International Trade Committee on Nov. 2nd, 2023

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call this meeting to order.

Welcome to meeting number 79 of the Standing Committee on International Trade. Today’s meeting is taking place in a hybrid format, pursuant to the Standing Orders. Therefore, members are attending in person in the room and remotely using the Zoom application.

I would like to make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. When speaking, please speak slowly and clearly. For those online, please mute yourselves when you are not speaking. I will remind you that all comments should be addressed through the chair. Members in the room, if you wish to speak, please raise your hand. Members online, please use the “raise hand” function.

For interpretation online, you have the choice, at the bottom of your screen, of floor, English or French. Those in the room can use the earpiece and select the desired channel. If interpretation is lost, please inform me immediately, and we will ensure that interpretation is properly restored before resuming the proceedings. I ask all participants to be careful when handling the earpieces in order to prevent feedback. Feedback can be extremely harmful to our interpreters and can cause serious injuries. I invite participants to speak into the same microphone that their earpiece is plugged into and to place earpieces away from the microphone when they are not in use.

I welcome all of our witnesses this morning, specifically Mr. Côté.

It's nice to see you here in person today.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, October 17, 2023, the committee is resuming its study of Canada’s proposed biocides regulation.

We have with us, from the Association pour le développement et l'innovation en chimie au Québec, André Côté, member, board of directors. From CropLife Canada, we have Gregory Kolz, vice-president, government affairs; and Émilie Bergeron, vice-president, chemistry. From Food, Health & Consumer Products of Canada, we have Gerry Harrington, senior vice-president, consumer health; and from Flexo Products Limited, we have Stephen Parker, president and chief executive officer.

Welcome, again, to all of you. We will start with opening remarks, and we will then proceed with questions from the committee members.

Monsieur Côté, I invite you to present for up to five minutes, please.

[André Côté, Member, Board of Directors, Association pour le développement et l'innovation en chimie au Québec]

Good morning.

Before I begin, I want to thank the committee for allowing me to speak after all the technical difficulties that occurred on Tuesday. I am here as a regulations expert and as a member of the board of the Association pour le développement et l'innovation en chimie au Québec, or ADICQ. I have worked in the product approvals field with Canadian authorities for more than 20 years.

The proposed biocides regulations are not new. Starting in 2016, together with many representatives of other associations, I attended preliminary meetings on the subject, during which Health Canada was already proposing a use of foreign decisions, or UFD, pathway for access to the Canadian market.

Since 2016, ADICQ and other industrial associations have expressed their disagreement with Health Canada's unrealistic implementation timeline for small and medium-sized businesses, or SMEs.

The overall objective of the proposed biocides regulations is to establish a new framework for certain product categories, essentially disinfectants and hard-surface and textile sanitizers, as well as food-contact surface sanitizers.

The Canadian industry is being asked to approve products based on a new approach that has never previously been requested for this product category in Canada. It is also being asked to approve products that are not currently approved.

Since 2014, food-contact surface sanitizers have no longer been subject to a Health Canada evaluation before being marketed. The Safe Food for Canadians Regulations discontinued the examination that had previously been required.

We know that 1,918 food-contact surface sanitizer products were subject to a Health Canada evaluation when the regulations were amended in 2014.

The deregulation hasn't changed much in industrial practice. Food-contact surface sanitizers are still in use, but none is currently approved. As a result, no Canadian company doing business exclusively in Canada holds an approval for this type of product.

That is simply because the product category doesn't currently exist in Canada. When the biocides regulations come into force, some 700 to 800 food-contact surface sanitizers will have to be approved under the new regulations.

You should note that approval of food-contact surface sanitizers has been mandatory in the United States for decades. All companies headquartered in the United States or marketing this type of product on American soil already hold foreign approvals.

When the proposed biocides regulations come into force, the use of foreign decisions will enable products approved in the United States to enter the Canadian market immediately to the detriment of Canadian manufacturers, which would have to have their products approved before putting them on the market.

This kind of treatment is unfair and threatens international market equilibrium as it would clearly favour American products on Canadian soil, and Canadian manufacturers would be subject to significant delays. From a technical and regulatory standpoint, Canada is going it alone relative to the other G7 countries.

