Evidence of meeting #2 for Industry, Science and Technology in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was goods.
A video is available from Parliament.
Conservative
Mark Warawa Conservative Langley, BC
Oh, thank you.
My question was, can they take action outside of Canada? Are there international agreements?
Conservative
James Moore Conservative Port Moody—Westwood—Port Coquitlam, BC
Our international agreements cover only importing and exporting to and from Canada.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Thank you, Mr. Chair.
I just want to follow up on that a little.
Paul, maybe you could elaborate on this export impact for those who might be creating counterfeit goods in Canada and then exporting them. How does this bill impact that?
Director General, Marketplace Framework Policy Branch, Department of Industry
Just in the ways the honourable member's question exposed, to the extent that an illegally produced counterfeit product by a manufacturer in Canada that doesn't have the right to produce it could also impact the Canadian innovator who does have that right. It could also impact a foreign company that has rights to Canada and internationally for that product. There's a kind of a good citizenship component to the bill as well, in that it applies to exports as well as imports.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
For those who might be watching the proceedings here and might not be IP experts or experts in the way the border works, could someone describe how the system works right now? How are counterfeit goods identified at the border right now, what happens, and maybe what are the shortcomings in that system?
Vice-President, Operations Branch, Canada Border Services Agency
Right now, our officers from time to time do find counterfeit goods, but the CBSA has no authority to detain or seize those shipments. The big advantage of the proposed bill is that it will give us the ability to detain and, in partnership with the rights holder, to confirm whether they are in fact counterfeit goods.
Today when counterfeit goods are declared, they're declared as a sweater or a shirt or a.... There's no difference when we process the information, because we have no authority to detain those goods. In some cases, rights holders will go to court and get a court order to get the assistance of the CBSA in getting a specific exporter, a specific shipment, and we cooperate with stakeholders when we are mandated by the court to do so.
For the CBSA, we value and are looking forward to those new authorities that will help us protect those copyrights.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
In layman's terms, what types of actions can you take right now? Maybe you could clearly differentiate that from the types of actions you can't take but will be able to take with the new act, just in a way that a regular person around the dinner table might understand.
Vice-President, Operations Branch, Canada Border Services Agency
Let's take the example of sweaters. Right now, there's nothing the CBSA can do. If we go with goods that could represent a danger to the safety and security of Canadians, then the CBSA has the ability to refer to and seek the help of the RCMP or Health Canada. We do so on a daily basis, because we have MOUs with these two organizations. That's today.
Tomorrow, the CBSA will be able to detain the shipment, get information, validate that information with the rights holders, and have the rights holders seek relief with the courts. In cases of a product that could represent a danger to safety and security or for shipments that we believe a criminal organization could be behind, we would refer those cases to the RCMP for further investigation.
Conservative
The Chair Conservative David Sweet
Thank you, Mr. Lake.
We'll now move to the NDP again.
Madam Charlton.
NDP
Chris Charlton NDP Hamilton Mountain, ON
Thank you very much, Chair.
I have a number of questions, so I'll try to be really quick about them.
First, did you consult with the Canadian Federation of Independent Business around this bill? One of the things I'm concerned about is that if there's an investigation at the retail level about possible counterfeit products and in the end you find that those products actually aren't counterfeit, the shop owner in the meantime would have been responsible for paying for expenses through, for example, the investigative process, but also potentially through court proceedings, until the final determination is made.
For some small businesses, that may lead to serious financial hardship, so I wondered whether you had an opportunity to consult on that aspect of the bill with CFIB, but also with others representing small and perhaps even medium-sized businesses.
November 4th, 2013 / 4:55 p.m.
Director General, Marketplace Framework Policy Branch, Department of Industry
We heard from CFIB, and we heard from retailers, and they are supportive of the bill. The issue I think you are pointing to is that small and medium-sized companies may not have the resources or may have fewer resources to participate in the system at the border regime right now. Is that the focus of your question?
NDP
Chris Charlton NDP Hamilton Mountain, ON
I'm concerned, because the remedy this bill provides, as I understand it, is possible reimbursement to those businesses at the end of the court proceedings, but that suggests at the front end that small businesses will have to pay those expenses out of pocket. You know how tight the margins are for many of those businesses, so I'm concerned about how viable that is for them as the investigation is occurring, particularly if the finding is that the products weren't counterfeit.
Conservative
James Moore Conservative Port Moody—Westwood—Port Coquitlam, BC
It's seen as a net benefit. There could be a cost to enforcement, but the net benefit is they can go after those who have abused the privilege of having products in their stores, and they can prosecute. As well, the rights holders could defend themselves. So it's seen as a net benefit.
NDP
Chris Charlton NDP Hamilton Mountain, ON
There's another part I don't fully understand. I know you have presented us with data about the increase in the number of counterfeit goods seized, but that's goods seized. We don't actually have very reliable data on what the overall cost is, what the economic impact is, what the overall size of the problem is, and what the overall impact on health and safety issues is.
Do you have reliable data on those things? In short, why are we doing this? We obviously think there's a bigger problem out there. What is that problem, and what's the magnitude of that problem?
Vice-President, Operations Branch, Canada Border Services Agency
CBSA has no specific data as to.... We have no authority to take action today. What we have already started doing is engaging with other customs organizations to get a sense of what they are seeing.
As you know, many countries have IP legislation and are able to get a sense of exactly what the problem is.
NDP
Chris Charlton NDP Hamilton Mountain, ON
So we can't quantify the problem, but we're offering a solution.
Conservative
James Moore Conservative Port Moody—Westwood—Port Coquitlam, BC
It's a self-evident problem. We do know that there are prosecutions in Canada. Beyond that, as I said, with regard to the European numbers, just three numbers are relevant, because they involve our trading partners. The European Union detained over 90,000 shipments containing 40 million articles worth an estimated value of 900 million euros. According to the United States government numbers, U.S. customs officials in 2012 seized almost 23,000 articles representing a retail value of $1.2 billion, with the average seizure of more than $10,000. As well—this is from the Japanese government—according to the Survey Report on Losses Caused by Counterfeiting, which is a report by the Government of Japan, more than one out of every five Japanese companies sustained losses from counterfeiting in 2011.
I remind you that Japan is a centrepiece country of the Trans-Pacific Partnership trade agreement as well. This is a growing problem of international consequence.
NDP
Chris Charlton NDP Hamilton Mountain, ON
I don't deny that the problem is real. I'm just trying to get a handle on what the magnitude is.
When you are talking about other governments and their reports, there is one report that says folks in a Chinese prison are making fake PlayStation 3s, so the government at least tacitly is aware of what they are doing there.
Do we have any bilateral agreements with other countries? Because it seems to me we can go after manufacturers of these goods in Canada, but we don't have any jurisdiction to go after manufacturers in other countries.
Does enforcement really only involve the retailer on the Canadian side? What are we doing to go after the manufacturers? Do we have international agreements?
Conservative
James Moore Conservative Port Moody—Westwood—Port Coquitlam, BC
We're the Government of Canada. We're not the government of other countries.
Conservative
James Moore Conservative Port Moody—Westwood—Port Coquitlam, BC
But you're correct that bilateral trade agreements that are rules-based and that enforce international laws are good things, which is why we're proud to be a party that supports free trade.