EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, March 20, 1996

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[English]

The Chairman: Ladies and gentlemen, we have sufficient committee members here now to begin the evening's discussions. I'll just make a couple of comments and then I'll call some people to the table.

Number one, I appreciate everyone coming out in the evening, on relatively short notice, for this meeting. It's a topic that has been discussed in various forms and in various ways for a number of months, quite frankly a number of years; some would say a number of decades. This was the only evening possible to get the witnesses and presenters we have tonight and the only time possible to do that before the House breaks at the end of next week for two weeks. So it was a matter of having a discussion tonight or maybe four or five weeks down the road from now.

I would at the outset thank everyone for coming. The time is ours for this evening. That doesn't mean we have to stay here for the whole night, but we have an opportunity tonight to hear some comments, ask some questions, hear some views and then hopefully collectively, maybe some of the presenters and maybe some of us, offer some constructive ideas and thoughts on this issue before us.

We have a number of presenters. The agenda is before the committee members, but I will introduce them.

From the Pest Management Regulatory Agency we have Dr. Claire Franklin, the chief executive officer there. She has some other people with her.

From the Crop Protection Institute we have Charles Milne. Charles, I believe, has a plane to catch back out of town, so we will have him come forward as soon as we possibly can so he has the opportunity to return to Toronto.

We also have representatives from the Canadian Federation of Agriculture and from the Canadian Horticultural Council.

What I propose we do is listen to all of the presentations first and then we'll have the opportunity to question or make comments to all of the folks after that, so we can all hear what each group wants to say. I will not allow a debate back and forth between the presenters when they're all at the end of the table a little later in the evening. Rest assured that won't happen.

Dr. Franklin, would you and, I believe, Mr. Ormrod and your sum like to come forward? I believe you have a presentation, and maybe Mr. Ormrod had some comments as well. It's over to you.

Dr. Claire Franklin (Chief Executive Officer, Pest Management Regulatory Agency): Thank you very much, Mr. Vanclief and members of the committee. I thank you for the opportunity to meet with you this evening and give you an overview of where we are at with regard to the cost recovery initiative.

The Chairman: Dr. Franklin, to begin, would you introduce the two people with you so it's on the record?

Dr. Franklin: Yes. I'll take this opportunity to introduce my colleagues.

Mr. Wayne Ormrod is the chief registrar for the Pest Management Regulatory Agency. Liz Javor is in my office and has been responsible for putting together all of the information and the various options we have before us during this consultation period. Dr. Bob Taylor fills out the contingent we have this evening. We felt it would be expeditious to have people available to try to answer any detailed questions you might have at this point in time.

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I would like to make my presentation this evening, in essence, giving some idea of the new structure - as you know, the agency is relatively new - to identify some of the performance enhancements and efficiencies we are introducing, to share with you the consultation process we are going through, and to give you some information on the cost recovery rubric and the details under which we are operating.

The agency has taken together staff from multiple departments, and as Mr. Vanclief has suggested, there's a fairly long background and history for all of this.

In 1990, the stakeholders - and that was a very broad group of stakeholders involving users as well as manufacturers and environmental groups - held consultations that went on across Canada, culminating in the document we have here, the final report, which was tabled in December 1990. As for the innovations that were to be made, the recommendations were put forward in this and the stakeholders agreed to the principle of cost recovery to generate funds to implement the program.

In 1994, after attempting to put in some of the recommendations via various means, the government then decided it would put together an agency, and in fact, the response to the recommendations and the way those would be implemented were put together in this document, which we call the purple book. This is the government response. In this particular document there was an estimation of the program costs for all of the recommendations that were going to be taken on board of $34 million, $20 million of which would be generated through cost recovery.

In February 1995, there was a cabinet decision approving the formation of the agency and in essence approving the recommendations that were put forward in this particular book, and on April 1, 1995, the agency was formed.

That gives you a little bit of the back history, and these documents are certainly available if you haven't already seen them. I think it very clearly gives a snapshot of all of the activities that have gone on and the regulatory reform that has come forward.

I'd just like to articulate the operating principles for the PMRA, because of course we now have multiple activities within the one agency. Our decision-making is based on the management of health and environmental risks, the development and promotion of sustainable practices, the use of science and fact-based information upon which we make our decisions, and we would have a balance of economic needs and risks - in other words, being very aware and cognizant of the issue of competitiveness.

We will be operating under specific requirements. We will be introducing service or performance standards that will give, I think, a much more stable base for industry to work in. They will be able to have a much better prediction of when a submission will be finished after they have submitted it.

Another requirement is that we be cost-effective. We will do this as far as we are able to through cost reduction and cost avoidance. It's fair to say that it's very difficult for us to change absolutely every process we have in place, getting on with all of the things we're doing at this point in time, so we have introduced some efficiencies. We anticipate that we will continue to see introduction of efficiencies over the next several years.

The efficiencies we are talking about are ways in which we will improve the handling and review of submissions. This is a critical factor, and we are looking to industry to support us by putting in a complete submission that's in good shape and then we will be able to review it and get through the review in a timely fashion.

Of course, as we are introducing processes that will handle submissions that come in now, we also have a very large number of submissions that have been in for a fair period of time. That's a reflection of a system that was acceptable world wide, that submissions would come in and they wouldn't have all of the data; the data would be developed as we moved through. That's not unusual. It's not unheard of. But it also makes it very difficult to be very predictable as to the time when submissions would be done. So we're taking major steps to improve the process with the assistance of industry.

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We're doing joint reviews, which is something that is very important to us. I think we've made a significant step forward in that direction in doing joint reviews, primarily with the U.S. We're prepared to do them with other countries, but we've really focused on that, and that's really been done through the CUSTA-NAFTA committees, which have been a very useful forum for us to get on with that task.

Global harmonization is another aspect of that; if the requirements are harmonized it's then beneficial to industry. It means it doesn't have to do different studies different ways for different countries, so that should have a very significant impact on the R and D costs for industry. It also enables us to harmonize or to do joint reviews with other countries. If you know the submissions are similar then you're able to get on with that. We conduct those activities through the NAFTA committee as such, through OECD as well as through UNEP.

As for cost recovery, we are operating under the Treasury Board policy for cost recovery, and the principles that are articulated by Treasury Board include deficit reduction, improved management of resources, and fairness. The idea is that those who benefit pay. These are Treasury Board policies; they aren't ones we have simply put in place. The other aspect in Treasury Board policy is that there's full costing of options, and this should be done according to its policy. We are watched to ensure that we perform all of the steps in the way our government is asking us to. We have summarized that type of information and could make it available, if you are interested.

Part of the Treasury Board policy is that there is open consultation and impact assessment. Its requirements are that it be done with the clients who pay directly - that would not include the user groups. We were rather concerned about that, so as I'll indicate in a moment, we have taken steps to ensure that the user groups are also part of the assessment to see what the impact of the user fees would be.

Our criteria for design of fee structure: Working under the Treasury Board policy guidelines, we would develop fee structure options using the following criteria. The recovered costs would fulfil the mandate. We're not trying to make profit on this; we're simply working on the basis that the costs we are recovering would be the ones we actually have to spend to review the submissions. We would avoid placing users at a competitive disadvantage. We would avoid deterring registration, and the process would be cost-effective to administer.

The fee structure would then be assessed during consultations. We have put several options together that we're now in a process of discussing with various user and manufacturing groups, saying these are several options and let's see which one works best. We're in a very open - at least we hope it's considered to be open - consultative process so we can identify what all the potential problems or advantages might be with the different structures.

Through the consultation process we hope to be able to listen to the concerns and perhaps come up with resolutions for them. The concerns are: a potential loss of access to products because of this; that there will be inequities in the fee structure; and that there will be an impediment to competitiveness for manufacturers and for users.

The actions we're going to take under consultation will be to assess the fee structure, including where there could be reductions from full cost for the service, and where there could be exemptions, and whether there should be application fees only, maintenance fees only or a combination of those. There are several ways to try to gain the resources. The attempt at this point really is to get a balance between all of these so that we do not impact unnecessarily.

The impact assessments: As I've indicated under Treasury Board guidelines, we are encouraged to conduct what is called a business impact test or a BIT test. That test only reflects on the manufacturers. We have taken it upon ourselves to have, in addition to that, an assessment that would allow the user groups to indicate what the impact is on them, and this is a very broad range of user groups: agriculture, forestry, domestic uses, disinfectants, aquaculture - any group that feels it might be impacted by this particular cost recovery activity. We've also asked Agriculture Canada economists to help us so that we can do an assessment by agricultural commodity.

