**April 4, 2003**

**Comments of the Canadian Produce Marketing Association (CPMA) on rules
proposed by the Department of Health and Human Services' Food and Drug
Administration (FDA) under the \[U.S.\] *Public Health Security and
Bioterrorism Preparedness and Response Act of 2002 (Bioterrorism
Act)*.**

Docket No.'s 02N-0278 02N-0277

The CPMA welcomes the opportunity to provide comments on the
above-referenced notices of proposed rulemaking as published by the Food
and Drug Administration (FDA), Department of Health and Human Services,
in the *Federal Register* of February 3, 2003.

While we appreciate that the normal course would be to submit comments
separately, and we understand that both are key elements of the proposed
USFDA strategies. In our review of both notices, it is our view that the
requirements of the registration process, and the reporting components
of the information required, and how some of that information may be
required on the daily notification, also makes the notification process
more difficult and onerous. The final conclusions on the registration,
will likely dictate the information required on the daily notices to
some effect.

Consequently, whatever the final decision on an appropriate time for the
Notice Process, the level of the date required in such notices in itself
may also impose significant difficulties and obstacles

Having said that, we will try to respect making specific reporting under
each docket #.

# The CPMA

The CPMA is a voluntary not-for-profit trade association whose members
have an interest in the health and economic success of the fresh fruit
and vegetable market in Canada and represents over 90% of all fresh
fruits and vegetables sold in Canada. It is a vertically integrated
association with members from the production side right up through to
retail and foodservice in Canada; including import and export. We also
have members who supply service to the trade and a large international
membership, with upwards of 40% of our members from outside Canada. This
stands to reason given that approximately \$3 out of every \$4 sold at
retail or at foodservice in Canada is imported. Our single largest
supply country is the United States; representing approximately 75% of
all fresh fruits and vegetables imported into Canada. Consequently, we
have over 170 U.S companies or commodity organizations as members, or,
approximately 85% of our international membership. The balance of our
international membership is from ten other countries.

CPMA's input is generally targeted to the Canadian legislative or
regulatory processes; however, periodically the CPMA provides input into
the U.S. legislative and regulatory process. This latter input is based
upon two objectives. The first is to provide input to U.S. authorities
on proposed, or actual legislation and/or regulations which may have a
negative affect upon our members who export fresh fruit and vegetables
to the United States. The second is to provide input to the U.S.
authorities on U.S. legislation and/or regulations, that if emulated or
replicated by the Canadian government, would potentially have a negative
impact upon trade into Canada, and as a consequence damage our Canadian
import members and foreign suppliers to Canada.

In this case, our reason for commenting is based upon both. However, we
are focusing upon the proposed USFDA regulations and commercial
practices of fresh fruit and vegetable exporters, as we have received
more comments from this sector. As an aside, we have asked importers in
Canada to equally assess the implications of such regulations were they
applied on imports into Canada. On this latter point, there is serious
concern that such regulations would create cost, and indeed create
problems upon trade into Canada. The reality is, of course, we received
little substantive importer feed back, as indeed most organizations have
nothing concrete (i.e. Canadian regulations) at this point to consider.
All of the parties understand the importance of the U.S. Bioterrorism
Law.

While we have many U.S. members, we want to emphasize that we did not
receive feedback as clearly the proposed regulations do not affect them
as they operate within the United States. We do not wish to leave any
impression to USFDA, nor our valued U.S. members that this input
reflects their views. That is neither our mandate nor desire. We fully
understand that the U.S. government has extensive dialogue internally to
obtain input from their constituents.

# Docket No. 02N-0278

# Prior Notice of Imported Food

The CPMA is pleased to have the opportunity to provide comments on the
*Bioterrorism Act of 2002*. We sincerely hope that the Secretary of
Health and Human Services will have the necessary regulatory authority
to implement the prior notice provisions in a way which achieves the
objectives of the provisions, while at the same time taking account of
the unique circumstances of produce commerce across the Canada-United
States border and the highly integrated nature of this industry in both
countries.

