Industry Committee on Nov. 4th, 2013

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

Thank you, Mr. Chair.

Hello, Minister. It's nice to talk to you in the room today. We often talk on the plane. It's a great pleasure.

Thank you to the other witnesses.

I just want to follow up with a couple of questions about enforcement, that Mr. Holder and Ms. Charlton were asking about. I was looking at the Treasury Board report on personnel, and it said that in 2012 the CBSA employed 14,710 staff, which is an increase, as you mentioned, from 2006, but in 2013 the CBSA only employed 14,218 staff, which is a cut of 500 people from the rolls. I'm just wondering if you expect that trend to continue, because it does seem odd to add a whole bunch of new responsibilities but yet have 500 fewer people to carry out these responsibilities.

I'm just wondering if you might want to comment on that.

[Martin Bolduc]

As I mentioned earlier, our front-line officers have remained constant at 5,600 or so. In the DRAP reductions, there was no impact to the front line, so we are confident. Again, this is the reality of the CBSA every day: process information, refer shipments for examination, detain, and take proper action. With a budget of over $1.6 billion, which is reflected in the main estimates, we are, in fact, very confident that we will be able to leverage those new authorities and this new tool to better protect Canadians.

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

With all due respect, you can see our concern. Again, our side is supportive of this legislation coming forward and we're glad it's here at committee. We share your concerns. Ms. Charlton talked about the cuts to the budget. And now finding 500 fewer staff, you can see our concerns here. Perhaps you want to revisit the resourcing of this. You may need to add more resources.

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

As I've said, if you wish to put those questions to Minister Blaney, that's great. But as a government, we also share concerns of arriving at a balanced budget and doing so responsibly. We think that having no reduction in front-line border services and their capacities is a responsible way to arrive at a balanced budget, to meet our commitments to shrink government spending in a responsible way while still realizing the need for public safety.

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

Thanks.

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

And I do appreciate your support.

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

Thank you.

My second question is specifically on the Port of Vancouver. It touches both of our ridings.

Last year, we had 2.7 million containers come through the port. What percentage of these would have been manually searched? That's what we're going to have to do with these counterfeit goods: we're going to have to manually search a lot of these containers. Can you tell us what percentage was manually searched and if that will increase under this new legislation?

[Martin Bolduc]

I don't have the specific data for last year, but physical inspection ranges from leveraging technology—you know, X-rays, what we call a VACIS machine, where we're able to see the inside of a container—open the doors, and verify the content of the container, or a full offload of a container. I don't have the specific numbers for last year. If the chair agrees, we will provide those numbers.

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

We've deployed that technology not only at the Port of Vancouver but also at the Port of Prince Rupert. It was one of the main additions when we built the container terminal there and expanded it. They have more plans for greater growth, with dedicated roads, where they have that kind of instant X-ray scanning of the containers coming in. It's now considered core and basic infrastructure at these ports.

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

We welcome the figures. As a rough estimate, though, do you think that, with this legislation, you'd be opening more containers or inspecting more containers? Is that your estimate?

[Martin Bolduc]

We will have to include those new responsibilities in our targeting priorities. Again, in the large number of inspections we do, we are confident that we will be able to assume the responsibility and what is asked of the CBSA.

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

I have one last question.

Just sticking with the Port of Metro Vancouver...oh, sorry.

[John Knubley]

I think it is important to stress that it's not just the responsibility of the CBSA or the RCMP to use the new tools. In fact, the objective of the bill is to create a new framework that gives new powers not only to CBSA and the RCMP but also to the rights holders themselves. As Mr. Bolduc said earlier, part of the benefits of this will be to promote much more sharing of information between the rights holders, the manufacturers, around these pirated goods and counterfeit goods. The bill is designed to encourage this process. That should lead to better results.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Knubley and Mr. Stewart.

Mr. Warawa, you have five minutes.

[Mark Warawa, Conservative, Langley, BC]

Thank you, Minister, and the witnesses, for being here.

I want to focus on the detainment of goods.

I had written down the question: how many days? I heard that it can be up to 10 days, and that the cost to warehouse these detained goods was the private sector's responsibility. Can you explain how that works?

If there's a suspicion that these goods that a customs officer has seen may be counterfeit, the officer makes a decision to detain them. They're put in the warehouse and you contact the rights holder to say, “Do you want to come and take a look at them?”

Is the rights holder at that time paying to have these sit in a warehouse?

[Martin Bolduc]

The importer would pay for the storage costs. The way it works is, the majority of the time these goods move from the border to, let's say, Montreal, inbound. So they move on an inbound carrier. They're brought into the warehouse. This is an inbound warehouse that is privately owned, but under CBSA authority. Based on the information provided by the importer, the border services officer would assess the country of origin, importer, exporter, and so on, and would decide to do an examination. In doing an examination, if the officer has reasonable grounds to believe that the goods could be counterfeit, then we'll take samples and pictures. We'd go back to the office and query the system where we have requests for assistance. If there's a request by a rights holder, then we would contact that rights holder and inform him that we have—

[Mark Warawa, Conservative, Langley, BC]

I'm sorry for cutting you off, but time is short. So the 10 days is 10 calendar days, or 10 business days?

[Martin Bolduc]

It's 10 days as soon as we inform the rights holders.

[Paul Halucha]

It's working days.

[Mark Warawa, Conservative, Langley, BC]

Okay, it's 10 working days.

Could you elaborate on the rights of the rights holder to take action, a new civil cause of action? The rights holder can take action based on the manufacturing, possessing, importing, exporting, and attempting to export counterfeit goods. What does that look like if there is a manufacturer in another country—and I'm going to give a hypothetical example—who produces a jersey or a jacket legitimately under contract and fills that order of 10,000 items, and then, as he has everything set up, goes and makes another 20,000, 30,000, 100,000 of those? He's not under contract with anybody, so it could be counterfeit. It may not create a risk, but the rights to the thing are owned by maybe a Canadian company. Could you elaborate on that?

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

Legally, there's a difference between making a replica and making a product for counterfeit. The counterfeit item can go into the marketplace and do commercial damage.

[Mark Warawa, Conservative, Langley, BC]

Are there agreements with other countries to make sure that the companies are not overproducing and have excess product that could wiggle its way into our country and create big problems? It may not create a safety issue, but it's a rights issue.

[Paul Halucha]

Are you speaking of legally produced goods in foreign markets? Do you mean parallel imports, where the exporter owns the IP and has the rights to produce it for the territory within which the manufacturing takes place?

[Mark Warawa, Conservative, Langley, BC]

In my scenario, they do not have the rights to overproduce, but they have the equipment and capability to do it. They over-create and sell it to somebody to import into Canada as a counterfeit product.

[Paul Halucha]

In that situation, that's clearly infringing on a legal product. The first time Canadian authorities would have the ability to stop it would be when it came into the country. We would not be in a position to stop manufacturing. The bill applies also to exports leaving Canada. Canada is not only an importer of counterfeit goods, there are exports happening as well, so that's where you're looking at the other causes of action. If there's a manufacturing facility in Canada that is illegally producing a good, that's where the causes of action are that a rights holder could pursue.