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Vol. 139, No. 11 — June 1, 2005 RegistrationSOR/2005-132 May 10, 2005 HAZARDOUS PRODUCTS ACT Children's Jewellery RegulationsP.C. 2005-805 May 10, 2005 Her Excellency the Governor General in Council, on the recommendation of the Minister of Health, pursuant to section 5 (see footnote a) of the Hazardous Products Act, hereby makes the annexed Children's Jewellery Regulations.
REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Order nor the Regulations.) Description The purpose of this regulatory initiative is to improve the protection of the health and safety of the Canadian public, especially children, when exposed to children's jewellery. This is accomplished by adding new regulations under Part II of Schedule I to the Hazardous Products Act which will make it illegal to advertise, sell, or import in Canada:
For the purposes of these Regulations, "jewellery" is defined as "an ornamental object intended for regular wear on the body or on clothing or clothing accessories". "Children's jewellery" is defined as "a jewellery item(s) which is (are) designed, sized, decorated, packaged, and/or otherwise produced, advertised, or sold in such a manner as to make it reasonably apparent that the item(s) is (are) intended to attract, appeal to, or be worn primarily by a child under the age of 15 years". Canada currently has no standards for migratable lead limits in consumer products. The 90 mg/kg migratable lead standard is consistent with European Union migratable lead limit standards for toys intended for children under six years of age. The 600 mg/kg total lead standard is consistent with maximum lead limits for surface coating materials under the Hazardous Products Act. Children's jewellery items must comply with both the migratable lead standard and the total lead standard. These standards will ensure that children are not exposed to harmful levels of lead in children's jewellery, while allowing jewellery manufacturers to make children's jewellery from substitute metals which are not prohibitively expensive. Substitute metals for children's jewellery, such as tin or nickel, are often mined with lead and contain trace amounts of lead. Standard grade tin, for example, has a permissible maximum lead content of 500 mg/kg. The standard would also permit jewellery manufacturers to rework substitute metals, since reworking may result in a slight increase in lead content above the average background levels of 65 mg/kg lead in Canadian soils. It also is consistent with the lead content standards for gold and silver which are used in making precious jewellery. Lead is a metal which is toxic even at very low levels of exposure. Lead accumulates in the body, so that exposure to even very low levels of lead may increase the body burden of lead to harmful levels. The adverse effects of lead on young children have been documented in hundreds of studies. Until recently scientists believed that blood lead levels in children of less than 10 µg/dL (micrograms per decilitre) did not represent a health hazard, but a 2000 study indicates that even blood lead levels below 5 µg/dL may be associated with harmful effects on the intellectual development and behaviour of children. Lead also has a variety of adverse health effects on adults. Lead is a soft, inexpensive, easily worked metal which has been used for centuries to make jewellery and other decorative items. A large proportion of costume jewellery sold in North America today contains lead. In April 1998, a consumer contacted Health Canada with a complaint about a child's pendant. The pendant, which was purchased in Canada, was made of pure lead covered with a decorative coating. The consumer's five-year-old child had developed elevated blood lead levels as a result of chewing off the decorative coating and sucking on the pendant. In October 1998 a consumer brought another incident involving a child's necklace to Health Canada's attention. The consumer's child had chewed the decorative coating off the necklace pendant and was sucking on the exposed cores. When tested by Health Canada, the pendants on this necklace were found to be almost 75% lead. Similar incidents involving children's jewellery have been recorded in the United States. In 1997, a U.S. chain store, Charming Shoppes Ltd., in co-operation with the United States Consumer Product Safety Commission, voluntarily recalled a children's medallion necklace containing high levels of lead. In 2003, an Oregon child developed lead poisoning after swallowing a leaded toy pendant bought in a vending machine. In July 2004, the U.S. Consumer Product Safety Bureau initiated a recall of approximately 150 million pieces of toy jewellery sold in vending machines in the U.S. and Canada, because of the possibility that the jewellery contained hazardous amounts of lead. In April 1999, Health Canada sent a letter to Canadian manufacturers, distributors, importers and retailers of jewellery. The letter explained the risks to children associated with leaded jewellery and sought the industry's voluntary co-operation with the following actions: For jewellery intended for children under
