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REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)
Amendment | Regulatory Impact Analysis Statement

Description

This initiative addresses an amendment to the Fish Inspection Regulations (FIR). The Fish Inspection Act (Act) enables the Government of Canada to regulate the safety and quality of fish products imported into Canada or produced in federally registered establishments for export or interprovincial trade. Pursuant to this Act, the FIR regulates the inspection of processed fish and processing establishments.

This proposed amendment is the result of the longstanding need to respond to the Canadian salted fish industry’s concerns regarding the existing provisions of the FIR with respect to salted fish.

The intent of this proposed amendment to the FIR is to:

The Canadian salted fish industry, through individual stakeholders and its industry associations, first identified the need to amend the salted fish portion of the FIR to the Department of Fisheries and Oceans approximately fifteen years ago and over the years considerable effort was expended in developing regulatory proposals. This phase of the work, later transferred to the CFIA, culminated in the pre-publication of a salted fish regulatory amendment in Part I of the Canada Gazette on September 29, 2001. However, with the changes to the industry and to markets as a result of the collapse of the Atlantic cod fishery, a significant sector of the salted fish industry could not support the amendment as presented. As a result, the proposed amendment was revisited and a revised amendment has been developed in consultation with industry.

Over the past fifty years, technological advances, changes in marketplace demands and the development of new markets have rendered certain sections of the FIR pertaining to salted fish obsolete. The arrival of splitting machines, mechanical dryers and refrigeration at all levels of the processing and distribution chain have permitted radical changes in the way salted fish is prepared and marketed. Today, in excess of ninety five percent (95%) of Canadian salted fish is exported and international competition is fierce. Currently, there is an ever increasing dependence on foreign suppliers for raw material and this, coupled with structural changes within the Canadian industry, changes in marketing strategies and customer demands, as well as a trend toward less salty and more "value added" salted fish products, make the existing regulations obsolete. If Canada is to remain competitive in the international marketplace, the sections of the FIR pertaining to salted fish must be revised and updated.

There has been a longstanding issue with the use of the term "Gaspé Cure" among major industry processing groups, particularly in Quebec and southwest Nova Scotia. For several years the Association québécoise de la pêche (AQIP) has taken the position that the term Gaspé Cure should be restricted to products produced in the Gaspé region of Québec, while the Southwestern Nova Scotia Fish Packers Association and their counterparts in Newfoundland and Labrador contend that Gaspé Cure relates to process parameters and not geographic location. In 1999, AQIP trademarked the term Gaspé and its various associations i.e. "Genuine Gaspé", "Gaspé Cured", etc and has since licensed Gaspé producers to use this term in association with salted fish that meets the unique characteristics of salted fish processed in the Gaspé. These amendments to the FIR replace the grade name Gaspé Cure Slack Salted Fish with the class name Slack Salted Fish which removes any regional connotation that could be associated with the term "Gaspé Cure".

This regulatory amendment will have minimum impact on Canadian consumers as less than five percent (5%) of salted fish products produced in Canada are destined for the domestic market. This amendment will primarily affect Canadian salted fish processors and exporters.

This amendment is consistent with the Codex Standard for Salted Fish and Dried Salted Fish and should facilitate international trade in Canadian salted fish products.

Alternatives Considered

Option 1 - Status Quo

The status quo is not an acceptable alternative as technological advances, changes in marketplace demands and the development of new markets have rendered certain sections of the FIR pertaining to salted fish obsolete. This amendment has been developed at the request of the salted fish industry and with their full participation. Because the present regulations do not correspond to current technological production practices, or to current marketplace requirements, and have essentially been replaced by a costly and time-consuming exemption process, a new and better way of doing business is essential.

Option 2 - De-regulation

Although a sector of the Canadian salted fish industry favoured a form of deregulation, complete deregulation of the industry was not considered to be an acceptable alternative. There were varying opinions with respect to deregulation, however, there was consensus that a minimum standard for salted fish should be defined (percentage salt and moisture) accompanied by the prescription of product presentations and classes to be used on a voluntary basis.

Four options representing varying degrees of deregulation were proposed. Each of the four options was evaluated and subsequently rejected as either being too prescriptive, or alternatively, too permissive to permit the minimum regulation of the salted fish industry.

