Stephen Harper, George W. Bush and Felipe Calderón at the 2008 North American Leaders' Summit in New Orleans (White House photo by Joyce N. Boghosian).
Bruce Campbell wrote yesterday on the Behind the Numbers blog about Trump's January 30 executive order on deregulation. On the face of it, the idea of eliminating two existing rules affecting business each time a regulator (like the U.S. Environmental Protection Agency or Canadian Environmental Assessment Agency) wants to introduce one new rule is absurdly dangerous--at some point you hit zero regulations, the libertarian's free-market (scorched earth?) paradise, which is, I suppose, the point.
Not that Trump is pioneering anything here. If the "two-for-one" rule sounds familiar it's because it was former prime minister Stephen Harper's idea first, a volley against Canada's environmental "terrorists" who, according to his government, were undermining Canada's global competitiveness with all their concerns about killing lakes with mining tailings, greenhouse gas emissions, etc.
Actually, Harper's "one-for-one" rule is still on the books in Canada. Regulators here are already required to spend time and money searching for rules to delete each time they want to introduce a new public health, environmental protection or consumer safety measure.
If it is surprising the new Liberal government would leave a dangerous deregulation clause intact it shouldn't be. As I write in a report out this week from the CCPA and several European NGOs, Canada has a long history of voluntarily deregulating for the sake of keeping trade and investment flowing with its major trading partner: the United States. Canada is now trying, through the Comprehensive Economic and Trade Agreement, to pull Europe's frequently more precautionary regulators into the same quagmire. (How that makes CETA a "progressive" deal I have no idea--neither do European progressives.)
What follows is an elaborated excerpt from that report with a few more details on the history of Canada-U.S. regulatory co-operation. As Campbell mentions in his blog, it's an important history to remember as Prime Minister Trudeau heads to Washington on Monday for preliminary discussions with Trump and gang about renegotiating NAFTA. Perhaps when the U.S. president has exhausted his countries' regulations through the new "two-for-one" rule, we might let him cut some of ours. You know, to demonstrate we're "a reliable ally" and all that.
***Over the past 30 years, Canada has prioritized harmonized regulations with the U.S. whenever possible—the natural result, some argue, of economic integration with a superpower flowing from the Canada-U.S. Free Trade Agreement (1988) and subsequent NAFTA (1993). There is some truth to this. As Canadian business and exporters became increasingly dependent on access to the U.S. market, they were highly vulnerable to shifts in U.S. policy affecting cross-border supply chains.[i] Automotive, food processing and agricultural firms, whose operations and ownership frequently span both sides of the border, have been the strongest advocates for common standards in food and consumer safety.
However, pressure to harmonize cannot fully explain the zeal with which consecutive governments in Canada have endorsed unilateral deregulation, to the point many Canadian regulators have come to depend on industry and foreign government science in their decision-making process.[ii] For example, even before NAFTA’s 30 cross-border regulatory working groups had been established, the Canadian federal government had asked all departments “to reduce the regulatory burden on Canadian businesses and individuals,”[iii] such as by making sure “Information and administrative requirements should be limited to what is absolutely necessary and impose the least possible cost on regulatees.”[iv]
Canadian environmental and public health advocates were already at that point fighting an opaque and industry-dominated regulatory model in key areas such as biotechnology. Their pressure forced the government to establish an expert panel to assess Canada’s biotechnology approval process. In 2001, the panel issued 58 recommendations for including precaution in the regulatory process, almost all of which were ignored. Instead, two years later Canada published a decidedly contradictory framework on the precautionary principle that would guide regulators for years to come.
“Precautionary measures should be cost-effective,” it said, “with the goal of generating (i) an overall net benefit for society at least cost, and (ii) efficiency in the choice of measures.”[v] The framework’s last point was that regulators should also consider the “least trade-restrictive” option among different measures for addressing market failures through regulation. “This is especially relevant in terms of international trade where disciplines and mechanisms exist for other States to challenge the nature and impact of precautionary measures,” it said. The framework reinforced the need for regulators to clear new rules with federal trade lawyers and officials who tend to view divergent regulations as hidden trade barriers.
