designated Ports of Entry to transport eligible imported goods into Canada. The CSA Program was expanded in FY 2009-2010 by including CSA clearance for eligible goods from Mexico. Additionally, the Program area has been working on expanding CSA to include offshore goods, expansion to non-resident importers and Other Government Department goods which have not yet been approved.
CSA-Platinum
The CSA-Platinum component started as a pilot partnership between the CBSA and two CSA importers in 2004 and was known as Partners in Compliance. The pilot expanded its membership in 2006. In October 2013, Partners in Compliance was revamped and presented as CSA-Platinum; a voluntary option that is available to CSA importers who have completed the CSA validation review and have a history of good compliance. Participants invest in internal controls and business systems to assume greater responsibility for the accuracy of their compliance with trade program requirements. CSA-Platinum goes beyond the regular CSA Program by allowing approved importers to self-assess and audit not only their own revenue reporting, but also their own trade program compliance.

Key Stakeholders

CBSA Stakeholders

The Trusted Traders Programs are delivered in the regions with support and oversight provided by the Programs and Operations Branches at National Headquarters.

Programs Branch

The Trusted Traders Programs Division, Pre-Border Programs Directorate, develops policies and procedures regarding Trusted Traders Programs. The Division provides functional direction to the regions with regard to their implementation. The Division is accountable for the application of Trusted Traders policies that support the movement of goods in a manner that ensures the health, safety and security of Canadians and supports the economy. Its role includes working with other areas in the CBSA and with other key government departments and external partners to review, update and ensure consistent, national application of policies related to trusted traders programs.Footnote 63

Other areas of the Programs Branch also collect information on, or provide support and contributions to the Trusted Traders Programs (e.g., International and Partnerships Directorate, Enforcement and Intelligence Directorate, Trade Programs and CARM Directorate).

Operations Branch

The Operations Branch is responsible for operational support to and the effective delivery of programs in the regions and at the Ports of Entry. Ports of Entry personnel are responsible for ensuring that Trusted Traders Programs carriers, importers and registered drivers follow program processes and procedures when seeking entry into Canada and that the border processing of members of Trusted Traders Programs is efficient.

Comptrollership Branch

The Comptrollership Branch provides corporate and operational leadership for the stewardship of resources, including the CBSA's corporate infrastructure, financial, physical and materiel resources, to assure transparency and integrity in the management of the Agency's programs. Specifically, the Branch ensures that all payment information of CSA members is downloaded into the CSA module of the Customs Commercial System and then reconciled against the assessment reported monthly by the CSA member via the Revenue Summary Form.

Other Government Department Stakeholders

The Canadian Food Inspection Agency (CFIA) is responsible for ensuring that public health risks associated with the food supply and transmission of animal disease to humans are minimized and managed; promoting a safe and sustainable plant and animal resource base; and contributing to consumer protection and market access based on the application of science and standards.Footnote 64 As part of Beyond the Border Action Plan, the CBSA and CFIA will conduct a one year pilot projectFootnote 65 to provide benefits to the processed-food sector aimed at providing program participants with the ability to submit required data to CFIA post-border passage and permit access to expedited clearance processes at the Port of Entry (POE) upon entry into Canada.Footnote 66

Natural Resources Canada (NRCan) develops policies and programs that enhance the contribution of the natural resource sector to the economy. The CBSA and NRCan have undertaken a pilot project to allow CSA importers to import regulated energy-using products under the CSA program. The pilot covers NRCan-regulated energy-using products imported from all countries, which means that CSA importers will have a CSA clearance option, when importing from the U.S. and Mexico, and Release on Minimum Documentation / Pre-Arrival Release System - when importing from other countries. Under this pilot project, importers will be able to transmit the required data elements directly to NRCan in a monthly report.

Bi-lateral Partners

The United States Customs and Border Protection (U.S. CBP) delivers trusted traders programs including the Importer Self-Assessment (ISA) and the Customs-Trade Partnership Against Terrorism. ISA is a voluntary approach to trade compliance and allows importers who have made a commitment of resources to assume responsibility for monitoring their own compliance in exchange for benefits. The U.S. Customs-Trade Partnership Against Terrorism establishes supply chain security criteria for members to meet and in return provides incentives and benefits such as expedited processing.

