Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue No. 5 - Evidence - May 12, 2016
OTTAWA, Thursday, May 12, 2016
The Standing Senate Committee on Banking, Trade and Commerce met this day at
10:31 a.m. to study the issues pertaining to internal barriers to trade.
Senator David Tkachuk (Chair) in the chair.
The Chair: Good morning and welcome to the Standing Senate Committee
on Banking, Trade and Commerce. My name is David Tkachuk and I am the chair of
Today is our eleventh meeting on our special study on issues pertaining to
internal barriers to trade. I'm pleased to welcome our first panel today, from
Consumer Health Products Canada, Karen Proud, President, and Gerry Harrington,
Vice President, Policy and Regulatory Affairs. With them at the table, from the
Canadian Trucking Alliance, is Stephen Laskowski, Senior Vice President,
On behalf of the committee, I thank all of you for being here today. We'll
hear the opening remarks of all witnesses and then proceed to a question and
answer session. Ms. Proud, please begin.
Karen Proud, President, Consumer Health Products Canada: Thank you,
chairman and senators, for providing us the opportunity to contribute to your
study on internal barriers to trade. This is an issue that's of great interest
to my association and the association members and of great impact to our
industry sector in Canada. We really welcome the work you're undertaking through
this study and hope to see some real results in your recommendations.
Just a little bit about CHP Canada: My organization, which is Consumer Health
Products Canada — I refer to it as CHP Canada — represents the makers of
evidence-based, over-the-counter medicines or non-prescription drugs as well as
natural health products. These products fall into a broad category of consumer
health products and are used by millions of Canadians every day to manage their
personal health and minor ailments such as coughs and colds, as well as some
chronic conditions such as allergies and arthritic pain. The types of products
we are talking about, so you get a sense of who we represent, are things that
you might use every day, like sunscreens and vitamins; pain relievers such as
Advil, Tylenol and Aleve; allergy medicines like those found in Reactine and
Nasonex; and things like nicotine replacement therapy. There is a very broad
range of products that our members manufacture.
Our sector is responsible for over 56,000 jobs in Canada and accounts for
$5.6 billion in domestic sales and more than $1.5 billion in exports. Certainly
we are no small sector.
Last week I was actually in Washington taking part in the Regulatory
Cooperation Council meetings between Canada and U.S. officials and industry
stakeholders, and we were discussing very similar things at that meeting as to
what this committee is looking at today around how to eliminate regulatory and
administrative barriers that negatively affect trade. What struck me at those
meetings, as I was thinking about the speaking notes for this particular
committee, is that in fact our biggest barriers to trade right now are within
the Canadian borders and not the Canada- U.S. system. Again, we're really happy
the Senate committee is looking at this study today.
When Minister Bains appeared before the committee, he spoke about misaligned
regulations and standards as well as this web of red tape. This is precisely
what we are dealing with when it comes to regulation of our members' products in
Canada. I'd like to take a bit of time to explain how the system works for our
products here in Canada.
The regulation of over-the-counter medicines and natural health products is
divided between the federal and provincial jurisdictions. On the one hand,
you've got Health Canada, who is responsible for ensuring the safety, quality
and effectiveness of the products; and on the other hand you have the provinces,
which mandate the conditions or place of sale of those products. Health Canada
gets its authority to regulate our products from the Food and Drugs Act, and the
provincial regulations are administered through the legislation designed to
govern the profession of pharmacy, not those to regulate products. Canada is the
only jurisdiction among our major trading partners to use this dual
jurisdictional approach, and this is really where the problem starts for our
The provincial regulation of conditions of sale is problematic because it
creates inconsistencies from province to province and because it overlaps and
even conflicts sometimes with the federal system. These overlaps and conflicts
negatively impact access to consumer health products across the board and to
varying degrees, depending on what province you happen to live in. They add
costs, complexity and uncertainty for industry and ultimately negatively impact
overall health care costs.
What I mean by that is, if you think about it, when Canadians use our
products to manage their health and treat their minor ailments, they're
practicing what we call self-care. This practice is beneficial in a number of
ways, including the fact that it can keep people out of the formal health care
system, saving the system both dollars as well as freeing up physician resources
to be used where they are most needed. Anything that hinders this process of
self-care is problematic to our overall health care system.
Just so you're aware, the main source of growth in the consumer health
products industry is the creation of new products through a process known as Rx
to OTC switch. That's where a product that's currently a prescription drug gets
switched to a non-prescription status after Health Canada has undertaken a
thorough review of the evidence, has undertaken consultations and has looked at
the labelling required for consumers in order for them to be able to use these
products without the intervention of a health professional.
After reviewing all of the evidence, Health Canada then makes a decision as
to whether or not it will change a product from prescription status to
non-prescription status. This point is when we see two different processes take
place at the provincial level, one for Quebec and one for the rest of Canada.
Outside of Quebec, there's a body known as the National Association of
Pharmacy Regulatory Authorities, otherwise known as NAPRA, which convenes a
committee that essentially reviews the Health Canada decision as to whether or
not a product should be switched from prescription to non-prescription and then
recommends the conditions of sale for that product. These recommendations are
basically what we call the scheduling system in Canada. They recommend whether
the product would be sold behind the counter in a pharmacy, known as Schedule 2,
or in front of the counter in a pharmacy, known as Schedule 3, or anywhere for
general use, which is unscheduled.
Here's the crazy part: NAPRA can actually overrule the Health Canada decision
to switch a product from prescription to non-prescription and put it back to
Schedule 1, which is a prescription drug.
The Chair: Would you repeat that?
Ms. Proud: The crazy part? This provincial body known as NAPRA, which
makes decisions around where a product can be sold, can actually overrule the
Health Canada decision. Where Health Canada says the product is safe to be used
as non-prescription, they can say, "No, it's going back on Schedule 1,'' which
is a prescription drug. This is part of the craziness of the system and part of
one of these barriers to trade that we run into.
Another part of the problem is what happens after NAPRA actually makes this
decision. This is where the provinces come in. In seven provinces, the
recommendations that NAPRA makes as to place of sale are automatically adopted,
and we call that by reference.
In Newfoundland and Labrador, there is an additional step where their own
board of the college of pharmacists reviews the NAPRA review before they decide
to add the product to their schedule.
The Chair: They can't overturn Health Canada, can they?
Ms. Proud: They don't overturn Health Canada, although they could if
they wanted to. They could also not go by NAPRA and decide not to schedule the
In British Columbia, they actually have to amend regulations in order to put
in place the NAPRA decision. The process has taken up to two years in order to
effect that change.
While all this sounds a bit disjointed, we haven't even talked about Quebec
yet. I know there are a lot of senators on the committee from Quebec, so this
might be of particular interest to them.
In Quebec, when Health Canada makes its decision to switch a product from
prescription to non-prescription, everything automatically goes behind the
counter. They don't participate in the NAPRA decision-making; they just put
everything behind the counter. If you want to move your product from behind the
counter to in front of the counter, you have to apply to the Office des
professions du Québec for a scheduling change, and this is a process that can
take, on average, about four years.
