International Trade Committee on Nov. 28th, 2006

[Carol Osmond]

I don't know if I brought my statistics with me, but as I mentioned, we have just completed a survey of our membership. We have just over 750 members, and I think close to a third of our members responded to that survey. I believe the breakdown was something like 20% of our members being service providers, so that would include freight forwarders, transportation companies, CN and CP, for example, which are members of our associations, lawyers, and so on. The other 80% would be companies that are engaged in importing and exporting.

In terms of the breakdown, we represent small, medium-sized, and large companies. Our members include some of the largest manufacturers and retailers in Canada, but we also have small and medium-sized companies as well. We represent a broad range of industries, food products, automotive, electronics, and so on.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

If we come back to the issue that Mr. Cardin raised, which is the whole issue of jobs itself, putting in place protections for some of the sectors where we're seeing imports basically gobbling up Canadian jobs, if we were to look at your association ten years ago as compared to now, and the average number of jobs per member ten years ago as compared to now, what would we see in evolution?

I'm asking about the quantity. I'm going to come back to you in terms of quality as well.

[Carol Osmond]

Right. I'm not sure. I don't have the statistics from ten years ago, so I'm not sure what the evolution would have been over the past ten years.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Is that something you track as an organization?

[Carol Osmond]

I'm not sure how far back we've been doing these annual surveys, but I can certainly check that for you.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Yes, because there's the issue of the quantity of jobs, and I think there's a very legitimate perception that over the last ten or fifteen years what we've seen is an erosion, both to a certain extent in the quantity of good jobs and also in the quality of the jobs that are available within the Canadian economy.

Some people, and I'm one of them, believe that our trade policies are in large part responsible for that, that what we're intending to do is substitute the good manufacturing jobs that we had in Canada in the past for lower-paid service jobs. In fact, Statistics Canada seems to back that up. In their most recent studies, they've indicated that most of the jobs created today in the Canadian economy are part-time or temporary in nature and don't come with things like benefits that existed in the past, such as pensions. So what we've seen is an erosion of the good jobs.

One of the reasons that people put forward is that we are putting all our eggs in one basket, and that is in trade with the United States, with 86% of our trade now going to the United States. That's something that a small-business person certainly wouldn't do. They wouldn't concentrate on dealing with one client, because that, of course, leaves you vulnerable to that client. We've seen with softwood lumber and with BSE that this vulnerability is something that can be a real problem for us.

So coming to the issue of trade diversification, is that something the association discusses? Do you have specific recommendations on how we can diversify our trade so we're not as vulnerable to our relationship with the United States and in a very real sense we're diversifying the possibilities around the world?

[Carol Osmond]

In terms of issues, really, given the makeup of our membership and the nature of the association, a key focus for our association is on issues related to customs procedures, regulations and requirements, and so on; issues related to the border and related to our ports of entry; issues related to security, or increased emphasis by governments on security programs such, for example, as the C-TPAT program when going into the United States; and proposals in Canada to enhance what we call our “partners in protection” program, which is our equivalent of the U.S. C-TPAT, and to make those programs compatible.

Those are the types of issues our membership is focused on.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Is diversification an issue that some members have raised, or is it something that has just not been part of the association's discussion?

[Carol Osmond]

It's not so much a focus of our discussion. There's a recognition, clearly, that our trading relationship with the United States is going to continue to be our principal trading relationship and that we need to pay attention to that relationship, to pay attention to issues at the border, to work on initiatives such as the security and prosperity partnership.

But having said that, obviously it shouldn't be our exclusive focus. We need to be looking at our trade relationships with other countries, including our relationships with China and other countries in Asia, and to take advantage of opportunities in those markets not just as sources of supply, but also as potential export markets.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

How much time do I have, Mr. Chair?

[The Chair, Conservative, Leon Benoit]

You have a minute or so.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you. I would like to move on, then.

In a sense, would it be fair to say that you're more concerned with the nuts and bolts of import/export and trading relationships rather than the overall strategy?

[Carol Osmond]

Yes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Coming back to the nuts and bolts, then—the issue of the physical infrastructure that you raised, and the very compelling figure you mentioned, that the port of Vancouver is looking at three times the trading volume by 2020—what would be the list of the three top issues, either in human resources infrastructure or actual physical infrastructure, that you believe the federal government needs to address? We know there's an infrastructure deficit. There's no doubt about that; I think all parties agree. But what would be the three issues you believe must be attacked directly, and what would be your recommendations?

[Carol Osmond]

There are obviously issues relating to the port infrastructure itself, and terminal capacity, and so on. There's also the issues of the infrastructure leading up to the ports—being able to access the ports and leave the ports. Those are critical to members.

