### United States Department of Agriculture

Animal and Plant Health Inspection Service June 2014

Analysis in Support of Certification that the Rule will not have a Significant Economic Impact on a Substantial

Number of Small Entities

Final Rule APHIS - 2008 - 0071 RIN 0579 - AD47
Importation of Plants for Planting

Policy & Program Development Policy Analysis & Development1



### Summary

APHIS is amend ing the regulations in 7 CFR §§ 319.37 through 319.37

- 14, which restrict the importation of living plants, plant parts, and seeds for propagation or planting. Several of the
amendments w ill update regulatory provisions and thereby continue to mitigate plant pest risks while promoting trade

. The final rule will also clarify certain import requirements a nd improve the consistency between certain import and domestic regulations. Economic effects of the rule are expected to be relatively minor

. Easing the import requirements for potato cyst nematode (PCN) host plants for planting that are grown in a PCN

- f r ee environm ent will result in cost savings for affected foreign producers , some portion of which may or may not be passed on to U.S. buyers. Adding Canada to the list of countries known to have plum pox potyvirus , while allowing
seeds of Prunus species to be imported from Canada if certifi ed free of this disease , will help protect the U.S. stone fruit industries while allowing for seed imports from areas in Canada that
are free of the disease to continue unabated. Allowing importation from the N etherlands of previously restricted Dianthus species as long as the y are grown in greenhouse nurseries and certified disease

- free will have a positive impact on carnation imports from that country

. While nearly all of the entities that may be affected by t he final rule , such as importers and wholesale merchants of fresh fruits and vegetables, flowers, nursery stock, and florist supplies are small, none of the effects will be economically significant. T he APHIS Administrator has determined that this action, if promulgated, will not have a significant economic impact on a substantial number of small entities.2



### Introduction
The following analysis provides the basis, as required by the Regulatory Flexibility Act, for certification by the APHIS Administrator tha t the final rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. APHIS is proposing to amend the regulations in 7 CFR §§ 319.37 through 319.37

- 14, which restrict the importation of living plants, pla nt parts, and seeds for propagation or planting . Several of the amendments will update regulatory provisions and thereby continue to mitigate plant pest risks while promoting
trade . Other changes will clarify certain import requirements and improve the c onsistency
between certain import and domestic regulations. The principal amendments w ill :

 A dd Turkey to the list of countries that are prohibited from ex porting restricted
articles of Chrysanthemum species , Leucanthemella serotina , and Nipponanthemum nipponicum to the United States, due to the presence of Chrysanthemum white rust ;

 R equire a permit for the importation of seed that is coated, pelleted, or embedded in a substrate that obscures visibility , and thus codify an existing import protocol ;

 Remov e the exemption for “wild collected plants” with respect to certification requir ements for articles associated with potato cyst nematode (PCN), and add an alternative declaration option for plants imported from a country where PCN is
known to occur , but in which the plants are grown either in greenhouses or on raised benches without soil, in vitro, or in an area known to be PCN

- free ;

 A dd Canada to the list of countries that are known to have plum pox potyvirus (PPV), but allow seeds of Prunus spp. to be imp orted with an additional3 declaration certifying that the seeds or mother plants have been tested and found
free of PPV ;

 P rovide for the importation of Dianthus species (carnations) from the Netherlands under inspection and certification requirements currently allowed for Great
Britain

. 

### Potential Impact on Small Entities

Here w e discuss l ikely economic effects of the principal amendments noted above, followed by a description of small entities that may b e affected by the final rule

. 1. The addition of Turkey to the list of countries where c hrysanthemum white rust is
known to occur is expected to have no impact on U.S. entities. Turkey has no history of having exported the re stricted species to the U nite d States , and there is no expectation that Turkey will be export ing these species to the United States in the future.
2. An existing protocol already requires that a permit be issued for the importation of any seed that is coated, pelleted, or embedded in a substrate that obscures visibility . The amendment
will codify th at protocol . Since there will be no change from current practice, this amendment
will not have any effect on seed importers or other U.S. entities.
For three years , 20 10

- 201 2 , the value of U.S. import s of planting seeds averaged more than $ 52 million and U.S. export s of planting seeds exceeded $ 5 9.7 million (table 1)

. U.S. seed exports have increased during these three years, while seed import levels have remained relatively constant

. Codification will more firmly establish the importance of an import permit for entry of seed that is coated, pelleted, or embedded in a substrate that obscures visibility

.4

Table 1: Annual value of U

. S

. t rade in vegetable and fruit seeds and spores for sowing and planting , 20 10

- 201 2 , million dollars (HTC:120999) 20 1 0 20 11 201 2 U.S. Exports $ 56.9 $68.3 $53.8 U.S. Imports $4 6.6 $56.9 $52.6 U.S. Net Exports $ 10.3 $11.4 $1.2 Source: U.S. Census Bureau, as reported by Global Trade Information Services, Inc.