**[When Must Prior Notice be Submitted]{.underline}?**

The single most significant time sensitive mode is truck -- for our
sector. It is the most impacted. As we understand it, the largest threat
to the U.S. is from offshore, yet the regulations severely impact
Canada. The proposed "one size fits all" minimum time for prior notice
is not flexible enough for Canadian fresh fruit and vegetable exporters,
a significant percentage of which live within 1 --2 hours from the U.S.
border; and for a sector that exports almost 100% of its products via
truck carrier. This sector alone is also one of the most complex of all
to deal with, given the closeness of many to the border -- less than ½
hour for some, the multiple product nature of some shipments, the
multiple growers on some shipments, the vast array of products, the
extreme perishability of many products, the very tight just in time
delivery time frames, and the large number of players exporting
products. As you can appreciate, for fresh fruits and vegetables, the
problem is significant. Relative to registration of facilities and
Canadian farms; shippers at times combine product from various growers
on any particular load, how this will work could be problematic -- there
is no doubt that this will create administrative burden. It is not yet
clear to us to how USFDA may require this information on each
notification, and how far back it goes to farms supplying the shipper.

We have also just been advised that any product (e.g. packaging) that
touches the product needs to be registered also. If this is the case,
fresh fruit and vegetable exporters will need to know how the
registration and reporting process works; including on the notification
process. This could include plastic wraps, paper cartons, or also paper
containers. This could also be potentially extremely problematic.

As we understand it, if notice is provided by noon, it can move at 12:01
midnight (next day). If notice is given at 1 minute after noon, it
cannot move into the USA until 12:01 midnight the following day -- in
essence 36 hours. Either is a huge problem -- many Canadian loads are
ordered and shipped in the afternoon of the day before the load is
required at the U.S. destination city, and within 1/2 hour of loading,
some loads can be and are at the border. How the proposed USFDA time
frames proposed could be seen to be workable is somewhat beyond our
comprehension; at least not without huge changes in commercial
practices; which likely will discourage U.S. buyers.

We understand there could be a proposal that FDA draw a representative
sample of the enormous volume of trucks (and train) from Canada as part
of their efforts to underpin the minimum notice time frame -- we highly
agree -- we also think the sampling needs to be examined between sectors
as well. In conclusion, four hours would certainly be preferable to the
current proposal. This will be useful to some in our export sector, most
easily acceptable by those firms four hours from the border, but again
those close to the border will find it problematic. Equally, if no
amendments are permitted, this too will be problematic.

Even a four hour proposal -- which as we understand USFDA had earlier
rejected -- is problematic for many of our exporters. A further caveat
of a proposed two hour period for amendments before arrival is also
problematic- particularly for multiple commodity exports. Amendments to
the final notice can occur at time of loading, which can be less that
one half hour before arrival at the border.

Quantity Changes Before Arrival - We would also ask that FDA allow for
the update of product quantities prior to two hours of arrival time. We
have been advised that in the sensitivity analysis which was conducted,
the estimated cost of the proposed rule is most sensitive to the assumed
fraction of prior notices that will need to be changed. We have been
advised that a greater volume of 20% of the notifications of all
perishable product shipments will need to be amended due to quantity
changes and not identity changes. We believe this is higher for produce
-- given the extreme time sensitive commercial reality, the reality of
mixed loads (multiple commodities, and/or varying pack sizes for one
commodity), and greater susceptibility for substitution due to
production vagaries, product sizing, etc. This will increase costs and
errors caused through increased amendments. It is understood that
amendments to the quantity of product arriving will impact sample sizes,
however, we do not think it should be a factor in decisions on whether
to interdict a shipment for bioterrorism-related reasons based on the
prior notice.

