Industry Committee on Nov. 4th, 2013

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Thibeault.

Now we go to Mr. Jean, for five minutes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair, and thank you, Minister, for the opportunity.

I was wondering if I could find out more in relation to the most popular things that are copied, which I understand are clothing and shoes, and why those particular items are copied primarily. Also, where do these come from around the world?

[Supt Eric Slinn]

It's hard to give you the answer on that, other than perhaps that our youth are attracted to apparel and shoes.

Speaking specifically on where they come from around the world, we have them from a number of different countries, but I don't think there's one sole country that is responsible for exporting all of these counterfeit goods. They can come from a number of different countries.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Which would be three of the most predominant countries that come to mind?

[Supt Eric Slinn]

We've seen a significant amount of goods come from China, some goods from India, and beyond that.... I'm going deep into my brain trying to come up with another one for you. There are one-offs. With some countries, such as Indonesia, we've seen some seizures.

They come from a number of countries, it's not just one country responsible for this. Sometimes goods may be transshipped through those countries, so we have to be careful how we couch where they are coming from specifically.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I would suggest to you it is probably the margins, the markups on clothes, etc. In these third world countries, I understand you can make clothing much cheaper than you can actually buy it, with sometimes a 1,000% margin.

Is there a lot of pressure from our government on these other countries that are homes to the manufacturing industry where this is happening? I imagine that most of these countries have licensing provisions, either state or municipal licensing provisions. Are there not things that more developed countries, those in the G-8, for instance, or the G-7, could do that would put pressure on these countries to stop that type of thing? Has that been done, or is it being done?

[Supt Eric Slinn]

That is a question probably better suited for the minister or the government. It's not law enforcement's interest.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

The rate of growth of 400% is certainly an area of concern. However, we have rules-based trade and enforcement mechanisms. Buyers and sellers are equally empowered, which is a good thing. This is an argument for what we announced in the Canada-Europe trade agreement. It draws in the intellectual property regimes of all countries. One of the precursors for the Canada-Europe trade agreement was the modernizing of copyright legislation. The idea of having rules for the way in which goods are made, engineered, and protected domestically in both trading nations is an area of constant concern. Those boxes have to be checked before trade agreements are even entertained, so it's a constant source of interest.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

In closing, I congratulate the government for putting this together. It is all about protecting consumers and we are doing that with this legislation. Thank you very much.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Jean.

Madam Quach.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Thank you, Mr. Chair.

I want to thank the minister and the other witnesses for joining us to discuss the legislation on counterfeiting, which concerns all of us.

Minister, in your presentation, you said that, over the last seven years, the amount of counterfeited products seized has increased. The value of those products went from $7.6 million to $38 million—an increase of 400%. The government has carried out a study on the issue, so it is aware of the situation. So why have no amendments been made to the legislation in seven years?

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

That's not at all the case. Our government introduced and passed a bill to modernize the Copyright Act. We're talking about copyrights inside Canada. We have also amended a number of pieces of legislation to protect consumers and creators. This bill is the next step. It was drafted following discussions and consultations. In our opinion, we are doing what is necessary by introducing a bill that ensures a good balance between the interests of the economy and those of the consumers. We are investing enough money to make sure that this balance is achieved in an effective and responsible manner.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

You just talked about the money necessary for the seizure of those products to be carried out properly. However, you said earlier that the funding and the number of officers would not increase.

In my constituency, which is located close to the American border, the Franklin customs office has been closed. The RCMP representatives have told us that it has become much more difficult for them to intercept people who are trying to cross the border illegally, or to intercept any illicit smuggling.

So additional efforts are needed to seize counterfeit goods. Will you at least prioritize certain products that are wreaking havoc in terms of health and public safety?

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Probably. That decision is not made by the government, a minister of a politician, even though there are concerns. You, as an MP representing a constituency close to the American border, should share your concerns with the officers, as it is up to them do decide what the best way to proceed is.

Mr. Bolduc, did you want to add anything?

[Martin Bolduc]

On a daily basis, 5,600 agency officers work at various ports of entry. Every day, 27,000 commercial shipments cross the border; 9,000 of them arrive through the airports and 5,400 arrive by sea, in containers. Last year, the agency processed more than 14.2 million commercial shipment declarations and carried out over 237,000 inspections.

This bill will be included in the Border Services Agency's enforcement priorities. Based on the figures I just shared with you, we can say that this is already part of our reality. We are confident that, by relying on a solid training program and the rights holders' expertise, we will be able to take measures, detain the shipments we deem suspicious and pass on to our RCMP colleagues the shipments that we feel represent a danger to the health and safety of Canadians.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Thank you, Mr. Bolduc.

