Evidence of meeting #59 for Industry, Science and Technology in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was problem.
A recording is available from Parliament.
4:20 p.m.
Conservative
Colin Carrie Conservative Oshawa, ON
I was going to ask Mr. Webster if he could comment too.
You've been a little silent over there, but from a Canadian business standpoint—
4:20 p.m.
Chair, Intellectual Property Committee, Canadian Chamber of Commerce
From a business standpoint, in my practice, I see this all time. I can't help but think it is going to be a serious problem with the United States. About a month ago, I was asked by one of our clients to register their trademarks with our border authority so that we could help them in seizing goods as they came in. I wrote them a letter about how we could do absolutely nothing for them because we had no enforcement mechanism.
I met with a fellow last week at the International Trademark Association meeting, and he was absolutely astounded that we have no border enforcement mechanisms.
I would like to say another thing too, to give you another angle on this. I do some work for a foreign-based slot machine company. They make gaming technology, and their machines are in the casinos here in Canada. I was told by them that knock-off slot machines are not a big problem for them in Canada because we're highly regulated here. However, they are a huge problem for them in South America, in countries like Colombia, Peru, Argentina, as well as in the former Soviet states in Eastern Europe.
However, Canada did not escape their eye, because they've discovered knock-off machines in Colombia that are being sold into the marketplace by organized drug cartels. When they looked at those machines, they found out where the circuit boards are manufactured. I don't have to tell you that they are manufactured here in this country, which makes you wonder how knock-off circuit boards are getting into Colombia. There has to be an organized crime connection to that.
I am speculating here. Perhaps it's transferring value back for drug deals into Canada. I don't know that as a fact, but it just makes me wonder why we're finding Canadian EPROMs in Colombia.
4:25 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Webster.
I'm sorry, we're over time here. We'll go now to Mr. Masse, please.
4:25 p.m.
NDP
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
Thank you to the delegation today.
Going to the issue of where the stuff is coming from, what ports is it coming into? Obviously I represent Windsor West, which is the busiest border crossing in North America, but that would involve goods coming in from the United States. What percentage is coming in from the United States? What's coming in from the east coast? What is coming in from the west coast? What is coming in on airplanes? We should be able to narrow some of this down, unless it's coming from the United States.
4:25 p.m.
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
In October 2000, I believe, there were some changes to the legislation, and customs started looking at shipments. If they found counterfeit, they would contact the RCMP. A regional intelligence officer would pick up the phone and speak to the RCMP. If the RCMP would take the case, then they would seize the product.
I've been doing this work since 1985 in anti-counterfeiting. Until then, I had never seized a container shipment out of Vancouver. We seized about 10 containers in less than six months. We ran out of space to store everything, and for years there were no more seizures of container-quantity product. However, when we stopped, in that six-month period, we started seeing it come in through Lethbridge, Alberta. So if you stop it in one place, it comes in somewhere else. For a period of time, when we got more active in the Toronto area, we started seeing that instead of using shipping containers, the counterfeiters would ship 45-kilogram shipments by air into Toronto or Montreal. Why? Because they were under the radar, and people just don't grab them.
Halifax, Montreal, Toronto, and Vancouver are the four main places.
4:25 p.m.
NDP
Brian Masse NDP Windsor West, ON
So they're not coming in--except in Alberta, I would suppose--from the United States. The United States wouldn't have much of an argument to put to us if it were circumventing, going through there and then through us. There are problems on our border. I can tell you that.
What are we going to do? If we're looking at the Pacific gateway agreement coming up, and more trade deals potentially with South Korea and China, and we do nothing, what's going to happen if we don't change our public policy on this, and we expand those avenues, if they are primarily the ones that give us the problems?
That is open to everybody.
4:25 p.m.
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
We're going to have more counterfeit here and we're going to be a hub for counterfeit going all over the place. I've seen cases where counterfeit is coming from Asia into Canada and then back worldwide, because with the Internet now there are a lot of websites that are in Canada and they're selling worldwide. I'm working on a case where the goods never actually land in Canada; they're in customs-bonded warehouses, waiting to be shipped from the bonded warehouse back into somewhere else in the world.
4:25 p.m.
President, Canadian Recording Industry Association
It's not lost on anyone elsewhere what's happening here. If you were a counterfeiter and you knew that the Port of Vancouver wasn't searching, detaining, ceasing, destroying, or doing anything, because they couldn't, where would you send your products? Would you send them to Portland? Would you send them to Seattle? Would you send them to the Port of Los Angeles? You might, because not every shipment is getting searched, but you might put Vancouver at the top of your list, and that is going to create increasing problems for us in the international community.
4:25 p.m.
NDP
Brian Masse NDP Windsor West, ON
Does anybody have an idea, for Vancouver port, what percentage is legitimate and illegitimate trade?
4:25 p.m.
Chair, Intellectual Property Committee, Canadian Chamber of Commerce
Nobody does, because you can't open up every box. That's just not done.