We firmly believe Canadian fresh fruits and vegetables represent very,
very low risk, and commercial trade is of a daily and highly repetitive
nature and we sincerely hope this is considered in the final development
of solutions.

[Information that Must Be Submitted]{.underline} - For each prior
notice, we understand the FDA is proposing to require much more
information than Congress intended and we would hope this is
reconsidered. In particular, multiple notices will be needed for
essentially the same product from the same exporter 365 days a year.
i.e. unlike customs documents which allow for 1 document for an entire
load. The FDA level of detail should be as compatible as possible with
the entry line level of detail required to be submitted to the U.S.
Customs Service. For example, it is not clear how requiring a notice for
different sizes of containers for the same product will substantially
aid the FDA in targeting shipments.

**[Use of FDA Codes -]{.underline}** USFDA refers to a code -- it is now
clear this is an additional code for this sector. We believe this will
also create more confusion, administration and potential for inaccuracy.
We would recommend that USFDA accept the HS codes that are already
provided to U.S customs. We believe the more that gets added, the
greater the potential for meaningless information and mistakes -- and we
would add potential for manipulation. Not knowing the nature of USFDA
codes, if they are tied to a commodity by commodity basis, then the
potential for confusion will grow, particularly on multiple commodity
loads.

Relative to the need for data -- which includes codes, product
identification, etc.; there may be some validity for the U.S. to look at
a comparable form to the Canadian Confirmation of Sale (C.O.S.) form for
this sector, as a means for them to obtain much of the information they
are seeking. The C.O.S. is the primary customs document for produce
shipped into Canada and includes the necessary data elements required by
Canada Customs and Revenue Agency. Agriculture and Agri-Food Canada,
Statistics Canada and the Canadian Food Inspection Agency and therefore
to both customs/security, plant health and human health. Indeed the
document clearly has specific reference to the importer (and exporter)
meeting Canadian plant and human health regulations. A C.O.S. must
accompany every load at the time the goods enter Canada. Having said
that, amendments are permissable importation to allow for importers to
correct the C.,O.S. for many of the minor adjustments for quantity,
value adjustments required due to product value deterioration from
quality change, etc. Why not a bilateral or even trilateral C.O.S.?
While this doesn't deal with the notification time problems, it may
provide other key important data, which when linked back to a
"licensing" system, would potentially provide far more security.

In addition, it is important for the FDA to clearly define the
circumstances under which updates or amendments or re submissions of
notices must be made due to changes in the nature if the shipment after
a notice is submitted.

We feel that for Canadian exports by truck (our major concern), rail or
aircraft, the FDA should establish times that reflect these modes and
the commercial transactions involved. This approach is being promoted by
the U.S. Customs Service. We think it is important for the Canada-United
States border that the minimum time allowed for notice strikes the right
balance between the FDA's needs and the huge volumes shipped by truck
and rail. We also feel it is also important that the requirements of the
two agencies (USFDA and US Customs) be as consistent as possible to
avoid costly duplications and unnecessary disruptions at the
Canada-United States border. It would also eliminate potential for
inaccuracies.

**[Docket No. 02N-0277]{.underline}**

**[Who Can Submit a Notice]{.underline}**

We will focus our principal attention in this area, as we feel it is
here where we might see the most effective solution. Indeed it might
well eliminate many of the foreseen administrative problems for industry
-- and we think U.SFDA and U.S. Customs.

Our initial view is it may be more effective for the two governments
would be more effective, for this sector (and potentially others), to
develop mutually agreed upon criteria that their respective exporters
must meet, maintain a registry that is mutually accessible to each
government, and is plugged electronically into each other's customs
systems. Failure to be on this list negates ability to move product into
each other's country. This puts the onus for clearance effectively back
at the greatest point of potential threat. This would have to be
examined as well relative to third party movement through both
countries. Equally carriers might follow a similar type registry;
certainly their views would be required.

