The Americas | Marked down in Markham

Canada coddles counterfeiters

A mall near Toronto appears on an American blacklist

|MARKHAM, ONTARIO
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“LOUIS VUITTON” handbags for the price of a sandwich. “Rolex” watches that cost as little as a T-shirt. You would not expect to find such obvious fakery at a suburban shopping mall in Canada. But deals of this sort are available at the Pacific Mall in Markham, near Toronto, according to the office of the United States Trade Representative (USTR). Its latest report on “notorious markets”, published in January, lists the three-floor mall alongside the Silk Market in Beijing, Tank Road in Delhi and El Tepito, an open-air market in Mexico City, as places where people can buy counterfeit goods. It is the first time a Canadian bricks-and-mortar outlet has appeared in the report, which has been published since 2011. “Requests for assistance from local law enforcement have reportedly gone unanswered,” the report complains.

The United States has long alleged that its northern neighbour is soft on piracy, allowing vendors to sell goods and cultural products that infringe trademarks and copyrights of American and other firms. Canada appears regularly on the USTR’s annual list of countries that are doing too little to protect intellectual property. The USTR estimates that global trade in counterfeit goods is worth $500bn a year, about 2.5% of total imports. Until now, it has directed most of its complaints about physical retail outlets at developing countries where the rule of law is weak.

By fingering the Pacific Mall, which calls itself “the largest Chinese shopping mall in North America”, it is turning up the heat on Canada. It is probably no coincidence that the United States, Canada and Mexico are holding talks to revise the North American Free-Trade Agreement (NAFTA), which encompasses the three countries. The United States wants better protection of intellectual property to be part of the new accord.

Its biggest complaint is that border controls in Canada, an important transshipment country, are too lax. In 2014 Canada enacted a law to give customs officers more power to detain shipments and toughened sanctions against people who violate copyrights and trademarks. But after hunting out drugs, guns and illegal immigrants, border guards have little time and money to look for non-Swiss Swiss watches. Over the past two and a half years Canada has detained fewer than 50 suspect shipments, says Lorne Lipkus, a Canadian lawyer who specialises in counterfeiting issues. American customs catch some 30,000 a year.

The United States also wants better policing within Canada. Unlike the United States and the European Union, Canada does not have a central law-enforcement team responsible for counterfeiting. The Royal Canadian Mounted Police, the national force, disbanded its unit after the government stiffened the law in 2014.

Local police forces are expected to help, but they lack manpower. Robert Whalen, the specialist for the Toronto police force, learned about counterfeiting while investigating organised-crime gangs, which traffic in tandoori ovens with bogus safety certificates, fake cancer drugs and other impostor products. Even he does not pursue counterfeiters full-time. “If I’m called right now and told there is a store with a whole bunch of counterfeit Louis Vuitton and I get a call five minutes later and [am] told there is a shooting up the street, I’m going to go to the shooting,” says Mr Whalen.

American suspicions of the Pacific Mall, where most sellers and customers appear to be of Chinese origin, are well founded, says Mr Lipkus. “I’ve served hundreds of court orders, cease-and-desist documents, and helped the police execute multiple search warrants there,” he says. The mall’s appearance on the USTR’s list of notorious emporiums may be having more effect. In a statement on February 20th its management said it was “deeply disturbed and disappointed” by reports that vendors were selling fake goods, and would take measures to stop the practice.

On a recent Friday (before the statement) a black “Chanel” handbag was on sale for C$12.95 ($10.20). (The real thing lists for C$5,950.) But that was one of the few fakes on display. Since the USTR’s report big names like Gucci, Burberry, and Louis Vuitton are hidden, says Mr Whalen. If the NAFTA countries agree to update the treaty, the fakes may stay off the shelves.

This article appeared in the The Americas section of the print edition under the headline "Marked down in Markham"

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