Archived - CFIA User Fee Proposal: Importer Licensing for the Non-Federally Registered Sector

Summary of Stakeholder Comments and CFIA Responses

April 20, 2012 – June 29, 2012

Table of Contents

1. Introduction
2. About the Consultations
3. Respondents' profiles
   • Table 3.1: Respondent's primary firm/business focus
   • Table 3.2: Number of employees per firm/organization
   • Table 3.3: Distribution of respondents or of respondent organization's head offices across Provinces and Territories
4. Respondents' Comments and CFIA Responses
   • Table 4.1: Did the respondent anticipate any effects of the proposed user fee
     • Summary of comments
     • CFIA response
   • Table 4.2: Did the respondent support the proposed user fee
     • Summary of comments
     • CFIA response
   • Table 4.3: Did the respondent think that the CFIA currently had service standards related to the proposal
     • Summary of comments
     • CFIA response
   • Table 4.4: Did the respondent support the proposed service standards
     • Summary of comments
     • CFIA response
   • Table 4.5: Did the respondent anticipate any effects of the proposed service standards
     • Summary of comments
     • CFIA response
5. Conclusion
6. Next Steps

1. Introduction

The Canadian Food Inspection Agency's (CFIA) stated mission is to safeguard food, animals and plants, which enhances the health and well-being of Canada's people, environment and economy. This includes ensuring the safety of all imported foods.

Imports of food and food products have experienced considerable growth over the past decade. The total value of food imported into Canada has increased by approximately 45% in the past nine years, growing from $20.9 billion in 2001 to $30.5 billion in 2010. Raw ingredients and food products are imported from an estimated 190 countries, each of which has varying levels of food safety controls.

In December 2007, the Government of Canada announced its Food and Consumer Safety Action Plan (FCSAP), a component of which is to enhance Canada's food safety system for imported food products in the non-federally registered sector (NFRS). In support of this commitment, the CFIA proposed to introduce regulations that would strengthen the accountability of importers in the NFRS and enhance CFIA's ability to communicate important food safety information to potentially affected parties.

The proposed regulations would include general obligations prescribing food safety requirements on importers of most NFRS products that fall under the definition of an agricultural product. Once the proposed regulations come into force, this sector will be called the Imported Food Sector. A list of products that will be subject to the new regulations can be found online. There would also be a requirement that importers of IFS products obtain a licence to import these products. The CFIA proposed a user fee for the issuance of an import licence¹ pursuant to the proposed regulations.

The Agency undertook a 70-day consultation on a user fee proposal for the Importer Licensing for NFRS from April 20 to June 29, 2012. The user fee proposal set out service standards and user fees anticipated to be fixed in the CFIA Fees Notice at a future date. The CFIA invited comments from interested parties by posting its consultation document on the CFIA website and on the Consulting with Canadians website. In addition to the public consultations, the CFIA conducted other outreach activities, such as holding several meetings with industry, business associations and Provincial government officials; published a Notice of Intent in Canada Gazette Part I on April 21, 2012; emailed information to over 12,000 CFIA subscribers and distributed information to all Members of Parliament. This report consolidates and summarizes comments directly pertaining to the user fee proposal and the CFIA's response to those comments.

2. About the Consultations

This public consultation was conducted using a web-based questionnaire to engage stakeholders. It involved posting the User Fee Proposal discussion paper on the CFIA website, and providing an additional link to the Consulting with Canadians website. The following figures provide information about the questionnaire response rate:

• A total of 145 individuals logged in to the questionnaire.
• 51 respondents participated in the questionnaire: some only provided profile information (such as primary focus of business), whereas others filled out the questionnaire itself, either partially or completely.
• The number of responses varies between questions as some respondents chose to not answer all questions.
• In addition to the above, the CFIA received two letters from industry associations.
• Nine respondents self-identified as "industry associations", two of which partially completed the questionnaire.
• 16 respondents requested more information on the proposal and the CFIA responded with individual letters to each stakeholder within three weeks of the consultation's end.

In addition to the web-based consultation, the CFIA used several other mechanisms to ensure outreach, for example:

• On April 21, 2012, the CFIA published a Notice of Intent regarding the proposed regulations and user fee proposal in Canada Gazette Part I.
• The CFIA invited over 12,000 subscribers to comment on the fee proposal.
• A news release was issued to the media informing the public about the opportunity to participate in the consultation on user fees for importer licensing.
• Members of Parliament were provided with background information, including "Questions and Answers", to field questions from constituents.
• Imported and Manufactured Food Division (IMFD) of the CFIA held and participated in many meetings with industry, associations, and provincial officials during which the user fee proposal was discussed.