In June 2008, the CBSA signed a mutual recognition agreement with U.S. CBP. Under this agreement both countries apply similar security standards and site validation practices for approving companies for membership in their respective trade security programs (i.e. PIP and U.S. Customs-Trade Partnership Against Terrorism).

External Stakeholders/Partners

The Trusted Traders Programs are directed at the private sector, and specifically organizations involved in the international movement of goods. Private sector companies involved in international trade and transportation, such as importer/exporters, carriers, freight forwarders, warehouse operators, customs brokers, among others are all potential participants in and beneficiaries of the various programs delivered by the Trusted Traders Programs Division.

The main beneficiaries of the Trusted Traders Programs are the 95 importers and 885 carriers enrolled in CSA; the 1,532 participants enrolled in PIP; and all of the future members of CSA-Platinum.Footnote 67

Other relevant external stakeholders include the Canadian Association of Importers and Exporters, the Canadian Society of Customs Brokers, the Canadian Trucking Alliance, the Canadian Chamber of Commerce, Canadian Manufacturers and Exporters and the Shipping Federation of Canada.

Appendix C – Program Logic Model

In consultation with key CBSA stakeholders, a logic model was developed, around which a project plan for the Trusted Traders Programs was drafted. The logic model presented is a visual representation that links what the Program does (activities) with what the Program produces (outputs) and what the Program intends to achieve (outcomes) (Exhibit C-1). It also was the basis for developing the evaluation framework, which provided a roadmap for conducting this evaluation.

Exhibit C-1: Trusted Traders Programs Logic Model

1. Program Mandate: To enhance the integrity of the trade chain by partnering with business to facilitate the movement of legitimate goods by pre-approved low-risk traders and to streamline the border process for low-risk pre-approved companies; allowing the CBSA to better focus its resources on shipments of high or unknown risk.

2. Inputs: Funding, facilities, IT infrastructure, legislation, regulations, and FTEs.

3. Activities:

  • 3.1 Development/Maintenance
    • 3.1.1 Develop and maintain program policies, procedures, legislation, regulations. Corporate reporting.
      • Outputs: Policies, SOPs, legislation, regulations, governance frameworks, cabinet documents, performance measures, service standards, reports (leads to immediate outcome 4.1).
    • 3.1.2 Develop, implement and maintain IT systems.
      • Outputs: IT systems (support), data quality analysis, reports (issues), change requests (leads to immediate outcome 4.1).
    • 3.1.3 Develop and provide functional guidance and program direction to the field. Develop and implement marketing and communications initiatives.
      • Outputs: Outreach and marketing, training and tools, communications, awareness sessions (leads to immediate outcomes 4.1 and 4.2).
  • 3.2 Collaboration/Partnerships
    • 3.2.1 Develop and maintain partnerships. Collaborate and exchange information with internal, external and international partners.
      • Outputs: Negotiations, agreements/MOUs, mutual recognition agreements, working groups and conferences, shared information (leads to immediate outcome 4.2).
  • 3.3 Delivery
    • Partners in Protection (PIP)
      • 3.3.1 Receive and review applications. Conduct risk assessments.
        • Outputs: Risk assessments, rejections/withdrawals, approved applications (leads to immediate outcomes 4.1, 4.4 and 4.5 and activity 3.3.2).
      • 3.3.2 Conduct site validations/revalidations and monitoring for PIP/C-TPAT. Information exchange between CBSA and CAN/US partners.
        • Outputs: Validation reports, MOUs with program participants, monitoring and compliance reporting (leads to immediate outcomes 4.1, 4.3, 4.4 and 4.5).
    • Customs Self Assessment (CSA)
      • 3.3.3 Receive and review applications. Conduct risk assessments. Conduct books and records and business systems assessments.
        • Outputs: Risk assessments, rejections/ withdrawals, approved applications, action plans (leads to immediate outcome 4.1, 4.4 and 4.5 and activity 3.3.4).
      • 3.3.4 Client support. Monitoring.
        • Outputs: Information and guidance, monitoring and compliance reports, AMPs, suspensions, cancellations, action plans (leads to immediate outcome 4.1, 4.4 and 4.5).