What does all this mean? It means that Canada is not a particularly
hospitable country for our industry sector to do business in. The uncertainty
that comes with this entire system is not something that global companies feel
is conducive to good business. It means that Canadians gain access to new Rx to
OTC switch products, on average, seven to nine years after those products are
introduced in the U.S. or the EU.
It also means that if you live in B.C., it may be two years before you see a
product that's available in the rest of the country, and if you live in Quebec,
you may never see the product, or at least you may not know the product is
available because it's behind the counter.
The solution to all of this issue really starts with federal leadership. This
is where I think the work of this committee could come into play.
Up until now, Health Canada, which is a globally respected regulator of
over-the-counter medicines and natural health products, has been hindered in its
efforts to administer what is really a world-class regulatory environment for
consumer health products. They approve the product for safety and efficacy, but
they have to share authority over scheduling with the provinces despite the fact
— I think this is key here — that they have authority under the Food and Drugs
Act as Health Canada to determine the conditions of sale.
While we are in no way advocating for the exclusion of the provinces in the
decision-making process, we believe that the most effective solution to these
problems is to integrate the product approval and drug scheduling processes at
the federal level. This can be done in a variety of ways but requires a
recognition that there's actually a problem with the system and a desire to find
a solution that works and makes sense. We're hoping that through this study, the
committee's work might be the catalyst for the change we need.
Before I close, I want to highlight a real life and very recent example of
the problems within the system. As some of you may be aware, Health Canada, at
the urging of public health officials at all levels of government, decided to
remove naloxone from the prescription drug list earlier this year. For those of
you who don't know what naloxone is, it's a life-saving drug that reverses the
effects of opiate overdose if administered at the right time. It was announced
by the Minister of Health and was a move that was welcomed by many in the public
Because it was seen as an urgent public health issue, Health Canada pursued
an expedited switch process, skipping WTO notification altogether in order to
effect the change in less than three months. We never get less than three months
for our switch products, but this was an emergency situation, or at least
recognition of a great public need.
The department finalized their portion of the switch in early March, but
because there is no mechanism to coordinate the process with the provincial drug
scheduling system, naloxone is still a prescription drug in eight of the ten
provinces and will remain so until a NAPRA reaffirmation of the switch is
completed in mid-June, more than doubling the time required to effect this
change. That's a real-life example we just had about the problems within the
system, even when the switch is initiated at the government level and not by a
manufacturer or a company.
I'd like to thank the committee for providing us with the opportunity to
raise those issues. My colleague Gerry Harrington and I would be very happy to
answer any questions you might have, and we are certainly happy to provide any
further information you might need as part of this study.
The Chair: Thank you very much. We're now going to switch from drugs
to trucking. I'd like to introduce Stephen Laskowski from the Canadian Trucking
Stephen Laskowski, Senior Vice President, Economic Affairs, Canadian
Trucking Alliance: Thank you, Mr. Chair. Thank you, senators, for having us
here this morning. I'll open with some remarks about who we are, our industry,
and then move into the guts of the presentation.
The CTA is a federation of provincial trucking associations from across
Canada. We represent about 4,500 member carriers. The alliance is made up of the
owners and CEOs. We do deal with driver issues, but our membership is made up of
the presidents and the owners of the organizations.
The Chair: How many trucks would that represent, if you don't mind me
Mr. Laskowski: In total, the truck aspect of it, we represent about
150,000 employees. That represents about 70 per cent of the freight in the
marketplace of the trucks on the road, either in their direct control or in
their indirect control as what we refer to in our industry as brokering off
freight. The freight would come in, they wouldn't move it on their trucks but
they might move it on a partner's vehicle. We represent the industry and are
proud of it.
With regard to the industry, trucks move approximately 90 per cent of all
consumer goods on the road, and that's almost two-thirds of the value of
In terms of overall population, we probably represent about 1.5 per cent of
the labour force, and that represents about $24 billion in personal income tax.
We're a large, important industry on a number of fronts.
With regard to why we're that big, it's service. The modern economy is
just-in-time. The Internet has been a friend to us, and the just-in-time
delivery system has been a friend to our industry, as has been north-south
trade. As our economy has changed, so too has our industry. It's a very
competitive industry but also a very nimble one, filled with many great
With regard to a leading indicator, I always say to people, "Never mind your
stockbroker; call the owner of a trucking company, ask what's happening, and if
it's good, you'll see that in the market in three months. If they say it's not
so good out there, you'll see that in the reports coming out.'' As the economy
moves, the quarterly reports come out. It's an excellent indicator of the
economy as well.
In terms of internal trade barriers, the CTA understands that this committee
is most interested in internal trade barriers. We have a number of north-south
barriers as well, but with regard to this study, we'll stick to the terms of
reference and deal with internal trade barriers.
I wouldn't define internal trade barriers in trucking from an academic
standpoint as a pure trade barrier like, for example, in the wine industry,
whether it's B.C. or Ontario in various trade battles, where goods cannot be
sold in their certain marketplaces. It doesn't downplay the importance of our
issues, but they're not what I would technically call trade barriers. They do
cause an impediment to trade and I'll explain why.
Trade barriers themselves are not a new concept to our industry but one that
has troubled our sector since the 1980s. A large number of trucking fleets in
Canada are engaged in interprovincial movement. However, the rules governing the
equipment and drivers engaged in this trade are written and enforced by each
province separately. While in some cases differing regulations are appropriate
given the conditions that exist in each jurisdiction, in other cases these
differences do constitute barriers to fair competition and effective trade. In
these instances, harmonization is essential.
The CTA would characterize the source of our issues within two key subject
areas: the National Safety Code and vehicle weights and dimensions.
The National Safety Code for trucks was introduced nearly 30 years ago as a
concept to deal with truck safety. I would say that our industry has come a long
way in 30 years with regard to truck safety.
In 1989, just so you understand, deregulation was a huge change for our
sector. We went from a very controlled marketplace to a free marketplace. In
many ways, our industry and the members in our industry are fairly new because
of the evolution that happened in 1989. As a result of that and many new players
and rules, just like any new sector, everyone had a bit of a learning curve with
regard to safety. That's not the case today, but perhaps it was a picture of
The National Safety Code deals with 16 standards, everything from truck
drivers' hours of service to carrier safety ratings to driver medicals to trip
inspections. However, after nearly three decades, many of these National Safety
Code standards have still not been uniformly adopted or enforced by the
provincial governments. This is not an acceptable situation for government or
Items like hours of service for truck drivers engaged in long highway
trucking should be uniform across the country. That is not the case. It took
over a decade for all provinces to agree on a new federal regulation governing
the hours of service work regulations. With the movement to electronic logging
devices by 2019, we fear the same pattern will emerge.