Deregulation became more explicit in the 2003–2005 “smart regulation” reform initiative, and once more it was tied to international co-operation. The second recommendation of the 2004 External Advisory Committee on Smart Regulation was that “the federal government should review and adopt international approaches wherever possible” and “limit the number of specific Canadian regulatory requirements.”[vi] Unique Canadian regulations “may be appropriate,” the committee added, when there is no commonly agreed upon international or North American standard, or the regulatory processes or decisions of a trading partner do not “meet Canadian policy objectives.”[vii]
There was no space here for Canada to move more quickly than its trade partners to protect the public interest where precaution would advise it; the fourth recommendation of the smart regulation committee even qualifies that should Canadian-specific rules be applied, regulators should first assess “alternative instruments for meeting policy objectives (e.g. voluntary measures, information strategies).”[viii] At heart, “smart regulation” was about prioritizing business innovation, and the introduction and cross-border trade in “novel” products whose safety would be tested on the market, all the while free-riding off foreign (U.S.) regulators.[ix] As a former Canadian industry minister put it in a 2003 speech:
Ottawa’s structure is overwhelmingly oriented towards the interests of Canadian producers, not consumers. Our sectoral departments, from Industry to Agriculture to Natural Resources to the Space Agency and even the granting councils, have producer interests foremost in mind.[x]Of course, similar forces were at play south of the border. A 2007 CCPA report on Canada-U.S. regulatory co-operation warned of the Bush administration’s “concerted assault” on the U.S. regulatory system: “It has put corporate lobbyists and anti-regulation extremists in charge of regulatory agencies, centralized the regulatory control in the White House, stacked scientific advisory bodies with non-scientists or pro-industry scientists, suppressed or edited agency reports, manipulated regulatory tools, obstructed regulatory processes and slashed enforcement budgets.”[xi]
In 2005, North American leaders launched the Security and Prosperity Partnership—a broad effort to align Canadian, Mexican and U.S. security and immigration measures, increase information sharing related to crime and terrorism, liberalize rules-of-origin, and ensure that “new regulations in all three countries are as compatible as possible,”[xii] among other priorities. A “Regulatory Co-operation Framework” was included into the process in 2007, at the request of the North American Competitiveness Council—a 30-member advisory committee made up exclusively of CEOs with direct participation in annual NAFTA summits. Public opposition to this cozy relationship between business and government, and a U.S. election, put the collaboration on hold.
The Canada-U.S. Regulatory Co-operation Council
Though the SPP was nixed in 2008 by incoming U.S. President Obama, Canada and the U.S. relaunched a similar initiative in 2011. Under the rechristened Beyond the Border Action Plan, the Regulatory Co-operation Framework was succeeded by a new Regulatory Co-operation Council (RCC). The RCC is composed of senior regulatory, trade and foreign affairs officials from both countries. “The United States and Canada are committed to working through the RCC to provide early notice of regulations with potential effects across our shared border, to strengthen the analytic basis of regulations, and to help make regulations more compatible,” said a joint statement in 2011.[i] This goal was elaborated in a three-part mandate for the RCC that can be summarized as follows:
- Increased regulatory alignment and transparency: At the government level, this involves opening up each country’s regulatory process “at the earliest stage possible” to examine options for alignment. It also foresees giving relevant stakeholders “early warning” of “upcoming rules that are significant and of mutual interest.”
- Greater alignment in regulations and recognition of regulatory practices: Recognizing the steps Canada and the U.S. have already taken to require cost-benefit assessments and the use of “best available science” before establishing new rules, the RCC is to align “also the activities associated with the application of regulations (testing procedures, inspection and certification activities, etc), and to accept and recognize the work done in each other’s jurisdiction.”
