Proceedings of the Standing Senate Committee on
Banking, Trade and
Commerce
Issue 8 - Evidence
OTTAWA, Tuesday, September 24, 1996
[English]
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-4, to amend the Standards Council of Canada Act, met this day at 10:00 a.m. to give consideration to the bill.
Senator Michael Kirby (Chairman) in the Chair.
The Chairman: Honourable senators, we have before us today witnesses from the Department of Industry on Bill C-4, to amend the Standards Council of Canada Act. I will ask the witnesses to proceed at this time.
Mr. Robert Main, Director, Regulatory Affairs and Standards Policy, Corporate Governance Branch, Industry and Science Policy Sector, Department of Industry: Mr. Chairman, I will outline briefly the main elements of the bill before the committee.
By way of background, the new president of the Standards Council of Canada was charged by the Minister of Industry to review the mandate and structure of the standards council in October 1994. Public consultations were undertaken across the country in January of 1995. Those consultations indicated broad support for strengthening the mandate of the standards council, in particular by broadening its mandate, as well as support for streamlining its structures.
The main elements of the bill are provisions to modernize the mandate and powers of the council, to streamline its structure, to ensure that members are qualified and represent the broadest possible spectrum of interests, to establish structures to support the participation of provincial government standards development organizations, as well as a number of miscellaneous improvements.
In terms of modernizing the mandate and powers of the council, the update broadens the scope of the mandate to cover all areas of standardization. The mandate specifically enjoins the council to work to involve more Canadian volunteers in standards activities, to promote communication between governments and the private sector, to coordinate the people and organizations involved in the national standards system, to foster quality performance and technological innovation in Canadian goods and services through standards initiatives, and to establish long-term objectives and strategies for its activities.
The streamlining of the council reduces the number of appointed council members from 57 to 15. There will be 11 private sector representatives, one representative from the federal government, two representatives from provincial and territorial governments, and one non-voting representative of the standards development organizations.
To ensure as broad as possible expertise at the council table, the bill requires that members represent a broad spectrum of interests. When we refer to private sector members in the council, we include representatives of organizations such as those which represent consumers and labour. We simply mean non-government in those cases. They are expected and required to have the knowledge or experience necessary to assist the council in fulfilling its mandate.
The bill formally creates two advisory committees of the new standards council. One is a provincial-territorial advisory committee to which each province and territory will be entitled to appoint a representative. That committee will select its own chair and vice-chair who, automatically, will be ex officio members of the council. The second committee is the standards development organizations advisory committee to which the five standards development organizations will nominate representatives. They will also select a chair who will be a non-voting ex officio member of the council.
There are a number of miscellaneous improvements, such as changes to titles, clarification of the role of the chair of the standards council, and clarifying that meetings can be held by electronic means and are not necessarily required to be held in Ottawa.
There is a general modernization of language in the act, including fixing some problems that existed in the old act in terms of translation between English and French.
That sums up what is in the act before you.
The Chairman: Thank you, Mr. Main. I have a few questions before turning to committee members.
Whenever you downsize -- in this case, I believe your numbers went from 57 to 15 -- there are a number of groups, individuals, governments, whatever, which are no longer represented. Who lost?
Mr. Main: This may sound glib, but I do not think anyone really lost. We had a large number of members in the past, many of whom were not bringing any particular constituency to the table. An effort is being made to select members for the new council who have good experience, high standing in the areas in which they are working, and bring a full variety of interests from both business and other social sectors to the table.
The Chairman: Members are appointed how?
Mr. Main: By order in council.
The Chairman: That is how is was done previously as well.
Mr. Main: Yes.
The Chairman: If you are looking for a consumer representative, to take an example, does the government pick a consumer representative, or does the government go to the consumers' association and asks for nominees? What is the process?
Mr. Main: There is not a specific process required. In fact, in some cases, they are going out and asking organization for suggestions. In other cases, they are going out and making suggestions to those organizations to see how they play.
Senator Meighen: Welcome, Mr. Main and colleague.
