Thank you, Mr. Chair and members of the committee, for your invitation to be here today.
I understand it was a late night last night. I was actually watching the vote at the airport in Toronto, on my way to Ottawa.
I'm here representing IE Canada, the Canadian Association of Importers and Exporters. The association has been a leading voice of the trade community since 1932. This past October we had our 75th annual conference in Toronto.
The association serves small, medium, and large enterprises throughout the country, as well as a range of service providers to Canada's trade community. Our members are manufacturers, distributors, and retailers from a broad range of industries, including food and food product, automotive, electronic, and textile and apparel. We have a growing membership that today exceeds 750 members.
Given the nature of our association, obviously issues relating to customs and the border are uppermost in our minds and a key priority.
I have been with IE Canada as its senior policy advisor for one and a half years. I am a lawyer by training. I practised customs and trade law with an international law firm for 12 years. I spent five of those years in Mexico, following the implementation of NAFTA, which makes me one of those Canadians who has been impacted significantly, both personally and professionally, by our free trade agreements.
More recently I've been involved in legal research projects examining implementation of trade facilitation measures in Latin America, and particularly central America, as well as issues relating to the global trade in pirated and counterfeit goods and border enforcement of intellectual property rights. I serve as vice-chair of the Canadian Anti-Counterfeiting Network, for which IE Canada serves as the secretariat.
I'd like to begin by reiterating some of the points that were made during the trade policy round table that was held by this committee on October 19. The first point relates to the integrated nature of trade.
Export Development Canada recently reported that the import content used to make Canadian exports has been growing steadily, and now averages around 35%. In many manufacturing industries, the ratio is 50% or higher. This is clearly reflected in the membership of our association. In a recent survey, 51% of our members indicated that they are primarily both importers and exporters. If we remove service providers, that number is over 63%. So imports are becoming an increasing percentage of our exports.
The second point relates to the importance of integrating our trade policy with our domestic policy. Together with modernizing and improving customs processes to take advantage of our trading relationships, we must ensure that we have the physical infrastructure in place at our border, as well as at our principal maritime ports, to move goods efficiently into and out of Canada.
For most importers and exporters, the current concern is not customs release times but the time it takes to get to customs inspection booths due to inadequate infrastructure at, and leading up to, major ports of entry. The problem will only be exacerbated in coming years as trade volumes increase. An estimated 58,000 crossings occur in the Detroit-Windsor region every day. By 2020 the number of daily crossings could exceed 90,000. The Port of Vancouver anticipates that by 2020, it will need to handle three times the volume it does currently. With current infrastructure, most North American ports will not be able to handle projected 2010 volumes.
Turning to our trading relationship with the United States, clearly that relationship is of far greater importance to Canada than it is to the U.S. As highlighted in NAFTA@10, a report prepared by the Department of Foreign Affairs and International Trade, the U.S. is far less reliant on foreign markets than is Canada, exporting 10% of its GDP compared with 40% for this country.
Exports to Canada account for less than 2% of U.S. GDP. Nevertheless, trade between Canada and the U.S. has grown dramatically since implementation of the FTA in 1989 and NAFTA in 1994. Our economies are becoming increasingly interdependent: 34% of our bilateral shipments of goods is comprised of intra-company trade, and over 70% is comprised of intra-industry trade.
Both Canada and the United States are facing intense competition from the Asia Pacific region, particularly China. China is competing with Canada as a primary source of U.S. imports, especially manufactured goods. To meet that competition, it is critical that we continue to work in very close cooperation with the United States as well as Mexico, through such initiatives as the security and prosperity partnership, to address North American competitiveness and issues related to the border.
Unfortunately, indications are that the Canada-U.S. border is becoming thicker rather than thinner. Despite significant investments made by both the public and private sectors to try to streamline and facilitate movement of goods and people across the border, initiatives such as the western hemisphere travel initiative and the imposition of the U.S. Department of Agriculture's APHIS or Animal and Plant Health Inspection Service fee at the border threaten to undermine those efforts.
We have to bear in mind in dealing with the United States that security continues to be a major preoccupation in the U.S. To maintain our access to that market we have to address U.S. security concerns, which makes the Ministry of Public Safety and the Canada Border Services Agency critical in our economic and diplomatic relations with the United States.
Finally, I would like to comment briefly on the issue of product counterfeiting and piracy. As I mentioned, IE Canada serves as the secretariat for the Canadian Anti-Counterfeiting Network. This is a coalition of broad-based associations as well as law firms and intellectual property rights holders that have joined together in Canada to address the issue of counterfeiting and piracy.
Lack of effective IP enforcement in Canada, especially at our borders, is a significant irritant in the Canada-U.S. trading relationship. Canada has been included on the United States trade representative's 301 watch list for the past several years. The major source of counterfeit and pirated products is Asia, especially China. This issue of counterfeit and pirated products not only has an impact in terms of our relationship with the United States, but it is also directly relevant to our trading relationship with China and the competition that we face from China.
It's estimated that counterfeiting and piracy cost the Canadian economy billions of dollars annually. The goods coming into the country range from potentially counterfeit pharmaceutical products, to car parts, to luxury goods, to toys, to electrical products, and so on. They not only present a threat to our economy and our tax revenue, but they also present a serious risk to the health and safety of Canadians.
Unfortunately we do not have an effective system in Canada to address this issue of counterfeit and pirated products. Particularly, our enforcement at the border is very lax and is somewhat of an embarrassment, I think, to this country. Not only is it of concern to the Canada-U.S. relationship, but it has also been raised internationally.
I'll finish my comments here, and I welcome your questions.