Wood packaging moving between Canada and the US

US Department of Agriculture (USDA) and the Canadian Food Inspection Agency (CFIA) are discussing the proposed timing for the elimination of the bilateral exemption between the countries on the need for ISPM treatment of wood packaging material. The two countries have avoided the need to comply with full provisions of the ISPM No.15 standard since 2006 and had agreed to introduce full implementation in 2013. The USDA pro-posed that the date be accelerated to early 2012, and CWPCA was one of the first organizations to respond to the consultation with a request for a number of concessions and clarity for the domestic industry.

Other organizations which provided commentary after our submission include the Association of American Railroads, Canadian Lumber Standards Accreditation Board, Canadian Sphagnum Peat Moss Association, Canadian Trucking Alliance, Canadian Wood Pallet & Container Association, CHEP Equipment Pooling Systems, Conrad Fafard, Food Marketing Institute, Gouvernement du Québec, Nortek and Unilever United States, among others.

The response from the Canadian Food Inspection Agency asked for implementation to be delayed until 2013 as originally proposed, and CFIA and USDA now will resolve the next step forward.

The CWPCA position required extensive discussion with members. Directors were aware that members were divided between wanting no end to the exemption and those that wanted an accelerated phase-out to allow the WPM industry to fulfill phytosanitary conditions and to disadvantage the „garage bangers‟ which compete with legitimate companies in the sector. There was discussion of the need for ISPM No.15 since pests flow across the border in a variety of means, but CWPCA administers the certification program for CFIA and adheres strongly to the objectives of forestry standards.

Since CWPCA filed its industry position, concerns have been expressed that any delay will allow the Canadian industry to “press the snooze button” and do nothing until the final deadline approaches, but the industry submission called for immediate „informed compliance‟ to ensure that all stakeholders in the export market are aware of the deadlines and the implications for non-compliance.

The proposed early termination was viewed as a non-tariff trade barrier or the use of non-fiscal measures to restrict international trade by constraining the actual shipment methods (ie: the pallet). The USDA background papers stated that the impact of the proposed ruling would be stronger on Canadian WPM manufacturers than US firms, and almost none of the delegates to the recent Western Pallet Association were aware of the issue.

CWPCA said the industry could accept the US desire to accelerate the schedule subject to a number of suggestions:

1. No export WPM should be delayed at the border if the WPM bears a valid IPPC stamp; the industry will not accept any evidence of arbitrary border delays which impede shipments when the WPM is certified.

2. There must be greater enforcement to identify WPM shipments from non-certified facilities.

3. To avoid confusion, there should be no difference in timing between wood containers and dunnage.

4. „Informed compliance‟ should start as soon as possible to ensure that all parties understand the schedule.

5. Any additional cost to treat WPM will reduce the economic competitiveness of wood relative to non-renewable pack-aging options.

6. The increased demand for certified WPM will strain existing supply facilities and efforts should be taken to address a probable constraint in production capacity.

7. A lead time until July 2012 should allow the domestic industry to deplete its inventories of non-certified WPM.

8. Clarification is needed on the expectations for documentation required for WPM under load.

9. It is assumed that Canada will terminate its existing bilateral exemption in a transparent manner that is equitable to the proposed US action.

10. Governments should consider monetary compensation or fiscal assistance to affected industry sectors to offset the economic impacts of an accelerated implementation.

CWPCA estimates that the domestic industry will be required to pay $30 million a year to heat-treat new WPM for ex-port, based on annual shipment of 26 million units to the US, of which 80% now will need to be HT‟ed at a unit cost of $1.25 for softwood and $2 for hardwood.

To HT the current inventory of 300m pallets which travel south under load, would incur a first-year cost of $300m, as-suming 50% of inventory must be treated at an average cost of $2 per recycled unit. This incremental cost in subse-quent years will decline but will remain above $200m.

CWPCA did not estimate any costs for production of US WPM for export to Canada, nor for non-HT units under load which move north. It soon may be impractical for WPM manufacturers to segregate wood for domestic and for conti-nental use, and the ensuing need to HT all WPM will impose more costs on industry and consumers.

Canadian Wood Pallet & Container Association

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