After numerous examples over the years, CTA believes it is time for everyone
to admit that the current policy development system is in need of a review.
There appears to be a communication breakdown somewhere between the various
levels of government and industry. Policy and political silos have to come down.
So you understand, the provincial governments enforce trucking rules and in
many ways develop them. The federal government implements standards and
suggestions, but there is no hammer over the provincial governments to adopt
what the provinces agree to at a larger table. They can go back to their home
jurisdictions and completely ignore the advice they developed around the table
or somewhat m,odify it. Neither is acceptable because you end up with a
hodgepodge of regulations from coast to coast. As I already outlined, trucks
move from coast to coast. That is why we say that is atrade barrier.
With respect to weights and dimensions, when I get to the end of this, your
eyes may glaze over because it's going to get into what I will call the axles
and wheels and where things go, but this is critical to our industry and it's a
simple thing. Just look underneath the trailer, and you will see two sets of
tires, three, four and five. It's all based on weight. Weight is a reflection of
the regional economy. If it's a heavy manufacturing area, you will see more
axles. If you see less, it could be light goods like potato chips, those types
of products. In some cases, they will be auto parts because some of them can be
bulky and big.
Where those axles are placed isn't by chance. Those are rules governed by the
provinces. To do these things, the trucking industry has to set up those axles
in a certain way, and it can be an impediment to trade, and I will explain that.
GHG emissions is another component that needs to be dealt with. What we're
dealing with is a component regulation. GHG emissions are a critical issue for
our industry. We are all in favour of improving our fuel efficiency and reducing
our carbon footprint; however, these are all done through technology. There is a
driving component. There are issues that the management team can deal with, but
in many aspects, it's all done through technology. I'm going to give you four
examples of technologies that are proven GHG technologies that aren't allowed by
One is new generation tires. That means a big tire versus two single tires.
These produce about 3 to 10 per cent more fuel efficiency. Only Ontario, Quebec
and Manitoba allow these tires to be used in a manner that allows the trucking
industry to load their vehicles to full loads.
What makes this rule even more of an issue is that in 2018, these tires will
become one of two mandatory options on trailers for all trucks. We are now in
2016. We have two more years for all the provinces to get on board, or the
trucking industry is going to be forced to comply with an environmental rule set
by Environment Canada that certain provinces have chosen to ignore, for a host
Natural gas vehicles: this is a new technology coming to the trucking
industry. It's a proven technology. It's not without its management challenges,
but it can be done. The issue here is that only one province has dealt with its
weight allowance. There are tanks on these trucks that are extremely heavy. The
CTA and the provincial associations have said to not to count that as weight
with regard to product in the back. For example, what some trucking companies
would have to do to operate these vehicles is put less product in the back of
the truck to compensate for the weight of these tanks. What we are saying is
don't count the weight of the tanks at this point until the manufacturers can
make the tanks lighter. Only the province of British Columbia has recognized
this. That is a challenge for us.
Boat-tails: For all those who like 911 Porsches from the 1970s and 1980s,
that's what a boat-tail is. Just think of the big tail on the back of a Porsche.
Well, it doesn't look like that on the back of a truck, but it's the same
concept. There is only one province that allows these aerodynamic devices. They
fold when they're down and open when they're operating. They've been designed
and controlled by Transport Canada so we deal with all the safety issues. But at
this point, only one province allows that, again, 3 to 10 per cent.
The other technology is a certain type of axle technology that goes on the
front of a tractor. It's about a 3 to 5 per cent fuel efficiency improvement.
This axle lifts and goes back to the ground based on the weight. It improves
rolling resistance when it's not required under weight. When it needs more
weight, it puts it down. Although trucking companies would love to have a full
tractor all the time, it's not always possible. What that does is it recognizes,
through a software system, that it's time to lift the axle, put the axle up
higher, and therefore we operate on a more fuel-efficient basis. There are
provinces that outlaw this type of technology. Again, this is something that
needs to be addressed because just think if you are a trucking company based in
Ontario or Alberta and you're serving either the west or eastern regional
markets, you need to spec your vehicle so it can operate everywhere, not just in
your home jurisdiction.
Those are examples on the safety side and spec sides of how provincial and
federal governments need to work better together to allow the trucking industry
to compete on a national basis in a more harmonized manner.
Thank you for your time. I look forward to your questions.
The Chair: I had heard a portion of what you said today from someone
else, so I know what an electronic logging device is, but perhaps you can
explain that to our committee.
Mr. Laskowski: Absolutely. Our industry has gone through an evolution
and, I think, a revolution since 1989 in terms of management and approach to
safety. Paper logs are an example of that.
Just to back up a bit so you understand: Truck drivers can only work so many
hours a day. They have to take rests at certain portions of the day. This all
has to be logged for compliance reasons, which we fully support.
Well, we are in 2016, and there is no need for this to be done on paper. As
we all know, paper allows for what I'll call creativity, and we are trying to
eliminate creativity from our industry. There are devices out there from very
low-end smartphone apps to high-end software/hardware systems that are full
management systems. What we are saying to the federal government and the
provinces is that it is time to eliminate paper from the long-haul trucking
industry. It is time to move completely to mandatory electronic logs. Transport
Canada has been working with us, but there has yet to be an official
announcement that this country will move.
Going back to my previous comments about the hours-of-service regime, our
great fear is that the provinces will agree to this, yet they will go back to
their home jurisdictions and begin to decide if they want to follow the National
Safety Code. On this matter, no one should be wavering on this issue at all.
This is an issue about safety, level playing fields and moving products safely
on the roads. To us, this is a no-brainer, but it has been a bit of a
frustrating exercise for us to date.
The Chair: Just to finish this: It's more efficient, because instead
of the driver, after the trip sitting down and filling out paper for half an
hour, he does not have to do that. He can go back home to his family, and he
would have to do the same at the beginning of the day.
Mr. Laskowski: Change is difficult in all aspects of life, and when
you bring in change of anything, there is a fear to it. But as we go through
these numbers and show them on the driver side, industry side and the government
side, this becomes a no-brainer. Drivers make more money. It allows transparency
and clarity for all. If there is some yelling in the woods, it's more from a
reticence to change and perhaps ignorance of what we're really trying to achieve
as an industry and as an employer group.
The Chair: Thank you very much. We'll continue with questioning.
Senator Greene: You have lots of issues. You have so many issues that
I think we ought to do a separate report just for you. Maybe we will one day.
I have a bunch of little questions that may turn out to have big answers. You
mentioned that the federal government has no hammer. Do they have a hammer but
they are not using it, or are they constrained by an interpretation of the
Constitution? And what do they do in the U.S. by comparison?
Mr. Laskowski: I will start with the bigger picture and drill down.
I think you're 100 per cent bang-on that this is a reflection not of our
industry but of Canada as a nation and how we are governed and were governed
between the separation of federal and provincial authorities and how we evolved.