- Smarter, less burdensome regulations in specific sectors: These target sectors are characterized by high levels of cross-border integration and a history of past regulatory co-operation, as well as those with “significant, emerging growth potential and that are characterized by rapidly evolving technologies where regulatory approaches are anticipated or are currently in early stages of development.”[ii]
Key areas of RCC co-operation to date include, but are not limited to, a joint reassessment of neonicitinoid pesticides and harmonization of the registration and maximum residue limits of chemical pesticides; a common North American approach to the disclosure, testing and tracking of chemicals and novel materials in consumer products; harmonized engine and vehicle emissions standards; mutual recognition of plant and animal health regulations and meat inspection methods; harmonized standards for the transportation by rail of flammable liquids; and a common set of principles for the regulation of nanotechnology.[iv] In some areas, including the regulation of toxic chemicals, technical working groups comprised of industry and civil society actors are regularly consulted on an ongoing basis. In other cases, industry is initially consulted on priorities for co-operation, but afterwards the work is carried out independently by regulators.[v]
The RCC process is somewhat more transparent than past co-operation efforts, but is clearly still primarily directed at supply-chain efficiency, not necessarily at increasing public safety. For example, a May 2016 update on the work of the RCC says industry, with its detailed knowledge of supply chain logistics, “can inform departmental decision-making on the design and delivery of regulations.” When making submissions on co-operation, business stakeholders are encouraged to include benefits for consumers—listed somewhat restrictively as “increased product choice; timelier market availability; potential cost impacts; product quality; etc.”—as well as those for regulated businesses.[vi]=
The RCC’s work so far on toxics regulation and pesticide management can help us understand how co-operation efforts, even when they are voluntarily entered into, can become yet another venue for industry lobbying against new rules, and erect barriers to effective public health and environmental measures.
Canada used to be a leader in the assessment of the toxicity of chemicals in commercial use, earning praise from consumer groups for the toxics provisions of the Canadian Environmental Protect Act (1999). Since then, Canada has fallen behind the EU in some respects, and may even become the weaker North American link in chemicals management once reforms to the U.S. Toxic Substances Control Act come into effect. The role played by regulatory co-operation—in particular the directives to Canadian regulators not to create unnecessary trade barriers through more stringent rules—cannot be overlooked in this regression.
Prior to a 2007 North American Leaders’ Summit, both the Environmental Protection Agency (EPA) in the U.S. and Health Canada had come under fire for hastily approving chemicals that were shown to harm human health, and for regulating in a way that was too slanted in support of industry.[vii] As in other areas like biotechnology, Canada’s regulatory decisions on chemicals are reliant on industry data, are made in a non-transparent way, and have been slow to phase out toxics.[viii] Consumer groups celebrated a recent decision to ban the use of Bisphenol A (BPA) in baby bottles, based on the risk of consumption for infants. But they are puzzled why neither Canada nor the U.S. chose to ban it from all food packaging as a potential hazard for consumers of all ages.
Despite regulatory co-operation efforts, there are still significant differences in how Canada and the U.S. regulate toxics. Canada, for example, makes greater use of hazard and exposure criteria in its listing decisions, and plans to scrutinize more than 4,000 high-risk chemicals of the 23,000 substances allowed into commerce without a proper assessment—double the number of chemicals on the existing U.S. priority list. The EU REACH process (Registration, Evaluation, Authorisation and Restriction of Chemicals), in contrast, will “require producers and users of an estimated 30,000 chemicals in commerce in Europe to register them and provide information on their production, use, hazard and exposure potential.”[ix]
The NAFTA governments could have decided at their 2007 meeting to harmonize upwards to the higher European standards. Instead, they issued a joint declaration on “Regulatory Co-operation in the Area of Chemicals,” with the goal of producing a continental alternative to REACH. This goal has carried over into the RCC process, though under somewhat different circumstances. The revised TSCA in the U.S. incorporates positive Canadian and some European features that improve the risk assessment process used by the EPA.[x] But, from a consumer and health protection perspective, it still falls behind EU legislation on favouring alternatives to chemicals, and with respect to endochrine disrupters.
Canada and the U.S. have agreed to try to jointly assess six high-priority chemicals using the RCC process. Meanwhile, technical working groups have been established in the areas of nanotechnology, risk assessment of new and existing chemicals, and how significant new activities (or significant new usage rules in the U.S.) are regulated.