fifteen (15) years of age:
OR
For jewellery intended for adults or children
fifteen (15) years of age or older:
WARNING — THIS PRODUCT CONTAINS LEAD. MAY BE HARMFUL IF MOUTHED, CHEWED, SWALLOWED OR OTHERWISE INGESTED. NOT RECOMMENDED FOR USE BY CHILDREN UNDER 15 YEARS OF AGE. The letter suggested that the recommendations apply to all jewellery products sold in Canada after January 31, 2000. As a follow-up to this letter, the Consumer Product Safety Bureau of Health Canada carried out a national retail survey of children's costume jewellery in May and June 2000. Of 95 pieces of jewellery collected across Canada, 94% contained lead in excess of 65 mg/kg. Sixty-nine percent of the samples or 66 pieces contained lead concentrations of between 50% and 100%, while 31% contained less than 10% total lead. The recommended warning label was observed only once. In December 2000 Health Canada sent a follow-up letter to the jewellery industry, outlining the results of the May-June jewellery survey, and informing the industry of Health Canada's intention to regulate the lead content in jewellery products. On January 8, 200l, Health Canada issued a consumer advisory alerting the Canadian public to the risks to children associated with jewellery containing lead. Health Canada issued another Public Warning on July 9th, 2004 regarding leaded toy jewellery sold in vending machines. These products were recalled in the United States and Canada by the four importers. Health Canada followed up with the twenty Canadian vending machine companies which had distributed the jewellery, and with industry associations to ensure that all of the affected jewellery had been removed from the Canadian marketplace. Pursuant to the requirements of subsection 7(1) of the Hazardous Products Act, the Minister of Health shall cause a copy of an order, amending Part I or II of Schedule I to be laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the day the order is made. If both Houses of Parliament resolve that the order amending Part I or II of Schedule I should be revoked, the order or that part thereof will thereupon be revoked. Alternatives 1. Status Quo Health Canada presently has no legal authority to control the import, advertisement or sale of children's jewellery containing lead. If the Canadian companies involved in the massive July 2004 recall of leaded vending machine jewellery had not cooperated with the recall, Health Canada would have had no means of removing the jewellery from the Canadian marketplace. The uncontrolled presence of these products on the Canadian marketplace is not acceptable because children's jewellery containing lead represents a significant risk to the health of young Canadian children. As mentioned above, there has already been an incident in Canada of elevated blood lead level in a child as a direct result of mouthing a piece of jewellery containing lead, and a 2003 case in an Oregon child who swallowed a leaded toy pendant. It is very difficult for parents to determine whether or not a piece of children's jewellery contains lead, because in most cases the lead is covered with a decorative coating. 2. Implementing the Recommendations of Health Canada's 1999 and 2000 letters to the Jewellery Industry Health Canada had requested that the jewellery industry refrain from selling jewellery intended for children under 15 which contains more than 65 mg/kg total lead. After consulting with industry on the implications of these recommendations, Health Canada has determined that a maximum lead limit of 65 mg/kg for children's jewellery is too restrictive, since it would not permit the use of reasonably priced alternatives to lead and would not permit the practice of reworking lead. Insistence on this standard would have a negative economic impact on the industry, reduce consumer choice and probably result in a significant increase in the price of children's costume jewellery. The limits of 90 mg/kg leachable lead and 600 mg/kg total lead are low enough to protect children against the effects of lead exposure while minimizing the impact on industry. 3. A Prohibition on All Lead-containing Jewellery A comprehensive prohibition would make it illegal to import, advertise, or sell in Canada any jewellery containing more than 90 mg/kg leachable and 600 mg/kg total lead, whether the jewellery was intended for wear by children or by adults. Such a prohibition would be extremely disruptive to the costume jewellery trade, since much of the costume jewellery currently on the Canadian market does contain lead. This action would likely result in significant reduction in consumer choice, since many manufacturers would not be willing to produce lead-free adult jewellery for the relatively small Canadian market. Lead has many properties which make it an ideal material for inexpensive jewellery. There is no associated health risk from simply wearing lead-containing jewellery; it is only when the jewellery is mouthed that lead exposure occurs. The practice of mouthing objects is common only in very young children. A prohibition on all lead-containing jewellery would be far beyond what is needed to achieve protection against childhood lead exposure. It is recognized that adult jewellery which contains lead may be handed on to children as a toy or may be bought for use by older children. Health Canada will advise the public that children should be discouraged from mouthing jewellery and other items not specifically designed for use by young children. Health Canada will also encourage industry to use a "Lead-free" label on children's jewellery and will encourage parents to allow children to wear only lead-free jewellery. 