I wish to know the view of the department with respect to some of the things that are not in the bill, as I understand it, but which were recommended by the Canadian Standards Association when the bill was before the House committee. I think one of them was that there should be a review clause of five years to ensure that the council and the national standards system remain relevant. The other, I think, was an explicit reference to the role of the council in promoting the harmonization aspect of the internal trade agreement. One of the last items we dealt with before the summer recess here was precisely that internal trade agreement, and there was some concern expressed around this table that it did not say much, that it was more words than action, and we were questioning who was going to put the teeth into it.
You have in your mandate some reference to assisting in harmonization of trade. I should appreciate your comment on whether you think you have the tools to do the job.
Mr. Main: Our feeling about the tools to do the job, frankly, relies very much upon the fact that the tools to do the job are the people who will be appointed to the new council. As I said earlier, the aim is to bring in people with a breadth of experience and knowledge so they can apply some thinking to these sorts of issues.
I must say that, in the past, the council has focused largely on administrative matters such as administering the standards system, accrediting standards organizations and that sort of thing. There is a staff of the council who are civil servants and are capable of handling a lot of that work.
Our hope is that a council with a higher level approach will focus on exactly these kinds of policy issues, make suggestions, be able to talk to governments at all levels in the country, bring these kinds of ideas together, and have an influence in those things. That is why we included in the mandate the reference to internal trade.
Senator Meighen: However, for better or worse, you have no enforcement power at all, do you?
Mr. Main: I think we influence the council. We have a member of our own on the council. The Assistant Deputy Minister of Industry and Science Policy at Industry Canada is on the council. We will continue, as we have in the past, to provide policy recommendations that can be delivered to the council through that individual. As well, there is the ministerial authority.
Senator Meighen: What about the review clause?
Mr. Main: That was considered. As to the concerns with putting in a specific review clause, frankly, we feel that the review we undertook in January of 1995 was quite successful. We had good attendance at meetings across the country and very good response to lengthy questionnaires which were sent out. We were pleased with it and thought it was a good thing and was worth doing periodically. However, when you start tying it down to a specific time frame, you run into all kinds of problems with things like elections, so there was reluctance to try to nail it down that hard.
Senator St. Germain: You say that the new restructured organization will give you a higher level approach to improving situations in international and domestic trade?
Mr. Main: Yes.
Senator St. Germain: Could you explain how downsizing will give you more profile and more clout to facilitate this higher level approach?
Mr. Main: Yes.We had 41-odd members appointed from the private sector in the past -- a large number. Adding the government members, we had 57, a number not really conducive to in-depth discussion of policy issues and exchange to develop policy recommendations. There is a concerted effort at the moment to look for people to appoint to the new council, people from senior levels in business and other parts of society, people who have had experience, whether in business, government activity or voluntary activities, and who have seen policy issues at a senior level and are used to dealing with them.
In writing the mandate the way we have, we have attempted to focus on a number of issues and say, "These are the things with which we want the appointed council to deal." It is our hope that many of the purely administrative functions of the standards council will be moved down into the staff work of the council.
Senator St. Germain: Are you saying that you are making the club more exclusive, and with exclusivity you will have higher quality people?
Mr. Main: "Focus" is the word I would choose. I think that "more focused" is what we are really after.
Senator Meighen: Is the remuneration of the appointees the same as that of the previous council?
Mr. Main: That is right.
Senator Meighen: So they are essentially volunteers?
Mr. Main: That is right.
Senator Meighen: I note that 51 per cent of your budget, if I am correct, comes from government appropriations.
Mr. Main: That is right.
Senator Meighen: Where does the other 49 per cent come from?
Mr. Main: It comes from cost recovery for council activities, production of documents and that sort of service.
Senator Meighen: Is that an estimate, or is it pretty firm?
Mr. Main: That is pretty firm at the moment. That is a changing figure over time. I could not tell you for sure if the appropriation was ever 100 per cent.
Michael McSweeney, who is sitting behind me, might be able to address that. He is the executive director of the council. The parliamentary appropriation has been declining as a proportion of standards council revenues.
Senator Meighen: Presumably your incentive for cost recovery is increasing as the appropriation is going down.
Mr. Main: That is correct.
Senator Meighen: Perhaps someone else will ask what that turns you into. You may be a very good watchdog, a watchdog with great teeth, or perhaps a collection agency.
You have the ability under the mandate to financially assist organizations.
Mr. Main: Yes.
Senator Meighen: How do you do that, and who do you assist?
