### United States Department of Agriculture

Animal and Plant Health Inspection Service December 2011

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

**Number of Small Entities Proposed**  **Rule APHIS**  **- 2008**  **- 0071**  **RIN 0579 -** **AD47 Importation of Plants for Planting** 1



### Policy & Program Development Policy Analysis & Development **Summary** APHI S is proposing to amend 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 would update regulatory provisions and thereb y continue to mitigate plant pest risks while promoting trade . The proposed rule would also clarify certain import requirements and 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 cy st nematode (PCN) host plants for planting that are grown in a PCN - f ree environm ent would 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 poty virus , while allowing seeds of Prunus species to be imported from Canada if certifi ed free of this disease , would 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. Allow ing importation from the Netherlands of previously restricted Dianthus species as long as the y are grown in greenhouse nurseries and certified disease - free would have a positive impact on carnation imports from that country . While nearly

all of the entitie s that may be affected by

the proposed rule , such as importers and wholesale merchants of fresh fruits and vegetables, flowers, nursery stock, and florist supplies are small, none of the effects would be economically significant. The APHIS2

Administrator h as determined that this action, if promulgated, will not have a significant economic impact on a substantial number of small entities. 

### Introduction The following anal ys is provides the basis, as required by the Regulatory

Flexibility

Act, for certification b y the APHI S Administrator that the proposed rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. APHI S is proposing to amend 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 proposed amendments would update regulatory provisions and thereb y continue to mitigate plant pest risks while p romoting trade . Other changes would clarify certain import requirements and improve the consistency between certain import and domestic regulations. The principal amendments would:

 A dd Turkey

to the list of countries that are prohibited from exporting res tricted articles of Chry santhemum species , Leucanthemella serotina , and Nipponanthemum nipponicum to the United States, due to the presence of Chry santhemum white rust ;  Require 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 ;  Remove the exemption for “wild collected plants” with respect to certification requirements for articles associated with potato cyst nematode (PCN), and add an alternative de claration 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 ;3  A dd Canada to the list of countries th at are known to have plum pox poty virus (PPV), but allow seeds of Prunus spp. to be imported with an additional 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 currentl y allowed for Great Britain . 

### Potential Impact on Small Entities Here w e discuss l ikel y economic effects of the principal amendments noted above, followed b y a description of small entities that may be affected b y the proposed rule . 1. The addition of Turkey to the list of countries where chry santhemum 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 United States , and there is no expectation that Turkey will be exporting 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 would codify

th at protocol . Since there would be no change from current practice, this amendment would not have any effect on seed importers or other U.S. entiti es. For three years , 2008 - 2010, the value of U.S. import s of planting seeds averaged more than $ 45 million and U.S. export s of planting seeds exceeded $ 5 2 million (table 1) . U.S. seed exports have increased during these three ye ars, while seed import levels have remained relativel y constant . Codification would 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 . trade in vegetable and fruit seeds and spores for sowing and planting , 2008 - 2010, million dollars 2008 2009 2010 U.S. Exports $47 . 8 $5 3.0 $56 . 9 U.S. Imports $47 .5 $41 . 6 $46 . 6 U.S. Net Exports $ 0.3 $11 .4 $10 .3 Source: U.S. Census Bureau, as reported by Global Trade Information Services, Inc. 3 . Countries known to be infested with potato cy st nematode (PCN) must currentl y certify that the growing areas in which they produce host plants for export to the United States are free of this pest. We expect that the proposed 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 States, since there would be no need for survey s of the growing media. Effects for U.S. importers are likel y 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 would reduce the risk of pest introduction by th is pathway . The value of U.S. potatoes sold in 2010 w as about $3.45 billion . Imports of fresh or chilled potatoes that year were valued at $132 million (equivalent to about 4 percent of U.S. production), with almost all coming from Canada. 4 . APHI S lacks data regarding production of Prunus spp. plants for planting within Canada, or the percentage of such production that is exported yearly to the United States. However, b y means of context, in 2010 , Canadian production of Prunus spp. fruit (plum, peach, a pricot, and other stone fruit) reached nearl y 44 ,000 metric tons (MT) , valued at $65 million

— less than 2 percent of the quantity and less than 4 percent of the value of U.S. production (table5

2) . Canada exported about 3 , 6 00 MT of stone fruit to the United States , a small quantity compared to U.S. stone fruit exports to Canada (94,000 MT) and to the world (231,000 MT) (table 3). Adding Canada to the list of countries known to have plum pox poty virus , but allowing seeds and nursery

stock of Prunus spp. to be imported with an additional declaration certifying that the articles or their mother plants have been tested and found free of PPV, would 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 continue unabated . Table 2: Quantity and value of selected stone fruits produced in the United States and in Canada, 2010

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

2,328,425 $1,797,0 00 ,000 43,941 $65,000,000 Note: Includes apricots, sweet and sour cherries, nectarines, peaches, plums and prunes. Source: FAOST AT / FAO Statistics Division 2011, and USDA, NASS, Crops Branch, Chapter 5, Statistics of fruits, tree nuts, and Horticultural Specialties, tables 5 - 10;20,21,47,50,64,65. Table 3: Quantity and value of U.S. trade with Canada and the world in selected stone fruits , 2010 U . S . Production U . S . Exports

to the World U . S . Im ports from the World U . S . Im ports from Canada U . S . Exports to Canada 2,328,425 MT $ 1,797,0 00 ,000 230,658 MT

$ 570,006,337 98,886 MT $ 171,609,291 3,644 MT $ 11,667,791 94,060 MT

$ 225,626,826 U . S . net exports to the World : 131,772 MT $ 398,397,046 U . S . net exports to Canada : 90,416 MT $ 213,959,035 Source: Stone - Fruit Commodity -based survey guideline; USDA/APHIS/PPQ/CPHST Melinda Sullivan and Tom Kalaris, July 2011; http://caps.ceris.purdue.edu/survey/manual/stone - fruit - guidelines 5 . The proposed inspection and certification requirements for Dianthus species from the Netherlands would al low 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 . The greenhouse nurseries would need to be inspected once a month for four consecutive months prior to U . S . importation. The proposed rule would 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 the6

Netherlands, as a percentage of total cut carnation imports by the United States, varies from year to year, and averaged about 13 percent between 2006 and 2010. Table 4 : Value of U.S. imports of cut carnations (HS: 06031) from the Netherlands and the world , 2006 - 2010

U.S. Partner 2006 2007 2008 2009 2010 World $69,581 $70,791 $62,915 $55,938 $62,370 Netherlands $15,000 $4,000 $8,000 $11,000 $2,000 U . S . im ports from Netherlands as a percent of U . S . im

ports from the world 21.6% 5.7% 12.7% 19.7% 3.2% Source: http://www.fas.usda.gov/gats/ Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics. Entities most likely

to be directly affected b y the proposed 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 determining which establishments are to be considered small. Imports/export merchants, agents and brokers are identified within the broader wholesaling trade sector. A firm primaril y engaged in wholesaling live plants and flowers is considered small if it employ s not more than 100 persons . The same small - entity standard applies to wholesale merchants of fresh fruits and vegetables. 1 In2007, more than 98 percent (3,534 of 3,601) of wholesale merchants of flowers, nursery stocks, and florists’ supplies that operated the entire ye ar were small by the SBA standard (table 5) . That same year, nearl y 95 percent (4,207 of 4,437) of fruit and vegetable whol e sale establishments that operated the entire ye ar were small by

the SBA s tandard .

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 industries 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 em ployees 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 proposed rule are small, none of the effects of the proposed amendments would 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 have a significant economic impact on a substantial number of small entities.