4. Requiring Warning Labels on Lead-containing Jewellery Under this option, all lead-containing jewellery marketed in Canada would legally be required to have a label warning of its lead content attached to the jewellery itself or to its packaging, or displayed near the jewellery. This requirement would be applicable to all lead-containing jewellery imported, advertised or marketed in Canada. A recommendation that all lead-containing jewellery intended for those over the age of 15 be labelled as containing lead was included in Health Canada's April 1999 letter to the jewellery industry. However, this action would require that the majority of adult costume jewellery be labelled, since most of it contains lead. Warning labels posted next to jewellery displays would be of limited effectiveness since they would be separated from the product at point of sale. Retailers believe that such labels would be a considerable disincentive to the customer to buy. If the jewellery itself were labelled, the labels would have to be so small and inconspicuous as to be ineffective for the purpose of ensuring that children do not interact with the jewellery. 5. Voluntary Compliance by Manufacturers, Importers, Distributors and Vendors Under this option, compliance with maximum lead content standards established by Health Canada for children's jewellery would be voluntary. Health Canada would have no legal authority to control the import, advertisement or sale of children's jewellery containing lead. Health Canada's 2000 jewellery survey indicated that the April 1999 letter to the jewellery industry requesting voluntary removal of children's lead-containing jewellery from the Canadian marketplace was not effective, since the majority of the jewellery pieces tested were composed of more than 50% lead. The costume jewellery industry is quite competitive, and while compliance is voluntary, the non-complying sector will have an economic advantage over the complying sector. In addition, because the presence of lead in jewellery is not obvious and is often masked by a decorative or protective coating, retailers may not be aware of whether or not the jewellery they market contains lead. 6. Developing Regulations for Children's Jewellery This is the preferred option since Health Canada has been working for a number of years on a hazard-based Lead Risk Reduction Strategy for consumer products to which children are likely to be exposed. In this Strategy, lead-containing jewellery is included in one of the product categories for which regulations limiting total lead content are proposed. The Strategy represents a major change in regulatory focus from a product-based to a hazard-based approach. This being the case, coupled with the broad spectrum of issues from interested stakeholders, limits the government's ability to introduce regulations based on the Strategy in a timely manner. Children's jewellery containing lead represents an immediate and significant health risk to consumers, and it would be inadvisable to wait a number of years before taking action which has a direct benefit to protecting the health of children in Canada. Setting out regulations to address the limit of leachable and total lead in children's jewellery is one step in achieving the goal of the Strategy and the regulations can be further amended should other health and safety concerns related to children's jewellery arise in the future. Benefits and Costs Background Most inexpensive jewellery in Canada is sold in general merchandise stores and outlets, rather than in jewellers' shops, which sell mainly fine jewellery. An estimated 95% of children's jewellery containing lead sold in Canada is imported. Canadian manufacturers can meet lead limits for children's jewellery, but this is economically feasible only if imported jewellery is required to meet the same standard. The Regulations will ensure that the same standards are applied for all manufacturers and importers. There may be a slight increase in the average price of children's jewellery if lead substitutes are used since these substitutes are more expensive than lead. The cost of non-toxic substitute metals such as tin, varies considerably. The lead tolerances specified in the Regulations will permit the use of standard-grade substitute metals such as tin. The white-metal casting industry, which makes alloys for jewellery and other products such as giftware and publicity objects, will also be affected by regulations on lead in children's