Mr. Main: The council assists organizations and individuals to participate in international standards-setting activities. There is a lot of standards development that goes on at ISO and IEC in Europe, and Canadians participate in those things. Very often, people who represent organizations such as consumer organizations, for example, do not have very much in the way of revenues, and the council assists their participation in that activity.
Senator Meighen: Is that by paying their fares or whatever?
Mr. Main: That is correct, or contributing to them.
Senator Kenny: I should like some general information. Could you describe to us the relationship between standards setting in Canada and that in other countries? How does it impact on trade? Specifically, I think of the size of our market vis-à-vis the Americans. If something is certified as being safe in the United States, do we just say, "Fine," and take it in? Do we accept the standards of other countries? Do other countries accept ours? How does the system work?
Mr. Main: The standards system world-wide is globalizing quite rapidly. I think the benefits of standardization for trade are well known. If you can demonstrate that your product meets a standard that is required in the jurisdiction where you want to sell, then you are in.
Very often, it is not a straightforward matter of whether we accept the standards of other countries or whether they accept ours. You must look at the regulation. Where standards are mandated by regulation, we frequently see a hard-edge, potential barrier.
We can take the example of electrical safety in Canada. An electrical code exists, consisting of a body of standards most of which in the past have been developed in Canada. Increasingly, we are adopting international standards as part of the Canadian code. Then the provincial governments are responsible for the regulation of electrical safety. Regulations demand that any product sold within a particular jurisdiction must meet the standards of the Canadian electrical code. They may be Canadian standards; they may be international standards. Then there is the system to determine whether a product actually meets that standard.
You are all familiar with the Canadian Standards Association sticker which is seen on a lot of electrical equipment. The Canadian Standards Association is accredited by the standards council to certify that products meet those standards.
The regulators have assurance that a product is reliably certified through the standards council's accreditation program. It is somewhat similar to an audit. It ensures that the CSA is doing the right things, managing their operation in such a way that you can rely on their judgment as to whether a product meets a standard.
The standards council, since the signing of the Free Trade Agreement with the United States, is now accrediting certifiers from the U.S. and potentially from Mexico under NAFTA. A producer in the United States could have its product certified by Underwriters Laboratories for both the United States and Canada. Conversely, they could produce it in Canada and have it certified by the CSA for both the United States and Canada or, in either country, they could have it certified by the organization in the other country for sale in both countries. There is a lot of integration going on.
In terms of standard development, first, a need is identified for a standard for a given product or service. The present rule is to first look for a standard which exists internationally and which can be adopted. No one develops a new standard unless it is necessary. If you cannot adopt or adapt an international standard, then, as a last resort, you develop your own. There are two reasons for that. One is the sheer cost of developing standards; it is an expensive committee-driven process which takes a lot of time and discussion and travel and so on. Second, standards which are developed unilaterally in different jurisdictions can turn into barriers to trade.
The Chairman: You opened up a very interesting line of discussion.
Senator St. Germain: When I was building houses, CMHC always required a CSA sticker. Will they now accept an Underwriters Liability sticker?
Mr. Main: I believe they will.
Senator St. Germain: Are they now transferable, if that is the right term?
Mr. Main: The certifications can be done by UL. If a product must be certified to a certain standard, the CMHC will require certification by an organization accredited by the Standards Council of Canada.
Senator St. Germain: So you accept the UL now?
Mr. Main: UL is accredited, yes.
Senator Kenny: Is that only for certification? If the sticker is on, is that enough, or are they just okay for certification?
Mr. McSweeney is shaking his head back there.
Mr. Main: There is dissenting view-holder behind me. You may want to invite Michael McSweeney to bring more details to the table. The SCC is accrediting certifiers from the United States.
The Chairman: For the record, can I ask you to not use acronyms for the benefit of our Hansard reporters.
Mr. McSweeney, please come up to the table.
The general set of questions on which we would like some insight is essentially the following: You have a council which accredits an organization which, technically, sets the standards, in this case the CSA. Is that correct?
Mr. Main: The organizations do a number of things. They accredit organizations which develop standards and which certify that products meet standards, and they accredit laboratories which do the tests to demonstrate whether the products meet standards. Those are separate operations.