3 . Countries known to be infested with potato cyst nematode (PCN) must currently certify that the g r owing areas in which they produce host plants for export to the United States are free of this pest. We expect that the fina l additional declaration option for host plants for planting produced in a PCN

- free environment (such as grown without soil; in greenhouses; on raised benches; or in vitr o ) may result in cost savings for entities that export such plants to the
United State s, since there will be no need for surveys of the growing media. Effects for U.S. importers are likely to be minor ; some portion of any cost savings realized by affected foreign producers may or may not be passed on to buyers. Removal of the exemption for “wild collected plants” with respect to certification requirements for articles associated with PCN will reduce the risk of pest introduction by this pathway. The value of U.S. potatoes sold in 201 2 w as about $3. 73 billion . Imports of fresh or
chilled potatoes that year were valued at $13 4 million (equivalent to about 4 percent of U.S. production), with almost all coming from Canada.
4

. APHIS lacks data regarding production of Prunus spp. plants for planting within Canada, or the percentage of such pro duction that is exported yearly to the United States. However, by means of context, i n 201 2 , Canadian production of Prunus spp. fruit (plum, peach, apricot, and other stone fruit ) reached nearly 4 2 , 224 metric tons (MT) , valued at $ 86 million

— around 2 percent of the quantity and less than 4 percent of the value of U.S. production (table 2)

.5

Canada exported about 2,739 MT of stone fruit to the United States , a small fraction (i.e., 3 percent) compared to U.S. stone fruit exports to Canada of 90,063 MT and to the world (2 2 5,877 MT) (table 3). Adding Canada to the list of countries known to have plum pox potyvirus , but allowing
seeds and nursery stock of Prunus spp. to be imported with an additional decla ration certifying
that the articles or their mot her plants have been tested and found free of PPV, will help protect the U.S. stone fruit industries from this disease and preserve U.S. export markets, while allowing for stone fruit seed imports from areas in Canada that are free of the disease to contin ue unabated

. Table 2: Quantity and value of selected stone fruits produced in the United States and in Canada, 201 3

U.S. Production Canadian Production Quantity in metric tons Value in USD Quantity in metric tons Value in USD

1,767,165 $ 2 , 288 , 13 8 , 000 4 2,224 $ 85 , 793 ,000 Note: Includes a pricots, sweet and sour cherries, nectarines, peaches, plums and prunes

. Source: FAOSTAT/ FAO Statistics Division 201 3

. Table 3: Quantity and v alue of U.S. trade with Canada and the world in selected stone fruits , 20 13 U

. S

. Production U

. S

. Exports

to the World U

. S

. Imports from the World U

. S

. Imports from Canada U

. S

. Exports to Canada

1,767,165 MT $ 2 , 288 , 13 8 , 000 2 2 5,877 MT

$ 665,861 , 000 7 8, 0 07 MT $ 1 33,66 5 , 000 2,739 MT $ 9,200,000 9 0 ,0 63 MT

$ 2 48,22 8 , 000 U

. S

. net exports to the World : 1 4 7,870 MT $ 532,196, 000 U

. S

. net exports to Canada : 87,324 MT $ 239,028 , 000 Source: FAOSTAT and World Trade Atlas (HS: 0809).

5 . The final inspection and certification requirements for Dianthus species from the
Netherlands will allow the importation of previously restricted articles of some species of carnations as long as the y are grown in greenhouse nurseries and certified disease free

. T he greenhouse nurseries will need to be inspected once a month for four consecutive months prior to
U

. S

. importation. The final rule will have a positive impact on U

. S

. imports from the Netherlands
of Dianthus species. As shown in table 4, U.S. imports of cut carnations from the Netherlands as6

a percentage of total cut carnation imports by the United States varies from year to year, and averaged about 3 percent between 20 10 and 201 3

.

Table 4 : Value of U.S. imports of cut carnations (HS: 0603

. 1 2.000 ) from the Netherlands and the world , 20 10

- 201 3

U.S. Partner 20 10 20 11 20 12 20 13 World $6 2 , 3 69,862 $69,63 5,803 $8 5,549,585 $80,380 ,431 Netherlands $ 2, 450 $1 0,956 $79,628 $3,805

U

. S

. imports from Netherlands as a percent of U

. S

. imports from the world 1 % 2 % 10 % 0.0%

Source: http://www.fas.usda.gov/gats/ Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics.

E ntities most likely to be directly affected by the final rule are importers and wholesale merchants of flowers, nursery stocks, and florists’ supplies (NAICS 424930) and wholesale merchants of fresh fruits and vegetables (NAICS 424480). The Small Business Administration ( SBA ) has established guidelines for dete rmining which establishments are to be considered small. Imports/export merchants, agents and brokers are identified within the broader wholesaling trade sector. A firm primarily engaged in wholesaling live plants and flowers is
considered small if it em ploys not more than 100 persons . T he same small

- entity standard applies to wholesale merchants of fresh fruits and vegetables. 1 In 2007, more than 98 percent (3,534 of 3,601) of wholesale merchants of flowers, nursery stocks, and florists’ supplies that operated the entire year were small by the SBA standard (table 5)

. That same year, nearly 95 percent (4,207 of 4,437) of fruit and vegetable whol e sale establishments that operated the entire year were small by the SBA standard

.

1 NAICS Code Report, https://epic.od.nih.gov/naics/Naicscodelist.asp (Subsector 424

– Merchant Wholesalers, Nondurable Goods; pp. 15:16 of 39

- )7

Table 5 . Prevalence of small entities in industr ies that may be affected by the rule, 2007

Industry Number of

Establishments Number of

Establishments that operated the entire year Number of

Establishments with fewer than 100 employees that operated the entire year Small

- entity Establishments as a percentage of those that operated the entire year Flower, Nursery Stock, and Florists’ Supplies Merchant Wholesalers (NAICS 424930) 4,218 3,601 3,534 98.1%

F resh Fruits and Vegetables , Wholesale Merchant s (NAICS 42 4 4 8 0) 5,074 4,437 4207 94.8%

Source: 2007 Economic Census. Sector 42: Wholesale Trade: Subject Series

- Estab lishment & Firm Size: Summary Statistics by Employment size of establishments for the United States

. While nearly all of the entities that may be affected by the final rule are small, none of
the effects of the final amendments will be economically significant. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action, if promulgated, will not ha ve a significant economic impact on a substantial number of
small entities.