Integrating the Canadian & US Regulatory Systems for GM Crops Presentation to the 19 th ICABR Conference Ravello, Italy June 16-19, 2015 Stuart Smyth, William Kerr & Richard Gray, University of Saskatchewan

Challenge: To reduce the cost of regulatory approval for new crops Increasing Regulatory Efficiency is Crucial

Introduction Canada and the US are each others largest trading partners 75% of Canadian exports worth C$358 billion go south 20% of American exports worth US$300 billion go north Signed Canada-US Trade Agreement in 1988 (CUSTA) Signed North American Free Trade Agreement in 1994 (NAFTA)

The role of NAFTA NAFTA recognized the cost of regulatory disharmony Two specific articles in NAFTA to deal with this: Article 906 – Compatibility and Equivalence Article 913 – Committee on Standards- Related Measures Considerable efforts taken to ensure that the potential for trade disrupting events were minimized

Institutional foresight Evidence of NAFTA’s shortcomings in regulatory harmonization can be found in the area of beef carcass grading After 20 years, there is still no harmonization Evidence shows that under NAFTA there is little to no consultation between Canada, the US or Mexico when one country changes regulations Sovereignty over regulations appears to be deeply entrenched

Lack of regulatory harmonization Agreement by trade negotiators doesn’t necessarily equal political willpower This is certainly the case when dealing with standard marketplace products but even more pronounced when dealing with food products Food safety failures have devastating and long lasting impacts on political careers, hence strong aversion to anything that may trigger a failure Regulatory harmonization could raise the risk of a food safety failure

Regulatory integration options Option 1: Country A harmonizes with Country B’s regulations Option 2: Country B harmonizes with Country A’s regulations Option 3: Both countries agree to participate in the establishment of a new regulatory framework Political dilemma is who bears the cost of harmonization?

Regulatory harmonization obstacles No country is going to want to bear the full cost of regulatory integration with another country Each country will have argued to their political higher-ups that their regulatory system is second to none Faced with harmonization, suddenly one nation has to admit that its regulations are not the ‘best system’ Canadian and US GM crop regulations are quite similar so this may be less of an issue

Example of regulatory harmonization NAFTA established the Technical Working Group on Pesticides, to integrate pest management Key objectives: Sharing information Undertaking collaborative scientific work Forging common data requirements Collaborating on risk assessments Carrying out joint reviews Developing common NAFTA standards

Reality of harmonization challenges Designed to collaborate on applications for new chemical use and renewals of existing chemicals The first five years ( ) seem to have been productive in terms of collaboration and outcomes Objectives set for second five year period (08-13) Process seems to have stalled during this period In 2011, Canada and the US established a new mechanism for regulatory harmonization Clearly, lack of progress triggered a failure

Economic impact of product regulation

Impact of market size on the AC of reg. compliance MC Demand with Reg. AC Reg. compliance Reg Compliance Cost Producer Surplus $ Price Quantity MC Demand with Reg. AC Reg. compliance Reg Compliance Cost Producer Surplus $ Quantity Small Market Large Market

Impact of regulatory harmonization

Challenges for Canada and US regulatory harmonization No formal super-national body to foster a bilateral agenda However, the US resents these types of institutions as sovereignty limitations may be placed on the US The ultimate key to moving towards a single regulatory agency for plant variety approvals in Canada and the US relies on developing non- partisan regulatory institutions

Conclusions Regulatory duplication delays ag innovation, creating forgone opportunities Governments are risk adverse and this is especially true when it comes to food regulation If two economically connected countries such as Canada and the US cannot achieve regulatory integration then the prospect that this be accomplished by other countries is greatly reduced

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