Contrary to what was suggested earlier this week, it is not because two regulatory processes involve the same protocols and methods that they are equivalent. In all G7 countries, human beings are treated with drugs such as penicillin, and services are treated with disinfectants such as bleach, for example. In every other G7 country, one set of regulations has been put in place for disinfectants and another for drugs.

The situation is different in Canada. You have to understand that, here, we “treat” a table with a “drug”, that is, a medication, to prevent a disease. According to the Canadian definition of the word “drug”, as provided in the Food and Drugs Act, bleach and penicillin are equivalent drugs. They are treated in accordance with the same principles, and that is precisely why the natural and non-prescription health products directorate manages approvals of disinfectants in Canada.

We welcome Health Canada's wish to align Canada's regulations with the international regulations adopted in the other G7 countries by proposing these biocides regulations. Unfortunately, the proposed regulations, in their current form, are far from comparable with the other regulations that earlier were alleged to be “equivalent”.

Implementation of these regulations would require Canadian businesses to comply with them, which is entirely normal, but within a framework that has already been in use elsewhere in the world for many years.

Consequently, Canadian manufacturers will have to prepare a submission in order to comply with the new requirements and to wait for Health Canada to reach a decision on their submissions. In the meantime, the use of foreign decisions will permit the de facto entry into Canada of products previously approved outside the country.

In ADICQ's view, the only way for the Government of Canada to be fair is to allow the Canadian industry to comply with the regulatory framework before permitting the use of foreign decisions.

In the circumstances, we request a two‑ to five-year moratorium before any use is made of foreign decisions. That moratorium will enable the Canadian industry to catch up and, more particularly, allow Health Canada to determine whether a foreign authority is competent to support the approval of biocides in Canada.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Monsieur Côté.

Mr. Kolz or Ms. Bergeron, whoever would like to go, you have up to five minutes, please.

[Gregory Kolz, Vice-President, Government Affairs, CropLife Canada]

Thank you.

Good morning, honourable members. My name is Gregory Kolz. I am vice-president of government affairs at CropLife Canada. I'm joined today by my colleague Émilie Bergeron, vice-president of chemistry.

Both Émilie and I were very pleased to participate in this committee's recent study on non-tariff trade barriers. We're equally happy to appear today as part of your current review of proposed biocides regulations and the potential trade impacts these may have on certain Canadian sectors.

CropLife Canada represents the Canadian manufacturers, developers and distributors of pest control and modern plant-breeding products. While our organization's primary focus is on providing tools to help farmers be more productive and more sustainable, our membership also develops products for use in a wide range of non-agricultural settings. These include urban green spaces, public health settings and transportation corridors.

Globally, biocides are sometimes classified as a type of pesticide. In some jurisdictions, the words “biocides” and “pesticides” are used interchangeably. For instance, the World Health Organization defines biocides as chemicals that “kill pests, including insects, rodents, fungi and unwanted plants”.

That said, as you heard from the government officials during your last meeting, Health Canada defines biocides as “surface sanitizers” and “disinfectants” that are regulated under separate regulations in Canada. Currently, disinfectants are regulated under the Food and Drugs Act, while surface sanitizers fall under the Pest Control Products Act.

While CropLife Canada's members do not manufacture biocides as defined in Canada, our interest in today's study is in the model this innovative regulation provides to the government in terms of how to make the regulatory system more efficient while ensuring that the same level of protection is achieved for Canadians.

[Émilie Bergeron, Vice-President, Chemistry, CropLife Canada]

CropLife Canada is championing a regulatory environment that both protects human and environmental safety, and encourages innovation and competitiveness. We are advocating for science-based regulations—both federally and provincially—that allow farmers access to the latest tools they need to safely and sustainably grow our food and compete on a global stage.

The proposed framework that is being examined by this committee aims to create a regulatory pathway for biocides within Health Canada that supports regulatory alignment, facilitates trade, reduces unnecessary regulatory burden, and encourages new infection prevention and control innovations to be brought to the Canadian marketplace.

While CropLife Canada has not been directly involved in Health Canada's pre-consultations on this specific proposed framework, we are very much in favour of recommendations that support and further strengthen existing regulations, while at the same time reduce red tape, enhance efficiency and promote greater access to innovative products for Canadians.