We think this may reduce the pressures at the border, provided the
exporter and carrier have a so called "clean bill of health". It might
eliminate or reduce the need of many of the administrative requirements
which will be burdensome to non-problematic or non-threatening industry
in both countries, and which in the end may not offer any real or
significant guarantee of protection to U.S. or Canadian citizens.

For the fresh fruit and vegetable sector, there already exists -- in
both countries -- a system of licensing or registration for many of the
firms that already export to each other (and Mexico is coming along).
Perhaps this is a suggested good first start -- possibly building upon
the ones that already exist. For our sector, the PACA, DRC and the CFIA.
We appreciate these registration systems do not fall under USFDA (or
whatever the Canadian security counterpart might be), but the fact
remains that our two governments already have a well defined and long
standing system of identification for firms that trade into each other's
country. Having said that, we only offer this in the context of an
option that may well warrant examination by the two governments and
industry.

It also would mean each country would have to develop mutually agreed
upon criteria as to the information needed to reassure each other of the
minimization of potential threat; and also have a system for reviewing
"registrants". If indeed the regulations are critical to meet U.S. and
Canadian food security objectives, this alternative may replace for the
majority of commerce and majority of legitimate traders, administrative
obstacles which would find them unable to trade, or in a constant
situation of being in violation, and consequently subject to criminal
action.

This would be our preference.

[USFDA Proposal]{.underline} - The proposed rule, under Section 1.285,
would require the prior notice to be submitted by a purchaser or
importer who resides or maintains a place of business in the United
States, or an agent who resides or maintains a place of business in the
United states, acting on behalf of the U.S. purchaser or importer. We
think this proposal will detract from FDA receiving the most accurate
and timely information in prior notices and will cause serious adverse
and unnecessary commercial consequences for Canadian exporters and their
U.S. customers.

Almost 100% of fresh fruit and vegetable imports from Canada at the land
border are sold on the basis of the Canadian exporter taking
responsibility for the entire U.S. Customs and FDA transaction at the
border. The Canadian exporter is the actual owner of the produce until
delivered to the U.S. customer. The invoice price to the U.S. customer
will normally be inclusive of all U.S. customs or other U.S. border
agency charges. The Canadian exporter normally hires and pays a U.S.
Customs broker to act as its agent at the border, including all
liabilities for duties or fees, including, for example, any redelivery
to FDA and Customs (or liquidated damages) of any food shipments found
to be non-compliant upon sampling and testing by FDA. It is the Canadian
exporter, for legal purposes, that is the U.S. importer of record.

If only resident U.S. parties or their agents are permitted to submit
the notice, we think the FDA will be creating obstacles to its
objectives.

The resident U.S. customer would need to provide information third hand
in the notice as obtained from the Canadian exporter. In transactions
involving perishables or just in time deliveries or transactions
involving companies located near to each other across the border, this
could introduce errors and make it more difficult to comply with the
minimum time for advance notice. It is the Canadian exporter that will
know the soonest, and with the highest degree of accuracy, precisely
what is being shipped in an order.

In any case where the shipment may be the subject of an inadequate
notice, it is the Canadian exporter that normally owns the products at
the border that would be held or sent to a secure facility. However,
under the proposal the FDA will be requiring the resident U.S. customer
which does not have a financial interest in the product to bear
responsibility for complying or disposal of the product. The inclination
may be to simply abandon the shipment and cease to do business with the
Canadian exporter.

From an operational standpoint, FDA is requiring detailed and extensive
information for the prior notice. The level of detail is consistent with
the information normally submitted by U.S. Customs brokers acting as
agents for importers of record. As noted above, it is the Canadian
exporter that hires such a customs broker and provides this information
to the broker acting as the exporter's legal agent. The proposed rule
would result in this information continuing to be submitted by Canadian
exporters and their U.S. customs brokers for Customs Service purposes
yet, at the same time, requiring for the same transaction the submission
of essentially the same data by a resident U.S. party (hiring the same
or different broker) solely to comply with the FDA prior notice
requirement. This will inevitably introduce complications, delays and
inaccuracies for the FDA.

