CFIB is providing comment on two items related specifically to the Own Use Importation (OUI) provision

Gaylene Leggett

Informations

• Publié par: Orro
• Nombre de lectures: 44
• Langue: English

Extrait

CANADIAN FEDERATION OF INDEPENDENT

BUSINESS

Submission to:

Pest Management Regulatory Agency

Re: Proposed Pest Control Products Regulations,

Canada Gazette, Part I, November 12, 2005.

December 9, 2005

1

Table of Contents

1.0 Introduction ………………………………………………………………………… 3

2.0 Own Use Importation ……………………………………………………….……… 4

2.1 10% Price Differential …………………………………………………...…. 4

2.2 Expiry and Renewal of Certificates…………………………………………. 6

3.0 Conclusion ……………………………………………...………………………...… 8

2

1.0 Introduction

While the Canadian Federation of Independent Business (CFIB) understands that a

certain amount of regulation of pesticide products is important for environmental and

public safety, excessive regulation leads to lost productivity, growth, and overall

competitiveness for Canadian primary producers.

Consistently, CFIB agri-business

members indicate that government regulation and paperwork burden are a high priority

concern for their business. In fact, a recent survey indicates 73 per cent of agri-business

members believe government regulation and paperwork burden to be a high priority

concern for their business (See Figure 1). Their concern for government regulation and

paperwork burden is higher than their concern regarding international trade, total tax

burden, and long-term safety net programs.

Figure 1: Which of the following issues is a high priority concern for your agri-

business?

79

76

73

70

70

68

62

53

53

50

39

30

29

10

0

20

40

60

80

100

Percent Response

Farm income

Input costs

Govt regs/paperwork/user fees

International trade

Environment laws/regulation

Total tax burden

Long term safety net programs

Marketing options

Transportation costs

BSE

Shortage of qualified labour

Farm finance

Labour legislation

Other

Source: CFIB Our Farm Members’ Opinions Survey, Preliminary Data (July 2005)

With this in mind, CFIB is providing the following comments regarding the Proposed

Pest Control Products Regulations

.

CFIB’s remarks are based upon the necessity to limit

excessive regulation that has serious negative consequences for the profitability of

Canadian farmers.

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2.0 Own Use Importation

CFIB is providing comment on two items related specifically to the Own Use Importation

(OUI) provision of the proposed regulations. However, this does not imply approval of

all other aspects of the proposed regulations.

The original intent of the OUI was to “ensure

that Canadian agricultural producers have

access to competitively priced pesticides”

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from foreign sources, as long as the product is

proven chemically equivalent to a Canadian

registered product.

It must be noted that

preliminary survey results from a recent CFIB

Prairie wide survey indicates a significant

majority of agri-business members believe the

federal government should maintain the OUI

provision for pesticides (see Figure 2).

Supporters understand that the program only

allows importation of products that are proven

equivalent to those already registered in

Canada. Therefore, environmental and public

safety concerns regarding the foreign product

are no different than for those regarding the equivalent product registered in Canada.

Additionally, the OUI program can provide significant savings for Canadian farmers as

they can purchase equivalent pesticides at lower prices.

Figure 2: Should the federal government maintain

the ‘own use importation provision’ program for

pesticides?

Source: Agri-Business Bottom Line No. 19 Preliminary Data

(December 2005)

Yes

64%

No

14%

Don't Know

22%

Therefore, the proposed regulations must not introduce measures that effectively reduce

the ability of farmers to participate in the OUI program.

CFIB is concerned that the

following two items may limit the capacity of the OUI provision to provide benefit to

Canadian farmers.

2.1

10% Price Differential

Proposed Regulations:

•

Section 39(2)

which reads:

The application must include information that

indicates that the requirements of paragraphs 43(a) to (d) are met, a copy of the

proposed own-use-importation label that shows the information referred to in

section 40, and all the following information:

(b) the comparable retail price in Canadian dollars of the same quantity of

both the registered pest control product and the foreign product

.

•

Section 39(4)

which reads:

The Minister must refuse to process an application to

determine equivalence if the information provided under paragraph (2)(b) fails to

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1

Pest Control Products Registration Handbook, November 30, 1998

establish that the price of the registered pest control product is at least 10%

higher than the comparable price of the foreign product.

•

Section 39(5)

which reads:

If subsection (4) does not apply, the Minister must

suspend, for the duration of the relevant growing season, the processing of an

application to determine equivalence if he or she is advised that the price

difference between the two products has been less than 10% for the last two

months.

•

Section 39(9)

which reads:

On the expiry of an equivalency certificate in

accordance with paragraph (8)(b), the Minister may renew it, on application, if

he or she is satisfied of all of the following:

(c)

that the retail price in Canadian dollars of the registered pest control

product has been at least 10% higher that the comparable price of the

foreign product for the same quantity of product for the last two months

.

CFIB Views and Concerns:

The addition to the Pest Control Products Regulations of a minimum 10% price

difference between the Canadian registered product and the foreign registered product

being considered for the OUI provision is unnecessary and would be teeming with

inaccuracies.

The proposed regulations suggest, “This price differential pertains to the processing of an

application to determine equivalency”

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. It is difficult to understand whose cost for the

processing of an application is being considered. If it is the cost to the Pest Management

Regulatory Agency (PMRA) to complete the review of the OUI application, the price

differential should be of no consequence.