However, I think the word "evolve'' is a good word here. We can look to our
neighbours to the south to get a lesson here. The Americans deal with these
similar issues, whether safety or truck weights and dimension rules, to get
federal compliance of state authorities — because they have the same regime —
with the big hammer of money, and money is a great hammer.
What they say to the states, the Federal Highway Authority to the U.S. state
DOTs, is, "Governors, this is what we are going to do in the trucking industry,
whether it's safety or on the truck weights and dimensions, and we will consult
with you.'' And they do, and at the end they make a decision. They say, "Here is
our decision. Now you can choose to abide by our decision. If so, here is some
money for those highways that those trucks pay use.''
I will clarify. The trucks pay for it because it comes out of fuel tax and
registration, which is purely dedicated in the United States, and that's a key
point. All the billions of dollars that the trucking industry pays in the United
States with fuel and registration are dedicated towards highway infrastructure.
Federal and state-wise, it is all dedicated; it all goes into a pot.
What happens in this case is that the federal government says, "Here is the
rule. If you choose to comply, here is the cheque. But it's your choice. If you
choose to not abide by the rule, we respect that decision. By the way, give the
cheque back.'' Actually they don't even give them the cheque.
In Canada, we have been pushing for the last decade for there to be a concept
of a trust fund. Three things to overcome are the separation of federal and
provincial authorities, the idea of dedicated funds and the concept of the
federal government being willing to take leadership but also to be able to will
the provinces into compliance. If they want money for provincial highways and
bridges that comes from federal coffers, they abide by national safety codes and
Senator Greene: That's an interesting idea. Would you recommend that
be one of our recommendations?
Mr. Laskowski: Yes.
The Chair: We do it with health care.
Senator Greene: Yes, we do.
Mr. Laskowski: Just in the United States, with consultation,
consultation is a good and necessary thing between the private-public sector and
the provincial authorities, but once a decision is made, leadership needs to be
shown. We need to say, "We have made a decision here. We will abide by this
decision. We have had a process in place. Now, it's time to move on.'' And we
must abide and not allow the provinces to go back to their jurisdictions and
say, "Well, that was a great exercise, but we're not going to agree with it, so
we will do what we want to do, and the money comes anyway.''
Senator Greene: Would you have any members within provinces who don't
truck beyond their borders and would prefer the barriers?
Mr. Laskowski: I think you could apply that question to both. For the
most part, people will look at free, open competition as a leader in business,
to not compete on artificial barriers but to compete on management — who is a
better manager and who is a better business person — as opposed to artificial
barriers. You could go across the trucking industry, whether it's intra- or
interprovincial, and find such operators.
But if operators are relying on artificial barriers to justify their business
or their business case, that's not a strong business case.
Senator Ringuette: Actually, there is such a fund nationally, except
that the money collected through that fund is given to the municipalities, which
removes the leverage in regard to your issue. But it does come from your
Mr. Laskowski: We have applauded the policy direction of the
Federation of Canadian Municipalities' fund with regard to the transit spending.
Without being an expert in that area — and it's not for me in the trucking
sector to talk about that — I understand there is not a perfect situation, but I
think it's an excellent example of the movement toward those types of measures.
Senator Wallin: I know everyone thought this was an odd combination
here, but when I worked in New York, these two sectors were there on the trade
file weekly, because — we didn't solve it, no. I do know that the rules and
regulations and internal trade barriers we're talking about here are a real
deterrent for international players as well as our own domestic industries here.
Like Senator Greene, I have a few little questions. Yesterday, we spent some
time dancing on the head of a pin about the use of the word "barriers'' versus
"irritants,'' with the person who was kind of involved in the internal trade
negotiations saying, "There are no barriers, really; there are just some issues
on the side.'' I would like to get both of you on the record here on barriers
versus irritants, if we could.
Ms. Proud: Are you interested in our opinion in the difference between
barriers and irritants?
Senator Wallin: Whether we have barriers or just irritants.
Ms. Proud: When you look at Canada in the global sense and say that
for introduction of new products, we're seven to nine years behind the EU and
the U.S., there are barriers here. That's not just an irritant. It's a definite
trade barrier. We overcome the barrier seven to nine years later, but it's
certainly a barrier to the global decision-making as to whether they bring new
products to this country.
Mr. Laskowski: I would build off that comment that, in the technical
term, whoever was saying that, I wouldn't disagree. However, whether it's an
irritant or a barrier, it has the same effect, being inefficiencies. If we can
eliminate the provincial inefficiencies, we're just a better marketplace. Yes,
technically those trucks can still roll across all those borders, but they do so
in a more inefficient manner than they should. As our members would say, "Just
fix it. I don't care what you call it.''
Senator Wallin: You made a reference, Ms. Proud, that in the drug to
counter the opiate overdose, they skipped the WTO process. Was there any
sanction for that?
Gerry Harrington, Vice President, Policy and Regulatory Affairs, Consumer
Health Products Canada: No. The WTO notification is to permit manufacturers
outside of Canada to come into compliance. As this was a single-manufacturer
drug, it wasn't considered to be an issue. There was no sanction in that
Senator Wallin: Is it something people could do more regularly?
Mr. Harrington: We would love to see that. We do have a proposal on
Senator Wallin: They could be as creative as they are in the trucking
Mr. Harrington: We took note.
Senator Wallin: I know this seems odd, but it's a personal anecdote
about one of the OTC drugs, Aleve, which you can buy in this country. You can
buy Aleve PM in the U.S. but not here; although, I can go to a pharmacy in
Canada and buy the two ingredients. The only difference is I have to buy two
Is there a level with the industry itself where those kinds of rules and
regulations are helping them? They obviously make more money if I buy two drugs
instead of one.
Mr. Harrington: No. To put it bluntly, the industry would far prefer
to innovate and to have that single product serve your need, because that's what
you were looking for. The problem is the barriers between you and the company
wanting to put it on the market. In that instance, that would be a separate
When a product is switched like Aleve, naproxen sodium, it is switched under
very specific conditions. If you want to combine it with another ingredient,
that's a separate switch application that will have to go through all of the
federal and provincial processes. It's a smaller market, and that's where those
barriers become more significant.
Senator Wallin: It seems like it would be financially in their
interest to sell two drugs, but you're saying no.
Mr. Harrington: No.
Senator Tannas: Ms. Proud, you mentioned the antidote to opiates,
naloxone. You said eight provinces are still fiddling around with it. That would
infer that two have already dealt with it. Is Quebec one of them?
Mr. Harrington: Yes.
Senator Tannas: Because of their unique circumstance, correct?
Ms. Proud: In Quebec, as you may recall, they don't deal with NAPRA.
It goes directly behind the counter, which actually is the intended place for
this particular switch.
Senator Tannas: In that case, they're ahead of the curve instead of
behind the curve, or outside of it.
You mentioned B.C. and their unique situation. Why hasn't the New West
Partnership and the commitment amongst the provinces to harmonize solved this
issue? Is it an exception that they put on their list?