Option 3 (recommended option) - Amend the FIR

This amendment to the FIR as presented is based on performance requirements as the detailed prescriptive standards are being removed from the regulations. A salted fish product must meet a minimum standard of salt and moisture content; however, the use of product designations and classes is voluntary. If a product designation or class is used, it must comply with the standards prescribed in the regulations. This option represents a compromise on the level of deregulation.

This amendment will provide the salted fish industry with the flexibility to market its products in the most economical, competitive and efficient manner without compromising consumer health and safety.

The proposed amendment to the FIR will more closely align Canadian salted fish requirements with international standards, e.g., Codex Alimentarius, thus enabling Canada to compete more effectively in the global marketplace.

Benefits, Costs and Regulatory Burden

The preferred option of amending the FIR is a minor regulatory initiative and therefore a full cost-benefit analysis was not completed.

The benefits to industry and stakeholders of implementing these regulations include:

• The flexibility to respond to domestic and international market requirements with respect to new product development and value added products with the removal of prescriptive and mandatory regulatory requirements.
• Industry personnel will no longer be required to be trained in the grading of salted fish products with the removal of mandatory grades.
• The number of Exemption Permits required should be significantly reduced thereby reducing industry administrative costs.
• Simplified labelling requirements should reduce industry label costs.

The initial cost to industry to train personnel with respect to these changes will be minimal considering that industry participated actively in the development of the revised amendment and already has in-depth knowledge of the changes.

Although this amendment will dramatically reduce the number of salted fish Exemption Permits, a limited number will still be required in order to authorize importing country labelling requirements that may not be allowed under the FIR. As an example, such requirements would include importing country grade standard designations, net weight designations and size designations.

The benefits to the CFIA of implementing this regulation include:

• A reduction in administrative costs as the number of Exemption Permits issued for salted fish products will be reduced. It is estimated that the number of Exemption Permits requested by industry and issued by the CFIA will be reduced in the magnitude of 70-75%.
• Inspection time, effort and complexity will be significantly reduced as CFIA inspectors will no longer be required to be trained in the recognition and application of salted fish grade standards. Once the grades are removed from the regulations, salted fish will only be examined for the sensory attributes related to taint, decomposition and unwholesomeness.
• No additional or new skills, abilities or processes, other than those currently in place, will be required by Agency personnel.

There will be no other substantial additional costs to government. Other than the costs of familiarizing personnel with the new regulatory requirements, the costs to the CFIA will be minimal.

These proposed amendments do not impose any additional regulatory burden on individuals or businesses involved in the salted fish industry. In fact, the regulatory burden is being substantially reduced as prescriptive grade standards, class, size and moisture content requirements are being removed from the regulations, to be replaced with more generic and voluntary product requirements.

Consultation

Prior to the September 29, 2001 prepublication in Part I of the Canada Gazette, extensive consultations were carried out with representatives from the salted fish industry from 1991-1996. A joint industry/government Salted Fish Working Group (SWG) was formed and met on seven separate occasions. All concerned producer organizations and brokers were represented.

Subsequent to the September 29, 2001 prepublication, the CFIA determined that additional consultation was required. Extensive consultations were again undertaken with industry representatives in the provinces of Quebec, Nova Scotia, and Newfoundland. These consultations included a mail out to 278 members of the salted fish industry on July 11, 2002 containing four regulatory options for their consideration and face to face consultations were conducted with members of the Gaspé Region, the Nova Scotia Fish Packers Association, members of southwest Nova Scotia salted fish industry and members of the Newfoundland salted fish industry.

A final package containing the preferred regulatory option and accompanying policy interpretations was mailed to 278 members of the salted fish industry for their final comments on November 20, 2002.

Provincial representatives were either present during the consultation sessions or provided written comments throughout the consultation process.

Based on positive feedback received from their review of the amended regulation, it is anticipated that the salted fish industry will support this amendment as presented.

Enforcement

No major changes will occur in the application or enforcement of the regulations as a result of this amendment.

Inspection services will be provided and the FIR will be enforced in the usual manner. Action in accordance with the Fish Inspection National Enforcement Policy, based on the CFIA Compliance and Enforcement Policy, will be taken to deal with non-compliance. Depending on the severity of the infraction, actions from the provision of warnings, up to and including charges could be taken.

The CFIA will ensure compliance by continuing to inspect salted fish at levels commensurate with the health and safety and economic risk of the product. There will be no need to institute new compliance regimes or appeal mechanisms.

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