4. Immediate Outcomes:

  • 4.1 Expanded benefits for members (leads to intermediate outcomes 5.1 and 5.3).
  • 4.2 Stakeholders have an increased awareness of the program (leads to intermediate outcome 5.1).
  • 4.3 Improved supply chain security (leads to intermediate outcomes 5.1 and 5.2).
  • 4.4 Enhanced identification of low risk traders (leads to intermediate outcomes 5.1 and 5.2).
  • 4.5 Increased commercial import compliance (leads to intermediate outcomes 5.1, 5.2 and 5.3).

5. Intermediate Outcomes:

  • 5.1 Streamlined/Expedited processes (leads to ultimate/strategic outcome 6).
  • 5.2 Increased CBSA risk management capacity (leads to ultimate/strategic outcome 6).
  • 5.3 Maximized reporting accuracy (leads to ultimate/strategic outcome 6).

6. Ultimate/Strategic Outcome: International trade and travel is facilitated across Canada's border and Canada's population is protected from border-related risks.

Appendix D – Evaluation Methodology

The evaluation collected both qualitative and quantitative data to address the evaluation issues using the multiple research methodologies that are described below.

Document and Literature Review

To confirm the relevance of the Trusted Traders Programs and to determine whether guidance and regulations are in line with expected outcomes, the evaluation reviewed CBSA planning documents/reports, organizational charts, documents outlining roles and responsibilities, and relevant internal correspondence pertaining to the implementation and management of Trusted Traders Programs as well as documentation, legislation, D-Memoranda related to CBSA priorities and the legal/regulatory framework of processing of goods. In addition, a literature review regarding the design, delivery and performance of similar programs in other countries was conducted for comparison purposes. WCO guidelines, frameworks and other relevant documents concerning customs-private sector partnerships were reviewed in order to provide a better understanding of the international context of these programs. The evaluation also reviewed publications and documents produced by various trade associations on the relationship between trade and programs like the Trusted Traders Programs that support trade practices.

Operational, Performance and Financial Data Analysis

An analysis of statistical and financial data was conducted to determine trends in Trusted Traders Programs in order to assess the effectiveness and efficiency of program activities and identify possible areas for improvements. The evaluation examined operational and financial data, trends, volumes, types and number of enforcement actions, program budgets and expenditures for FY 2012-2013 to further enhance the assessment of the effectiveness and efficiency of program activities.

Key Stakeholders Interviews

The evaluation conducted a total of 19 one-on-one and group interviews to gather information on the relevance, performance and economy of the Trusted Traders Programs. The interviews were also used to solicit views and explanations on data and results obtained through other methodologies.

Site Visits

The evaluation conducted a site visit to the Greater Toronto Area (GTA) Region to visit the CSA/FAST Importer Unit (Mississauga) and the CSA/FAST Carrier Units (Hamilton). The visit provided the opportunity to gain a solid understanding of how the Programs are managed and delivered in the field; and how regional personnel coordinate with key partners and headquarters. In addition, the site visit served to enhance the understanding of the application process, the risking components of the application process, the compliance activities, and how the performance of these components is measured and tracked.

Survey

An online survey was conducted of Trusted Trader Program members to assess their views on the value of the Programs, and their perceptions as to the benefits and impact of the various Trusted Traders Programs. In addition, the survey was used to determine the extent to which companies have been able to increase their client base, receive cost savings/increased revenue as a result of membership in the Program; and whether or not they have been able to reinvest these savings into infrastructure, systems, tools, resources, etc.

For a 95% confidence interval, the margin of error for all respondents was 7.4, 8.1 for only Carriers, and 16.6 for Importers due to a low response rate from this segment. As a result, general conclusions were drawn from the Carrier data and from data elements that combined the Carrier and the Importer data, such as overall satisfaction. No conclusions were drawn based only on the survey responses.

Footnotes

Footnote 1

Source: Trusted Traders Programmatic Assessment, March 2011.

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Footnote 2

Source: Source: WCO SAFE Framework of Standards to Secure and Facilitate Global Trade, June 2007(http://ec.europa.eu/taxation_customs/resources/documents/customs/policy_issues/customs_security/normes_wco_en.pdf) (Accessed July 17, 2014).

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Footnote 3

Value for Duty is calculated on the value of the purchase price of the goods in Canadian dollars.