From a commercial standpoint, if resident U.S. customers have to hire a
U.S. customs broker, incur additional expenses for submitting the
notice, and incur liabilities for holding products at the border, solely
for purposes of the proposed rule, then a distinct competitive
disadvantage will be newly introduced for Canadian exporters.

While we prefer the CFIA/DRC/PACA type registration option articulated
earlier in this section, if this ultimately is not an acceptable
alternative, then we would hope FDA amends the rule to include food
exporters in the requirements for who must submit the notice. We
understand that Congress did not specify which parties must submit the
notice. We think these circumstances are unique to the Canada-United
States border. We would re emphasize that this will be a more effective
and accurate information flow and in the most timely way consistent with
FDA's objectives.

We also think the time frame provided for registration should be
expanded beyond the 8 week period this fall. Given the number of
commercial exporters, and dependent on the level of information
required, we think USFDA may be very challenged administratively. This
would mean that many firms might be left out through no fault of their
own. On the other hand it could well be that adequate registration
review staff are in place.

**General Comments**

**1/ Canada -- Mexico Trade -- and Offshore Movement into Canada through
the USA, and through Canada into the USA.**

We would mention that we have not yet examined how the new regulations
will affect movement between Canada and Mexico -- almost all exports
into Mexico, or imports into Canada from Mexico, moves through the USA
via truck. Re offshore (and notably ships), but also some air through
the USA to Canada, much of the imports into Canada are first landed in
the USA; e.g. Chilean grapes through eastern seaboard, New Zealand kiwi
through Los Angeles, S. African citrus through New York, etc., it is not
clear to us at this point how this will be handled by either government.
We will be seeking input over the next few months.

To a far lesser degree, Canada moves product similarly, and this will
need to be addressed, although, it will be governed by the USFDA
regulations and this will also have to be assessed.

**2/ Filing by electronic means.** Certainly if this were a requirement
for many Canadian importers (in a situation where Canada adopted this
approach) we would eliminate many importers at this point. Having said
that, most Canadian exporters could use these means. We would be
concerned re computer "crashes" and potential delays, however, we are
sure this has also been addressed.

Also unique for Canada-United States transactions is the Customs-Trade
Partnership Against Terrorism (C-TPAT) and the Free and Secure Trade
(FAST) bilateral arrangements which are available for low risk imports.
They flow from the Smart Border Plan directed by Department of Homeland
Security Secretary-designate Ridge and Deputy Prime Minister Manley. The
USFDA should be building on these Customs initiatives which share the
FDA's counter**-**bioterrorism objectives. Canadian exporters enrolled
in these programs have invested heavily in preventative measures which
clearly result in reduced bioterrorism risks from an FDA perspective.
The proposal therefore needs to take this into account through reduced
prior notice times or otherwise acknowledging the reduced risk.

For exporters, we have heard that this is a time consuming and expensive
process, and one which to date has not been extensively pursued by this
sector. While in concept it might be a useful solution, it will require
much more time and cost to industry and likely government as well.

**3/ Border facilities** - There are already delays at the border. These
new requirements will add further delays. Even if an exporter works to
meet these, what happens if the delays are caused by U.S. Customs or
border lineups. If the product deteriorates, the U.S. buyer might reject
the load; or if delayed too much cancel the order. And where does this
product go? We see this as even a bigger challenge at the Windsor
/Vancouver ports, albeit it will occur elsewhere. The increase in border
line ups might also provide even more potential for tampering.

One suggestion to address the potential for line-ups at the border and
attendant possibility for increases in time spent waiting to get through
the border (and potentially adding to the four hour allotted window to
arrive at and cross the border) is a registration-type mechanism. In
this scenario, a vehicle arriving at the border could register as
arriving at the border at a certain time, then if unusual delays led to
waits for processing over the four hours allotted, there would be proof
that they had indeed arrived in necessary time. While this would add
another level of administration to the border proceedings, it would
never-the-less provide a vehicle to ensure carrier efforts to adhere to
the 4 hour window would be verified and subsequently ensure the
recognition that they had made every effort to comply with the required
processes.