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When we get those three pieces together, we will then be able to put those in and have a consolidated assessment, and on that basis we believe we should have a very fair assessment of what the actual impacts are across this range of stakeholders.

Our timeframe for this: In March we shared information through our advisory council, which was to give details on the various options. From April through June we will be doing the economic assessment. We have indicated that we are available to meet with stakeholder groups if they require additional information or explanation of the structure.

In July we anticipate that we will document the stakeholder feedback. We will have the impact assessments and we will integrate these comments, and then we will develop a fee structure based on all of this input that we've had. Then we kick into the regulatory process, which is to put this into Canada Gazette part I. Then there's another period of time where there can be comments on the fee structure, and then we anticipate that we will put it into Canada Gazette part II in January so that we will be in position to start collecting fees at least by April 1, 1997.

That, Mr. Chairman is the information I wish to share with you, and I will stop at this point. Thank you very much.

The Chairman: Thank you very much, Dr. Franklin.

Does Mr. Ormrod wish to make some comments now?

Mr. Wayne Ormrod (Chief Registrar, Pest Management Regulatory Agency): Mr. Chairman, I don't have a presentation to make. I'll try to contribute by answering questions on the registration process as they arise, the status of various products that may be of interest to the committee, if that's acceptable.

The Chairman: All right, let's do that later, then, so we can move along with all the presentations.

Would Mr. Milne, vice-president of the Crop Protection Institute, come to the table and present his comments?

Mr. Charles Milne (Vice-President, Government Affairs, Crop Protection Institute): Thank you very much, Mr. Chairman, committee.

On behalf of the Crop Protection Institute of Canada, I would like to thank the members of the Standing Committee on Agriculture and Agri-Food for the opportunity to appear in front of you this evening to share our institute's views regarding the Pest Management Regulatory Agency's discussion paper on cost recovery.

Just to give you a bit of background, the Crop Protection Institute is a non-profit trade association representing the manufacturers, formulators and distributors of crop protection products in Canada. Founded in 1952, we are the voice of the industry and a source of information on crop protection products.

I would like to begin my remarks this evening by emphasizing the fact that the institute has not had an opportunity to meet as a group to discuss the proposals contained in this paper; we'll be beginning these deliberations at the institute's government affairs meeting tomorrow in Toronto. As a result, my remarks this evening will be general in nature and reflect some preliminary observations that have been made by our members.

Firstly, the institute members have been greatly encouraged by the level of accessibility and collaboration that the PMRA has demonstrated in its initial consultation phase. This has not been the case in the past, but more recently we have been very refreshed by this new attitude of openness. We hope this openness and transparency will be sustained through the entire process as industry and government work together to address areas of difference with respect to cost recovery.

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In the immediate future we look forward to an opportunity to exchange views with Dr. Franklin and her staff tomorrow afternoon, when she will attend our government affairs meeting, and again on Friday, when the institute will participate in a stakeholder briefing meeting on the discussion paper.

The institute's position on cost recovery of registration costs through the PMRA has been consistent and sets out three principles. Those are cost avoidance, cost reduction and cost recovery. Cost avoidance speaks to the need to identify and eliminate agency activities that do not provide value to the pesticide industry or pesticide users. Cost reduction means a need to ensure that our members and the users of our products are delivered services by the most economical means possible. By cost recovery, the institute expects the PMRA to commit itself to differentiating between those activities that benefit our industry and those that benefit society at large.

Applying these principles, the institute's first impression is that the fee regime as outlined in the discussion paper will be very costly. We also have concerns that the proposal provides no data to show the actual cost of providing the PMRA services that we will be asked to pay for; nor does the discussion paper analyse the existing PMRA services in terms of determining which are necessary and which are not.

With regard to cost-efficiency, the institute is concerned that the discussion paper doesn't address potential areas of inefficiency, in spite of the fact that the institute has made a number of recommendations in this area. The proposal also appears to provide the agency with substantial latitude for future growth, both in terms of expanding employment levels and taking on additional activities.

Within this context, the institute cannot accept the notion of maintenance fees. Members feel that these would erode the agency's incentive to work faster to register new products and simply provide the PMRA a constant cashflow.

In terms of structuring the fees, the institute is extremely concerned about linking of fees to the value of sales. Members feel that to do this would place a disproportionate burden on the agency's costs on agriculture, while non-agricultural clients would effectively receive subsidized registrations. Cost recovery is intended to capture the actual value of the service provided. Basing fees on sales levels is inconsistent with this principle.

The last issue I wish to raise is the cost recovery provisions that apply to minor use crop protection products. Canada's agriculture derives much of its global competitiveness from niche markets and niche products, and the production of these products often rely on these minor-use crop protection products. We are particularly fearful that the proposed cost recovery provisions could marginalize minor use and therefore drastically impact Canada's ability to be competitive in agriculture.

In summation, our preliminary analysis of the proposal suggests that the cost recovery system will have serious negative implications for the members of our industry and the competitiveness of farmer customers. The issue of the PMRA and the added costs that cost recovery imposes on the agrifood value chain is an issue we raised last November when the institute appeared before this committee. At that time, we also discussed the fact that the competitiveness of the Canadian farmers is impeded if the market cannot provide them with timely access to the latest technology. We also feel that this issue is not satisfactorily addressed within the proposal.

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In concluding, we wish to again emphasize that these are our preliminary observations. We are hopeful that the PMRA's proposed consultation processes will continue to provide us with the opportunity to work constructively with the PMRA staff to address these issues and ensure a cost-efficient, effective PMRA that meets the needs of our industry and our customers.

Thank you very much for your attention. I appreciate the opportunity to address the committee.

The Chairman: Thank you very much, Mr. Milne. There may be some questions or comments later before you have to leave.

The next presenter is Sally Rutherford, executive director of the Canadian Federation of Agriculture.

Who's making the presentation, Sally? Ron Cameron and Jack Wilkinson. Is the Canadian Horticultural Council coming to the table at the same time? We have both. Who's the lead spokesperson here?

Mr. Ron Cameron (Chairman, Crop Protection Advisory Committee): It is not very often I get this opportunity, but I'm going to speak ahead of Jack.

The Chairman: I can guarantee you won't get the last word. Some of us know Jack. Ron, perhaps you would introduce yourself so it goes on the record.

Mr. Cameron: Thank you, Mr. Chairman.

I'm a farmer from southwestern Ontario. I am the chairman of what we call our Crop Protection Advisory Committee, which is an advisory committee to the executive of the Canadian Federation of Agriculture and the Canadian Horticultural Council.

Thank you, Mr. Chairman, for this opportunity to speak about the cost recovery issue and the opportunity to present to the committee our feelings about this issue. It has been causing us very grave concern in the farm community for the last long while and certainly since October 1994, when we were apprised of the possibility that there would be a considerable amount of cost coming back to the farm community from the costs of the Pest Management Regulatory Agency, which has been formed.

I would just like to read from a prepared statement and would like the opportunity later to elaborate on any points that anyone would like to raise out of that.

Certainly in the farm community a wide variety of statements, claims and theories have been circulating among the regulatory system, the politicians and the producers about the issue of cost recovery in the new pesticide registration system. It makes it necessary at this time for Canadian farmers to state clearly their common position on the issue.

It is generally recognized that improvements to the system for assessing pest management products and technology are in the best interests of the whole of society. As a result, the whole of society should bear the general cost of making these improvements. However, during the pesticide registration review process, which was five and six years ago, producer participants accepted that users should bear some of the cost of system improvements that would directly benefit them.

We have to remind everyone that the pesticide registration review, which occurred in 1989 and 1990, was a total collaborative group of stakeholders from all segments of Canadian society, of which agriculture was only one part. We built among that group a consensus that led to recommendations that favoured some, disfavoured others, but we felt there were some winners in that consensus arrangement and some losers in it. I think all of the stakeholders involved in that process would say the same statement. The things we needed we hopefully arrived at for the Canadian farm producers. Other things we had to give in on. Certainly, we did not like to be assessed with additional costs.

We supported the recommendation that the Pest Management Regulatory Agency, through a system of consultations, would develop a system based on service fees for recovering some of the additional cost of producing new registrations in a more timely manner. Since the review process there have been attempts to estimate the additional cost of the new system. For example, $20 million was one figure that we saw in October 1994. It is very important to note that these are just estimates and at no time have producers accepted or acknowledged a fixed amount that would be recovered through user fees.

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Again, I think we have to go back to the review process. When those recommendations were sent out and we went across the country listening to all of the people who wanted to have input on the pesticide issue, at no time were the costs of those recommendations outlined to the Canadian public. As producers, we tried to be very insistent that those costs be outlined, but at the time it went to the public consultations there were no cost figures attached to those recommendations. So it became rather an open game for everyone to get their wish-list provided for in those recommendations without having to accept that there might be additional costs of doing it. As concerned at the time as we producers were about the stature of the agricultural community, we thought this was a rare misgiving that should not have happened, but there were no costs involved in setting out the recommendations that the review team came up with.