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Footnote 4

The estimated savings for 2012 were calculated as follows [(December YTD figure /9)*12] Source: Canada Border Services Agency, (2013), Trusted Trader Dashboard, December 2013.

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Footnote 5

Source: Evaluation of the Partners in Protection (PIP) Program, 2011. P. 1.

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Footnote 6

Source: Evaluation of the Partners in Protection (PIP) Program, 2011. P. 1-2.

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Footnote 7

Source: Customs Self Assessment Program – Evaluation Study, 2007.

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Footnote 8

Participating importers can reduce the cost of doing business with the CBSA. Importers can use their own business systems and processes, which must meet the CBSA's requirements, to forward trade data and to report and remit payment of taxes and duties once a month through their own financial institutions. This self-assessment option represents cost savings because importers no longer have to remit payment at the time of each shipment. Source: http://www.cbsa-asfc.gc.ca/prog/csa-pad/import-eng.html (Accessed December 6, 2013).

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Footnote 9

Participating carriers and registered drivers in the highway mode have the option of clearing CSA-eligible goods more quickly at the border once identification confirms that the importer, carrier and driver have been pre-approved. With this streamlined clearance process, transactional transmissions of data related to eligible goods are no longer needed. Source: http://www.cbsa-asfc.gc.ca/prog/csa-pad/carrier-transport-eng.html (Accessed December 6, 2013).

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Footnote 10

Commercial drivers can be approved under the Commercial Driver Registration Program (CDRP) or the Free and Secure Trade (FAST) program. Both programs fall under the Trusted Travellers Division. Source: http://www.cbsa-asfc.gc.ca/prog/csa-pad/driver-chauffeur-eng.html (Accessed December 6, 2013).

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Footnote 11

For CSA eligible goods, CSA members, are not required to provide advance cargo and conveyance data through eManifest. As such, processing these shipments remains the same as they were prior to eManifest.

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Footnote 12

Source: Treasury Board Policy Suite (http://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=15024) (Accessed October 16, 2012).

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Footnote 13

Source: Audit of the Trusted Traders Programs - Audit Engagement Plan. October, 2012.

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Footnote 14

Source: Canada Border Services Agency, Evaluation of the Partners in Protection (PIP) Program (January 2011), http://www.cbsa-asfc.gc.ca/agency-agence/reports-rapports/ae-ve/2011/pip-pep-eng.html.

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Footnote 15

Source: News Release: Free and Secure Trade (FAST) pilot to improve service for trusted traders, December 7, 2012 (http://www.cbsa-asfc.gc.ca/media/release-communique/2012/2012-12-07a-eng.html) (Accessed December 6, 2013).

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Footnote 16

Source: Speaking Notes from the President to the Economic Club of Canada, March 7, 2013.

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Footnote 17

Source: Speaking Notes from the President to the Economic Club of Canada, March 7, 2013.

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Footnote 18

Source: Consolidated Management Reporting System (CMRS) data.

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Footnote 19

Source: Canada Border Services Agency, (2013), Departmental Performance Report 2012-2013 (http://www.cbsa-asfc.gc.ca/agency-agence/reports-rapports/dpr-rmr/2012-2013/report-rapport-eng.html) (Accessed November 22, 2013).

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Footnote 20

Section 5 of the Canada Border Services Agency Act gives the Agency sole responsibility for providing integrated border services that support national security priorities and facilitate the free flow of persons and goods, including food, animals and plants.

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Footnote 21

Source: Part III - Departmental Performance Report (DPR), (http://www.cbsa-asfc.gc.ca/agency-agence/reports-rapports/dpr-rmr/2012-2013/report-rapport-eng.html) (Accessed January 10, 2014).

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Footnote 22

Source: Membership data for FY 2009-2010 to FY 2011-2012 is from program performance data. Membership data for FY 2012-2013 is from the last program dashboard available, dated October 2013. PIP membership increased 293 between FY 2009-2010 and FY 2011-2012 and 47 between 2011-2012 and October 2013. Between FY 2009-2010 and FY 2011-2012, CSA membership grew: (Importer: 6.2%; Carrier: 2.9%) and Between FY 2011-2012 and October 2013, CSA membership grew: (Importer: 1.1%; Carrier: 3.1%).

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Footnote 23

Source: Program performance data. Data for 2012-2013 only includes Q1 and Q2 compiled from 2012-2013 Q2 Agency Performance Report.