For perishables, it the need for proper facilities to handle product is
critical, otherwise product could be damage in physical handling -- or
submitting produce including temperature extremes. In our own context,
we have worked with both the Canadian Food Inspection Agency and Canada
Customs and Revenue Agency to develop within this sector alone criteria
for perishability, but also as it relates to any potential Canadian
import customs inspections when temperature extremes can ruin a product.
We think this too may be useful for U.S. customs where and when product
may require some inspection, particularly if this need will increase
with the implementation of the new regulations.

**Outreach**

The CPMA appreciates that FDA officials will inform affected parties and
to fully consider all comments. With the creation of these new rules,
extensive new information requirements and the creation of new
electronic supporting systems, it will be even more important for FDA to
continue these outreach efforts as implementation proceeds. It will be
equally important for FDA to ensure that administrative systems are
fully operational and maintained to avoid any need to revert to a paper
system. Even temporary shut downs will result in unmanageable congestion
at the Canada-United States border.

Whatever the final decision, we also sincerely look to consistency of
application across the various U.S. Customs zones.

**Future Amendments**

If we could make but one recommendation, it would be to emphasize the
importance and the absolute need for engagement of bilateral efforts to
develop and fine tune or assess the commercial implications of the
regulations. We feel it is critical that this include USDA, US
Commerce-- and their Canadian counterparts -- under the Smart Border
Initiative. We would go further and suggest that, at some key point,
Mexico be included; the largest commerce remains between our three
countries -- we also share the borders (and therefore the potential
threat).

From our side, we will recommend that our government form a specific
consultation group with the CPMA to address the fresh fruit and
vegetable sector issues, from an export and import perspective.

**[Summary:]{.underline}**

This is an important initiative by USFDA to address what is sadly a
reality of the times; consequently, the U.S. should be applauded for
their commitment to protect their citizens from any food security
threat. Notwithstanding, the regulations as proposed, if implemented,
will be highly disruptive to the two countries' trade, which we fully
understand was never the intent. We understand that security requires
new thinking and solutions.

We sincerely hope the FDA will build into the final rule, the capability
to amend either regulatory requirement -- registration or notification -
notably in respect of imports from any country for which the FDA has
reached an arrangement that would serve as the basis for having
different (e.g., more efficient or effective) registration or prior
notice requirements. Such a provision would be important for the FDA to
adjust procedures quickly and efficiently to reflect actual reductions
in risks through such arrangements.

Again, notwithstanding the final evolution of USFDA regulations, we
would ask that the above points be addressed in the Smart Borders
dialogue. We would again highlight the issue related to trade with
Mexico and how it will be impacted, as well as how offshore movement to
Canada through the USA will be impacted.

We appreciate the opportunity to provide our comments, and hope they are
of some value in assessing the application of the proposed regulatory
requirements on fresh fruit and vegetable exporters from Canada; and
possible suggestions for the development of the regulations. We
sincerely hope that once the U.S. has completed their review, which we
would hope includes U.S. Customs and USDA, that there will be further
bilateral discussions prior to implementation to assist the effective
implementation of a system that meets U.S. needs without negating or
damaging what has been an outstanding volume of non threatening trade
into the U.S. from Canada.

We would be pleased to play any role we can to assist in the efforts to
develop necessary bio security controls, while maintaining a smooth of
fresh fruits and vegetables between both countries.

Danny Dempster

President

Canadian Produce Marketing Association

9 Corvus Court

Ottawa, Ontario, Canada, K2E 7Z4

Tel: (613) 226-4187 extension 216

Fax: (613) 226-2984

ddempster@cpma.ca