We strongly believe the Canadian government can best protect market access and the competitiveness of Canadian businesses by remaining science-based, focusing on product safety, and being transparent about their decisions.

To encourage regulatory reform efforts, CropLife Canada will continue to advocate for regulatory alignment with like-minded countries that share our science and risk-based approach to regulation and work to achieve similar levels of protection.

In an environment where resources are limited and regulatory efficiencies are needed, we need to ensure innovative approaches like this one are promoted and facilitated in order to ensure the long-term sustainability of our regulatory system.

[Gregory Kolz]

Once again, it is worth noting that Canada is a net food exporter and the fifth-largest agricultural exporter globally. We produce some of the highest-quality and most sought-after products in the world, but we need predictable, transparent and science-based trade rules with our major trading partners in order to get our products to market.

As mentioned, CropLife Canada fully supports regulatory approaches that help create a more competitive business environment, facilitate trade and remove barriers to market entry, while ensuring that they continue to protect the health and safety of Canadians and the environment. In order to grow crops sustainably and profitably, Canadian growers require access to plant science innovation such as crop protection products and modern plant-breeding technologies. As is the case for biocides, a science-based, efficient regulatory system is the best way to achieve this objective.

Thank you, honourable members, for inviting us to appear today. We appreciate this opportunity to share our perspective.

We look forward to taking any questions you may have.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will now go to Mr. Harrington for up to five minutes, please.

[Gerry Harrington, Senior Vice-President, Consumer Health, Food, Health & Consumer Products of Canada]

Thank you, Madam Chair and members of the committee, for this opportunity to provide Food, Health & Consumer Products of Canada's perspective on the proposed biocides regulations.

Food, health and consumer products sectors employ nearly 300,000 Canadians in businesses of all sizes across the country that manufacture and distribute the safe, high-quality products that are at the heart of healthy homes, healthy communities and a healthy Canada.

FHCP strongly supports the proposed biocides regulations.

The two key types of products captured by the proposed regulations—surface sanitizers and disinfectants—are currently governed under two separate pieces of legislation, the Food and Drugs Act and the Pest Control Products Act, and regulated by separate agencies. Given that these products have similar risk profiles and are used under similar conditions, this approach is cumbersome and inefficient for both government and industry. A single framework and regulator, as proposed under these regulations, is an important step forward for all, especially for consumers and taxpayers.

The COVID pandemic underlined the importance of sanitizers and disinfectants to all Canadians, as well as the vulnerability of our supply of these products. Through the extraordinary efforts of Health Canada and a broad range of Canadian companies, those supplies were bolstered by virtue of an interim order by the minister that allowed them to be authorized for sale in Canada based on foreign approvals. One of the key benefits of the proposed biocides regulations, in our view, is the creation of a permanent pathway for the use of decisions by trusted foreign regulators in authorizing products for sale in Canada.

FHCP is very encouraged to see Health Canada apply the lessons learned during the pandemic to modernize the framework. The “use of foreign decisions” provisions will create more competition and innovation in the marketplace, increasing consumer choice and, in so doing, will ease some of the inflationary pressure on these products. The UFD provisions do not compromise safety for Canadian product approvals. The ambulatory list of trusted regulators whose decisions can be leveraged is limited to those whose approval criteria align with those of Health Canada.

Since the supply chains for these products are generally North American in scope, it is natural that the United States Environmental Protection Agency is the first foreign regulator to appear on this list, but the regulations provide a process and pathway for other regulators to be qualified and to further increase the opportunities to reduce the amount of resources going to redundant reviews of the same safety information against the same criteria and generating the same outcomes.

Once approved, these products will be subject to the same postmarket oversight by Health Canada as all other licensed products. Should that postmarket experience result in questions about the safety of a product, all of the authorities from Vanessa's Law will be available to compel manufacturers to submit additional safety information, including the information submitted to the original foreign regulator.

Given the absence of any compromise on consumer safety and other regulatory outcomes, the appropriate use of foreign decisions in product regulation offers a great opportunity to drive costs out of the system and increase competition. This would give consumers more choice and more competitive pricing at a time when the cost of living is a significant concern for so many.