Mr. Harrington: There have been numerous attempts to harmonize the
various provincial regulations. It's never been on the agenda within the Western
alliance, but there have been numerous attempts for the various provinces to
work together and try to harmonize these requirements.
Consistently, there have been issues arising that have kept them from getting
the job done. Primarily the problem is that the organization that is at the
centre of that — the National Association of Pharmacy Regulatory Authorities —
is not a government agency. What we've heard from provincial governments is that
they are not comfortable delegating that authority to a non-government body.
Senator Tannas: Do you know if it is specifically exempted in the New
Mr. Harrington: I'm not familiar with any specific language for this
initiative for drug scheduling, so I can't answer the question. I can tell you
that the rules in B.C. and Alberta are significantly different. Alberta does
indeed follow the NAPRA system by reference, whereas in B.C. they have their own
regulation that has to be amended.
Senator Enverga: Thank you for the great presentations.
As we go through international trade, we always deal with the U.S. more
often. Could you cite some examples where it's easier to trade with the U.S. and
other countries than from province to province, especially with pharmaceuticals?
I know trucking has issues, but can you give me more examples, if there are any?
Mr. Harrington: It is less a matter of conducting business once a
product is approved. The challenge is that it is easier for a company to gain
approval for a product federally in Canada that's been approved in the United
States. That part is relatively efficient and comparatively gives much the same
sort of result. It's when you then go through the remaining process that the
I will give a concrete example: In the U.S., the one advantage is that when a
manufacturer makes a submission for a switch, they have to create research
evidence to support that so Canadians can use it safely without a prescription.
The U.S. actually provides a period of protection for that data so that they can
recoup that investment in a period of three years.
We don't have that in Canada, which is not in itself a complete deal breaker.
You can still make that investment pay, but when you add to it all these delays
you have in the provincial system, what ends up happening very often is that the
second-entry drug is getting distribution at the same time and in some cases
even before the innovator drug is on the market.
In that respect, it's a bigger barrier than the absence of the data
protection at the federal level. That's the sense in which we say that
interprovincial barriers are more important. They have a bigger impact on the
willingness of a company to invest in a switch product, and it is a bigger part
of the reason why we're seven to nine years behind on those switches.
Senator Enverga: Do you have examples in trucking?
Mr. Laskowski: I would say that since 9/11, nothing has been easy for
trucking dealing with the United States — the myriad of rules at the border,
enforcement at the border, what I'll call taxes applied at the border, state
enforcement of Canadian trucks close to the border because of certain funds
being directed towards them to keep them afloat. Canadian trucks become more of
a target of local enforcement.
Canadian trucks cannot make efficient moves in the United States. You can
basically only drop your freight and then go back to Canada with the freight.
You cannot reposition vehicles in the United States that are empty.
9/11 is an important hallmark in world history, but it has had a dramatic
impact on how trucking does business in the United States, and not for the good.
Senator Greene: Can Americans reposition trucks in Canada?
Mr. Laskowski: No, but like anything, there is creativity. Enforcement
is always the judge of what can be allowed. Enforcement in the United States on
this issue is vigilant; in Canada, not so much.
The Chair: The Americans have finally figured out a way to get around
free trade by doing what the provinces do here.
Mr. Laskowski: Senator Wallin would know more about this from her
previous life in her role and responsibility as the lead negotiator with several
of the states in the federal government. The Americans, we found over time, only
respond to our asks when it means something for their side.
For example, it has been illegal since 9/11 to traverse through the United
States, for example, from Toronto to Vancouver using the U.S. route because it
is shorter. Why burn fuel when do you don't have to? That has been illegal since
9/11, by the Americans. We, on the other hand, allowed it until the Canadian
Trucking Alliance stepped up, and we put a lot of pressure and said: Well, I
don't know how you're going to get freight to Alaska, because that's an in
transit route. We're going to say if it's good for the goose, it's good for the
gander. The same thing for U.S.-Michigan mail. It comes through Ontario. That
got their attention. I think there is a lesson in both of those that when it
matters to them, they'll negotiate.
The Chair: That will help trucking to the east because right now
you're forced to go through Ontario rather than taking the easier route through
Mr. Laskowski: Absolutely. For Americans, just so senators understand,
our registration fees and fuel taxes are prorated based on where we travel. So
if we travel through the U.S. states, they get the appropriate portion of the
fuel tax and the registration fee of that truck going through their
jurisdiction. So there's money in it for everyone.
Senator Massicotte: On the issue of trucking, you say the Canadian
truck can deliver, and your words were that you can come back with the same
Mr. Laskowski: With another load. You can go to another customer but
must return back home.
Senator Day: Mr. Laskowski, you indicated the National Safety Code was
developed in 1988-89. Was this developed by all the provinces and the federal
government, or was this imposed on the provinces by the federal government?
Mr. Laskowski: It's a process that involves Transport Canada as the
chair and the various provinces from the various ministries as committee
members, so it is a well-organized process. The industry is allowed to
participate, and provinces participate. As technology and rules evolve, you
develop what I will call a "gold standard'' about how the rules should be
written. There are 16 of them. And then you go back home to your own
jurisdiction understanding the language and how things may fit. But in essence
that becomes a boiler plate. The process is open, and it's not a question of the
rules within the National Safety Code. It's a matter of implementation.
Senator Day: It seems strange that if there is agreement and the
provinces participated in this agreement at the national level, that they go
back home and don't necessarily implement it. You indicated the problem is not
implementing some of these code provisions.
Mr. Laskowski: Correct, senator. That's why I have grey hair and I'm
Senator Day: But they were developed without objection at the national
Mr. Laskowski: Correct, sir.
Senator Day: You were talking with the chair about this electronic
logging device. You indicate that it's coming into force in 2019.
Mr. Laskowski: Correct.
Senator Day: There is not going to be a problem with that? Because
there is some indication that maybe some of the provinces won't adopt this even
though it has been agreed nationally to adopt it by 2019.
Mr. Laskowski: There is a fear that history will repeat itself, based
on the practices and responses over the last twenty years of the provinces. I
find it difficult, senator, that in 2016, if I was a minister of transportation,
I wouldn't be embracing this technology as a measure to improve highway safety
in my jurisdiction. Yet, to date we only have, I believe, two provincial
ministers who have actually embraced this technology publicly.
Senator Day: My final question is to Ms. Proud and Mr. Harrington. It
deals with your reference to the expedited way that naloxone was dealt with in
terms of bypassing certain rules. I think I heard Mr. Harrington indicate that
we have a proposal to maybe use that process again. Are you able to share your
proposal with us?
Mr. Harrington: Yes. Because the WTO notification is about allowing
other manufacturers who would be affected by the decision to be notified six
months in advance, we proposed to Health Canada to remove just the product that
has been applied for by the innovator from the prescription drug list during
that six-month notification period, and at the end of the six-month notification
period then move that entire ingredient, which would then impact the other
manufacturers. It's a simple and, we think, elegant solution to the problem that
is completely consistent with WTO's intent.