Agriculture producer support for the concept of some cost recovery in the pesticide registration system continues to be conditional upon the following comments.

First of all, there should be a better pesticide registration system with enhanced service standards - for example, an 18-month turnaround time for a registration decision. Producers are not prepared to recover the costs of an inefficient system.

Secondly, user fees and cost recovery system should be completely transparent to ensure that they are fair and equitable to producers. Again, we could echo at this time the statement that Mr. Milne just made relative to making sure agriculture is not unfairly assessed in the total cost recovery system in which various other parties will have participation, whether it be for commercial pesticides, a new pool chemical for recreational purposes, a forestry pesticide, or some new insect repellent in the commercial sense.

Thirdly, the cost recovery system based on a commodity cost per unit of pest management technology should not place Canadian agriculture producers at a disadvantage compared to their competitors in other jurisdictions.

The other thing that concerned us during the review was that in the 1989-90 period and since then, we have progressed in agriculture toward several major trading arrangements that were not in existence at the time the review process started. Although we tried to interject on how these new trading arrangements - CUSTA, NAFTA, GATT - would impact upon the farm community with a new regulatory system for pesticides, those trading arrangements were not considered during the review process. Therefore, they were not part of the recommendations or any changes in those recommendations where we could see impact coming from a regulatory system that may fall out of step with the new trading arrangements we faced.

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The other point we're concerned about is that we see that the costs that have been outlined, be they $17 million, $20 million or wherever they will end up...we can see additional costs of 1.5% to 2% on some commodities that use a considerable amount of pest control products. That 1% to 2% will come directly out of our margins, because we will have no ability to recover those costs given the trading arrangements we face.

Therefore, what appears to be a relatively small cost of 1% to 2% basically becomes part of our margin, and there may be as much as a 20% reduction in the profitability of some commodities based upon the fact that they are irrecoverable at the producer level. I think that could be significant in how we arrange our farm competition system, given the worldwide trading system we face.

The other point we'd like to drive is that continuous efforts be made to reduce the overlap, to increase the efficiency and thereby reduce costs. The current undertakings of the Pest Management Regulatory Agency, working with the United States Environmental Protection Agency and other international bodies, must continue and must be expanded with these goals in mind.

The benefits of these efforts must be reflected in the user fees and must be passed on to the producer who ultimately will pay the costs. Certainly, we applaud the efforts of the agency at this point to enter into those types of relationships in which we see real hope. Our main concern is that we do not see the effect of those possible future arrangements and the arrangements that are now under way reflecting in the reduced cost of the agency's doing business and providing and regulating the technology we need.

Safe, affordable and effective pest management products and technology are an important component of a healthy, safe and financially viable food production system, a sound environment, and a strong economy. Consumers, regulators, government policy-makers, industry, research and extension specialists and food producers all benefit from and must work together as a team to promote the long-term sustainability of the Canadian agrifood industry, which makes sure we make the most conservative use of all food production resources.

The review and basic recommendations that have led to the development of the PMRA were developed before Canada entered into a host of new trade arrangements, and we're seeing now how these may impact upon those trading arrangements and our ability to remain competitive within them.

The magnitude of proposed costs for the PMRA, which we see outlined at approximately $28 million over the short term, increasing to $34 million over the longer term, need to be reviewed against that which we can afford. We are concerned that the proposed costs will prevent certain technology from being made available to us and increase the cost of technology that is made available.

Justifying a 212% increase in the number of PMRA staff, which is going from what were told to be approximately 129 people in 1993 to a proposal that includes about 403 person-years on the basis of clearing up the present backlog and implementing an 18-month turnaround time for registration, is not acceptable, especially when one considers that the 85% increase from 129 to 238 person-years that are presently involved has not demonstrated any increase in measurable output.

Increased efforts towards harmonization would seem to offer the appropriate cost avoidance and cost reduction opportunities that need to be implemented as soon as possible rather than looked for later.

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I think that's the main thing we feel about cost recovery. I don't think we can fail to impress upon the committee the frustration that exists in the farm community about the length of time that it's taking to fix the problem.

I've been concerned with this problem since about 1977. We looked at it with progress that we thought was coming through the review process in 1989 and 1990. We felt that progress was coming when the previous government outlined its response to the review recommendations. We think progress was outlined to us in the October 1994 document that this government brought about.

However, there is extreme frustration in the farm community because, although there is promise, there are very few deliverables. That frustration seems to continue to grow and is certainly reacting in different ways in different communities.

There is frustration with the proposed solutions, which seem to be administratively complex, costly, and a duplication of work that has already been done in a host of similar jurisdictions; there is frustration with the short time for consultation on this proposed cost recovery system for the PMRA; and certainly there is frustration about being caught between the technology supply companies and the regulators, with each faulting the other for the delays that continue to impact upon our competitive access to world-based technology.

I hope we can have the opportunity to highlight or elaborate on some of the things I've commented on here. We certainly look forward to that opportunity, and we will be pleased to work in any way possible with the committee or with any other concerned people who want to fix this problem, because it has been a burr under our saddle for a long while and needs fixing. We can only display our frustration about it.

The Chairman: Thank you very much, Ron.

Jack Wilkinson is the president of the Canadian Federation of Agriculture. Do you have any comments, Jack?

Mr. Jack Wilkinson (President, Canadian Federation of Agriculture): Just a couple of brief ones.

I'd like to congratulate Ron for having been so polite with this brief. If I had given it, it would have.... He really understates.

This is a very serious issue, on which the farm community is starting very seriously to lose trust that anybody is paying attention to their concerns. Therefore, when people talk about the art of the possible and the consultations still to come, which was expressed by the first presenter, about looking at competitive issues, about looking at cost, about making sure we have product available in areas that are needed, there's a sense that it's time to walk the talk. I think many people would say that they feel as if they have been strung out from the agriculture side on this issue, that we have tried very hard to come to some sort of workable solution at the end of the day but we don't feel as if we're any closer to the resolution of that. In fact, we are substantially further away.

Earlier today our organization met with the National Farmers Union and the Farm Bureau Federation from the United States at some meetings in Toronto. Very clearly, from a farm organizational point of view, they are facing many of the same frustrations as we are. They have many of the same problems in getting product through the EPA. With the acreage they're talking about, with what they classify as minor use in horticulture crops and in other areas, if they're seeing and feeling a concern about products being registered and the speed and what not at which it's going to occur, then obviously it's going to be a very big issue from the Canadian producers' point of view, when we have such small acreages in a number of these areas.

I think it's fair to say that we are in the middle of where technology is moving very quickly in the farm community, where environmental organizations are putting a great deal of pressure on the farm community to respond in a positive way in reducing usage, with product being more benign to the environment, in coming on stream very quickly, in having to have product in a very fast, competitive world, in getting products available to people. There seems to be constant frustration with getting this point through: that it has to come through quickly and at the right cost so it will be available to the producers.

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A lot of the new products are totally different and much better than some of the ones we have available to us. We're getting pushed into a box as farmers, having to hang on to old product because the new ones aren't available to us. It's a very, very serious issue; I'd like to underscore that. There has to be some positive resolution to this.

We can't approach cost recovery on a basis of ``whatever the traffic will bear, throw a number out there, and if we can talk you down a little bit, then you've satisfied the farm community''. That's unacceptable. We don't think a lot of these numbers have ever been justified, and I think Ron has made it very clear in a host of points where we have major problems which have to be resolved.

The Chairman: Thank you, Jack.

I would ask Dr. Franklin and her team and Charles to come to the table. You gentlemen can stay there.

We will begin with comments from the committee members. I would ask the committee members to address their questions to specific people. I'm not going to allow a situation where, when there's a question, everybody gets a chance to comment on every question. I don't think we will get anywhere or get out of here if we do that.

So I'll ask Dr. Franklin and Mr. Ormrod and Liz and Charles would come to the table.

I know, for example, there may be some specific questions on registrations that members may wish to ask. I will go to the Reform Party, the Liberal Party, and the Bloc Québécois, in that order. Mr. Hermanson, Mr. Calder, and Mr. Landry - we'll go in that order. I know it may be difficult, but we're going to go with ten-minute rounds, so if the members take nine minutes to ask the question or make their comments, that's going to cut things pretty short. But I will make sure I balance it.

Mr. Hermanson (Kindersley - Lloydminster): Thank you, Mr. Chairman. I'll try to make my questions short and hopefully the responses won't be too long, although we may need a little bit of detail.