The Chairman: And they are all accredited or approved by the council?
Mr. Main: Yes.
The Chairman: Do you, in a sense, "own" them or "manage" them? Do you simply accredit them? Does the funding for the testing or the development of standards come from the council, or from separate private sector entities which are simply accredited by you?
Mr. Main: They are separate private sector entities that are accredited by the council. Some are not for profit; others operate for profit.
The Chairman: They are not run by government, either federal or provincial?
Mr. Main: Some are, actually. I suppose I misspoke. The Canadian General Standards Board is a standards developer which is a unit of Public Works and Government Services Canada. Le Bureau de normalisation du Québec is a Crown corporation in that province, I believe. The other standards developers in Canada are independent.
The Chairman: However, in every case they are accredited or approved?
Mr. Main: Yes, by the standards council.
The Chairman: The question of Senator St. Germain is this: Under the FTA, and now NAFTA, do the corresponding organizations in the U.S. automatically have accreditation in Canada by virtue of NAFTA, and vice versa?
Mr. Main: No. They must apply to the Standards Council of Canada and meet our requirements.
The Chairman: Is it a rubber-stamp application?
Mr. Main: What do you think, Mr. McSweeney?
Mr. Michael B. McSweeney, Executive Director, CEO, Standards Council of Canada: No. It is not a rubber stamp. For example, we only accredit in the certification field, in the laboratory-testing field and in ISO 9000 which is the quality management systems standard. We do not accredit American organizations in standards development. That is purely Canadian.
The Chairman: Let me be clear. In local standards development, there is a presumption that no international standard exists?
Mr. McSweeney: That is correct, if there is a domestic standard.
The Chairman: In the standards testing, an acceptable American standards-testing organization is automatically acceptable to you?
Mr. McSweeney: No. We accredit them and they do the testing. We do not just allow their products to come up here, as Senator Kenny said. They test and certify to a Canadian standard, not to an American standard or a Japanese standard.
Mr. Main: And they are not automatically accredited on the basis that they have been accredited by an organization in the United States. They must go through the same accreditation process with the Standards Council that a Canadian organization would have to go through. They have to prove their credentials.
The Chairman: That applies to both testing labs and certification.
Senator Kenny: To clarify, you are telling us that a product with a UL sticker has been certified to some set of standards somewhere. It will not necessarily be to Canadian standards. However, a product could be certified to Canadian standards. One must read the sticker more closely to find out whether it has been certified to Canadian standards.
Mr. Main: That is right.
Mr. McSweeney: For most UL products in the U.S. you will just see "UL". If it has been tested and certified to a Canadian standard, you will see "UL" with a little "C" at the eight o'clock position. If you only see a UL sticker in Canada, it means the product is in Canada illegally and the inspectors have not been doing their job, generally speaking.
The Chairman: Does it mean the product is in here illegally or the product is in here and when you buy it you know it meets U.S. standards but you do not know it meets Canadian standards?
Mr. Main: That is right.
The Chairman: Those are two different statements.
Mr. Main: That is correct.
Senator Kenny: You cannot use it until it has been certified to Canadian standards. Just because it has been certified by UL to Mexican standards, that does not mean you can use it in Canada.
Mr. Main: The regulation of whether a product is okay for use in Canada is applied at the retail level. In terms of legalities, it would be a provincial responsibility and it is not legal for sale in Canada. You can go down to the States, buy a toaster, throw it in your trunk, bring it back to Canada, plug it in and use it, and you are not breaking any laws.
Senator Kelleher: It has been my experience in trade matters that it is not beyond the realm of possibility for countries to use standards as a non-tariff barrier.
I remember an occasion in New Zealand where I was told our salmon were not being allowed into the country because each salmon had to be certified to be disease-free by a veterinarian, who had to sign and attach a tag to it. That is a perfect example of a non-tariff barrier.
When we run into cases like this, what role, if any, do you people play to assist us in trying to remove these non-tariff barriers in the standards field?
Mr. Main: One way of addressing non-tariff barriers in the standards field is through the WTO Agreement on Technical Barriers to Trade. The actual controls would be pursued on a government-to-government basis through WTO mechanisms or, as in the case of trilateral trade with the U.S. and Mexico, through NAFTA mechanisms. The Standards Council of Canada is in a position to provide considerable knowledge and advice to help the government locate the right experts to deal with such an issue. However, it would be largely an advisory role.