Senator Day: That proposal has been made by your association, Ms.
Ms. Proud: It has. We've been talking to Health Canada for some time
about this. We have a large graphic representation of the current system in
Canada we have been developing over some months, as well as a proposed system
that we would like to see in place. We would be very happy to share that with
the committee. It details the various aspects, because it is a complex system,
and we will be happy to share that with you.
I've only been in my role for two years, and when my team was explaining this
issue to me, I didn't believe that it could be this insane with regard to the
products, but I quickly learned that they were in fact telling me the truth. I
think even when we talk to the various levels of government, both federally and
provincially, everyone sort of says, yes, it's a bit crazy and we'd like to see
What we're really hoping from today is that if there is something in a Senate
report that speaks to it, maybe that would be a catalyst for some change. We
know it just takes one little thing, one sort of priority or a Speech from the
Throne or something like that to put it on the agenda. If this were to be put on
an agenda for P-T ministers of health to look at, then we can make some
progress. We'd be happy to share the documentation we have with you and
certainly feed any further information you might be interested in.
The Chair: Thank you very much, witnesses. This was a great session, a
great way to start the morning.
We will now welcome one, Mr. Daniel Schwanen, Vice President, Research, C.D.
Howe Institute. Thank you for coming, and please begin, Mr. Schwanen.
Daniel Schwanen, Vice President, Research, C.D. Howe Institute: Thank
you, honourable senators, for your invitation to comment on some issues around
internal trade in Canada.
The C.D. Howe Institute is an independent public policy think tank. We have
hundreds of members and fellows across the country that advise us on what they
think the important economic issues are that affect the lives of Canadians, and
we try to research them and analyze them and come up with recommendations to
improve Canada's economic performance and the standard of living of Canadians.
Barriers to commerce and to plying one's trade within Canada have accumulated
over many decades, due mostly to the proliferation of programs and regulations
in our various Canadian jurisdictions. A lot of that is accident. Some of that
is protectionism and some of that is willful, but a lot of that just occurred by
accident over many decades across the many areas in which governments exercise
I really enjoyed the discussion on barriers versus irritants. The expression
that we like and that I think most captures them — apart from the
straightforward barriers that are protectionist barriers and discrimination
against other Canadians — the expression that we use at C.D. Howe is the
"tyranny of small differences.'' It's the tyranny of differences that are
actually really small and completely unnecessary for governments, federal or
provincial, to actually achieve their legitimate policy goals, such as consumer
protection, et cetera. That's how we look at this.
There has also been debate about the cost of these discriminatory practices
and small differences. Over the decades that I've been looking at this, there
have been wide differences in these estimates of what these costs are.
One thing I would point out is that any estimate that comes to you is usually
an estimate of what it has cost someone to overcome, to actually manage to do
business in spite of the barriers. What were the additional costs they had to
pay? What were the additional costs to consumers? You never get the costs of the
seven-year delays that were just discussed in terms of getting drugs to market.
You never get the cost of the business that is not done at all because people
just look at the barriers and say "I'm not going to bother reaching out to
customers, even though I know I would offer a better service. It's too
complicated. I have to register my business in another province,'' et cetera.
There's a caveat there.
Those invisible costs fall mostly on small business and individual Canadians.
A small business does not have the luxury, or it's more difficult for small
business, to access foreign markets where barriers typically, even to access the
United States, are higher. To grow beyond their original provincial
jurisdiction, they really need access to the Canadian domestic market.
In fact, that's why the Canadian domestic market was created, to encourage
business growth and also to provide Canadians with more economic security. If
there are not a lot of jobs in your chosen profession or skill in a particular
jurisdiction but more in another jurisdiction, you have that added security or
risk reduction of being able to have your skills or qualifications recognized in
Those are the invisible benefits, but they are very real. In a sense, that's
why, in my view, apart from the broader efficiency questions and the reduction
of costs to consumers that we just heard from the transportation and the drug
industry, there are also those invisible costs — the lack of dynamism for small
business, the lack of protection for workers being able to move where the jobs
That's just the broad picture. I want to say I've been looking at this for
too long, and I want to emphasize something positive. There has been a change in
mindset at the provincial level, particularly since the negotiation of the
Comprehensive Economic and Trade Agreement with the European Union, in which the
provinces were involved. I do hear and do believe that they're going to come out
with successful efforts — the provinces and territories have been at it for a
couple of years — to at least improve on some of the remaining shortcomings.
There are many. Even though we signed the Agreement on Internal Trade in 1994,
there are many barriers remaining under this agreement.
The provinces and territories have taken the experience of CETA to look, for
example, at how to complete the internal Canadian market in terms of access to
procurement. It makes no sense to have better access for Europeans to any given
provincial procurement market than for someone from another province, for
example. They're going to harmonize those international rules; make sure that
the purchasing manager in the province doesn't have 30 different sets of rules,
one with CETA, one with NAFTA, one with the Agreement on Internal Trade, to
comply with; make sure there are no greater barriers vis-à-vis Canadians than
there are vis-à-vis suppliers that want to access the procurement market from
another country; and lower the threshold at which Canadians have
non-discriminatory access to procurement contracts at the provincial level.
That's one example.
I don't have inside knowledge exactly. I think that's exactly what they're
discussing right now, to actually build and improve on the Agreement on Internal
Trade, building on the international negotiation experience. It makes no sense
to raise our barriers against Canadians higher than against foreigners. We have
all heard of this experience. Let's plow ahead with reducing even further
barriers to access to procurement contracts, for example.
I think that, under the AIT, the provinces have made genuine improvements to
the mutual recognition of skills and professional qualifications in a number of
areas, but not a lot in terms of harmonized standards. There have been some.
You've heard today that one of the principal irritants remaining is the whole
regulatory framework, or perhaps lack thereof, across Canada that provides for
some regulatory harmonization, the absence of which is very costly to business
I probably shouldn't believe every communiqué I read or rumour I hear, but I
think that some progress is being accomplished at the provincial and territorial
levels. I think something will be announced this year. Nevertheless, it won't
deal with all the remaining barriers, including some of the ones you heard about
One barrier that likely will remain, and to me is a particularly poignant
illustration, is the need for Canadian businesses to separately register with
provincial registrars in each province in which they want to do business. That
is bizarre. This is a problem that other federal countries, very decentralized
countries like Switzerland and a bit more centralized like Australia, have
fixed. It's a problem for which technical solutions exist despite the many
different provincial programs and regulations that do require businesses or
provinces or provincial regulators to have access to information about a
business operating in your province. That's a legitimate goal. In the domain of
tyranny of small differences is the fact that you have to register in each
separate province in order to do business. In Alberta, you even have to be
listed in the phone book. How quaint.