I suspect my first question might be best answered by Dr. Franklin, although perhaps others could answer it as well.

This whole business of cost recovery and who the beneficiaries are of the inspection services and the registration and all of that is different in different cases, but my understanding is that under the new World Trade Organization created by the GATT agreement anything that is spent by governments in a lot of these areas are GATT green - in other words, a justifiable public expense.

I've heard from the industry that they don't mind perhaps paying some of the cost recovery for services that help their pocketbooks - maybe they're getting better seed and it's helping them in that way. But when it benefits society, particularly through health and safety, there is real concern that these costs are being passed onto the industry, onto producers, when in fact it should be passed on to the consumer, to society, through the government, rather than perhaps funding some other federal programs that are not so GATT green.

How do you respond to that?

Dr. Franklin: The issue you raise is one that obviously has been raised very frequently. In fact, both of the other speakers today have alluded to or specifically spoken to that.

The cost recovery policy from Treasury Board is not quite as...what is the word I'm looking for? They do not request or require or necessarily even allow us to make that differentiation. If the program is there to provide a review or to do something that is then going to allow someone to market a product that will benefit from it, the costs in that program that have to be accrued to be able to provide that service are considered to be what we have to cost-recover. In fact, we are counselled to not try to split this into public-private; in fact, all of the activities we do within the agency go towards making sure the product that is going to be sold by the manufacturer is acceptable to be on the market in Canada. So those are the guidelines under which we are operating.

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Mr. Hermanson: Maybe you can just clarify. Are you saying that under Treasury Board policy, health and safety costs that are covered under cost recovery are passed on to the producers and not to Canadians en masse?

Dr. Franklin: The issue that I could perhaps reflect on is that we have to evaluate the impact on environment or on health because of the use of a product from which someone who sells it will make some profit. So in that sense we have to be very clear that we're not having a carte blanche that all health costs or all environment costs are being passed on. The necessity for government to do that review is tied in to the acceptability of a product upon which someone will make a profit.

Mr. Hermanson: How does our system compare to what happens south of the border? Do the Americans pass their costs on to producers in the same way? Would their equivalent to the Treasury Board regulations be like-minded to the Canadian?

Dr. Franklin: I would not venture to try to guess what the regulations would be in another country as to how they would determine those costs.

Mr. Hermanson: But it's important for producers to know that they're on a level playing field. Are American producers being handicapped with the same cost-recovery regime that Canadian producers may be entering upon?

Dr. Franklin: I think that question is different from the one you initially asked me. The cost-recovery regime that may be put in place in another country will be based on very different requirements within that country.

There are cost-recovery schemes that are put in within various countries. Some of them are based on straight levy and some are based on recovery of costs for services. So it's really quite variable. My understanding is that in the U.S. there is a mixture of ways in which they will attempt to do cost recovery.

Mr. Hermanson: From your position, do you think the Treasury Board policy is the correct policy for the Canadian situation when it comes to health and safety? That's a tough question, but I think it's important that we know the answer.

Dr. Franklin: As a bureaucrat, I'm certainly not in a position to answer a question like that.

Mr. Hermanson: Then I would ask Mr. Wilkinson or Ron Cameron if they would care to comment on that, and then I want to touch on a couple of other areas before we run out of time.

Mr. Cameron: I guess the only comment I would make is that our main competitors are in the U.S.A. As a general rule, American production would be ten times our size in most of the commodities we deal in. Therefore, if a cost recovery were to cost, let's say, $250,000 as a fee to register that product in the United States and it's used on an acreage that is ten times as large as ours, then I guess the relationship would be that anything beyond a $25,000 fee in Canada would seem to put us at a competitive disadvantage.

Mr. Hermanson: Okay, we'll just move into a slightly different mode. You said that the slowness and difficulty in registering products in Canada that are in use in the United States is very frustrating to Canadian producers. If you could wave your magic wand and didn't have to deal with the slowness of government, what would you see as being a fair registration process in terms of the time it takes and the research that's required before a product could be registered in Canada?

In other words, if the Americans register a product for use in Ohio, do we have to go through all the tests over again and do the same testing process in Canada before we register it? What are your feelings on that?

Mr. Cameron: I've been asked that question before and I've answered it this way. If my cousin in the United States gets a new product made available to him through the registration process in the United States, I would hope the providers of that technology would present their product for registration in Canada at the same time and that our registration system would look at it cooperatively with the United States and arrive at their independent decision, maintaining Canadian sovereignty of decisionship. If the science is right, it should deliver that product to me the same as to my American cousin.

.2030

Mr. Hermanson: So really what you're saying is that the product should be registered at the same time in both Canada and the United States?

Mr. Cameron: That would be the epitome of -

Mr. Hermanson: What's the reason that's not happening? Is it because of our government or our regulations, or is it because the manufacturers of the products only bother to go through the American process and don't pursue registration in Canada until they have a product registered in the United States?

Mr. Cameron: I think that's true in a lot of cases. Again, the American market is much larger than ours. Therefore, a provider of that product would probably look to get his product registered in the United States to ensure that market before he would present that product in Canada.

Unfortunately, that's a history with which we have lived for a long while, in that the products often do not come to the registration system until the science of the assessment might have changed. The conditions upon which the product was registered in the United States may change in the time lapse before that product has come into Canada. That has put us at a disadvantage in availability.

Mr. Hermanson: How can we fix that, though?

Mr. Cameron: I think it's going to take a very cooperative effort between the regulator and the provider to make sure that the registration systems do respond in kind and appropriately in time, and that the system would look at the product cooperatively.

Mr. Hermanson: I guess I've heard that these companies have to go through so many hoops to get their product registered in Canada that, for the volume of the product we often offer, they hesitate to do that. Is there any justification in that argument, or are they just being lazy? Don't they care about selling their product in Canada?

The Chairman: Maybe Mr. Milne would comment on that.

Mr. Milne: I guess I'd have to say that we represent a variety of private interests. Those are commercial decisions that they make within their own organizations, but I would add to the point that was made earlier that, yes, they do often look at the United States first because of the size of the market and the potential business they could accrue there.

Also, I think one of the deterrents to looking at Canada, not in all cases but in some cases, has been the historic slowness in Canada. Therefore, I think they take the attitude of fishing where the fish are, then follow later. I can't say this is necessarily the case for all of them, but I certainly have heard from within our membership that some organizations look at it that way.

Mr. Wilkinson: I would like to make a brief comment on that as well. I think what we were trying to do with the new system, from the farm community side anyway, was to resolve some of the problems that we had in the past. I think that with this proposal, there's concern from our point of view that there's nothing being resolved in some areas.

With the proposed price tag that's there in particular, we could create a much worse situation with the solution than what we had with the problem. That's not very useful from a farm point of view.

We already have a number of troubled areas that have been the impetus behind trying to have a much more harmonized and more streamlined system and changing the system so that hopefully, as users, we can push the manufacturers to register at the same time, etc., to try to eliminate some of the road blocks that have clearly been there in the past.

The question, to really put it here in the discussion, is this: is the new proposal eliminating the problems or is it adding to the problems? Those, I think, are our concerns. We don't see enough elimination. Some of these price tags could very well just be the kiss of death on some product registry.

Mr. Calder (Wellington - Grey - Dufferin - Simcoe): Claire, Wayne, Ron, Jack, Charles, thanks very much for coming.

This is a very important issue for me in my riding right now. I've got a number of apple growers to whom I'll be talking Saturday night. They're quite interested about one in particular, which is ADMIRE, because we're looking at apple buds coming out, and they're concerned about a number of issues for that.

I want to get into the process and find out how this works. I'll explain what I understand from it, and then you can tell me where I'm right and where I'm wrong. Maybe there will be some ideas as to how we can improve it.

.2035

As I understand it, right now, on new pesticides that are brought in, basically the different groups will go to the CFA, then the CFA will put together a list. That list is presented to the PMRA. From there, they review that list and make recommendations back to the government, which is basically the Department of Health.

Is that the system, as it stands, in a very simplified form?

Mr. Cameron: I think that's the system that has been developed for minor uses.

Mr. Calder: Okay.

Mr. Cameron: It's not the system that is used for major-use products.

Mr. Calder: Okay, then let's use this example of ADMIRE then. Right off the bat, there's a specific. I like dealing with specifics, because I'm going to have to deal with it Saturday night. What was the process that ADMIRE went through?

The Chairman: ADMIRE is out there and in demand for a number of crops.

Mr. Calder: Yes, potatoes right now.

The Chairman: It's been registered for some, I believe: potatoes, tomatoes, apples, etc.

