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Working With Canada: The Pros and Cons of Border Controls on Food

by David Acheson on November 29, 2012 in Food Safety

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Just before Thanksgiving, Canada’s House of Commons passed new food safety legislation, the Safe Food for Canadians Act (SFCA), more closely aligning Canada’s food safety system with that of the U.S. including the Food Safety Modernization Act (FSMA). With its earlier passage by the Senate, that means SFCA (Bill S-11) now becomes law if given “Royal Assent.” –much akin to US Presidential signature.

Canada’s SFCA consolidates four food safety pieces of legislation (the Canadian Agricultural Products Act, the Fish Inspection Act, the Meat Inspection Act, and the food provisions of the Consumer Packaging and Labeling Act) in an effort to strengthen oversight and safety of inter-provincially or internationally traded foods, while providing Canadian industry with maximum import/export opportunities.

Similar to FSMA, the goal of the Canada’s SFCA is to:

  • make food as safe as possible for Canadian families.
  • protect consumers by targeting unsafe practices.
  • implement tougher penalties for activities that put health and safety at risk.
  • institute a more consistent inspection regime across all food commodities.
  • strengthen food traceability.
  • provide better control over imports.

The goals of SFCA may appear relatively easy to comply with at first glance, figuring that as long as you produce safe food, compliance will follow. But the last bullet point—which has similar verbiage in FSMA—may actually prove to be a hurdle for many food producers on both sides of the border, regardless of how safe your food is and how long you have been exporting it across the U.S./Canada line.

As explained in an overview of the Act by the Canadian Food Inspection Agency (CFIA), “The new import control measures build on Canada’s existing suite of import safety measures by clearly prohibiting the entry of potentially unsafe food commodities into Canada. In addition, the Act includes provisions to register or license importers, holding them accountable for the safety of the food commodities they bring into the country.”

What Does This Means to You?

The SFCA may mean potential market-access issues for U.S. companies. The Act’s “provisions to register or license importers” do not explicitly touch upon importer residency issues, but the CFIA is already well down the road towards implementing food importer licensing. As described by one of our Canadian colleagues in the food trading industry, “The Agency’s first stab at importer licensing will address Canada’s non-federally registered sector (NFRS) with this new licensing regime seeing a coming into force date of fall 2013.”

Canadian importers will automatically be issued licenses, but validation follow up and proof of food safety preventive controls will be required. Additionally, resident importers who do not directly control foreign facilities will have to demonstrate that they have oversight in place—much like FSMA’s Foreign Supplier Verification Program.

This is not the case, however, for food producers of the U.S. (and other foreign countries) wanting to sell into Canada. Rather, food importer licensing will be restricted to resident importers in Canada. That is, even if you have an established business or food safety track record as a non-resident importer in Canada, you will now be considered a foreign entity with three choices: You can set up shop in Canada, change your supply chain so your clients become the importer, or, as our Canadian colleague noted, “hire a new class of trade gatekeepers”– a term that reflects the need for a resident entity with the appropriate credentials to allow legal trading into the U.S.

Like FSMA, there is a great deal to be done to implement SFCA, but as the provisions are being detailed and published, it is critical that, if you are involved in exporting food to Canada from the U.S. or you are a Canadian company relying on a U.S. supply chain, you stay updated on these cross-border market-access issues and provisions, so you don’t inadvertently lose your license to sell.

Also playing into the scenario is the Canada-United States Regulatory Cooperation Council (RCC), a 2011 joint creation by Prime Minister Stephen Harper and President Barack Obama to increase regulatory transparency and coordination between the two countries.

While both Canada and the U.S. have well-developed, independent regulatory regimes and regulatory departments, and the systems are very similar in their goals, the RCC was created to enhance “the mechanisms in place to foster cooperation in designing regulations or to ensure alignment in their implementation or enforcement” to help lower costs for consumers and businesses, create more efficient supply chains, increase trade and investment, generate new export opportunities, and create jobs on both sides of the border.

However, it remains to be seen how this new council will be effective. Its focus is all trade, not just food import/export. Further, although it is only about a year old, we have not seen much activity from this newly created entity.

In sum, if the SFCA is signed into law, which appears an almost certainty, it will impact both U.S.and Canadian companies.U.S.companies will need to not only focus on FSMA compliance but also ensure their efforts align and comply with SFCA if exporting into Canada. As for Canadian companies, the same challenges hold true but in reverse.

Needless to say, food companies are facing an ever-changing regulatory landscape requiring careful attention to compliance on both sides of the border. On the one hand, it makes good sense to align regulatory strategy in North America, but, on the other hand, if the regulations around the movement of food between the U.S. and Canada are not well coordinated, these new requirements will throw up unanticipated trade barriers with no public health benefit. Currently, the RCC is the solution to prevent this from happening; so we hope they will ramp up their activity and ensure these changes result in public health gain – but without negative trade consequences.

 

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