There are actually only two provinces, New Brunswick and Nova Scotia, that
have this mutual recognition: If you're registered in one province, you can
operate in the other and vice versa without any need to reregister. I could
speak to that at some length. It's a perfect example of a barrier that could be
addressed. It doesn't cost hundreds of millions of dollars annually to the
Canadian economy — at most tens of millions. Still, it's incomprehensible to me
that in this day and age of information in the cloud and so on you have to
register separately in all these jurisdictions in order to do business. I'm
The Chair: Would you have to file in all provinces every year?
Mr. Schwanen: Yes. Sometimes you need to have a representative. If
you're from another province, you need to file through someone in the province,
a local law firm. All these barriers have their own constituencies in terms of
people that get to work or some of the bureaucracies involved, but I won't go
Another poignant example is a bit trickier, but it's real: The federal
government's supportive and even decisive role in maintaining internal barriers.
I'm encouraging the committee to maybe look in that direction as well, as a
recent judgment handed down recently in New Brunswick provincial court reminded
us. The pre-eminent example, and I have to mention this, is the federal support
for supply management with individual quotas in each province. That could not
exist without federal legislation.
I don't want to be too dogmatic about this, but I think, and in closing I
will say, that the federal government could be more muscularly proactive — did I
write this? — in ensuring that federal legislation conforms to section 121, for
one thing, and in examining federal legislation to see if it does conform, for
In addition, use the trade and commerce powers to at least forbid provinces
to maintain barriers against other Canadians that are higher than barriers
maintained against non-Canadians. Why should that be the topic of federal-
provincial negotiations? It should be a principle of our economic union that the
federal government can enforce. I could go on. The federal power has been
involved in the past to resolve some of our surface transportation problems, for
example, interprovincial or intercity bus back in the 1980s. Some of the issues
we heard about earlier this morning could be addressed in a more proactive way
in terms of the federal responsibilities for the economic union.
The Chair: Thank you very much. We now have Robert Carberry, Assistant
Secretary, Canada-United States Regulatory Cooperation Council; and we also have
Philippe Massé, Director General, Labour Market Integration, Skills and
Employment Branch. Mr. Carberry.
Robert Carberry, Assistant Secretary, Canada-United States Regulatory
Cooperation Council, Treasury Board of Canada Secretariat: Thanks very much.
I believe that Karen Proud was just here and she referred to the show in
Washington last week. That was actually our show; so we survived.
I'll just read some opening remarks. They're not overly long so as to leave
as much time as possible for questions.
In February 2011, the Prime Minister of Canada and the President of the
United States announced the creation of this Regulatory Cooperation Council. Its
goal was to align the regulatory systems between the two countries.
This primarily touched the manufacturing and supply chains, recognizing that
there were things impacting the cost of production in moving products back and
forth between our two countries that were impeding economic competitiveness for
both countries. The intent was to get at that.
A secretariat was formed on both sides of the border to work together and
advance this regulatory cooperation effort and to boost North American trade and
competitiveness. I've been the lead for all aspects of the Canadian secretariat
since that time. My counterpart is in the Executive Office Branch of the White
House. They've proven to be really competent, hard-driving partners over the
last five years.
Canada and the U.S. have the world's most integrated manufacturing
relationship and market. However, there are two independent regulatory systems
that impact on all supply chains and products, resulting in duplicative and
unnecessary costs and requirements for manufacturers, double the work for a
number of regulators and impact on consumers. Simply put, between the Canadian
and the U.S. regulators, we scrutinize and do things twice. The goal of
regulatory cooperation is to avoid the unnecessary requirements and steps for
businesses and to generate benefits for business, consumers and the regulators
Work began through the creation of an initial action plan that we settled on
about 29 work streams. As we worked on those 29, we knew there would be another
229 created, but we needed to start somewhere. The work included initiatives in
14 federal departments on both sides of the border, Canada and the U.S., and
covered a broad range of health-, safety-, and environment-related activities.
The first action plan was intended as a first step only to initiate a new
kind of dialogue and to generate some lessons learned. I was the person who met
with all Canadian regulatory departments and the U.S. regulatory departments.
When I said I was there to talk about economic competitiveness, I had the same
answer from every department on both sides of the border, which was: "We do
health and safety work; we have no impact on the economy.'' That has
substantially changed over the last five years. When I say we want to get a new
dialogue going, that's what it was.
It also allowed us for the first period of the initial action plan time to
consider how to achieve systemic Canada-U.S. regulatory cooperation rather than
having to do a series of initiatives as we have done in the past. When we put
out the initial action plan, I'd inserted a phrase called "We will work towards
creation of ongoing alignment mechanisms.'' When people came to me and asked
what they were, I'd leave the room quickly. I had the notion but didn't know
what it would look like, but we got that in the initial time period.
The initial action plan actually did a lot for us. It initiated this new
dialogue between regulators. It added the new lens and legitimatized discussion
of economic consequences as the health and safety outcomes were being pursued —
not seen as contrary to health and safety outcomes, which was important. It
clarified the various categories of benefits that can be realized, and they're
in three buckets: Business, consumers and the regulators themselves.
It demonstrated that the focus of our work is rarely on the regulation
itself; it's really on how we implement it. I've said this a number of times.
The same regulation in Canada and the U.S. would still require us doing
everything twice, so we have to get at some of the implementation procedures.
It also showed us that there were some very real barriers and challenges for
systemic regulatory cooperation in terms of how we might want to jointly fund
something or the information we might share and the use of that information, so
we're working on some of those.
Doing it in an aggregate created a considerable amount of momentum, which was
very helpful as well. It recognized the important role of stakeholders, which is
embedded going forward. It successfully demonstrated the proof of concept
through a bunch of individual initiatives that really worked, and it allowed us
to figure out what kind of a model would have to be put in place to achieve this
A lot of consideration went into that latter aspect on how we do this
permanently. It became clear that misalignment wasn't occurring because we had
different regulatory outcomes in mind between Canada and the U.S.; it's simply
that we haven't taken the time to work on achieving those outcomes in the same
way and doing it together. There were no structured formal mechanisms to plan
together and align our directions and efforts.
I tell a story sometimes around this: Since the time of covered wagons, we
have been integrating our economies. We've been sharing in the production and
manufacturing of things. We've been addressing common issues that we face from
offshore. But at the time we're doing that, we were also building two
world-class regulatory systems, but the regulatory systems don't recognize the
quality of work being done in the other jurisdiction. There were no bridges
built. There was no anticipation there would be a willing and competent partner
on the other side of the border.