Maybe Mr. Ormrod could give us a quick thumbnail sketch of what has gone on with that product in the last number of months or years.

Mr. Ormrod: Mr. Calder, let me try to do that with a little history, if I could.

I have a couple of comments this evening in terms of harmony and moving in step with the U.S., getting submissions in here at the same time, and getting the same submission with the same product. I can only applaud that kind of business. Unfortunately, this is a situation in which that did not occur.

Mr. Calder: Okay.

Mr. Ormrod: Approximately one year ago January we received a submission for ADMIRE. That submission was filed in the U.S. about two years earlier. In fact, the first uses were approved in the fall prior to it appearing in Canada.

The situation was acute. That's the way I'll describe it for potato growers particularly, in terms of the Colorado potato beetle. There was a lot of effort - I think it was legitimate - put in to bringing that problem front and centre to the regulating machinery at that time. It wasn't the agency; it was the previous structure.

A decision was taken after consultation with all of the players - that's the manufacturer, growers and provincial interests - such that this particular submission would be given a priority review. Basically, that means starting today and putting extra effort on it to try to get on with it.

The submission came in for three crops: potatoes and tomatoes, both of which were the Colorado beetle, and apples, for a series of insect pests. It quickly became apparent to all that if we tried to juggle three balls at a time, we'd drop all three. That didn't seem like good business. Again, after consultation with all of the key players I mentioned, the judgment was that the potato issue was the number one issue and that this should be our priority item.

I won't go into all the details, but to make a long story short, we were able to register that product for use this past season for potatoes. I will say that there was a good deal of anxiety about that particular registration and decision. The characteristics of that product are such that it stays in the soil for a remarkably long period of time.

Mr. Calder: So it would be a concentration issue, then.

Mr. Ormrod: There is, to the point at which rotational crops in the U.S. in fact require low-level tolerances. Those same questions were of concern to us here in Canada.

That situation obliged us to have a plant-back interval for rotational crops of twelve months, which we realized wasn't practical at the time. In the interval we've been able to resolve that just as recently as within the past two weeks. So that's a step forward.

The product was registered about three or four weeks ago on a two-year, time-limited registration for use on Colorado beetle and the plant-back problem was resolved about two weeks ago. That was done in a cooperative way involving provincial people as well and benefiting from EPA reviews that we were able to get in the course of our attention to that product.

As for the tomato situation, last year when we had to put that on hold in order to get the potatoes out of the way and looked after as our number one priority, it was recognized that this would have to be the number two challenge and commitments were made to try to undertake that. Some residue questions were involved, for which data is still coming in. The jury is still out on whether or not we can resolve that situation, but I can assure you that these days it's certainly receiving attention every day of my life.

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Mr. Calder: Would that be the issue of the seven-day withdrawal?

Mr. Ormrod: That's part of the question. From my understanding of growing tomatoes, that, upon examination, doesn't look terribly logical. I've recently had some discussion with people who are a lot closer to this question than I am, and they confirmed that understanding.

There may be some opportunities around extending that withdrawal period. There are a couple of ways of using that product, and we're looking at both of those options to see if we can be helpful.

If that hurdle is overcome, it will not alleviate the fundamental difficulty of the characteristics of this product. It's persistent in the soil and there's a question of what happens to it in water thereafter.

Some monitoring of that was done in association with the potato use in 1995. To make a long story short, it did not result in any residues appearing in well water. It did result in low-level residues appearing in tile drain water if rain followed shortly afterwards.

Those are not inconsistent with the kinds of projections one would have made if one looked at the physio-chemical characteristics of the product and at the data that was available from the U.S. and so on.

That brings us to the apples. I believe the opportunity to introduce that product for apples is quite limited, largely because of the unresolved soil persistence problems. The tomato and potato crops were considered to be a critical need because there was large-scale resistance in both of those situations. I've discussed with you the order of priority to try to address those.

The apple situation is not as mature in terms of our ability to deal with that, but there is the underlying difficulty that dealing with this persistence question in the longer term is a real concern. The further we expand it on the extension of crops, without knowing the characteristics of the product in the Canadian situation.... That's not an easy situation to resolve.

That's perhaps a longer history than was necessary, but that's it in a nutshell.

Mr. Calder: I would like to get a response from the CFA as to what they think about that.

Mr. Cameron: There's always concern when one producer has access to a material that is denied to another producer. Those are questions that we have attempted to reconcile with priority setting for need.

Because of the concern about the potato fields being next to the tomato fields, and now apples, we certainly agree with the priorities that Wayne just described. That is the way in which we have set our priorities.

We had a national committee set up in the minor use area in order to arrive at those priorities, and I was amazed by the full agreement that existed at that time among producers when they recognized each other's needs and reconciled those with those priorities.

Mr. Calder: So in essence you're saying that the system that exists right now works.

Mr. Cameron: We have not yet had enough proof that the minor-use system that has been put in place is working. We have very grave concerns that even within the ADMIRE issue - and we might as well be frank about it - a system can be driven somewhat by political pressure to produce a registration that might not be in keeping with the priorities that were originally arrived at. We have to find a way in which to address that.

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Mr. Ormrod: Just to finish the apple component, you may be familiar with a product called Confirm, tebufenozide, which is also used in apples. That product has now been registered, in fact just this week. That product is not yet registered in the U.S. for apples.

[Translation]

Mr. Landry (Lotbinière): I'd like to thank the witnesses.

My first question is for the official of the Canadian Federation of Agriculture.

At the end of your presentation, you stated that a lot had been said but that on a practical level, nothing tangible was being done. Could you explain to me a little more clearly what you meant by that? That's my first question.

[English]

Mr. Wilkinson: I was referring to some of the issues Dr. Franklin put on the table in relationship to how products were going to be looked at in the consultation process.

From our point of view we could have given basically the same presentation: that we're going to look at it from a competitive point of view, that we're going to look at issues to make sure that the cost of registration will not impact on the availability of product.... A number of other points were made there. All I'm saying is that we would say many of the same things in our presentation.

The question is that we have a proposed structure, though, in which the farm community is asked to cost-recover 60% through their passing it on to us, which is a normal way to do business. Anybody who can pass costs on does so. We fully assume that when you get a bill for registration and they are members, they will pass it on to the farm community.

From some of the things Ron has said, we know full well that there are going to be competitive problems from the farm community point of view because of the low acreage that exists. So if you take that out, take those registration costs and pass them over those acreages, because in many cases they are very small, it'll increase the cost to producers.

From the Canadian point of view, from our best extrapolations, we're very concerned that we're going to lose products, again because of the cost in relationship to acreage. Manufacturers are going to say it is not worth their while to register their product in Canada for some of these small acreages, and that will be a very major concern for growers here, both from a competitive point of view and from the point of view of what they can use to deal with a number of pest problems peculiar to minor use.

Our concern is that even though we may be saying the same words, we see a major difference of opinion. One means an increase in cost of more than 200% and a much larger bureaucracy. What we thought could be dealt with from cost reduction is going to be a magnification of cost. What we thought could have helped in cost reduction in relationship to harmonization....

Again, this is going to happen to some extent in the future. We're concerned that all of these issues that we have kept raising from the farm community for almost the last 20 years are always going to be solved at some time in the future. We keep moving along with what we think is a very slow improvement in the situation. Even though improvements are being made, with entering into many of these new trade deals the rate of change has accelerated dramatically. The farm community has to respond much more quickly than it did in the past.

Competition is much more vicious. As tariffs on commodities come down, we are right into the market force with any competitor around the world, and we are getting frustrated from not moving at the speed we think we need in order for the farm community to stay in business and look at new products and diversify farm operations.

[Translation]

Mr. Landry: I have another question.

Have you ever made recommendations and what were the ones you made to the agency?

Finally, have you ever had problems with environmental groups?

[English]

Mr. Cameron: We are now entering into a process of consultation with the regulatory agency. We outlined our position very shortly after the so-called mauve book, the October 1994 response to the review recommendations, was put out by the agency and by the present government. At that time we outlined the concern we had, which is really our bottom line: that on a cost per unit of technology that is provided by a company, our costs will not be any higher than a cost in a competitive jurisdiction.

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As for the reaction from the environmental advocacy groups, we've been dealing with them for a long while. On many things we are in complete agreement. After all, we are farmers living in the very environment that we are accused of contaminating with pesticide. No one has greater concerns than we do, for our own health, our families' health, and the health of the resources we use in food production.

I am an environmentalist. I'm not often called that, but I deserve the title much more than some of the advocates who've come before us.

Mr. Hoeppner (Lisgar - Marquette): Dr. Franklin, I see that you're going to have performance standards or records in your organization. Who does the grading or evaluating of them later on? Do you do it yourself, or does the industry do it?

