Industry Committee on Oct. 30th, 2012

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Will there be reports that we could read on how that is changing?

[John McDougall]

I don't know what you'd read in reports. You can read on how what—

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

I guess you will be reporting this in your annual reports so that the public—

[John McDougall]

We don't talk about basic research, actually; the outside community does a lot, but internally we actually don't very much....

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Okay.

Thanks.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Stewart.

Mr. Carmichael, for five minutes.

[John Carmichael, Conservative, Don Valley West, ON]

Thank you, Chair.

Thank you to our witnesses this morning.

I'd like to focus my short time on the anti-counterfeiting issue. I've done a bit of reading on the scale of this industry in Canada. It's an industry worth some $20 billion, I guess, as projected by Baker and McKenzie. I don't know their source, but it's a pretty sizable industry. It goes beyond safety, obviously, with all shapes and sizes of products.

At our last session, we heard Mr. Spreekmeester of Canada Goose talk about the counterfeit product and, as an example, some of the health and safety issues around the content in the jackets. It was very disturbing. When you look at the product, unless you have a very keen eye or some other method of scoping out the fraudulent product, it's virtually identical to anything that's manufactured in their plants.

Today it sounds as though we have tremendous agreement with our colleagues opposite on some of the recommendations from previous testimony. In fact, from my colleague opposite, we even heard an endorsement, I think, on the oil sands, which I appreciate. That was well placed.

[An hon. member]

[Inaudible—Editor]

[John Carmichael, Conservative, Don Valley West, ON]

We want to ensure that we have safe equipment for our workers in those fields because there are tens of thousands of workers in that area.

I wonder if you could just talk to me a bit about the actual costs, and not so much the dollar costs, but the impact of trying to police this product at the border. You have a database, Mr. Hunter, which you referred to, and I think that's an incredible place to start for anybody bringing in product, whether they're safety products or for general retail.

While we've heard about U.S. border officials being able to capture some of this product at the border, I think you're absolutely right: we need to have more stringent authorities for our CBSA officials to be able to do likewise. What is entailed in meeting this objective?

Mr. Edwards, maybe you could start. To me, it's a massive project. This is a very large business.

[Wayne Edwards]

Yes, but you need to start somewhere. Like I said in my notes, I attended an IP conference in Panama that was hosted by Interpol and UL. They referred to numbers that were in the hundreds of millions of dollars. Because of the nature of this, it's difficult to come down with a scope-out. In particular, how big is this issue?

What was very clear is that all countries are experiencing it and that there are all kinds of devious things going on that you can hardly imagine until you hear other speakers address them. Here, we've tried to keep our issues specifically in the safety area. There are all kinds of other areas that are outside of that realm, but it's a huge problem. Other countries are trying to address this. At this particular conference, as I indicated, there were 60 countries present, and Canada had one RCMP corporal. I said “official”, but I'm not even sure he was official—he was there.

I was there with Mr. Hunter and some of his colleagues, representing my own organization and Canadian Anti-Counterfeiting, and we heard for three days about what is going on across the world. It's a huge problem. Some of the recommendations that were put forward five years ago are a good place to start.

[John Carmichael, Conservative, Don Valley West, ON]

I would agree with you. Clearly, the reason we are here today is that we take this very seriously. Having your expert testimony here is validation of that.

Mr. Hunter, is CSA approval adopted by other jurisdictions outside of Canada because of its quality and stringency?

[Terry Hunter]

That's right. We certify products to Canadian and U.S. standards. We would use our mark in the U.S. as well.

[John Carmichael, Conservative, Don Valley West, ON]

Sorry, I'll ask that more deliberately: do other jurisdictions mandate safety product on your standards?

[Terry Hunter]

Yes. Different states have different policies and mandates. Some do use our mark as an authorized certification mark.

[John Carmichael, Conservative, Don Valley West, ON]

So to your comment, Mr. Edwards, and a very good one, $20 billion of fraudulent counterfeit product in Canada is only the tip of the iceberg.

When we looked at the maps from Mr. Spreekmeester the other day on the Canada Goose product, he showed the distribution of their product globally. I can't imagine what that reflects in terms of counterfeit product, where you have untrained experts. We're just talking about product coming to Canada. Obviously we have to focus on our own safety.

Thank you very much.

[The Chair, Conservative, David Sweet]

That's all the time for that round.

Now we'll go on to Madame LeBlanc

You have five minutes.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Good afternoon, gentlemen. Thank you for your statements.

Mr. McDougall, as you know, the aerospace sector is incredibly important to the Montreal area, providing 70,000 jobs and bringing in billions in revenue. Montreal is one of the top five industrial clusters in the aerospace field.

The NRC Institute for Aerospace Research makes public labs available to the private sector for research and collaborative initiatives, in both Montreal and Ottawa. However, in its 2012 budget, the government announced major changes to the NRC.

Can you give us any reassurance in that regard? Will the Institute for Aerospace Research continue to support research and development to ensure the aerospace industry remains competitive?

[John McDougall]

Well, as I am sure you know, the Canadian aerospace industry was number four in the world until a couple of years ago. It's now number five. Its overall sales have risen, but its world ranking has slipped.

I am sure you also understand that there are changing global landscapes in aerospace, especially with emerging countries and so on. The challenge is obviously that, for Canada to remain a strong player, it definitely needs research and innovation.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

So you're saying that the NRC will be a strong player, that it will help the industry retain its ability to compete.

[John McDougall]

Yes.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I know budget figures were set and cutbacks and changes were expected at the NRC. Will the Aerospace Manufacturing Technologies Centre on the Université de Montréal campus have to close its doors?

[John McDougall]

Again, I have to reiterate that to this point in time, the budgetary impact on NRC has been positive, not negative. With a growing participation by industry, that should continue, notwithstanding whether the funding goes up any more from government. Aerospace remains a very large component of our business. We actually do, overall, the equivalent of about $60 million per year, plus or minus, related to aerospace research. We're a very important player in working with Canadian industry and also with international industry, connecting Canadian suppliers to it.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Very well.

Gentlemen, you talked to us about counterfeiting. I would like to know if there is any innovation on that front. You realize that our study has to do with intellectual property and innovation, and how the two go hand in hand.

Are there any innovations or companies out there that could prevent counterfeiting or the entry of counterfeit goods? I am just trying to establish a direct link between those companies and the government, so we are aware of the latest developments and engaged in the fight against counterfeiting.

[Wayne Edwards]

I'm going to ask Mr. Hunter to relate to the committee some of the activity that's going on with chips that are going into products. This is a way to help prevent fraudulent product from coming in. Maybe that partly addresses the question.

[Terry Hunter]

There are a number of private companies out there that deal with levels of security to protect from counterfeiting, and it comes within labels or synthetic DNA. For example, some of our labels have synthetic DNAs built into the label itself, so that label can't be counterfeited.

I'm not sure if there's a company out there that can actually help on a nationwide basis, but there are services right now that industry can use to help them out that specialize in intellectual property protection, and that would be investigators and security features for their product, and synthetic DNAs, reflective labels, and different technologies out there.