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Footnote 24

Value for Duty is calculated on the purchase price of the goods in Canadian dollars.

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Footnote 25

Source: Program administrative data and the CBSA Report on Plans and Priorities and Departmental Performance Report documents.

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Footnote 26

Source: Statistics Canada, CANSIM, Table 228-0058. Merchandise imports and exports, customs and balance of payments basis for all countries, by seasonal adjustment and principal trading areas, monthly (dollars). Importations from the United-States represented 62.5% of all importations into Canada in 2012. (in dollars)

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Footnote 27

Source: Statistics Canada, CANSIM, Table 228-0058. Merchandise imports and exports, customs and balance of payments basis for all countries, by seasonal adjustment and principal trading areas, monthly (dollars).

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Footnote 28

Including offshore goods in CSA has been discussed since 2009.Source: Canada Border Services Agency, (2009), Customs Self Assessment – Offshore Expansion Proposal, Border Commercial Consultative Committee (BCCC) Meeting, September 29-30, 2009.

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Footnote 29

The number of releases includes the ones completed at Non-Terminal Offices (NTOs) which are offices where the CBSA does not accept electronic release or accounting data for commercial transactions.

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Footnote 30

Source: Canada Border Services Agency performance data.

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Footnote 31

Source: Part III - Departmental Performance Report (DPR), (http://www.cbsa-asfc.gc.ca/agency-agence/reports-rapports/dpr-rmr/2012-2013/report-rapport-eng.html) (Accessed January 10, 2014). The target is for CSA goods to account for more than 5% of passages. Since data on passages are not collected, releases provided the closest proxy. There can be multiple releases on a single passage.

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Footnote 32

Source: Canada Border Services Agency, CBSA Strategic Framework 2014-2017.

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Footnote 33

Source: Whole of government framework. June 20, 2013 (http://www.tbs-sct.gc.ca/ppg-cpr/descript-eng.aspx) (Accessed December 6, 2013).

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Footnote 34

Source: SAFE Framework of Standards to Secure and Facilitate Global Trade, June 2007 (http://ec.europa.eu/taxation_customs/resources/documents/customs/policy_issues/customs_security/normes_wco_en.pdf(Accessed July 17, 2014).

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Footnote 35

Source: Partners in Protection Memorandum of Understanding to Enhance Border Security and Suppress Contraband Smuggling.

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Footnote 36

Source: CBSA (2008), Membership Benefits, Partners in Protection (PIP), http://www.cbsa-asfc.gc.ca/security-securite/pip-pep/about-apropos-eng.html#a1 (accessed July 23, 2014).

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Footnote 37

Source: Canada Border Services Agency, (2013), Free and Secure Trade (FAST) Pilot Closing Report (DRAFT) June 24th, 2013. P. 14.

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Footnote 38

Source: Joint Canada Border Services Agency – Canadian Food Inspection Agency Customs Self Assessment Pilot Study.

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Footnote 39

Canada Border Services Agency, Pre-Border PMT Risk Profile, April 2013, p.2.

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Footnote 40

Source: Canada Border Services Agency, Evaluation of the Partners in Protection (PIP) Program, January 2011. (http://www.cbsa-asfc.gc.ca/agency-agence/reports-rapports/ae-ve/2011/pip-pep-eng.html) (Accessed December 6, 2013).

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Footnote 41

The Internal Audit and Program Evaluation Division regularly monitors the implementation of the management action plan developed by the program area in response to recommendations flowing from various evaluation studies. The business case was developed in response to a recommendation in the Evaluation of the Partners in Protection Program 2011. (http://www.cbsa-asfc.gc.ca/agency-agence/reports-rapports/ae-ve/2011/pip-pep-eng.html).

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Footnote 42

Source: Canada Border Services Agency, Audit of the Trusted Traders Programs, July 2013. (http://www.cbsa-asfc.gc.ca/agency-agence/reports-rapports/ae-ve/2013/attp-vpnf-eng.html) (Accessed December 6, 2013).

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Footnote 43

The AMPs reported do not include zero-rated AMPs for late payment (C244). Between FY 2007-2008 and FY 2012-2013, an average of 5,794 C244 were issued per year. This AMP is issued automatically when a payment is late and it is used to calculate that CSA members are on time at least 95% of the time. If they are not, a C246 is issued, though for the same time period, no C246 AMPs were recorded.

