A global anti-counterfeit group is pointing an accusing finger at Canada, claiming that we're home to an estimated $20 billion-per-year industry in fake designer clothes, counterfeit software and countless other fraudulent goods.

In a scathing report to the United States Trade Representative (USTR), the International Anti-Counterfeiting Coalition (IACC) estimates that "20 per cent of the Canadian market is now pirate product," and accuses Canada of doing little to stop the illegal industry.

In fact, the coalition says China -- notorious for being the single largest manufacturer of counterfeit items -- offers better enforcement against counterfeit products than Canada.

The USTR already put Canada on its Special 301 Watch List in 2003 -- a list identifying countries deemed by the U.S. as failing to provide adequate protection or enforcement of intellectual property (IP) rights.

But the IACC is pushing the agency to go even further. The IACC wants the trade office to raise Canada to its Priority Watch List, "and actively engage the Canadian Government to prompt a more proactive approach to combat piracy and counterfeiting."

The U.S. Department of State website says countries placed on the priority list "are the focus of increased bilateral attention concerning the problem areas."

Intellectual property rights lawyer Lorne Lipkus says Canada is taking positive steps toward fighting IP violations, but we've still got problems.

"No disrespect to any of the countries in the world, but it is embarrassing to be on that list, period."

Lipkus adds: "I know that it is tarnishing our reputation among people that are involved in anti-counterfeiting in other countries."

Canada's government wouldn't respond to the report Tuesday, but Conservative Industry Critic James Rajotte told CTV News from Edmonton: "It's very disconcerting to know that the Canadian government has been warned about taking action on counterfeiting and has, in fact, not done so."

"So unfortunately, it seems like the only thing that this government understands is a threat like this."

The IACC says its members hoped Canada's government would engage them in dialogue about improving the country's counterfeiting and piracy problems, but that it was disappointed by Canada's "lack of willingness to engage" in such discussions.

"The biggest issue now is the lack of political will," IACC president Tim Trainer told CTV News. "There's no other explanation . . . They don't care about consumers, they don't care about local industry."

Trainer adds that a counterfeit culture not only hurts trade, but is hazardous to people's safety.

"I believe that Canada is putting its citizens at risk due to substandard goods," he said, referring to items such as aviation or car parts which could potentially be life-threatening if manufactured fraudulently.

During the month of February, intellectual property theft surged to 36 per cent of global counterfeiting, according to Calgary-based Gieschen Consultancy, a counterfeit intelligence consulting group.

Gieschen said in a statement released Tuesday that more than 95 per cent of all counterfeit items seized by customs, law enforcement and brand enforcement agents related to IP theft, accounting for $55 million US.

Other IACC recommendations for Canada to combat counterfeiting crimes:

• Enact border enforcement legislation.
• Impose higher penalties for IP crimes.
• Improve communication and intelligence sharing across government agencies (RCMP and customs).
• Improve enforcement training and promote understanding of IP crimes as a public offence, deserving RCMP resources for criminal investigations.
• Instruct federal and provincial prosecutors to make greater efforts to pursue trademark counterfeiting and copyright piracy cases.

With a report from CTV's Washington bureau chief Tom Clark