Dr. Franklin: On the concept or the introduction of performance standards, that term is utilized to say that there will be an agreed-upon timeframe from when a submission has been screened in and accepted as being suitable for review until a point in time at which we would make the regulatory decision. That time would be the performance standard.

The proposal was put forward that it be 18 months. That is what we would call a performance standard. It will be blindingly obvious to the manufacturers, who will certainly know the date at which they got their acceptance and then the date at which the document went out for consultation. That's a very measurable type of performance standard. Obviously there will be others.

Neither the performance standards nor the costs are going to remain fixed in perpetuity. If we are able to have joint reviews and we see any gains and reductions in the resources that we need to do the submission reviews, then obviously that will be reflected in any fee structure we have.

At least in my estimation, equally important is the timeliness of a product's getting on the market. Of course, the shorter the time period, the more resources it takes to get to that, because if we have an 18-month time period and all of the submissions come in at the same time, it's going to take more resources. We have to consider that as we're pushing on one area it will start to have an impact on the other.

We should not lose sight of the fact that with earlier entry to market, particularly for a manufacturer, they are able to start to recoup their research and development costs as soon as that's able to be sold. We also believe that it's important to do that, and that's why we're very committed to establishing standards and then trying to ensure that we meet them and then improve them as we're able to do so.

Mr. Hoeppner: I have a small-scale saskatoon grower in my area. He's had a devil of a time in finding the product to use. I just want to see if this is correct, because I could hardly believe it.

He has told me that there are different standards for levels of tolerance of residues for food that's imported and food that we grow ourselves. His saskatoons are mostly ``you pick''. He says that if the people come in to pick the blueberries or the saskatoons, then they would have to go to North Dakota and sell them to a wholesaler and bring them back in, because Health Canada has a higher level of tolerance of residue than Agriculture Canada has.

Is that correct? As far as residues are concerned, is there a difference between imported foods and what we grow?

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Mr. Ormrod: Mr. Chairman, in terms of tolerance, let me deal with the question of Agriculture Canada versus Health Canada: there is only one tolerance. It is set by Health Canada under the authority of the Food and Drugs Act, and that is the only tolerance that exists in Canada for domestic or imported produce.

If I understand your question correctly, it may be a situation where for one reason or another - and there are some cases where this occurs - a tolerance is different in the U.S. from that in Canada. That can create a trade irritant, and your case may be one of them. We could visit after the meeting if you wish to look at the specifics. The CUSTA activity has been mentioned here this evening, and one of the items on that agenda where we have made some progress is to identify situations where tolerances are different between the U.S. and Canada, and to rationalize or even out those tolerances to avoid a trade barrier problem.

Mr. Hoeppner: Does Health Canada set the tolerance level for residues for Ag Canada, or is it vice versa?

The Chairman: They set the tolerances for Canada.

Mr. Ormrod: That's correct - the chairman has put it very succinctly.

The Chairman: It's not Ag Canada, it's not Health Canada, it's not Industry Canada; they set the tolerances for Canada.

Mr. Ormrod: Yes, that's correct; imports and domestic - same tolerance.

Mr. Hoeppner: To me it seemed almost a bit wacky, because if they want to come and picket they've got to go to North Dakota to sell it to a wholesaler so they can bring it back into Canada, because there was a different tolerance level. Maybe what you said, that their tolerances...but then it shouldn't be imported; they shouldn't be allowed to bring it in.

Mr. Ormrod: It does sound a bit complex, and perhaps we could meet afterward on some of the details.

The Chairman: Yes, I might suggest that you could speak to Mr. Ormrod afterwards on the specifics.

I wonder if I could intervene here for a moment. We very often hear the comment that a product is registered for use in another country and not registered for use in Canada. Let's say an apple, a fruit or whatever product it is can be shipped to Canada. The argument is: if this product is registered, for example, in the United States and it's not registered here, why do we allow that product to come into Canada?

I wonder if Dr. Franklin or Mr. Ormrod would explain what the world situation is regarding tolerances, etc., or if they could give us the answer to that.

Mr. Ormrod: First, just to repeat and make it crystal clear, once a tolerance is established in Canada, it applies equally to domestic or import product. The same rules apply to both.

The question is, a crop grown in the U.S. using a product registered in the U.S. may not be registered in Canada; nevertheless, the apples, the potatoes, the tomatoes may be imported into Canada. That situation can arise in cases where we have no application yet in Canada, a product hasn't been registered, a registration hasn't been considered, but a tolerance may have been set for import produce. The most typical case, for example, would be citrus fruit, which we don't grow. So obviously if there are pesticides being used in the U.S. and they're coming into Canada on a citrus crop, a tolerance must be established to allow for that.

There are some situations where that imbalance exists in an agricultural crop as well, but if there is no tolerance, or if the tolerance is exceeded, monitoring is done at the border to prevent that fruit or vegetable crop from entering.

One of the most visible cases in recent years has involved pears in B.C. and a product called amitraz, which was used and was registered in the U.S. It did have a tolerance there - as I recall it was 0.3 ppm - but that product was not allowed to enter Canada. There was monitoring done to stop its entry because there was no tolerance set here, because the health and safety analyses of that product didn't warrant it.

The Chairman: One more question, Mr. Hoeppner.

Mr. Hoeppner: Mr. Chairman, that's probably something that could pertain to this saskatoon issue. Also, would NAFTA have some effect on this now? Can you keep that out under NAFTA?

Mr. Ormrod: Again, if the imported produce is exceeding an established tolerance, then yes, we can keep it out, and yes, we do keep it out. There is monitoring done of imported produce to see if it meets the tolerance.

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The Chairman: Mr. Steckle, and then Mr. Collins.

Mr. Steckle (Huron - Bruce): Thank you very much for appearing this evening. If you're like I am, you're getting tired.

We're talking about crossing borders on product that was perhaps grown in the U.S., and I'm thinking of a specific case in 1992 where we had a corn crop failure in Ontario because of weather conditions. We imported a tremendous amount of corn into Ontario, corn that was produced in the U.S. and sprayed with a chemical called Accent. We couldn't use it in Ontario and still aren't legally allowed to use it in Ontario, even though it is being used, and apparently there will be people facing court action because of it. They're admonishing others to use it, or helping people to find the product. I don't think any trucks were ever tested at the border to see whether Accent was used on the product, which was brought in by the hundreds and thousands of tonnes.

The Chairman: Product or corn?

Mr. Steckle: I'm sorry, the corn.

We didn't use that kind of product, because farmers are generally pretty conservative in their use of chemicals because of the cost.

I think it bears the argument: how can we allow this product into the country when we can't use the chemical used to produce that product in another country? Our chairman alluded to that question a moment ago.

Another point, made at a recent meeting I was at, is that people are going to the stores and buying apples at $1.79 for 10 pounds, and they wouldn't pay 79¢ for Ontario-grown apples. These products grown in another country, probably grown under the influence of chemicals that we can't use here.... The consumer is choosing to pay more for something that we probably can't grow here under these particular conditions. How do we rationalize these kinds of things?

There are a lot of questions. I can tell you this is a fact with Accent, and any farmer in Ontario who knows the corn crop will argue that point.

The Chairman: Mr. Ormrod, I think you've probably answered these types of questions before.

Mr. Ormrod: Thank you, Mr. Chairman.

Certainly I wouldn't argue with that farmer you're speaking of from Ontario, or any place else.

I'll deal with the situation we're discussing with the corn case first, and your example of Accent as a herbicide. As you know, it's a product for which an application has never been made in Canada - a commercial decision, not a regulatory decision, not a government decision.

We do have a related product registered for use on corn, called Ultim, and in fact it contains the active ingredient that is in Accent, along with another one. That commercial decision was made by the manufacturer - to market Ultim in Canada and not market Accent in Canada.

To come to your question of the importation of the corn, many herbicides used early in the season, and in fact most herbicides, don't require a finite tolerance, and that means greater than 0.1 ppm in Canada. In the U.S. the system of setting tolerance is a little different; it's basically done on the limit of sensitivity of the analytical method, and usually in an early treatment, as these herbicides are used, you wouldn't find any residue as low as you can go. Nevertheless, the procedure and practice and policy in the U.S. is to set your tolerance at that level of sensitivity.

We don't have the legal right to stop that corn, if we wanted to, on a tolerance basis, because it's well below 0.1, and probably couldn't even be identified below 0.1 at the level of sensitivity of the method. So on the corn and Accent question, that would be the response I would give.

Mr. Steckle: In this particular case, then, the manufacturer is really dictating what product Canadian corn producers can use.