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Footnote 44

Trusted Traders: Includes CSA importers, carriers and PIP members.

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Footnote 45

Source: Canada Border Services Agency, FY 2013-2014 overview as at P7 for Trusted Traders Programs.

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Footnote 46

Source: Canada Border Services Agency performance data. This is the VFD for FY 2011-2012 which is the last year with complete data.

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Footnote 47

The $5.1 million is reserve funding and is not directly allocated to the program.

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Footnote 48

Canada Border Services Agency, Pre-Border PMT Risk Profile, April 2013, p.2.

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Footnote 49

Source: Canada Border Services Agency performance data.

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Footnote 50

Source: Canada Border Services Agency, (2012), Programs Performance Report, Q4 January-March, 2012. p. 34.

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Footnote 51

Source: Canada Border Services Agency, (2011) Programmatic Assessments, Trusted Traders Programs (Pre-Border Programs), March 3. The report estimated the value based on a $25 fee per shipment.

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Footnote 52

Source: Canada Border Services Agency, (2012), Programs Performance Report, Q4 January-March, 2012. p. 34.

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Footnote 53

Source: Canada Border Services Agency, (2012), Programs Performance Report, Q4 January-March, 2012. p. 34.

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Footnote 54

The estimated savings for 2012 were calculated as follows [(December YTD figure /9)*12] Source: Canada Border Services Agency, (2013), Trusted Trader Dashboard, December.

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Footnote 55

Survey responses of Strongly agree/agree that they are examined less: FAST members: 63%, 77; CSA members: 50%, 75.

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Footnote 56

Survey responses: First and Second choice of streamlined border processes as expected benefit: 61%, 92; Strongly agree/agree Realized benefit 60%, 90.

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Footnote 57

Source: Trusted Traders Programmatic Assessment, March 2011.

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Footnote 58

Members agree to implement and adhere to high security standards while the CBSA agrees to assess their security measures, provide information sessions on security issues and offer other benefits. Source: PIP Logic Model Narrative, June 2012.

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Footnote 59

Participating importers can reduce the cost of doing business with the CBSA. Importers can use their own business systems and processes, which must meet the CBSA's requirements, to forward trade data and to report and remit payment of taxes and duties once a month through their own financial institutions. This self-assessment option represents cost savings because importers no longer have to remit payment at the time of each shipment. Source: http://www.cbsa-asfc.gc.ca/prog/csa-pad/import-eng.html (Accessed December 6, 2013).

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Footnote 60

Participating carriers and registered drivers in the highway mode have the option of clearing CSA-eligible goods more quickly at the border once identification confirms that the importer, carrier and driver have been pre-approved. With this streamlined clearance process, transactional transmissions of data related to eligible goods are no longer needed. Source: http://www.cbsa-asfc.gc.ca/prog/csa-pad/carrier-transport-eng.html (Accessed December 6, 2013).

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Footnote 61

Commercial drivers can be approved under the Commercial Driver Registration Program (CDRP) or the Free and Secure Trade (FAST) program. Both programs are the responsibility of the Trusted Travellers Division. Source: http://www.cbsa-asfc.gc.ca/prog/csa-pad/driver-chauffeur-eng.html (Accessed December 6, 2013).

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Footnote 62

CSA members are not required to provide advance cargo and conveyance data through eManifest. As such, processing these shipments remains the same as they were prior to eManifest.

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Footnote 63

Source: CBSA Intranet, Trusted Traders Program Division, Programs Branch.

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Footnote 64

Source: About the CFIA, CFIA Internet Site. (http://www.inspection.gc.ca/about-the-cfia/eng/1299008020759/1299008778654) (Accessed December 18, 2013).

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Footnote 65

The CBSA/CFIA pilot project covers food products in the non-federally registered food sector (NFRS) The NFRS encompasses a wide range of products, including infant foods, alcoholic beverages, bakery products, and cereal products.

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Footnote 66

Source: Enhancements to CBSA's Trusted Traveller and Trusted Traders Programs: Business Case, November 2012.

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Footnote 67

Source: Canada Border Services Agency, Trusted Traders Dashboard, October 2013.

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