Table 1 lists the members of the RCC technical working group on chemicals risk assessment, broken down by industry, NGOs and “alternate” members. The American Chemistry Council, which played a significant lobbying role in Europe to postpone a proposed ban on pesticides containing harmful endocrine disruptors (EDCs), has three seats on the technical working group (four if you count the alternate).[xi] Apart from the obvious imbalance between industry and non-industry voices, the working group is notable for its dominance by U.S. multinationals, reflecting the high levels of foreign ownership in the Canadian chemicals sector.
Table 1: RCC Risk Assessment Technical Working Group Members[xii]
|Rubber Manufacturers Association (RMA)
|Consumer Specialty Products Association (CSPA)
|International Molybdenum Association
|Ford Motor Company
|American Cleaning Institute (ACI)
|American Chemistry Council (ACC)
|Chemistry Industry Association of Canada (CIAC)
|Alkylphenols & Ethoxylates Research Council (APERC)
|Canadian Cosmetic, Toiletry and Fragrance Association (CCTFA)
|Phthalic Anhydride Panel (American Chemistry Council)
|Dow Chemical Canada
|Silicones Environment, Health and Safety Council (SEHSC) (American Chemistry Council)
|Susan Van Volkenburg
|Procter & Gamble and Canadian CSPA
|Fe de Leon
|Canadian Environmental Law Association (CELA)
|Chemical Sensitivities Manitoba (CSM)
|Natural Resources Defense Council (NRDC)
A source with access to the process claims it is still too early to know if the RCC will be a drag on needed reforms to Canada’s toxics regulatory framework—for example, moving from a largely “risk-based” to a “hazard-based” assessment model more in line with the precautionary principle—or if it could result in upward harmonization. They report, however, that the joint assessments of six priority chemicals are stacked with industry players, and that NGOs were only incorporated into the technical working groups two years ago, after the RCC working areas were established.[xiv]
Co-operation on pesticide regulation, including harmonizing maximum residue limits, or MRLs, was already advanced in North America prior to the RCC, through work that started within one of the more active NAFTA technical working groups. A 2006 report found that, to that point, “There is evidence that patented producers, through their industry organization, CropLife, are highly involved in [the] process, while generics and agricultural producers are not. From the TWG minutes, there seem to be key roles adjudicated to [the] global pesticide industry and government federal agencies leaving behind farmers, NGOs and consumers.”[xvii]
Another report that year found that Canada allowed many ingredients in registered pesticides that were banned in other OECD countries, including known or suspected carcinogens and developmental toxins.[xviii] The report claimed North American harmonization efforts were a “driving force” of changes to Canadian pesticide regulation. The problem was that “both Canada and the U.S. fare poorly in protecting public health from pesticide risks in comparison to the European Union and Australia.”[xix] The largest pesticide makers, represented through CropLife, have made it clear they see regulatory co-operation in the Transatlantic Trade and Investment Partnership (TTIP) and CETA as a means of stopping the EU from diverging further from North American norms.[xx]
Within Canada, according to CropLife’s 2014-15 annual report, industry has been busy countering proposals for municipal bans on cosmetic pesticide use and advocating for “science-based” regulations for neonicitinoid-treated corn and soybeans in Ontario, where the province has called for an 80% reduction in their use as a precautionary measure to protect bees and other pollinators threatened by the technology.[xxi]
In contrast to this provincial example of acting preventatively to remove a potential threat to human and animal health, the binational RCC process for reviewing three neonicitinoid pesticides, based on a “new pollinator risk assessment framework,” shows how regulatory co-operation can become a drag on precautionary measures taken in the public interest. Since announcing that binational review in 2014, Canada has approved two new neonicitinoid products containing the active ingredient clothianidine, manufactured by Bayer CropScience but currently banned in the EU as a potential risk to bee colonies.[xxii] In July 2016, Environmental groups in Canada launched a court challenge to Canada’s pesticide registration process, claiming, "We've had a situation where for years, they're continuing these product registrations without the scientific information that the agency itself flags as critical for determining the risks of these pesticides."[xxiii]