Senator Kelly: Do you play a significant role in that area? Do you attempt to assist in that area and be proactive?
Mr. Main: I am trying to recall a case of a barrier that was a standards barrier rather than a technical regulation.
Senator Kelleher: There were some with Europe in the electrical area.
Mr. Main: Yes, there may well be. Have you seen any recent activity?
Mr. McSweeney: We are currently negotiating an agreement in the electrical safety sector with the European Union.
Mr. Main: I suppose that gives me a hint to the real answer to the question, which is, while we have not been dealing with any specific barriers that we are concerned with in recent years, there are proactive efforts to try to further coordinate standards activities and ensure that everyone is using standards that do not amount to barriers. More and more countries are using international standards and recognizing other countries' standards. This is a proactive effort that the council is actively involved in.
Senator Hervieux-Payette: My understanding is that the members of the council are not paid. It is not a remunerated position.
Mr. Main: That is right.
Senator Hervieux-Payette: So we are not saving anything except expenses by reducing the number of people from 57 to 15.
Mr. Main: That is right. Expenses are reimbursed.
Senator Hervieux-Payette: What did the provinces say about the mechanisms? Were they consulted? Did they agree on the mechanisms by which they will be included in the process?
Mr. Main: Yes. We were told in every city we went to in the cross-country consultations that the ideal number for the council would be 10 to 15 people. We met with the provincial members on the council and discussed the issue with them. The provincial members recognized that if the council were to have the complex policy discussions we would like it to have, and if it were to come up with the directions we would like it to come up with, there would have to be a significant downsizing. It was agreed that 12 or 13 provincial and territorial representatives clearly would not be an option.
At the federal level we used to have six representatives on the council. It is important that we maintain provincial involvement because much of the use that is made of standards happens at the provincial level and we want to continue with the unified national system. It was suggested that there be some proportionality between the provincial representation and the federal representation which existed before; they had 10 members and we had six. We have gone to two and one. We have created in the legislation an advisory committee over which the provinces have control. The provinces determine who is on that committee and that committee determines who represents them at council. They will operate and provide advice and input to council deliberations.
As we were developing the legislation, the minister wrote to his provincial counterparts following all of those discussions and told them what he thought we were likely to come up with. He had responses from seven provinces. They all supported the direction we were taking and recognized the need. No one suggested that they should have a guaranteed seat.
Senator Hervieux-Payette: What about Quebec?
Mr. Main: That includes Quebec.
Senator Hervieux-Payette: That is good news.
How do you manage mandatory standards and voluntary standards with respect to mandatory standards? Are you the organization enforcing the standards?
Mr. Main: No. The Standards Council of Canada does not enforce anything except its accreditation schemes on the organizations it accredits. Mandatory standards are simply voluntary standards that a government at some level has decided must be used. The electrical safety standards were developed through the voluntary system. Regulators have said, if you want to sell an electrical product in our territory, it must meet that standard. That standard has become mandatory, but the enforcement remains with the regulators.
Senator Hervieux-Payette: There could be some Canadians violating the standards and there could also be people who are exporting to Canada who are violating the standards. Do you stop exported products at the border?
Mr. Main: No. To take the example of electrical safety, the regulation is at the provincial level and enforcement is at the retail level. Periodically, checks are done for products that do not meet the regulations by not meeting the standards. It is pursued that way.
Senator Hervieux-Payette: Customs has nothing to do with that?
Mr. Main: They do not inspect for adherence to standards. If a case arose of a dangerous product coming onto the market, I would think customs would act on that.
Senator Hervieux-Payette: Let us take the example of pyjamas manufactured with dangerous material; they look fine, but they are very cheap. Who will remove them from the shelves?
Mr. Main: Under the Dangerous Products Act, which is administered by Health Canada, an alert would be issued and customs would watch for the product.
Senator Hervieux-Payette: So there are some enforcement mechanisms when a violation of the standard puts the health of people in danger?
Mr. Main: That is right.
Senator Hervieux-Payette: We have a role to play, not through your organization but somewhere else?