Mr. Ormrod: I prefer not to respond to that question.

Mr. Steckle: I'm not asking you to, but I'm making a statement, and I think it's well-founded.

But would you agree with the point being made? If a product is registered in the U.S., safe for use in the U.S., on a commodity that we grow equally well in both countries, if it were registered there first, would it not be fair to have a simple method of accepting that product as a safe-for-use product in Canada - and the same vice versa, for the Americans to use a product that's registered here early?

.2105

Maybe you would want to comment on that. Why can we not come to a simple accommodation of this issue? As long as I've been in the farming business, and that's going back a few years, we've been talking about this issue, arguing about this point, and I never thought that some day I would be at a table where we would perhaps set the direction of policy.

I think it has to come to a point where we make a decision, and we are able to make decisions. I don't think we're able to do that, and now we're going to have a $20 million cost added to the producers, which in many cases they can't pass on to the consumers, and we're still not getting our products registered. I think we need some answers and some resolve on these issues. But I want you to comment on that one.

Mr. Cameron: I would certainly agree with you. Up to this point we have talked, I would think, with considerable accommodation to recognize a Canadian regulatory system, and certainly the sovereignty of decision among the Canadian public.

However, when we start looking at the costs we are now faced with, I think we have to find ways to simplify the system. If we recognize the trading accommodations that we're now into, and the increased costs that we're now facing in a Canadian regulatory system, I think we have to look at new ways of doing the business, and I don't think we're on that road yet. I think the route map has been there, and with some of the work that's been done under the CUSTA technical working group in that committee, which meets next week in Washington, I think we're looking down that road. Maybe we have a road map, but I don't think we're progressing down that road nearly fast enough. In light of the costs we're now facing, I think we have to get a vehicle and get moving on that road much faster than we're presently doing.

The Chairman: Mr. Ormrod, did you wish to comment? Then I'll go to Mr. Collins.

Mr. Ormrod: I think I could also agree, sir, with your suggestion that we need a simpler and quicker method, as Mr. Cameron suggests. It was also interesting this evening to hear acknowledged that in fact this challenge we're discussing tonight isn't unique to Canada; it also applies in the U.S.

In the last year or two, I have observed a very sharp change in the atmosphere in visiting back and forth with colleagues in EPA in Washington. I think it's a reflection of the comment you made earlier this evening, Mr. Wilkinson, that they're suffering the same problems - more to do than they're able to do and not being able to offer the client service they'd like. That has provided us an opportunity for doing joint reviews and working together, and that's a very active item on our agenda.

We have two products that are being considered in that very situation today, and I think we're going to have an answer on those products between now and spring, and we only began that work in about January of this year. The answer may be yes or it may be no - I won't forecast that here and now. But if we can get that answer through work sharing and joint review, that's the kind of efficiency I think will lead to the simpler approach, the quicker approach. Yes, it's never quick enough, but I believe the opportunity is there for progress, and certainly the joint review thing has got to be, in my book, one of the best.

The Chairman: Mr. Collins.

Mr. Collins (Souris - Moose Mountain): Mr. Chairman, I'll ramble for just a second.

I was glad to hear what you had to say at the end, because as I go through the border, we've got two custom houses - the guy's checking me coming in and checking me going out - whereas if we had one custom house, it might make sense. I understand we're going to look at that. We've got meat inspectors; we've an inspector here and an inspector there, and somebody else inspecting the guy that's inspecting.

When we move our product down to the United States, if the guy would see one smear on it, he'd send it back, the whole bloody carload. If he had to pay part of the bill, I don't know if he would send it back. If there's some reasonable.... I think those things are coming through. What I did hear, and I'm sorry the gentleman left -

The Chairman: He had to catch a flight, I'm sorry.

Mr. Collins: He said we're very refreshed by a new attitude and approach, a new process. I think if we work on a positive approach and say, ``We may not agree with everything you're doing, but we're prepared to work with you'', we'll go a lot further. Everything kind of speeds up; even your attitude to one another speeds up if you feel you're doing it cooperatively. But if you see that you're a burr in my saddle and I'm a burr in your saddle, guess what? We'll ride a hell of a long time with burrs in our saddles and we may not get off the camel. So we have to see that we go through the process.

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What I am concerned about is, as we go through on spraying wheat midge - and I'm sure my friends opposite know - you spray it once, you spray it twice, you spray it three times. Is that in the testing process? I know we went through those kinds of spraying processes in southeast Saskatchewan.

I wonder, when we see research done by our counterparts in the United States, could we not gather some of that research without going over it and retilling the soil and starting at square one? I'll give you an example: rbST, which we sat in on. We heard from every side of the coin that you can imagine. But the public has a perception of our rushing through and doing things.

I can understand what Mr. Wilkinson is saying, or how Ron feels. Who's going to bear the cost?

Canadians do expect that there is some security and some safety in the supply they're getting. So all that has to be factored into the process, maybe not from a political standpoint, but we're going to hear about it.

I say to you, wherever you can, cut the paperwork down, streamline the process and allow for those efficiencies to happen. Then I think we'll all get along and move down that trail much faster.

All I'm saying to you is how do we do it? How do we do it?

The Chairman: Who wishes to comment? Dr. Franklin.

Dr. Franklin: The points you raise are ones that we're certainly interested in, finding ways to do that. Despite the fact that it isn't patently obvious to everyone, and even in the year that I've been there, I think we've made enormous strides in the way we're doing it. It will take a period of time before that pops out, because we have quite a mixture of quality of submissions in process and it simply will take us time to work through that. I know that's been stated for a long time, but as I said to Ron - we seem to meet quite frequently lately - it is happening, and I am confident that it will happen. Unfortunately, I don't have any tangible evidence to be able to prove that at this point in time.

On the harmonization of testing requirements, I think at one of your last meetings there was what I believe to be somewhat incorrect information. We don't require testing to be done in Canada, for example, for the toxicology portion that is done on animals in Canada. That testing is done once, it's done worldwide, it's wherever the headquarters of the company are, and that information is then provided to us; there is no additional requirement. The only areas where there have been some additional requirement have been where we believe that because of soil, climate and eco-zone conditions there may be differences for a product being used in Canada versus where it's being used somewhere else in the world.

We've made enormous strides in basically coming to grips with eco-zones. In fact, we're working with the U.S. at this very point in time to say that if it's a contiguous growing area between Canada and the U.S., that if the residue data are done in one area or the other, they will be utilized for the submission in the U.S. or in Canada. I believe that's an incredibly significant improvement and will in fact reduce enormously this perception that they don't come to Canada because the data requirements are different. I believe we already have some tangible items and I anticipate we will continue to see these developments over the next year or two.

Mr. Collins: Mr. Chairman, can I just ask one question?

The Chairman: Go ahead.

Mr. Collins: How often does that happen?

Dr. Franklin: Does what happen?

Mr. Collins: Where you have these contiguous zones and you're just saying, look....

Dr. Franklin: It really depends on the particular crop. We have in fact developed a map that will show that if you basically forget the political boundary and just look at apple-growing areas in the Okanagan versus the state of Washington, for all intents and purposes you may very well have something that is similar. We will keep adding to that. It won't just be soil or temperature; it may well be whatever microbes or organisms are in the soil. We will try to expand that. It can be expanded to other countries as well.

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Mr. Collins: That's encouraging. Thank you.

The Chairman: Mr. Hermanson, a quick question.

Mr. Hermanson: I'll be fairly brief. I want to pursue this.

Dr. Franklin, if a product is registered in the United States and there's demand for it in Canada, does your agency have the latitude to look at the data from the U.S. and over the space of a month, based on that data, authorize or register that product in Canada?

Dr. Franklin: There are two parts to that, and I'll ask Mr. Ormrod perhaps to comment on a situation - a real tangible one.

If the company is unwilling to put the submission in, we have no legislative authority to force a company to put one in; it really becomes the company's decision. If they decide to put the submission in, what we're prepared to do now - and in fact we have several examples where we're doing this....

You have to recognize there has to be a level of confidence between reviewers in various countries. They can't just say they're going to accept it, because they have to take the responsibility that it's not going to be harmful if it's utilized.

But we are prepared to say to the U.S. or whichever country, give us the basis upon which you made your decision. We will utilize that information; we will make sure it's the same product that's going to be marketed in Canada - it may not be exactly the same - and find out whether the use conditions are the same and whether there is any difference that would lead to a different residue level, or that type of thing.

In fact, we are quite willing to do that - in essence, build on what's already been done, see whether it really is common, and make a decision on that basis. We anticipate that we will see an enormous shortening of the time it would take to make that decision.