jewellery. There are approximately 10 white-metal casting companies in Canada. However, the industry can meet the demand for other metal alloys suitable for costume jewellery. Costs Only incremental costs, which are costs that arise solely from the proposed control measure and are in addition to the costs for pre-existing activities, are considered. This avoids double counting that could substantially overestimate the costs. The total cost of a control measure to prevent the importation, sale or advertising of children's jewellery with a high lead content is represented by compliance costs to industry and government regulatory costs. The incremental costs to society of the proposed regulations can be represented by the following equation: Total Social Costs = Total Incremental Private Costs + Total Incremental Government Costs Amending the Hazardous Products Act to limit the total lead and leachable lead content of children's jewellery will make it necessary for manufacturers to make their product from other metals. Substitute metals for children's jewellery include tin, zinc, nickel or low-lead pewter. These metals often contain traces of lead but at levels that would remain below the proposed standard. For example, standard grade tin has a maximum lead amount of 500 mg/kg. The average 2001 commodity prices (in American dollars) for lead, zinc and tin were $0.21, $0.41 and $2.12 per pound respectively, suggesting that switching to alternate metals will increase the metal component price of the product from two to ten times. The metal component cost of jewellery is significant, while manufacturing costs, which vary with the intricacies of the jewellery and the workmanship involved, may also be significant. Domestic jewellery manufacturers and manufacturers of white metal alloys indicated that a number of alternates for lead in jewellery manufacture exist, including low-lead zinc and pewter. The base cost of low-lead zinc is about twice the base cost of the lead currently used in jewellery. Manufacturers who were consulted did not anticipate any additional manufacturing costs associated with a switch to non-lead alternatives. Assuming that a replacement metal would cost twice as much as lead, a single Canadian jewellery manufacturer estimated that costs to them associated with a change of metal would be $15,000 in the first year, and $20,000 in the second and subsequent years. Indications are that there are few (possibly no more than two) Canadian manufacturers of children's jewellery which would be affected by the Regulations. If it is assumed that there are three affected domestic firms, all of a similar size to the single firm that provided cost data, the cost of the Regulations to domestic producers will be $45,000 in the first year and $60,000 per year in subsequent years. Foreign manufacturers of children's jewellery are likely to incur the same cost differential when switching from lead to a non-lead alternative. Similarly, their cheapest and most likely option is a switch to low-lead zinc, which would double the cost of the metal used in the manufacture of the jewellery. Monitoring, enforcement and related laboratory costs for Consumer Product Safety of Health Canada are estimated at $30,000 in the year after the Regulations are introduced. These costs would tend to decline over time as experience is gained and non-compliant jewellery is removed from the marketplace. After the third year, costs are estimated at an average of $5,000 per year. The present value of Total Social Costs is roughly $600,000 over the lifetime of the Regulations, at a 3% discount rate. Benefits This section evaluates how the Regulations will improve the well being of individuals in society and where possible, express these welfare improvements in monetary terms. It includes the following three steps:
In this instance, quantifying and monetizing reductions are greatly limited by the availability of data and resources. Estimated benefits for the Canadian public are based on the values for cost of illness and medical costs found in the valuation literature. These values are summarized in Table 1, below. Table 1: Measures of benefit for lead reduction
The data in this table indicates that the cost of medical treatment combined with the cost for extra education, on average ranges between $6,000 and $10,000 per case. This range of values will be compared to the costs that are outlined in the next section. Net Benefit Since we do not have exhaustive data regarding benefits, a true comparison of benefits and costs is not feasible. However, a break-even analysis, which determines the point at which benefits equal or exceed costs, may be used instead. For the Regulations, assuming that costs over the lifetime of the Regulations have a present value of roughly $600,000, and the partial benefits per case range from $6,000 to $10,000, the Regulations are efficient as long as, over their lifetime, 60 to 100 cases of lead poisoning are avoided. Distributional Analysis The preceding analysis of benefits and costs indicates the point at which the control measure is economically efficient, that is, the point at which net benefits become positive. A distributional analysis considers the distribution of costs and benefits, and the fairness of the regulatory outcome. For the purpose of this analysis, those considered favourably affected by the Regulations include:
Those considered unfavourably affected would include:
There is no indication of differences among users of children's jewellery based on such factors as provincial, income or gender disparities. Any child in Canada is thus considered to be as likely as any other to be a user of children's jewellery. Consequently, there is no observable difference in impact among the users who will be beneficiaries of the Regulations. Similarly, there appears to be no significant differences in the potential impact of the Regulations among the importers, manufacturers, and distributors of children's jewellery who bear the costs of the regulations. Furthermore, those employed in the manufacturer/importation/distribution of children's jewellery may also be the parents of users of the jewellery. Thus, members of this group may be both positively (as a consumer) and negatively (as an employee in the manufacture, importation or sale of children's jewellery) affected by the Regulations. Summary The benefit-cost analysis based on the available data has indicated that regulations of the lead content of children's jewellery would be an efficient control measure if, over the lifetime of the Regulations, 60 to 100 cases of lead poisoning are avoided. Consultation General merchandisers are not opposed in principle to a prohibition on leaded children's jewellery. The concerns of general merchandisers selling children's jewellery relate mainly to interpretation of the Regulations. Children's jewellery is not marketed by specific age groups, and industry has expressed uncertainties over which jewellery items would be included in the Regulation. In response, Health Canada has drafted explanation guidelines for the Regulations and will consult with industry before finalizing them. Health Canada will also provide specific guidelines for field staff on application of the Regulations. The Canadian jewellery manufacturers industry expressed concern regarding a number of points in the two letters sent to them by Health Canada. In response to their concerns, Health Canada raised the proposed lead limits in children's jewellery from 65 mg/kg to 90 mg/kg migratable and 600 mg/kg total lead and has excluded some items which are not meant for regular wear. A teleconference between Health Canada and major general merchandise companies was organized by the Retail Council of Canada in July 2001 to provide an opportunity for the industry to present their concerns to Health Canada officials. Health Canada is committed to ongoing consultation and communication with the jewellery industry throughout the process of developing the Regulations. After pre-publication of the proposed Regulations in the Canada Gazette, Part I, on November 22, 2003, Health Canada received comments from four stakeholder groups. All comments were addressed in detail and responses were set out in a table which was sent to all four stakeholder groups. Copies of the response table provided to the four stakeholders can be obtained upon request to the contact listed at the end of this Regulatory Impact Analysis Statement. The stakeholders' comments related mainly to the scope of the Regulations or the lead content standards. Two respondents commented that all costume jewellery should be included in the Regulations, and one respondent proposed that only jewellery intended for children under the age of eight should be regulated. Health Canada responded that the chosen age limit of fifteen years will provide optimal protection for children without unnecessarily restricting trade. Three respondents commented that the 600 mg/kg total lead content standard was inadequate; one of the three proposed a total lead standard of 200 mg/kg. In response, Health Canada explained that both the total lead limit of 600 mg/kg and the migratable lead limit of 90 mg/kg specified in the Regulations must be met. Together these standards provide adequate protection to children against lead exposure. Health Canada determined that the potential impact of the concerns raised by the stakeholders was not significant enough to justify modifications to the Regulations or to delay implementation of controls on the hazards associated with children's leaded jewellery. Compliance and Enforcement Compliance and enforcement of the Regulations will follow Departmental policy and procedures, including sampling and testing of children's jewellery, and follow-up of consumer and trade complaints. Action taken on non-complying products will range from negotiation with traders for the voluntary withdrawal of these products from the market to prosecution under the Hazardous Products Act. Health Canada field staff are responsible for the compliance and enforcement actions. Contact Sarah Sheffield R.S., c. 24 (3rd Supp.), s. 1 |
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