Mr. Main: Yes, and while the standards council runs a voluntary standards system, it is a good conduit for information on problems of that sort.
Senator Hervieux-Payette: Do you participate in the World Trade Organization discussions of standards? Where are these standards being discussed? We all know they constitute one of the main barriers to trade.
Mr. Main: Yes. I referred earlier to the Technical Barriers to Trade Agreement under the World Trade Organization. The negotiations are handled by the Department of Foreign Affairs and International Trade, but the standards council is called upon to provide advice on standards matters for those negotiations, and also when there are bilateral or other multilateral negotiations.
The Chairman: Am I correct that enforcement is entirely provincial?
Mr. Main: I was using the example of electrical standards. Standards could be used in regulation by the federal government, such as in the case of life jackets. It would be the Coast Guard that would enforce regulations on life jackets. There are standards for life jackets. The regulation would say you have to meet the standard. I believe the Canadian General Standards Board writes the standards for those.
The Chairman: So, in fact, you cannot make a blanket statement on enforcement. It depends entirely on the area in which the product is found?
Mr. Main: Yes, and on who is the responsible regulator. I do not think we can emphasize too much that the standards council oversees a voluntary standards system. Governments make use of the standards that are produced in that system for regulation. It is simpler. It is easier for business to comply with because they have been involved in developing the standards. However, when they do that, they still retain the responsibility for that legislation or regulation and enforcement of it.
Senator Hervieux-Payette: How many organizations are accredited?
Mr. McSweeney: In standards development, we have five organizations. In certification, we have 11 organizations. In test laboratories, we have about 265. For quality management systems, we have 14. Of the 11 certification organizations, three are American, eight are Canadian. In test laboratories, we probably have 20 American of the 265.
Senator Hervieux-Payette: Are those American organizations operating in Canada?
Mr. McSweeney: Not necessarily. They can be operating in the United States.
The Chairman: Are any of that whole set owned by the federal government?
Mr. McSweeney: The Canadian General Standards Board, which writes standards and is a certification organization, contracts Test Laboratory to do its testing and quality management system.
The Chairman: It is part of Public Works?
Mr. McSweeney: Yes.
The Chairman: It would be by far the largest in its field in the country, is that correct?
Mr. McSweeney: Yes. It would compete equally with CSA, as far as standards development.
Mr. Main: However, the CSA is a larger organization.
Senator St. Germain: You made reference to the provincial representation on the board. I am not really concerned about the provinces; they will bicker and fight and never be happy anyway. I am more concerned about industry representation. How will the change from approximately 50 members to 11 impact industry? Will that give a balanced and adequate representation to the diverse businesses in the country?
Mr. Main: We think it will. We did study the numbers. Frankly, to try to make sure everyone is covered, we would have had to increase rather than decrease the number of members on the council, and we already felt we had a problem with such a large number because there was not necessarily an awful lot of attention being paid by many of the individual members to standards council issues. The effective running of the operation was being done more by an executive committee of council than by the broader council. As I said earlier, with 50-odd people in a room, it is difficult to carry on a detailed, complex policy discussion. The appointment process will involve a serious effort to have people from a good variety of sectors on the board, people with sufficient background, experience and standing in their respective communities to be bringing more than just their own individual views to the table.
Senator St. Germain: Has the European Union gone to one standard right across the board? If it has, are we working towards that type of system with our NAFTA partners as opposed to trying to establish our own system?
Mr. McSweeney: In Europe, each member body develops its own standards, much as we do in Canada, but there is an organization called CEN, which is the European standards organization. For electrical products, which is separate, the organization is called CENELEC. They are developing standards for the European Union, but they have a very close cooperation with the ISO, the International Organization for Standardization, and the IEC, the International Electrotechnical Commission, which develop all electrical standards. We are doing the same thing in Canada. We are working sector by sector. For example, in the electrical sector, we work very closely in an organization called CANENA, which is Canada, the United States and Mexico, through which we are not only trying to write regional standards but trying to harmonize our standards and adopt international standards within Canada. Everyone is working toward the same goal: one standard, one test, and ultimately one mark.
The Chairman: Thank you very much, gentlemen, for coming.
Senators, can I have a motion to report the bill back without amendment?
Senator Meighen: So moved.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: Carried.
The committee adjourned.