In April 2016, the Canadian government moved responsibility for the RCC from the Privy Council Office (PCO) to the Treasury Board Secretariat (TBS), “to effectively integrate the Government of Canada(‘s) coordinated efforts,” according to a PCO official. “Housing the RCC at TBS brings together the Government’s primary regulatory policy functions, which will result in increased synergies and better support of regulatory co-operation between Canada and the U.S.,” said another.[xxiv]
This further institutionalization of the RCC has been received with mixed praise by business groups. An April 2016 report from the Canadian Chamber of Commerce, funded by Monsanto, CropLife, Johnson & Johnson, Google, Eli Lilly and several other multinationals complains of an “impotent” RCC and promotes, instead, the value to industry of a more “bottom-up” approach to co-operation. The report recommends the establishment of a “dashboard that industry stakeholders can use to track the agendas and progress of bilateral partnerships between Canadian and U.S. regulatory agencies,” and to provide input to regulators. Such an online portal was under development by the Canadian Food Inspection Agency at the end of 2016.[xxv]
Stuart Trew is a trade researcher with the CCPA and editor of its bimonthly magazine, the Monitor. He is the co-editor, with Scott Sinclair, or the recent book, The Trans-Pacific Partnership and Canada: A Citizen's Guide (Lorimer).
[i] Joint Statement by President Obama and Prime Minister Harper of Canada on Regulatory Cooperation, February 4, 2011, https://www.whitehouse.gov/the-press-office/2011/02/04/joint-statement-president-obama-and-prime-minister-harper-canada-regul-0
[ii] Terms of reference for the United States – Canada Regulatory Cooperation Council, June 3, 2011, https://www.whitehouse.gov/sites/default/files/omb/oira/irc/us-canada_rcc_terms_of_reference.pdf
[iii] RCC Newsletter, March 2016 https://www.tbs-sct.gc.ca/ip-pi/trans/ar-lr/rcc-ccmr/rpswp-epmrpt-eng.asp#toc2
[iv] For more on the RCC working groups, see Government of Canada, “Canada–U.S. Regulatory Cooperation Council,” https://www.tbs-sct.gc.ca/ip-pi/trans/ar-lr/rcc-ccmr/index-eng.asp.
[v] Personal communication with RCC contacts in Canada.
[vi] Government of Canada (2016), “Canada – U.S. Regulatory Cooperation Council E-Newsletter, March 2016,” https://www.tbs-sct.gc.ca/ip-pi/trans/ar-lr/rcc-ccmr/rpswp-epmrpt-eng.asp
[x] See Richard Denison’s blog series for the Environmental Defense Fund, http://blogs.edf.org/health/2015/04/15/tsca-reform-legislation-enhancing-epa-testing-authority/
**Richard Denison (2007), “Not That Innocent: A Comparative Analysis of Canadian, European Union and United States Policies on Industrial Chemicals,” a co-production of Environmental Defence and Pollution Probe, require producers and users of an estimated 30,000 chemicals in commerce in Europe to register them and provide information on their production, use, hazard and exposure potential.
[xi] Union of Concerned Scientists (2015), “Bad Chemistry: How the Chemical Industry's Trade Association Undermines the Policies That Protect Us,” http://www.ucsusa.org/center-science-and-democracy/fighting-misinformation/american-chemistry-council-report#.WBuVjOErIUE.
[xii] Chart supplied by the RCC Substances directorate within Environment Canada.
[xiii] Regulatory Cooperation Council Joint Work Plan: Chemicals Management, http://www.ec.gc.ca/international/default.asp?lang=En&n=7C5E4437-1
[xiv] Personal conversation with author.
[xv] Corporate Europe Observatory, “Better Regulation: Corporate-friendly deregulation in disguise,” p. 7.
[xvi] Canadian Chamber of Commerce (2016), “Canada’s Next Top Trade Barrier: Taking International Regulatory Cooperation Seriously,” p. 19.
[xvii] Dan Badulescu and Kathy Baylis (2006), “Pesticide Regulation Under NAFTA: Harmonization in Process?” CATPRN Commissioned Paper CP 2006-6, p. 15.