3. Respondents' profiles

Table 3.1: Respondent's primary firm/business focus

Table 3.2: Number of employees per firm/organization

Table 3.3: Distribution of respondents or of respondent organization's head offices across Provinces and Territories

4. Respondents' Comments and CFIA Responses

The CFIA received few comments on the proposed user fee itself. Many more were about the proposed Importer Licensing regulatory regime that is under development. The following sections provide a summary of respondents' comments and the CFIA's responses.

Table 4.1: Did the respondent anticipate any effects of the proposed user fee

Summary of comments:

Some respondents saw the proposed fee as a new form of taxation. Many commented that the fee would affect the retail price of the imported products and that the consumers would have to bear the increased costs of these products. A respondent commented that, in the wake of a new user fee being proposed, there should be an accompanying new service standard that is better defined. One respondent questioned whether exemptions or reductions could be made to the fee in order to accommodate small businesses.

CFIA response:

The proposed user fee of $259.00 (fiscal year 2013/14) is for a licence which is valid for two years. This equates to about $130 per year. The licence does not impose limits on the frequency of imports per year, nor on the quantity of products imported per shipment. The service standard for the issuance of this licence is 10 days; however, most licences will be issued automatically through an online portal once the fee is paid.

At this point, the CFIA is not considering reducing the fee, however there are a number of measures that could be put into place to accommodate small business. For example, the CFIA proposes to implement a Stream of Commerce phase for a specified time period. During the Stream of Commerce period, Imported Food Sector (IFS) products will be allowed entry into Canada even when importers do not hold a licence. During the Stream of Commerce period, education and promotion of the new regulations will be used to address situations of non-compliance with the Imported Food Sector Products Regulations. With the introduction of this new Regulation, the CFIA remains committed to minimizing the impact on trade while safeguarding food for Canadians.

While education will be the preferred tool to ensure compliance with the IFSP Regulations, it is important to note that in circumstances of contravention with other applicable legislation (e.g. the Food and Drugs Act, the Food and Drug Regulations, the Consumer Packaging and Labeling Act and Regulations) the CFIA will continue to exercise enforcement action up to, and including, prosecution.

Table 4.2: Did the respondent support the proposed user fee

Summary of comments:

Many respondents were supportive of the user fee for a variety of reasons: many thought the fee was fair given that it is valid for a two-year time frame; others thought the licence increases importers' accountability; and others supported the fee based on the idea of increased food safety in general. Some wanted to see the licence requirement extended to products beyond Imported Food Sector products. A few respondents were not supportive, again citing the fee as another tax, while others didn't see any food safety benefits as a result of issuing the licence. One respondent was concerned that the licence would replace existing regulatory requirements around food safety.

CFIA response:

The Government of Canada decided to focus initially on the import of non-federally registered sector products. This is part of the Government of Canada's overall strategy to minimize the risk of unsafe food coming into Canada.

The proposed regulations to support the issuance of Importer Licensing under the Canada Agricultural Products Act (CAPA) would enhance the safety of over 85 percent of imported food products. Given that the CAPA is only applicable to food that is, or is derived from, a plant or an animal, it therefore excludes an estimated 15 percent of non-federally registered sector products such as bottled water, salt, vitamins, minerals, and synthetic colours and flavours. These products (i.e. the remaining 15 percent of excluded products) would continue to be regulated under the Food and Drugs Act, as are all foods sold in Canada. It should be noted that among the licensing requirements will be the implementation of a preventive food safety control program. The CFIA will continue to modernize its legislative framework and supporting programs pertaining to food.

The issuance of an import licence will not supersede existing statutes and regulations governing the importation of specific products. The proposed regulations are intended to strengthen the accountability of importers for the safety of food products in order to minimize the risks of unsafe products entering the Canadian marketplace.

Table 4.3: Did the respondent think that the CFIA currently had service standards related to the proposal

Summary of comments:

Some respondents understood that the proposed service standard presented in the User Fee Proposal: Importer Licensing for the Non-Federally Registered Sector proposal was 10 days for the issuance of a licence. One respondent commented that they weren't aware of any service standards at the CFIA, and that service standards should be linked to any new user fee being introduced.

CFIA response:

The CFIA is working to improve its service delivery. The User Fees Act requires regulating authorities to develop service standards when developing new, or amending existing, user fees and states that service standards should be in line with those of comparable jurisdictions. When developing new user fees or amending existing fees, the CFIA benchmarks its service standards and user fees against comparable jurisdictions, such as the United States and the United Kingdom. Furthermore, the delivery of services must be tracked against the service standards in order to measure the performance of the CFIA.

The CFIA is committed to excellence in our processes and practices and we strive for continuous improvement in dealings with our regulated parties and stakeholders. We are committed to providing quality service that is consistent, professional, timely and fair, based on the CFIA's Statement of Rights and Service for Producers, Consumers and Other Stakeholders. On April 1, 2012 the CFIA launched a new Complaints and Appeals process that will provide a more transparent and accessible way for stakeholders to register complaints and appeals related to quality of service, administrative errors and regulatory decisions.

