Mr. Speaker, I am happy to take part in the debate today.
I realize the Minister of Industry was away from the House and from parliament for a few years. I thought he was down east in Newfoundland but obviously he was further east than that. He was in the Middle East on the road to Damascus because he certainly had a conversion along the way in this drug patent regulation and on free trade. I would say good for him. He may have been slow but he finally got there, and I am glad he and the Liberal Party have.
I rise to speak today on the subject of Bill S-17, an act to amend the Patent Act. The purpose of Bill S-17 is to bring the Patent Act into compliance with our international obligations, obligations that Canada signed many years ago. These obligations stem from the trade related aspects of the intellectual property rights agreement, commonly known as TRIPS, which Canada and all other members of the World Trade Organization, approximately 145 members now, are signatories.
Bill S-17 would amend the Patent Act to implement two rulings made by the World Trade Organization against Canada.
In October of last year, the WTO ruled against Canada on a complaint initiated by the United States. At issue was Canada's term of protection of old act patents or pre-1989 patents that did not conform with TRIPS. The TRIPS agreement requires WTO members to provide a patent term of 20 years from the date a patent application is filed.
New act patents are those patents that were granted since 1989 and already conform with a patent term of 20 years from the date of filing and are not affected by the WTO ruling. However old act patents, patents that were made before 1989, were only given 17 years at that time. Bill S-17 would change section 45 of the act to provide old act patents a 20 year term of patent protection which is in line with our TRIPS agreement. According to Industry Canada, the amendment would affect 53,500 patents, of which 30 are commercially significant drugs.
The second ruling was from 1997. The European Union initiated a WTO dispute settlement process against Canada over two exceptions to an action for patent infringement. Since 1992 the Canadian Patent Act allowed generic drug companies to develop a generic version of the patented drug in order to obtain regulatory approval and to manufacture and stockpile a patented drug before the patent had expired. The European Union claimed that both these exceptions were inconsistent with the TRIPS agreement. However the WTO determined that Canada's early working exception was consistent with TRIPS but not the stockpiling provision that we had.
Bill S-17 would implement the WTO ruling by revoking the manufacture and storage of patent medicine regulations, regulations to prevent the infringement of a patent by any person that would be enacted by order in council.
The Canadian Alliance recognizes that the right to own property and benefit from private property is an important aspect, including intellectual properties.
I would like to briefly mention that a relative of mine from Peterborough by the name of John Stephenson patented the first Peterborough canoe in about 1879. I recently had the opportunity to see that patent when I visited the Peterborough canoe museum. Canoeing was a way of travel in those days. There were no railways and no highways. The lakes and rivers were the highways of Canada. He developed a new cedar strip canoe what eventually went on to become the Peterborough Canoe Company known all over the world. He applied for and received a patent for that over 100 years ago.
We recognize that it is important to protect one's property. It lies at the very heart of our legal and economic systems and it distinguishes us in a free society. Moreover, the protection of intellectual property, domestically and internationally, is the foundation necessary for a knowledge based economy. By passing the bill, Canada would send the right signals to the international community that we take our obligations very seriously. We need to do that because so much of our trade depends on outside sources. I believe that over 45% of our gross domestic product now comes from exports and it is rising every year. Canada's prosperity depends on trade that is based on rules and international agreements.
As a medium sized economy, Canada cannot compete with the big players who can throw their weight around on the world scene in terms of subsidies, countervailing duties and trade wars. We simply cannot afford to do that. We need the rules based system to protect us. However, we can compete and win in an open rules based trading regime with a dispute settling mechanism based on law, such as the WTO.
I will digress for a moment and talk about the softwood lumber dispute that is currently happening with the expiry of the softwood lumber agreement. This could well end up at the World Trade Organization. Canada could win that dispute but we need international organizations, like the WTO, with the rules that are provided, in order to ensure Canada's prosperity in things like our forestry industry.
As a result, we cannot ignore rulings when they go against us. We have to bring our laws into line with the obligations we signed internationally, which is what we are doing here. We may not like the decisions that come out against us from time to time but there is no question that we benefit from the stability and clarity that the WTO provides to world trade.
As I mentioned, it was the United States that challenged Canada's treatment of pre-1989 patents at the WTO. Two way trade in goods and services between Canada and the United States jumped up from $626 billion in 1999 to $700 billion in 2000. Canada exported $130 billion more worth of goods and services to the United States than we imported from our southern neighbours. This is a fantastic achievement for a small country of 30 million people.
Canada also sells more to the United States than any other country does by a wide margin. In 1999 Canada's market share in key markets in the United States was close to 20% of its overall consumption in the United States. Mexico's market share in the same markets was just over 10%. A lot of people in the United States and even in Canada do not realize who is the biggest supplier to the United States. We are by far. While Mexico is making inroads, Mexico's market share in the same market was just over 10%. A combination of all 15 countries of the European Union together have a market share roughly the same size as Canada.
The Canadian-American rules based trading relationship is very important to Canadian prosperity and has been the model for the world to follow. In fact 87% of our exports last year went to the United States and it is rising every year. We benefit greatly by having a terrific neighbour to the south that takes a lot of the good products that we manufacture. However, we do need the protection of trade agreements, like NAFTA and the World Trade Organization, to ensure that continues.
The generic drug companies have expressed their understanding that the WTO rulings must be implemented. They have also indicated their dissatisfaction with the way the drug patent regulations are being implemented. For example, the generic companies feel that the research based drug companies are able to extend their patent beyond 20 years through the notice of compliance linkage regulations. Some argue that this two year process is not in Canada's best interest.
The debate over the regulatory environment for drug patents is a very important one but it should not slow down the passage of the bill. Bill S-17 is basically a technical bill designed to enable Canada to comply with its international obligations. The WTO gave Canada until August 12, 2001 to implement the recommendations and the rules arising from the U.S. and European Union challenges. It is time to pass the legislation.
Although the debate on drug patent regulations is very significant, it should not affect the passage of Bill S-17. While appearing before the Senate banking committee on trade and commerce, the Minister of Industry had to eat a little bit of crow about his past comments regarding drug compliance. He promised to take a much broader look at the drug patent regulations in the fall. I applaud him for both admitting that he was wrong in the 1980s and now looking at how we should handle our new drug patent regulations. I am also pleased he recognized the current dispute between the generic and research based drug companies and promised a role for parliamentarians.
I suggest that the industry committee should do a separate study regarding the issue of notice of compliance and the two year stay. It is an important debate and all things have to be put on the table. It would be a good opportunity to do it at the industry committee. I suggest to the minister that is where it should start, but it should not affect the passage of the current legislation we have before us. Bill S-17 should be passed and then let us deal with that issue to see who is right on the notice of compliance. It should be a separate issue.
We will co-operate from our side. We want to see Bill S-17 passed. We think the issue of the generic and patent drugs with regard to the timeframe pass the 20 year patent, the notice of compliance and the two year stay are all important issues that need public airing. I challenge the Minister of Industry to make sure that happens.