International Trade Committee on Oct. 31st, 2023

[The Chair, Liberal, Judy Sgro]

Okay, please go ahead.

[Dr. Celia Lourenco]

In terms of the size of the markets, it's estimated to be worth about $200 million annually in terms of the biocides sector. In terms of companies, we have a split: About 69% of the companies are Canadian-based, and about 31% are international.

[Chandra Arya, Liberal, Nepean, ON]

No, it's the size, because 69% may be tiny manufacturers. From the $200-million market, what percentage is from domestic manufacturers and how much is through importation?

[Dr. Celia Lourenco]

Out of the $200 million, we would need to get that. Regarding the percentage of the Canadian market, we would have to get that data for you.

[The Chair, Liberal, Judy Sgro]

Thank you. If you could have that sent to the clerk, it would be appreciated.

Next we have Mr. Savard-Tremblay for two and a half minutes, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Madam Chair.

We're told that this isn't a new product category and that there won't be a variable-geometry process for Canadian and Quebec companies, on the one hand, and American companies, on the other.

What will these new proposed regulations make easier for our businesses, which are small and medium businesses, SMEs, and have to face competition from extremely powerful American multinationals?

How does that contribute to the domestic market supply chain?

[Dr. Celia Lourenco]

We know that about 25% of the companies that market these products in Canada are small businesses. A good majority of them, about 75%, operate through licence agreements in Canada. The use of the foreign decisions pathway and additional products entering the market could create new opportunities for Canadian small businesses to enter into licence agreements.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Yes, how many of those businesses, which represent a 75% majority, are in fact a profit centre in the United States?

[Dr. Celia Lourenco]

We know that about a third of the companies that market these products in Canada are international. The vast majority, over 90%, are American companies. The other 66% or so are Canadian companies, and out of those, 25% are small businesses.

A good majority of those small businesses do those licensing agreements, as I explained. They can do licensing agreements with Canadian companies, American companies, or with companies from elsewhere that may not be interested in Canada as a smaller market. They may want to leverage an agreement with a Canadian-based company to sell their product in Canada and not have to worry about bringing the product in themselves.

[The Chair, Liberal, Judy Sgro]

You have 15 seconds.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I won't have enough time to ask any more questions. Let's go to the next round.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Cannings, you have two and a half minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I want to find out more about the genesis of all this and what drove the decision to change these regulations.

It seems that the use of these foreign decision pathways mainly benefits companies that have already gone through the EPA process. Was it pressure from some of those importers into Canada that were exporting from the United States, or was it that your departments were facing an increase in applications and that this would make it more streamlined? I'm trying to get an idea of why you decided to make these changes and what was driving your department internally to do that.

[Dr. Celia Lourenco]

These changes have been a long time coming. We've been hearing from industry stakeholders for quite a long time about the concern of having different products with similar risks, similar applications, similar uses and similar claims regulated under different frameworks. We've been hearing from industry for a long time about the desire to have this fixed so that depending on the product they have, they could just go to one single place to get their application. That's one of the key drivers that's been in play for a long time.

The COVID-19 pandemic highlighted that even further. Some of our earlier pathways would take longer for products to enter the market. The COVID-19 pandemic highlighted the need for more flexibility in our different pathways for these products. That was another key driver.

The third one is that the regulations that are in place now, before the biocides regulations come, in have standards that are not quite risk-based. They don't quite fit the need for these products. There was, really, a need to create a new set of regulations that would be able to address all of these concerns.

Certainly during the pandemic, we saw a very high influx of products. Usually we get about 200 to 300 applications for these products per year. During the pandemic, 900 applications came in per year. It really highlighted the need for more efficiency as well.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I had one more question.

[The Chair, Liberal, Judy Sgro]

I'm sorry, Mr. Cannings. We now have Mr. Jeneroux for five minutes.

[Stéphane Lévesque]

Thanks, Madam Chair. I'll just put my timer on quickly.

Thank you for being here and joining us today. It has been fascinating to learn about this from all sides of the table.

Just so I'm clear on how this works, if a company wants to do business in Canada or vice versa, do they come to Health Canada? Does Health Canada go to them? Is this through the Department of Trade? Can you walk through an example of this?

[Dr. Celia Lourenco]

Sure. If a company wants to market one of these products in Canada, they file an application with Health Canada. They can also come and meet with us in advance to talk about their application and what their plans are. We are happy to provide guidance on that.

We also have guidance that's published on our website for companies to be able to follow the process in terms of applying to Canada.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

That's the first part. Then, after that, if they're approved already in the U.S., for now they then say that they have this approval under everything that's done in the U.S. Then, at that point, do we go through the process of the approval, or is that essentially what the application is from the start?

[Dr. Celia Lourenco]

The companies are the ones who initiate the process in terms of getting a product reviewed and authorized in Canada. There are different ways that they can have their product approved, depending on whether it's a new product, a product that's copying another one that's already available on the market, or a product that is already marketed in the U.S. Depending on the product, they have different application types that they can follow.

They'll come to talk to Health Canada about what kind of application they want to file and what their product is about. Then we provide guidance on that application. Once we receive it, we review it and then issue an authorization. Then they can market their product in Canada.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

The review started in July 2019, as you said. Prior to 2020 it was very rigid, then, throughout COVID, there was a lot of flexibility put into the process. It's now returning to the rigidity a bit, so it is not quite as flexible as it was during COVID. Would you agree with that assessment?

[Dr. Celia Lourenco]

I'll turn to David to talk abut the exceptional application.

[David Lee]

The mechanism we put in through an emergency measure only addressed imports, so it wasn't the full regulation of products. There was a driving need to have supply come in. We wanted to make sure it was a safe supply, though, so we said that it had to be approved by a list of countries, again predominantly the United States.

There were also labelling requirements, but it really wasn't meant to pull out a full scheme for appraising products.

This is tailored, I would say. It's different from the current drug regime, but it's tailored for these products. That's the advance.... It's not less, but it's focused on the types of products.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

The review started in 2019, and then COVID happened. It paused the review, I assume, and provided a ton of flexibility, and now we're going back. Is this where we're at now? Are we through the review process?

What would be the holdup, then, of approving a country like the U.K., for example? Is that more on the trade side of things, or is Health Canada the hurdle here? What is slowing things down?