Mr. Hermanson: Is there a good reason why you can't register a product if it's requested that the product be registered by the user of the product rather than the manufacturer of the product?

Dr. Franklin: My understanding of the legislation is that it's product-by-product registration on the basis of submission of data. If the user had the data and could provide all of that information, it's certainly a possibility that they would then be considered to be the manufacturer and would be responsible for the product.

I'm not aware that that's ever happened. The data are generally considered to be confidential business information and the manufacturer is the one that will provide that information.

Mr. Hermanson: But if the producer requested the registration, could you approach the manufacturer and ask them for the data?

Dr. Franklin: We have not done that in any of the areas in regulatory systems, because we don't wish to be accused of any type of bias or favouritism. In fact, it would really be somewhat outside of the mandate of the PCP act for us to do that.

The Chairman: Mr. Ormrod, did you want to comment on that aspect of it?

Mr. Ormrod: Perhaps I could, Mr. Chairman. A situation that is a good analogy to the question you've raised, sir, would be one where we have a product registered, for example, for certain uses and a grower group wishes to expand it to a small acreage crop. It may or may not be worth while for a manufacturer to do that, and we have a program that brings the agency together with provincial people and with the manufacturer. Indeed, Agriculture Canada has some funding on the table to make that program work so that we can get additional information that might be necessary to extend a product from use on carrots to cabbages, or whatever the case may be. That's a situation that does occur and seems to work reasonably well.

Mr. Hermanson: That's moving in the right direction.

The only other thing I would ask is this, again very briefly. The cost of some product is higher than in the United States. Is this cost recovery thing going to assist that or make it worse? In other words, is the cost spread between the U.S. and Canadian product going to increase with the cost recovery as mandated under Treasury Board or is it going to get better?

Dr. Franklin: I believe that over the next period of time we may have a little more tangible information to try to answer that question, but I don't have any conviction that it's an easy question to answer, because there are a lot of factors involved in the pricing of products. Hopefully, we'll be able to get some information to answer you.

The Chairman: There has been some price monitoring done. I wonder if Ron or Jack could comment on that. Was that not one of the recommendations in the blue book - that there be price monitoring? I forget.

Mr. Cameron: The recommendations of the review team at that time were to develop a price disciplining system.

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The Chairman: That's right.

Mr. Cameron: The price disciplining system that was arrived at, after long consultation, was that a product...could be imported by Canadian producers if they could prove that product was exactly the same as the product that was registered in Canada. That turned out to be a fairly costly thing, to develop that likeness and similarity, and it has to a certain degree discouraged that product.

At the same time, there was a monitoring system developed that looked under a contract at prices in the United States versus prices in Canada and compared them on an active ingredient dollar-for-dollar basis. I think we found that was a very effective system of making producers aware of what those costs were and tended to be probably the major price disciplining system that came out.

But as we look at the system of cost recovery, I don't think we could say anything but that it's going to increase prices to producers at the farm level. There can be no doubt of that, if we're going through with the present process.

The Chairman: Okay. I know Mr. Wilkinson wants to make some comments. The evening is getting on. I don't want to shut it down needlessly, but if there are no further comments from the members, maybe we'll hear just a very quick closing comment from those who wish to make it. We'll go in reverse from the way we came up.

Mr. Wilkinson: Mine is a closing comment as well. I think, as much as the questions have been answered, it's clear that in some areas progress has been made. We have never denied that progress hasn't been made, but what we're very concerned about is that the speed of change that has been occurring has not kept up with the speed of change that farmers are forced to adapt to.

So when you put those on parallel tracks, there's a grave concern that even though we're making progress in some areas, it's not nearly fast enough to move us ahead. At best we're treading water; at worst we're slipping behind in relationship to some of the competitive factors that the farm community is dealing with. Many of the people on this committee know how serious this issue is, and in our opinion, it really needs prompt attention to move extremely fast in many areas...versus a product that has worked by putting it on the fast track.

These comments are in no way meant to be personal attacks against anybody. We just see that these issues have to move much faster in the future. We are very nervous, obviously, with the price tag that goes with this and the sense, as Ron has said over and over again, that when you see those price increases from the old system to this system, they have nowhere to go but onto the backs of producers, because it is unreasonable to assume that very much will be absorbed by manufacturers. There may be some points being made in relationship to R and D and getting a product on quicker in that they will be able to absorb a fraction of the cost, but it will be a fraction in comparison to what's being asked here.

To sum up, the idea that a 60% cost recovery somehow works for us, whereas different levels of cost recovery are applied in other jurisdictions, is unacceptable from the farm point of view. It has been a major problem all the way through the Treasury Board approach to cost recovery to the farm community. Next week we'll be in talking about cost recovery and the sense that there is no rhyme or reason to a host of these numbers. We're basically told, that's the game plan; here's the bill. There's no discussion on the details. This is an example in a long list of examples ranging from different commodities, inspection and grading services - the list goes on and on.

I just want to close with that. Remember the good news you have heard, but also remember the price tag that's coming with this proposal. Does it sound reasonable? Is it going to deal with the questions? Is it reasonable that farm communities should eat those costs? What is it going to do for product availability in the future?

We're saying it's not reasonable. It needs to be amended in a substantial way.

The Chairman: Thank you. Ron, any comments?

Mr. Cameron: No. I think the concern that we've raised.... As we said, we've had lots of conversations with the PMRA and we certainly are pleased to see that some of the burrs under the saddles that we've had have been solved by the freedom of exchange that we've had.

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I guess our main concern is that we do see a considerable opportunity to save money by getting into a harmonized system with other jurisdictions. We have yet to get any real detailed analysis or consultation upon those costs that we have outlined. That's not any reflection, it's just that we haven't had the opportunity to do it yet. As we look at those costs, we're concerned that the agency is setting itself up for not recognizing those opportunities. We think those opportunities for cost saving should be recognized at the outset and that we should let them drive the cost-effectiveness of the costs that are being outlined.

We should not staff to comfort; we should staff to expectancy of efficiency of using these new systems.

With that, I would only hope we could use the cooperation of this committee to work with the whole system towards that end. I really thank you for the opportunity to present our views.

The Chairman: Thank you, Ron.

Dr. Franklin, do you have any comments?

Dr. Franklin: Yes, thank you, Mr. Chairman.

I appreciate that a process that has taken at least 20 years, as one of the speakers has already commented today, does seem very slow. I can only comment that I believe there already has been some real opportunity for cost reduction with the formation of the agency, just by having the agency together and reducing the cost of having separate departments involved in this. I think that actually is a realization. I understand the level of frustration, and I can only say that my staff are working as hard as they can to do these various things and that I think you will see tangible results in the very near future.

I believe we are recognizing the opportunities for harmonization. We have already built upon those, because in fact the estimate that's on the table now is lower than the estimate that was put forward in the purple book. So we have already incorporated a number of the efficiencies, and it's a recognition that the program that the government committed to do, and that we've been asked to deliver on, is a very large program.

The fact that we are projecting that we will be able to review submissions and have decisions made in eighteen months is a significant step forward from where we have been in the past. I think it's really important to understand that we are already building on that fact. I think it is a reflection in the cost already. Undoubtedly, there will be modifications on those, and we will certainly factor those in as we have the information upon which to base those decisions.

I would like to thank you, Mr. Chairman and members of the committee, for your comments. They will help us in understanding some of the user needs and some of the needs in the communities. Certainly we will take all of those into consideration as we go through this consultation period and try to formulate a fee schedule at the end of this.

The Chairman: Thank you very much, everyone. I certainly hope that the opportunity for us all to make comments tonight has helped and does help to move the process along. If we could sum it up in one comment at the end, I know it's the desire of everybody to fix the system and fix it faster then it has been in the past. We want to move it along as quickly as we possibly can.

The comment was made that we in Canada are not unique in the problems we're having in this. This may be of little comfort, but in a document that Jean-Denis passed me tonight, which came off the Internet this afternoon or today, is a comment: ``Delaney Clause on Collision Course with Farmers'' in the United States. I'm sure a number of people have seen that. I'll just read one paragraph from it.

The regulation, known as the Delaney clause of the Federal Food, Drug and Cosmetic Act, prohibits any trace of certain products in food no matter how small the concentration and regardless of health risk.

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It will be interesting to watch that process. Anybody who hasn't seen that and would like to have a copy of it - it's only in English - can ask to get a copy or how you can get it off the Internet.

We are not alone. That's little comfort in some ways, but it does point out that we are together in the challenges we have, and maybe we'll emphasize even stronger the importance of working in cooperation and consultation with each other within Canada, and between Canada and other countries, to assist.

I thank you very much for this evening. Have a safe journey home.

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