Table 4.4: Did the respondent support the proposed service standards

Summary of comments:

While there was widespread support for the proposed service standard, many respondents understood the issuance of a licence as including additional activities, such as audits, inspections and other processing of applications. As a result, respondents were concerned about the CFIA having enough resources available to conduct these activities in a timely manner (e.g. having enough inspectors to conduct inspections). The principal concern was regarding the negative effects these additional activities would have on business.

A few respondents commented that delays in issuing the licence may mean delays in retrieving their imported products at the border. Some respondents commented that the 10-day service standard seemed excessive given previous discussions on the CFIA having an online portal to issue licences automatically. One respondent was not aware of the proposed 10-day service standard.

CFIA response:

The service standard contained in the User Fee Proposal: Importer Licensing for the Non-Federally Registered Sector is found on page 11 of the proposal: "the CFIA is proposing to issue import licences within a maximum of 10 working days upon receipt of a complete application." It should be noted that, because the majority of applications will be processed on-line, issuance of an import licence will generally occur immediately.

The licence will be issued automatically based on completion of the application and confirmation of payment of the licensing fee, and will be valid for two years before renewal is required. The proposed 10-day service standard is a minimum standard requirement imposed by the World Trade Organization (WTO) for electronic licensing. Thus, the proposed licensing regime is in accordance with the WTO Agreement on Import Licensing Procedures.

Holding a licence does not necessarily imply additional inspections, audits or other CFIA activities.

Table 4.5: Did the respondent anticipate any effects of the proposed service standards

Summary of comments:

Some respondents were concerned with how the licence would affect their dealings with the Canada Border Services Agency, and whether their imported goods would be held up at the Canadian border, due to the perception of under-resourced border services. Some respondents commented on the CFIA's ability to deliver more inspection services in a timely manner while others were concerned that the proposed licensing regime would lead to more inspections in addition to those to which they are already subjected. One respondent commented that the CFIA should keep in mind the balance between its mandate to ensure a competitive industry in the marketplace and new regulatory regimes.

CFIA response:

Licences will be issued by the CFIA and not the Canada Border Services Agency. Importers will be required to hold a licence prior to importing IFS products. In order for an IFS product to clear customs at the border, importers will have to provide a valid IFS import licence number. Those without a valid licence will not be able to import IFS products into Canada and will be referred to the CFIA to apply for a licence.

The on-line portal will issue licences automatically based on completion of the application and confirmation of payment of the licensing fee. The CFIA's risk-based import inspection programs are based on internationally recognized standards and principles, and are comparable to the import inspection systems of other developed countries. As previously stated, the proposed 10-day service standard is a minimum standard requirement imposed by the WTO for electronic licensing, and the proposed licensing regime adheres to the WTO Agreement on Import Licensing Procedures.

5. Conclusion

In general, support for the user fee proposal was relatively strong (44%) compared to those who did not support the proposal (12%). While a few respondents did not agree with the concept of an importer's licence as well any fee attached to it, many responded positively to the idea of an importer licence (including the fee and the service standard). However, a significant number of respondents were "unsure" about the proposal (44%). This statistic speaks to the need for more clarity and context in the user fee proposal's executive summary. This part of the proposal will be revised to provide more clarity, simplicity and transparency prior to its tabling in Parliament.

6. Next Steps

Pursuant to the Canadian Food Inspection Agency Act, the fee for the issuance of an importer's licence for Non-Federally Registered Sector products will only take effect once the import licence program is ready to be launched and the service is delivered. Several steps need to be achieved beforehand, such as completing the development of the new regulations, training staff, and ensuring operational status of the online licence issuing portal.

A significant portion of the feedback received during the consultations focussed on the proposed regulations of the Importer Licensing program, scheduled to come into force in 2014. In an effort to clarify how the Importer Licensing program will operate, the CFIA will provide more context in the executive summary of the User Fee Proposal before tabling it in Parliament. Also, the proposed fee will be for $259.00 initially rather than the $259.48, which was the proposed amount in the consultation document. It has been recommended, from both internal as well as external sources, that the CFIA round off fee amounts in order to ease transaction processes and to eliminate the perception that the Agency is overly fastidious about fee amounts.

There will be an opportunity for stakeholders to comment on the proposed Importer Food Sector Products Regulations once they are published in Canada Gazette Part I, expected towards the end of the current fiscal year.

The CFIA would like to thank everyone who took the time to share their views during this consultation process.

¹ Consistent with the World Trade Organization Agreement on Import Licensing Procedures, import licensing is defined as an administrative procedure used for the operation of import licensing regimes requiring the submission of an application or other documentation (other than that required for customs purposes) to the relevant administrative body as a prior condition for importation into the customs territory of the importing member.

² Percentage totals may add up to more than 100% when they are summed, as percentage figures are rounded off.