OTTAWA — A series of glitches has plagued a $706-million digital system that Canada launched a year ago to collect duties and taxes on commercial imports, and that business groups had warned for months was not ready for prime time.

The bugs in the system even caught the eye of the Office of the U.S. Trade Representative, which mentioned the platform in its most recent annual report on foreign trade barriers.

“It’s costing time, it’s costing money to have to deal with these outages,” said Julia Kuzeljevich, director of policy and regulatory affairs at the Canadian International Freight Forwarders Association, which represents firms such as freight brokers and warehouse operators. “It’s not looking good for Canada as a trading nation.”

The Canada Border Services Agency (CBSA) launched the new tool—known as CBSA Assessment and Revenue Management, or CARM—in October 2024 to replace outdated software. The agency typically collects about $40 billion per year in duties and taxes on commercial imports, and the agency has said the “aging technology” that predated CARM was putting that money at risk.

The rollout has not been smooth. Kuzeljevich’s organization counted 49 outages between Oct. 5, 2024 and Sept. 28 of this year, based on notices the CBSA provides to industry. Only three were for scheduled maintenance. Not every CBSA outage has been specific to the new platform. In late September, a failure of different systems—not included in the count—delayed both travellers and commercial trucks at the Canada-U.S. border, with agents having to process things by hand. Wherever they originate, the chronic interruptions are a major problem, the association told federal Public Safety Minister Gary Anandasangaree in an Oct. 3 letter. “Unfortunately, these constant outages are now an inherent flaw of CBSA’s customs systems, not just a bug.”

Karine Martel, a CBSA spokesperson, acknowledged bumps in the road after CARM launched. “As with any major digital transformation, despite all the preparation and testing, there were challenges to address,” she said in a written statement. They included “higher-than-average systems downtime” last October and November, but most outages were shorter than four hours, and had little impact on imports, she said. The CBSA improved the underlying infrastructure, she added, and since December the availability of the CARM portal had increased from 90 per cent to 99.9 per cent.

Still, to Conservative MP David McKenzie, the system’s problems bring to mind the Phoenix pay system, which came to symbolize Ottawa’s costly struggles to purchase the tech needed to effectively run a modern government. It spent nearly $4 billion on Phoenix to replace an antiquated payroll system, but glitches caused tens of thousands of public servants to be underpaid, overpaid or not paid at all. “It gives me concern about our federal government’s ability to effectively procure large operating systems,” said McKenzie, who recently asked about CARM at the House of Commons trade committee.

The U.S. trade representative’s issues with CARM are not limited to performance. Its annual report on trade barriers last spring noted importers must now register and provide a security deposit before their goods can be released—even if they are based outside Canada. But the report also pointed to general bugginess that left importers struggling to access the portal. “When we need to be focused on reducing trade irritants with the U.S., here’s this irritant that we’ve imposed on ourselves,” said McKenzie, who represents Calgary Signal Hill.

Canadian business groups have long been flagging CARM’s issues. “We believe the system is not ready,” Kim Campbell, past chair of I.E. Canada, which represents importers and exporters, told the Commons trade committee in March 2024. Each round of testing had been “extremely frustrating,” she said, “filled with errors and confusion.” Candace Snider, vice-chair of the board of directors at the Canadian Society of Customs Brokers, warned MPs the system was making mistakes, or letting others slip through. The CBSA ultimately extended the transition phase.

Others have shared concerns about the system even when it is working as intended. The Canadian Federation of Independent Business warned earlier this year that the financial security requirements would add to trade “chaos” at a time when many were navigating disruption caused by U.S. President Donald Trump’s trade policies, plus Canada’s retaliatory tariffs. “We were sold on this idea that it would modernize and make trade much easier, even for small business owners,” said Michelle Auger, a senior policy analyst with the federation. The CBSA did end up creating some wiggle room in the system, including by allowing the use of a credit card.

Auditor general Karen Hogan is planning to scrutinize the project, The Globe and Mail reported in July. It was chosen “through our regular audit-planning process, which considers factors such as risk, significance and public interest,” spokeswoman Claire Baudry told The Logic in an email. The timeline for the audit has not been published.

About $678 million of the $706 million authorized for CARM had been spent as of March 31, said the CBSA’s Martel—almost $499 million for development and nearly $180 million for maintenance. Since CARM came online, the agency has assessed more than $49 billion in duties and taxes, she added.

Louise Upton, a partner at Deloitte, which led the project, told MPs last October there is always “trepidation” about a new system. A year later, Deloitte spokeswoman Katie Watkins said the consulting firm is proud of its work.