I agree with everything Mike has said, and the key message of that book is that we have to get our own house in order in North America. It's stunning how similar the issues are, looking at competitive issues not just within North America but within any developed economy. These are issues around skills, investment in skills and workforce capabilities, investment in innovation and knowledge, investment in infrastructure, investment in new technology--all of this is extremely important.
I would say the other message is we have to think about business and international business very differently. Mike and I both have lots of companies in our organization where it's really difficult to talk about trade, because that's not where their business is. I've got Canadian owner-operators, engineers, and designers who are working with Indian engineers who have manufacturing operations in China and in Canada who don't have any product, or the final product doesn't come from Canada, but is shipped into the United States and into world markets. They're virtual companies. People are operating at the same time they're designing a product, and you have designers and engineers around the world working in several different countries at the same time.
You think, what does our R and D tax system say about that? Probably it means that research is not eligible because it's international. How do you classify the benefits in Canada? You look at EDC financing or the benefits on the Canadian side. It's very difficult to know how much value is being generated in Canada, because it's part of an international business. So we have to think very differently about the nature of international business and how we support that.
One final thing. The one area on the trade policy side where we have to pay a lot more attention is in the enforcement of trade rules. Free trade is not just about opening markets, it's also about making rules. We do a really good job defining the rules of the game and we do a terrible job enforcing them, and I'll give you an example: counterfeit product and fraudulently marked product made in Canada. More automotive dies are shipped from Canada to the United States marked “Made in Canada” than are manufactured here. This sends up several red flags to the United States' trade representative, who has already put Canada on the watch list. We're a major exporter of counterfeit and fraudulently marked product into the United States. This is going to become a major problem in our trading relationship with the United States unless we effectively enforce and stop this product coming into Canada.
In 2004, U.S. Customs made 36,000 seizures of counterfeit product coming into the United States; Canada Border Services Agency made six. Even if you scale that up by a factor of ten, you don't come close to 36,000. We don't have the ability to enforce some of these trade rules.
We have a very cumbersome procedure for companies facing unfairly subsidized product coming into the country. We make it very difficult for Canadian companies to bring those cases forward. When they are brought forward to the Canadian International Trade Tribunal, they're often turned down by government. I'm talking about the case of bicycles and barbecues, where, frankly, the sector was sold down the pipe because someone made a decision that in the best knowledge of the officials, we don't produce bicycles and barbecues in Canada. Then we will acknowledge China as a free market economy, which simply puts the onus on Canadian companies to prove there's subsidization in China. In every other product area it's up to the Chinese to show that subsidies are not being applied. That put Canadian manufacturers at a tremendous disadvantage. They were unable to make the case.
On the trade policy side, we're not paying sufficient attention to the fact that everybody doesn't necessarily play by the rules of the game around the world. We have to make sure we're not just protecting Canadian industry, but that everybody is playing the same game.
I'm sorry, Mr. Chair, for going on.
One other issue that always causes a problem is when Canadian companies doing business around the world are frankly used as a pawn for foreign policy. I'll give you a good example. The Canadian government would like to impose export controls on products being exported to Belarus for political reasons--maybe some very good political reasons. The diplomats aren't prepared to do anything. We still recognize Belarus politically, but we're going to stop exports.
I have a member in Quebec who exports agricultural seeds and equipment to Belarus. Their business will be shut down as a result of this. In cases of small countries, why is it that this government penalizes Canadian exporters to make a political point on the foreign policy side that it isn't willing to make on the diplomatic side? Why use Canadian exporters as the pawn for something we're trying to achieve diplomatically?
At the end of the day, we're talking about getting our domestic house in order, and there are issues like that. We have to look at what we are trying to achieve in our foreign policy and our trade policy, and to make sure these are integrated together much better.