Canadian manufacturers can be very competitive, but many organizations, including the World Economic Forum, have noted a decline in our competitiveness and cite burdensome regulations as a principal cause of that decline. Regulatory modernization can have a dramatic impact on international competitiveness.

In the decade that followed the introduction of the natural health products regulations in 2004, we saw exports of these products more than double in Canada, to over a billion dollars. That is a growth rate in exports of more than double the overall average for Canadian manufacturing. This was because those new regulations were internationally recognized as being both robust and class leading and, at the same time, provided an efficient pathway for innovative products to reach market.

Only time will tell whether the biocides regulations will have a similar effect, but making the marketplace for these products more competitive is not something we should fear.

Thank you, Madam Chair.

I'm ready to answer questions from members of the committee.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Harrington.

We'll go on to Mr. Parker, please.

[Stephen Parker, President and Chief Executive Officer, Flexo Products Limited]

Thank you, Madam Chair.

I appreciate that the committee has undertaken a review of this subject and that you have invited me to speak.

I am the owner of Flexo Products, a Canadian company that's been in Niagara Falls since 1918. I'm the great-grandson of the founder. My son, who will be the fifth generation, has also joined our company. I have an engineering degree and an MBA from the University of Toronto, and I'm a registered professional engineer in the province of Ontario.

My company employs 85 people and is a manufacturer and distributor of cleaning chemicals and supplies to industrial customers. We stock 7,000 products in seven warehouses. We sell these products to school boards, day cares, health clubs, universities, nursing homes, cleaning contractors, hotels, restaurants and industry. We are both a manufacturer and a distributor to end-users. We make approximately 60,000 deliveries a year in our own trucks. During COVID, my company was on the front lines, trying to fulfill the requirements of customers for not only biocides but also other needed supplies, such as hand sanitizers, gloves and masks.

My company has been making registered biocides for over 35 years. We currently have a list of 26 products in the Health Canada drug product database. While the current regulations have been effective over the years, we welcome the development of a new category of regulated products through the creation of a single framework.

When our company decides to produce a new disinfectant cleaner, we reach out to various producers of biocidal active ingredients to find an appropriate formula for our needs. These companies, all based in the U.S., own master registrations and have completed all the work to prove to Health Canada that their formula has verified biocidal claims. Our registration documents go to Health Canada, together with a letter of authorization from the raw material manufacturer and a label proposed by us. We wait for our notice of compliance. Upon approval, we buy the main disinfectant raw material and make the product in our facility.

The majority of manufacturers in Canada would not have the resources to make and sustain the necessary biocidal claims without the work the U.S. companies perform for us. Typical testing to certify a new product costs over half a million dollars per product. There are no guaranteed results. As new bacteria and viruses arise, we rely on these companies to update their claims, so we can update ours. During COVID, as a result of their work, we were able to update labelling on many of our products. The Canadian market needs these companies and their R and D. We need access to new technologies. Most current biocides are made from corrosive and sometimes flammable raw materials, and the push for safer and greener products in our environment requires new technology.

There's no shortage of Canadian manufacturing capacity to make the end-use product. Our company and many of my competitors in Canada have highly scalable facilities. Our biggest problem during COVID was not that we didn't have the proper products to kill the virus, or that we couldn't get the appropriate label claims. In fact, during COVID, Health Canada staff were very responsive. They gave us excellent support and worked overtime to process requests. The real problem was that we could not get enough of the raw materials in a timely manner. We need to consider how to ensure we get these raw materials should another pandemic occur.

The financial impact to Canadian manufacturers of recognizing foreign registration is a dual-edged sword. We need the U.S. registrations and their technologies. What will likely come is more U.S. manufacturers selling their products into Canada. It will cause a reduction in sales among domestic manufacturers. The moderately reduced fees that have been proposed for Canadian manufacturers in no way mitigate that problem.

I was happy to see the new regulations propose changes to labelling. I get to see and talk to many end-use customers. I would like to suggest that the labelling of bottles be reviewed with more emphasis on helping the end-user. Many users in janitorial positions do not have the education or expertise to fully understand all the information on existing labels. Current labels are frequently packed with huge amounts of data not needed for the application of the product.

