A ‘weak link’ no more?

New trade deal prods canada to stop chi­nese coun­ter­feits headed for u.s.

North Bay Nugget - - BUSINESS - Tom Black­well

TORONTO — the au­thor­i­ties knew they had ar­rived in canada — 55,000 chi­nese-made, knock­off ver­sions of ties by gucci and the like. then they dis­ap­peared, never show­ing up for sale in this coun­try.

Fi­nally, the er­satz de­signer ac­ces­sories sur­faced in chicago, Mi­ami and New york, hav­ing ap­par­ently passed through here on the way to their ul­ti­mate des­ti­na­tion, ac­cord­ing to a lawyer.

ex­perts say canada is likely a ma­jor stopover for such coun­ter­feit goods, a “weak link” of lax en­force­ment on route to the huge amer­i­can mar­ket. cana­dian cus­toms of­fi­cials do lit­tle now to stop their flow.

but that may be about to change, as the united States-mex­ico-canada agree­ment, the new North amer­i­can trade deal, re­quires all three coun­tries to au­tho­rize their bor­der guards to de­tain “ex-of­fi­cio” — with­out a court or­der — pi­rated goods in tran­sit to other na­tions.

com­bined with sim­i­lar pro­vi­sions in the re­cently con­cluded the canada-euro­pean union com­pre­hen­sive eco­nomic and trade agree­ment, the change could usher in a new era of cana­dian bor­der guards com­bat­ing coun­ter­feit mer­chan­dise that their own cit­i­zens will likely never buy.

that would be a wel­come de­vel­op­ment, say ad­vo­cates for copy­right-hold­ing com­pa­nies.

“a coun­ter­feit is a coun­ter­feit is a coun­ter­feit,” said david Lip­kus, a toronto-based lawyer. “the end goal for the coun­ter­feit mer­chan­dise al­ways is to re­move it from the mar­ket­place, and the best place to do that is at the bor­der.”

as it stands now, “canada is seen as the weak link,” said Mark evans, an­other toronto-based in­tel­lec­tual prop­erty lawyer. “i’m hope­ful this is the first step to­ward strength­en­ing all of these bor­der mea­sures.”

but those who ap­plaud the change set out in the ten­ta­tive trade deal also say there’s no guar­an­tee it will lead to con­crete ac­tion. de­spite laws that al­ready give of­fi­cials power to act in other ar­eas, canada has largely ig­nored the coun­ter­feit prob­lem, they charge.

doc­u­ments re­leased in June 2017 in­di­cated the canada bor­der Ser­vices agency had de­tained just 36 ship­ments in the two years since the cur­rent anti-coun­ter­feit law came into ef­fect.

by con­trast, the u.s. seized 34,000 ship­ments of knock-offs last year alone, in­clud­ing al­most 600 from canada, ac­cord­ing to home­land Se­cu­rity de­part­ment sta­tis­tics. even on a per-capita ba­sis, that is well over a 100-fold dif­fer­ence.

“it doesn’t seem like a very high pri­or­ity for cbsa,” said Jean Pierre-Pierre Fortin, pres­i­dent of the cus­toms and im­mi­gra­tion union.

the agency it­self “will not spec­u­late” on why it halts so many fewer coun­ter­feit ship­ments than the u.s., said cbsa spokesman Jay­den robert­son.

as for the new re­quire­ments in the usmca, “cbsa con­tin­u­ously re­views its op­er­a­tional ca­pac­ity and ad­justs re­sources as re­quired to carry out its man­date,” he said.

Some ex­perts, mean­while, ex­press worry about pos­si­ble col­lat­eral dam­age from in-tran­sit in­ter­cep­tion of al­leged knock-off prod­ucts.

generic drugs made in in­dia and des­tined for de­vel­op­ing coun­tries, for in­stance, have been stopped in euro­pean ports as sus­pected coun­ter­feits, po­ten­tially de­priv­ing de­vel­op­ing na­tions of needed medicine. in­dia and brazil both filed com­plaints with the World trade Or­ga­ni­za­tion in re­sponse, though europe later agreed to stop the prac­tice.

“that’s a real is­sue,” sad Michael geist, a uni­ver­sity of Ot­tawa law pro­fes­sor and in­tel­lec­tual-prop­erty ex­pert. “Where those pow­ers ex­ist, there’s been con­cern around mis­use or abuse of them.”

Nev­er­the­less, the re­sponse to coun­ter­feit­ing is one of the chief rea­sons the u.s. placed canada this year on its in­tel­lec­tual-prop­erty “pri­or­ity watchlist” — a cat­a­logue of the 12 coun­tries it says have the worst records in the world for pro­tect­ing ip. Most are de­vel­op­ing na­tions, none of the oth­ers are g-7 mem­bers.

“the united States re­mains deeply con­cerned that canada does not pro­vide cus­toms of­fi­cials with the abil­ity to in­spect, de­tain, seize and de­stroy in-tran­sit coun­ter­feit and pi­rated goods en­ter­ing canada des­tined for the united States,” the the Of­fice of the u.s. trade rep­re­sen­ta­tive said in a re­port on the watchlist ear­lier this year.

What’s more, the doc­u­ment added, there were no known crim­i­nal pros­e­cu­tions for coun­ter­feit­ing in canada in 2017.

a sep­a­rate ustr re­port re­cently in­cluded the east asian-themed Pa­cific Mall north of toronto among an in­ter­na­tional col­lec­tion of 18 bricks-and-mor­tar “no­to­ri­ous mar­kets” for knock-offs.

the sale of coun­ter­feit goods at the mall is “sprawl­ing and per­va­sive,” while ven­dors ap­pear to op­er­ate with vir­tual im­punity, the re­port said. Lo­cal po­lice did con­duct a raid there this June, how­ever, seiz­ing an ar­ray of coun­ter­feit items.

cur­rent cana­dian leg­is­la­tion lets bor­der guards “de­tain” goods they sus­pect are coun­ter­feit — then con­tact the owner of the copy­right to see if they want to take le­gal ac­tion — but only for prod­ucts headed for the do­mes­tic mar­ket or ex­ported di­rectly from here. in-tran­sit mer­chan­dise was specif­i­cally ex­empted.

the new usmca, if rat­i­fied, would re­quire canada to get rid of that ex­emp­tion.

even though it’s not a prime fo­cus of en­force­ment ef­forts, canada was the fourth largest source of the 34,000 coun­ter­feit ship­ments seized by amer­i­can au­thor­i­ties last year, ac­count­ing for two per cent of the to­tal, ac­cord­ing to home­land Se­cu­rity. tblack­well@post­media.com

Kevork Djansezian/getty im­ages

The new NAFTA re­quires United States, Mex­ico and Canada to au­tho­rize their bor­der guards to de­tain “ex-of­fi­cio” — with­out a court or­der — pi­rated goods in tran­sit to other na­tions.

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