The other issue that continues to arise is our rail capacity and the ability, once the goods have arrived, for example, in the port of Vancouver, to then move them from the port to points east. What we're finding is that, since the dispute that took place in Vancouver a year or so ago with the truckers, there has been an improvement. From what I'm hearing, instead of taking ten days on average for containers to be moved onto the rail, it's now taking something like five days.

But for some of our members, that's still a significant delay. What we're hearing is that the railways are allocating space on the trains to the various steamship lines. Now, having said that, I think the railways have made significant strides in trying to increase capacity, but I think it's going to continue to be an issue.

Another issue I referred to that our members face is this whole issue of visibility in the supply chain. With the issue of having your containers wait on average five days at the port to be put on a train, the problem is you don't know whether it's going to be one day or five days, so in terms of your cost in maintaining inventory and so on, you have to plan for the worst case scenario, though in fact it may take less time than that.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Julian.

We'll go to the Liberal Party now, to Mr. Maloney, please, for five minutes. Let's keep it to five minutes so we can get through as many questioners as possible.

[John Maloney, Liberal, Welland, ON]

On counterfeiting and piracy, you say it's costing us billions of dollars. How do you calculate that?

[Carol Osmond]

It's very difficult to calculate what the costs are, because it's basically a black market. When you're dealing with a black market, you obviously don't have clear figures. We base it on estimates that have been made globally and estimates in the United States. I believe in the United States they estimate that it costs the U.S. something like $250 billion annually in loss to the overall economy. Given that Canada's economy is roughly 10% of the U.S. economy, we could be looking at a $25 billion to $30 billion loss to the Canadian economy.

The cost is something that is very difficult to estimate. Based upon those who have been involved with this issue over the past decade or so, I can tell you that the trend we're seeing is that the range of goods being counterfeited has expanded incredibly. It used to be that when you were dealing with counterfeit goods, you were dealing with fake watches or fake T-shirts. What we're finding now is that practically any product that can be manufactured is being counterfeited, everything from toys to Christmas tree lights, to bottled water, to baby formula, to prescription drugs, and so on. We're seeing an explosion in terms of the range of goods.

[John Maloney, Liberal, Welland, ON]

Who is doing this importing? You represent an association of importers and exporters and there are 750 members. I would assume that none of your members are doing these illicit—

[Carol Osmond]

Not knowingly, no.

[John Maloney, Liberal, Welland, ON]

Who is doing this importing? How do we apprehend them? What are the penalties?

[Carol Osmond]

Those are very good questions. It goes to the root of the problem that we have in Canada. Unfortunately, we don't have an effective border enforcement system in Canada for intellectual property rights. Part of the reason for that is we do not have a clear mandate for the Canada Border Services Agency to target and to detain and seize counterfeit goods.

The best source of information on this issue, I guess, would be our customs authorities. But because we don't have the proper legislation in place, because we're not dedicating the appropriate resources to this issue, it's difficult for us to know the extent of the problem and who exactly is importing these goods.

There are investigations that go on with RCMP, with local police. IP rights holders conduct their investigations, so they're able to identify who some of these offenders are. But getting a complete grasp on the issue to be able to address it effectively, we need to do more in Canada both in terms of our legislation and of the resources we're dedicating to this issue.

[John Maloney, Liberal, Welland, ON]

Looking into a crystal ball, this is a very serious situation, and few really have a concept of the seriousness of it. If the United States were to say there is so much coming across in transshipments or whatever, is there a possibility that they could conceivably put up more barriers for our transborder trade, because of the questionable...?

If they see a container load of Ralph Lauren T-shirts or something coming via China, they know they are knock-offs. Are we concerned about that, or should we be concerned about that label and make that border even thicker?

[Carol Osmond]

I think that's a potential concern. Certainly the United States takes this problem very seriously. It's been identified by the USTR and the Commerce Department in the United States as being a serious concern. In terms of the bilateral trade relationship, I think we shouldn't underestimate the importance of this issue to the United States.

The USTR will be coming out with its 301 report early in the new year. I think we can expect that Canada will be on the watch list, again, this year. We're almost equated with China, basically, as being a problem. So I think, yes, it does affect our relationship with the United States.

There is an initiative pursuant to the security and prosperity partnership of North America for the three NAFTA countries to try to coordinate their enforcement, but I think certainly we need to do more in this country. And in fact Canada has been identified at the World Customs Organization as a country that is not doing enough to address this issue.

[John Maloney, Liberal, Welland, ON]

Are there any self-policing initiatives within your own sector, within your own industry, or is it all up to government?