In the scope of the new biocides regulations, it was proposed to exclude air sanitizers at this time. During COVID, one of the major requests from customers was to help them sanitize rooms through the use of hand-held sprayers. Huge amounts of sanitizers were sold for this use. It is a potentially dangerous operation to perform without proper safety standards. Should another similar pandemic arise, there will be countless people once again wanting to do this, and I would suggest that regulations on air sanitization be reviewed as soon as possible.

I appreciate the time you have afforded me. I look forward to your questions and comments.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Parker.

We will now go to the members.

We have Mr. Martel for six minutes.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thanks to the witnesses for being with us today.

Mr. Côté, from what I understood of the testimony given by the Health Canada representatives, the standard that Canada uses is the internationally adopted one.

Would you please explain that to us?

[André Côté]

Product effectiveness isn't at issue in Canada. The quality of Canada's products is equivalent to that of other countries. Bleach made in Canada is as effective as that produced in the United States or Europe.

The problem is that approval requirements are different in Canada. Canadians aren't asked to meet the same requirements to approve bleach produced here as the United States asks of its manufacturers.

It isn't a matter of capacity or product quality, but rather of process. When Health Canada alleges that the processes are similar, that's false. The processes are very different, and they result in similar products.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

So does that have an impact on the principle of reciprocity?

[André Côté]

No reciprocity is possible because the present Canadian system, and even what's provided in the proposed regulations, don't align with what's happening in Europe and the United States.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Regrouping biocides within a common regulatory framework should simplify the administrative burden.

What you think about that?

[André Côté]

It would simplify matters for foreign businesses wanting to do business in Canada.

The burden will be the same for Canadian companies wanting to have a product approved. There is no regulatory framework right now. It's new for the entire Canadian industry. The proposed biocides regulations are new. No one in the national industry in Canada holds approvals under those regulations.

However, the Americans and Europeans have approved products. What we're saying is that we simply have to pay attention. The scientific and technical basis isn't in question. The Canadian industry must be allowed to comply with the regulatory framework before foreign companies are allowed to come and compete with our products in Canada. That's all this is about.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Do you think a one-year delay is enough? What's being suggested is 90 days.

[André Côté]

When the new regulations come into force, a Canadian company operating nationally will first have to conduct efficacy tests. That will cost it thousands of dollars. As Mr. Parker said earlier, those tests are very costly, and waiting times for results are from 3 to 12 months.

Then it will have to prepare a file and submit it to Health Canada. It will also incur further costs of $10,000 to $12,000 to open the file.

Lastly, the company will have to wait 9 to 12 months for Canadian authorities to process the file. In all, the process will take 12 to 24 months, and the company will have spent $10,000 to $12,000, not including research and development costs.

In the meantime, for the same product in the United States, a company will file an expedited administrative application, pay $3,500 USD and receive approval for its product within three months. That's possible when the American regulatory file is deemed in order.

Our view is that we should wait before allowing an American file to be submitted in Canada; in other words, we should waive the 12‑ to 24-month period imposed under the new regulations for every Canadian company. We think it will take two to five years for Health Canada to complete the entire process.

There are precedents for this. When the natural and non-prescription health products directorate was created, it took seven years to process applications. Now, five years after the Safe Food for Canadians Regulations came into force, we're still issuing establishment licences. That's not what was planned.

We don't mean to attack the Health Canada people, but it is what it is. Implementation delays are always longer and more complicated than anticipated. That's the situation we have to face.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Côté.

Mr. Parker, your website indicates that your company manufactures a variety of cleaning products.

Is that correct?

[Stephen Parker]

That's correct. Yes.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

You will obviously be affected by this new regulation, will you not?

[Stephen Parker]

Yes. It will.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Could you tell us about what impact the regulatory changes will have on your ability to innovate?

[Stephen Parker]

At our size, we use third parties generally out of the U.S. that have registrations in Canada, so we do not invent new products. We take existing products that have been registered, and, as do maybe 80% or 90% of the people in our industry, we market them. The new regulations for us will just be something that we will follow, and we will adapt to that.