Whether the foreign product is 5% less

expensive or 25% less expensive then the Canadian product should have very little

impact on the PMRA’s process. If this statement is referring to the costs to the party

applying for the OUI provision, a cost/benefit common sense approach will determine if

they proceed with the application. It is highly unlikely that an application for an OUI

equivalency certificate will be made if the cost associated with the application process is

higher then the price differential between the two pesticide products.

CFIB is also concerned a requirement for a minimum 10% price difference between the

two products is an invitation to create a price floor for pesticide products in Canada and

will not encourage manufacturers to provide competitive pricing.

If this proposed

regulation were implemented, there would be no incentive for a pesticide manufacturer to

price their product competitive to the foreign product as long as they were below the 10%

threshold.

Some may believe that a 10% price differential between a foreign product and a Canadian

registered product is not a significant difference. One needs only to review the latest

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Canada Gazette Part I, Pest Control Products Regulations, November 12, 2005

5

Statistics Canada results that indicate total farm income levels are below the 5-year

average despite record high government support payments, to understand that a 10%

increase in input costs can be significant for many farmers.

Furthermore, the 10% price differential does not suggest what price should be used and

fails to take into consideration the variance of prices across Canada’s vast geographical

and economical landscape. Is the price based upon suggested retail pricing or actual

retail pricing? Does it take into consideration manufacturer’s rebate programs? How

would the various marketplace-pricing differences be considered?

An attempt to

determine the price to base the 10% differential upon could be highly subjective.

Additionally, the proposed regulations indicate the 10% price differential should be in

effect for two months prior to the processing of the application to prove equivalence or

the renewal date of the equivalency certificate.

This may create an opportunity for

pesticide pricing in Canada to be reduced for a two-month period prior to a PMRA

review to prevent the acceptance of the product into the OUI program. However, once

the product was refused the equivalency certificate, it would be possible for the price to

be increased beyond the 10% for the rest of the “relevant growing season”.

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CFIB Recommendation:

CFIB therefore, requests that the regulations be revised to remove the 10% price

differential requirement from all aspects of the OUI program.

2.2

Expiry and Renewal of Certificates

Proposed Regulations:

•

Section (39)(8)

which reads:

An equivalency certificate

(b)

expires on the date specified in the certificate, which must be no later than one

year after it is issued;

•

Section (39)(9)

which reads:

On the expiry of an equivalency certificate in

accordance with paragraph (8)(b), the Minister may renew it, on application, if he or

she is satisfied of all of the following

:

(a) that the circumstances described in paragraphs 43(b) to (d) continue to be

true;

(b) that the composition of neither the registered pest control product nor the

foreign product has changed; and

(c) that the retail price in Canadian dollars of the registered product has been at

least 10% higher that the comparable price of the foreign product for the

same quantity of product for the last two months.

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Canada Gazette Part I, Pest Control Products Regulations, Section 39(5), November 12, 2005

6

CFIB Views and Concerns

CFIB questions what procedures may be required for the equivalency certificate to be

renewed. The regulations, as written, state that the Minister, “on application”, may renew

an expired certificate. However, it is not indicated what the application procedure, cost,

or requirements would be. From CFIB’s understanding, the initial process to apply for

the equivalency certificate is very detailed. A requirement to complete this procedure

annually would, in effect, make the OUI program impractical to use.

Additionally, to reaffirm, CFIB has great concerns with the proposed regulation of a

minimum 10% price differential between the Canadian registered product and the foreign

product for the two-month period prior to expiry of the equivalency certificate.

As

mentioned, this may invite manufacturers to reduce the price of the Canadian registered

product for only the two months prior to the equivalency certificate expiration. If the

renewal of the equivalency certificate is declined, the Canadian registered product could

once again be priced well above the foreign product.

CFIB Recommendations:

It is understandable that a review of an equivalency certificate may be necessary to

ensure that there have been no changes to either environmental or public safety.

However, the procedure that is put in place must not be burdensome to the point that the

OUI program becomes too onerous to utilize.

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3.0

Conclusion

The OUI program was introduced to allow Canadian farmers access to equivalent

pesticide products that may be less expensive in other countries. Again, it is important to

note that the OUI program only allows importation of products that are proven equivalent

to those already registered in Canada.

Therefore, environmental and public safety

concerns regarding the foreign product are no different than for those regarding the

equivalent product registered in Canada. Additionally, the OUI program can provide

significant savings for Canadian farmers as they can purchase equivalent pesticides at

lower prices.

It is essential that this program be maintained in an effort to improve the economic

stability of the agriculture industry.

The recent report prepared by Wayne Easter,

Parliamentary Secretary to the Minister of Agriculture and Agri-Food, entitled

Empowering Canadian Farmers in the Marketplace,

discussed the lack of competition

within the farm input supply industry. This consolidation has effectively reduced the

market power of farmers in Canada, limiting their ability to garner more profit from the

market. The OUI program provides an opportunity for increasing the competition within

the farm input industry and has been proven to significantly reduce the cost of inputs for

Canadian farmers. Therefore, any changes that are made to the OUI program regulations

must not reduce the ability of farmers to use the program as was intended.

Additionally, any changes to the Pest Control Products Regulations must balance the

need for environmental and public safety with the need to prevent unnecessary regulation

and paperwork burden that damage the agriculture industry through lost productivity,

growth, and overall competitiveness.