Canada: Trade Implications of Proposed Consumer Products Safety Act

Excerpt from North American Free Trade & Investment Report
published by WorldTrade Executive, Inc.

By Cliff Sosnow AND Elysia Van Zeyl
(Blake, Cassels & Graydon LLP)

The federal government recently introduced new legislation that, when passed, will dramatically increase the obligations of Canadian companies and impose particularly onerous requirements on companies that import consumer products from foreign suppliers. This legislation, referred to as the Consumer Products Safety Act, follows several recent high-profile recalls affecting toys, food, and pharmaceuticals.

Recalls Will No Longer Be Voluntary
When approved, Bill C-52 will provide the Minister of Health with extensive powers to deal with products that pose health or safety risks to consumers, including the ability to issue mandatory recalls. This new power represents a significant change from the current system whereby product recalls are entirely voluntary. The Minister will also be given the authority to ban any product that poses an “existing or potential hazard”. Moreover, the Minister will be granted the ability to disclose confidential company information in the absence of company consent where it is believed that a product poses a “serious and imminent” health risk.

New Ministerial Powers to Order Health Safety Tests
The proposed legislation empowers the Minister to order an importer or manufacturer to conduct tests on consumer products and to compile any information that the Minister considers necessary to verify compliance with the Act or regulations. The Minister may also require importers or manufacturers to provide documents that contain information on the results of such tests within the timeframe to be determined by the Minister. Failure to comply with any such order by the Minister is an offence under the Act.

These obligations could pose difficulties for importers who may not have access to thorough and accurate information from their foreign suppliers. Furthermore, considering that international suppliers may not be required to comply with equivalent standards in their home country, there is no guarantee that such information or records even exist. Thus, in the absence of full co-operation by foreign suppliers, importers may have to choose between conducting tests themselves and providing the requisite information, facing penalties, or choosing new sources of supply from co-operating foreign suppliers.

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What Will Happen to US Trade Agenda This Year?

Excerpt from North American Free Trade & Investment Report
published by WorldTrade Executive, Inc.

By Steven J. Mulder
(Greenberg Traurig)

It was with a certain amount of amusement -- if not disbelief -- when I recently read in an “Inside the Beltway” publication that there was “Still a Big Trade Agenda” for Congress to address this year. Huh? Really? While there may be a lot of trade legislation pending in Congress, it seems unlikely Congress will be able to approve much of it -- particularly before the elections -- in the current political environment, where anti-trade sentiment is clearly on the rise.

For one thing, the “trade agenda” is largely a priority of the Bush White House and the Democrats are in no mood to grant anything the Administration wants in its remaining months. The Democrats in the House and Senate are expected to make major gains in the November elections and thus they seem willing to simply “wait out” President Bush on most major legislative initiatives, including trade-related measures.

The Colombia Free Trade Agreement is a perfect example. The agreement, concluded over a year-and-a-half ago, is strongly supported by the President, who rarely misses an opportunity to raise the importance of its passage.

The President formally presented the agreement under the so-called “fast track” rules for Congressional consideration of free trade agreements back in April (fast track protects free trade agreements from amendment and filibusters in the congress).

However, the President took his action without the consent of the Democratic leadership, which clearly does not want to have to deal with the agreement. No problem: Speaker of the House Nancy Pelosi (D-California) presented a Resolution to the House that simply removed fast track timeline (which vitiates the need for congress to consider it within 90 days), the Resolution passed with overwhelming Democratic support, and the agreement is now effectively “in limbo.”

Never mind that over 100 newspapers (even the New York Times!), too many former Democratic officials to count, and every business organization in the United States supports passage of the agreement -- unfortunately for the agreement, U.S. labor organizations have “drawn a line in the sand” against it and that would seem to be enough to stop its movement.

Supporters of the agreement are hoping that the Speaker will have a change of heart and allow the agreement to come up for a vote in a “lame duck” session of congress that would take place after the elections of November 4th. However, there is no assurance that such a session will take place. Democratic leaders are working hard to avoid such a scenario, but given that there is a range of “must pass” legislation that has to be enacted this year -- not the least of which are the 13 annual appropriations bill that keep the government running, none of which have been enacted at this point -- a lame duck session seems likely.

Other free trade agreements that are on the agenda include ones with Panama and Korea. For more information.