[xviii] David Suzuki Foundation (2006), “The Food We Eat: An International Comparison of Pesticide regulation,” p. 5: http://www.davidsuzuki.org/publications/downloads/2006/DSF-HEHC-Food1.pdf.
[xix] Ibid. p. 22.
[xx] Erica Smith, David Azoulay and Baskat Tuncak (2015), “Lowest Common Denominator: How the Proposed EU-US Trade Deal Threatens to Lower Standards of Protection From Toxic Pesticides,” Center for International Environmental Law, p. 14.
[xxi] CropLife Canada, “Helping Canada Grow,” 2014-15 Annual Report, p. 7: http://www.croplife.ca/wp-content/uploads/2015/11/CROPLIFE_2015AnnualReport_web_E.pdf
[xxii] “PMRA continues to register bee-killing pesticides,” Sierra Club Canada press release, August 8, 2014, http://www.sierraclub.ca/en/media/2014-08-08/pmra-continues-register-bee-killing-pesticides
[xxiii] Bob Weber, “Lawsuit filed over federal permits for alleged bee-killing pesticides,” CBC News, July 6, 2016, http://www.cbc.ca/news/politics/neonic-lawsuit-ecojustice-1.3667172
[xxiv] BJ Siekierski, “Liberals shift responsibility for Regulatory Cooperation Council from PCO to Treasury Board,” iPolitics.ca, April 10, 2016, https://ipolitics.ca/2016/04/10/liberals-shift-responsibility-for-regulatory-cooperation-council-from-pco-to-treasury-board/
[xxv] Personal communication with CFIA official, November 7, 2016.
[i] Stephen Clarkson, Sarah Davidson Ladly and Carlton Thorne (2002), “De-institutionalizing North America: NAFTA’s Committees and Working Groups,” paper presented to the third EnviReform Conference, November 8, 2002, p. 24.
[ii] The free trade era intersects in Canada with a period of large federal deficits and growing debt, which triggered much rethinking about what governments should do and how they regulate. As a Health Canada official said in 2000, “Both officials and political leaders realize that governments regulate too much.” Harmonization was a way to bring government budgets down (even at the expense of domestic scientific capacity and knowledge) while at the same time removing a “regulatory burden” from business engaged in cross-border trade.
[iii] Government of Canada (1994), “Agenda for Jobs and Growth,” Quoted in Lucy Sharratt (2002), “Regulating Genetic Engineering for Profit,” Polaris Institute, p. 15.
[iv] Treasury Board of Canada Secretariat (1995), “Government of Canada Regulatory Policy”: http://www.collectionscanada.gc.ca/eppp-archive/100/201/301/tbs-sct/tb_manual-ef/Pubs_pol/opepubs/TB_B3/RP1-1E.html
[v] Government of Canada (2003), “A Framework for the Application of Precaution in Science-based Decision Making About Risk,” p. 12: http://www.pco-bcp.gc.ca/docs/information/publications/precaution/Precaution-eng.pdf
[vi] External Advisory Committee on Smart Regulation (2004), “Smart Regulation: A Regulatory Strategy for Canada – Report to the Government of Canada,” p. 19: http://publications.gc.ca/collections/Collection/CP22-78-2004E.pdf (Emphasis added.)
[viii] Ibid., p. 20.
[ix] Marc Lee and Bruce Campbell (2006), “Deregulation and Continental Regulatory Harmonization,” in Campbell and Ed Finn, Living With Uncle: Canada-U.S. Relations in an Age of Empire,” Lorimer, p. 124.
[x] Harry Swain, “Reflections on the Evolution of the Federal Industry Department,” speech to the Industry Canada 2003 Executive Conference, quoted in Public Interest Advocacy Centre (2009), “Consumer Protection in Canada and the European Union: A Comparison,” p. 31.
[xi] Bruce Campbell (2007), “More Than Jellybeans: The SPP Regulatory Framework Agreement and its Impact on Chemicals Regulation,” Canadian Centre for Policy Alternatives, pp. 3–4.
[xii] Ibid. p. XX