When it comes to the investigations and verifications, in a case where costs would be incurred by an importer who is rightfully concerned about the goods detained by the customs officers, and it then turned out that the goods were detained by mistake, who would be responsible for bearing those costs?

[Martin Bolduc]

In the case of imported commercial goods, the storage is managed by the private sector. Those goods are not necessarily stored in the agency's stockrooms. They are put into sufferance warehouses that belong to private companies. That's how things are already being done.

In cases where the legitimacy of a shipment is in doubt, the bill will enable the agency to contact the rights holder and to legally detain the goods for 10 days, to give the holder time to take matters to the court.

Storage costs are included in import costs. That aspect will be managed by the private sector, and not by the Border Services Agency.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Bolduc.

Now we go to Mr. Holder for five minutes.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank the minister and our guests.

As the newest member of the committee, this is actually my first meeting where I've had the opportunity of witnesses being in the same room, so I'm struck by how critically important this issue is for all Canadians.

Minister, I was particularly struck, when you were making your formal comments, about the extent of the problem. Over seven years the problem has increased from some $7.6 million up to some $38 million of retail value seized. If that's the value that's seized, I'm curious whether we have any sense of how large this problem is, knowing that's the amount that we've actually taken in.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

That's a good question, and perhaps Monsieur Bolduc can speak at greater length on that, but I do have some global stats here. It's quite interesting, given what I've used as a reference about our trade opportunities.

Studies from the OECD suggest that there's been an increase in the trade in counterfeit and pirated goods globally from $200 billion in 2005 to $250 billion in 2007, in just two years. In 2012, border officials from the European Union detained over 90,000 shipments containing almost 40 million articles. This represents a retail value of almost 900 million euros or $1.3 billion Canadian. That's the European market.

It is a global problem; it's not just a Canadian one. Those with whom we are now trading have stepped up, have their regimes in place, have legislation that's necessary, and their border agencies have the necessary authority. By the way, we have been at it for a very long time with modernized tools in a way that I think it's time we stepped forward to do it ourselves.

[Ed Holder, Conservative, London West, ON]

That then prompts a question. You touched on CETA. You made this comment again in your formal remarks. I also sit on the Standing Committee for International Trade, and we're pleased that CETA has finally been signed. We look forward to its passage.

I wonder how the liberalization of this trade agreement with 28 more countries will make it that much more challenging to enforce. I'm trying to get a sense of what we might anticipate as the cooperation with the European Union, and not just the challenge it might be to implement. Going the other way, how much easier will it be, or how does this legislation facilitate our ability to stop counterfeit goods?

[Martin Bolduc]

It gives us the ability to leverage the expertise that the rights holders have, but also to draw on colleagues from other border management organizations around the world with which we have a long-standing working relationship, such as the United States and Australia, to leverage the World Customs Organization, to get a sense from them what is out there and align the tools and the training package that we will provide to our front line, based on their knowledge. That's one of the good things, when you can use the good and bad of others in building what you expect to be an effective and efficient system.

[Ed Holder, Conservative, London West, ON]

Minister, I've heard a couple of members opposite make reference to their concern about the challenges associated, not just with training, but with whether there is an adequacy of funding for folks to do their jobs.

I wonder if you could make it clear how strongly you feel that the current budget is sufficient to allow our members of CBSA and RCMP who will be associated with that to not only do their training but to do their job.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

I do have confidence in that. As I gather, Ms. Charlton put a motion before the committee to have Minister Blaney come before the committee. He can speak in more detail about the department of Public Safety and its decision on allocation of resources, but I would also reiterate what I said in French: we wouldn't bring forward legislation without having consulted the CBSA, without having done our due diligence to ensure that these new powers wouldn't be authorized without adequate resources to see them realized on the ground in a practical way.

Every organization wishes it had more funding. In governing, you have to make choices. CBSA has to make choices within its structure, and we have a commitment as a government to balance the budget in 2015. We have limited tax resources coming in. We have to deploy them responsibly, and I have every confidence that CBSA can do its job, and, by the way, perhaps even do its job more efficiently and better with these tools.

When we pass other legislation in the criminal justice area where we increase penalties or we have more tools for the prosecution of certain criminals, it doesn't then necessarily mean that the OPP needs to have an increase in its budget because we have different laws. No, we provide law enforcement with new legislation and new powers sometimes resulting in a reduction of cost of investigation and ease of enforcement that allows them to do their jobs more efficiently.

[The Chair, Conservative, David Sweet]

Thank you, Minister.

Thank you, Mr. Holder.

Now we go on to Mr. Stewart for five minutes.