How many drugs are sold in your kid's high school? You just don't know. You know there's a problem, but you can't quantify the amount.
4:25 p.m.
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
Only 2% to 3% of shipments are checked, period.
4:25 p.m.
President, Canadian Recording Industry Association
They're covert, they're sophisticated, they know what we're looking at, they know where we're looking, and they know how to evade it.
4:25 p.m.
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
And they know the laws better than we do.
4:30 p.m.
NDP
Brian Masse NDP Windsor West, ON
The one example that's really interesting is the almost one million batteries and the mercury. It is an excellent point, as part of this. It's not just the immediate problem you have with the object and its questionable state for use; it's the legacy it leaves behind.
What public policy things do you think we should do? When I look at that, I start thinking, why should we have any batteries come in from China if during that year we had almost one million come in that were a danger to our citizens and poisoning our landfills? Any trace of mercury is absolutely devastating. What public policy things would you suggest in terms of trade agreements if we are going to be entering into more of that?
4:30 p.m.
President, Canadian Recording Industry Association
We can have as many policies as we want, but the issue is that it's not going to be recognized businesses in China that are sending us that, it's going to be the pirates. The issue then becomes, what do we need the Chinese to do, or what do we need whatever source country to do? What do we need to require? Do we need to have laws that require countries not to export? Should there be that kind of a prohibition? That type of treaty has been talked about.
4:30 p.m.
NDP
Brian Masse NDP Windsor West, ON
You could do some form of pre-clearance, so to speak. You can identify the proper ones, and everything else is not.
May 7th, 2007 / 4:30 p.m.
President, Canadian Recording Industry Association
Only to discover that the certificates are forged and counterfeit themselves. It's a terrific problem.
4:30 p.m.
NDP
Brian Masse NDP Windsor West, ON
That concerns me. When we start talking like that, it almost discourages people from taking any action, period. I think there is a role for public policy as part of this. The enforcement aspect is critical, and that has to be part of it.
Thank you, Mr. Chair.
4:30 p.m.
Conservative
4:30 p.m.
Liberal
Andy Scott Liberal Fredericton, NB
Thank you very much.
I'm sure you can't answer this precisely, but I can guarantee you'll answer it better than I would. What is the profile of the trade? Imported from the United States and imported from elsewhere and exported out, what does it look like? Just give me a visual of what's manufactured in Canada, what's imported to Canada, what's transshipped through Canada, and how that works.
4:30 p.m.
President, Canadian Recording Industry Association
The World Customs Organization has identified China as, I think, the source of about 80% to 90% of the counterfeit goods. That's not to say that it's all manufactured in China, but it's the source. It could start someplace else, end up on a boat in Hong Kong, and come over here. You're not going to find much counterfeit product coming from the United States into Canada. Believe me, it's going the other way, if anything.
Increasingly you're finding manufacturing taking place here. One of the reasons you're finding manufacturing taking place, particularly in the entertainment end of the business and the software end of the business, is that the technology is available now to manufacture counterfeit copies using DVD burners on a massive scale in the basement of a mall. Hundreds of thousands can be manufactured like that. So they don't necessarily need to manufacture them in sophisticated operations in Malaysia, or wherever, and then send them here—although they do.
You might have read the stories about Lucky and Flo, the two black Labradors that can smell polycarbonate through steel doors. Did you read about these guys? The two dogs are touring Southeast Asia right now with a bounty on their heads. There's a bounty that has been put on their heads by the counterfeiters because they're the only two dogs in the world that can sniff polycarbonates through steel doors, so it's driving the counterfeiters crazy.
But they're doing it here in very large numbers, and it's very sophisticated.
4:30 p.m.
President, Canadian Motion Picture Distributors Association
The two dogs in question were trained by the Motion Pictures Association of America. I simply wanted that on the record.
I think what Graham has said is important to note. Three or four years ago, the pirated DVD product was being imported. Today it has changed completely. It's being burned, as Mr. Henderson said, in small portions of the malls in Toronto, Montreal, and so on. It's much more difficult.
4:30 p.m.
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
I don't know what the percentages are from Asia, but we know that's the major problem. There's no country, really, that's immune to manufacturing product that is coming into Canada. For example, we had someone go the St-Eustache flea market a few weeks ago, and they reported to me that over 8,000 counterfeit garments were counted—8,000. They all appeared to be manufactured in Canada. Well, if they're at the St-Eustache flea market, I would venture it's a good guess to say they were manufactured in the Montreal and surrounding area. That's where the manufacturing takes place. Sometimes we find the same or similar products imported, with tags and labels, coming in from Asia. So it's a combination.
With the technology that exists, if you can manufacture it in Canada, then there's somebody who is likely manufacturing it here. We talked about batteries. I was conducting a raid in Winnipeg several years ago at a toy store, and in the back someone was manufacturing cellular batteries. They were putting a fake label of the company on it, and they were sitting with soldering irons and manufacturing batteries. I wouldn't want to put that next to my ear.