When I took my son to the Alamo a few years ago, because I waited too long
before spring break to buy picture tickets to Florida, I took him down there. It
struck me that I wasn't afraid to breathe the air, drink the water, eat the
food, rent and drive a vehicle, or buy over-the-counter drugs, because I knew
that the regulatory system was working. I know that when my U.S. colleagues come
to Canada, they feel the same way. But the two things that don't recognize that
are our regulatory systems. That's what we've been working at: Getting our
regulatory systems and regulators to recognize that, actually, there is a good
job being done on the other side of the border and we don't have to do
These lessons learned and understandings led to a joint forward plan being
released in 2014. That was set as a transition into a new Canada-U.S. regulatory
relationship. The forward plan was significantly different from the initial one,
which picked on these topical issues — it was very issue-centric. That was the
best way to start; we had to get a dialogue started somewhere. But we really put
this in place to create a foundation for a more institutionalized, regulatory,
cooperation effort between the two countries.
We did three things in the forward plan. We asked for public agreements
between similarly mandated agencies in Canada and the U.S. for them to take the
leadership role in regulatory cooperation — it's not the role of the centre all
the time, and they need to embrace it. They would actually be doing plans on an
annual basis, and they would do it through the creation of new senior-level
committees — the Health Canadas and FDAs, and the CFIAs and the USDAs. Those
kinds of bundles have formed. We have 16 of those partnerships in place.
We also moved from an individual-issues approach to one that has longer-term
commitments. Instead of fixing two motor vehicle safety standards, we said, "In
these bundle of standards, we're going to align all of them going forward. That
may take some time, but we're making that level of commitment, and we'll cast
that in annual action plans so we can actually show what we're doing on an
annual basis.'' We also formalized a role for the stakeholders at the strategic
and technical levels.
We got these agreements in place. Last week, the session Karen was talking
about, was the kicking off of these senior-level committees and the departments
taking on responsibility for that planning cycle. We actually had over 420
registered participants in this event — senior regulators, but mostly industry
at the event. When I started this, we had to get people in a room five at a
time. This is a big change in five years. There's been a lot of momentum. The
room has changed. The flavour has changed.
Importantly, we are now looking at a short-, medium- and long-term focus. We
learned that once a regulation is already being proposed, it's very hard to
unplug it. We need people to be working together and thinking about the next
generation of regulation, the new technologies coming down the road and how
might we take those on together — the nanotechnology, the synth-bios — those
kind of things.
On March 10, Prime Minister Trudeau and the President met again, and we added
a few more enhancements to our approach where we're going to create an industry
consumer and expert group, so we can talk to them about where we want to take
this and ensure there's an emphasis on consumer issues going forward. We're
going to include regulatory department officials into the overall governance so
they actually have skin in the game. We put a call out to generate the most
ambitious work plan by July 1 of this year that's existed between Canada and the
U.S. The first one was 29, and the last one was about 120 items. We want this
one to be even bigger, and it's new departments that are loading in.
As another point, as we've been doing this between Canada and the U.S. over
the last five years, international regulatory cooperation has emerged to be a
real, interesting and important international aspect of work going forward. The
WTO technical barriers to trade and sanitary and phytosanitary standards,
requirements and tariffs are all kind of dealt with. Now comes regulatory
cooperation, where we have existing market channels and those types of things.
We're going to use this to remove some unnecessary costs from the system.
There's a lot of dialogue going on about it. The Canadian model is held in
the highest regard. This is the one folks want to see applied elsewhere, because
it just makes good common sense. We should be very proud of what we've been able
to do. We should be proud of the fact that, with the U.S., we've actually held
the pen; we've had the thought leadership on this going forward. It has been a
very unique exercise and experience for someone such as me, after arguing with
the U.S. over so many things over a career of 37 years.
I was actually vice-president of the Canadian Food Inspection Agency, so all
the BSE work, the P.E.I. potato ban — all those things — I was in the centre of
that. Now, I'm building bridges. I like this a lot better.
That's where we're at. I open up to any questions you may have.
The Chair: Thank you, Mr. Carberry. Mr. Massé, please go ahead.
Philippe Massé, Director General, Labour Market Integration, Skills and
Employment Branch, Employment and Social Development Canada (EDSC): Hello,
my name is Philippe Massé and I am the Director General of the Labour Market
Integration Directorate at Employment and Social Development Canada.
Part of my responsibilities is to cooperate with provincial and territorial
governments to foster labour mobility in Canada. I will speak briefly about
these activities and explain how they are governed within the Forum of Labour
Market Ministers (FLMM). In particular, I would like to talk about the evolution
of labour mobility in the context of the Agreement on Internal Trade (AIT).
There are structures in place to support its implementation. I will also discuss
the Red Seal Program and the ongoing work of the Canadian Council of Directors
of Apprenticeship (CCDA) to promote mobility within the skilled trades in
Let me provide you some broad context on the overall mobility situation in
Canada. Labour mobility is an important element of a well-functioning labour
market and economy, as it facilitates the efficient redistribution of workers
from areas of low employment demands to high demands, and it enables Canadians
to take advantage of job opportunities.
The majority of Canadians who move permanently each year — about 1.2 million
— actually move within a province or territory. There are another 300,000 that
move across provincial borders. About 20 per cent of those who go across borders
move for the main reason of a job. There is also, of course, a significant
number of workers who reside in one province or territory and work in another as
part of their ongoing business or who move temporarily to take advantage of
opportunities in other jurisdictions.
The majority of people who work in Canada are employed in non-regulated
occupations. It's estimated that about 15 to 20 per cent of those employed work
in regulated occupations, and this involves working in a field that requires
licences to be recognized by a regulatory body in the province or territory they
are destined to work.
The Agreement on Internal Trade, as you know, was signed in 1994 to increase
the movement of goods and labour across Canada. Chapter 7 is where labour
mobility is covered. Although it's specifically designed to eliminate or reduce
interprovincial barriers that restrict or impair mobility in Canada, it did not
start out this way. So for over a decade, mobility still remained quite
fragmented across jurisdictions and occupations. There wasn't a lot of progress
toward achieving full interjurisdictional mobility. Until 2009, many occupations
were unable to bridge differences across the standards that existed across the
In 2009, there were amendments made to chapter 7 that strengthened the
mobility of regulated workers by establishing the core principle of
certificate-to-certificate recognition. As the name suggests, it allows workers
certified for a regulated occupation in one province or territory to be
certified for that occupation anywhere in Canada without any additional material
training, experience or assessments.
The amendments essentially reversed the burden of proof of competencies from
workers to regulators. Provinces and territories must demonstrate why a
certified worker from one jurisdiction isn't qualified to be licensed in their
jurisdiction. It doesn't actually bind the provinces' hands, and governments can
approve exceptions to mobility in certain occupations. For example, in the legal
field, a lawyer from Quebec who is trained in civil law and wants to work in
another province must undergo additional training in the common law field to be
allowed to practice. They're not meant to be restrictive in terms of aggregating
barriers, but they are ways to communicate to Canadians what additional
requirements might be required for a specific occupation that need to be met The
idea is that these are posted. They are available for Canadians to be able to
have the information. There are 44 exceptions that exist, currently, covering 14
Implementation of chapter 7 is a good example of federal-provincial
collaboration, and the responsibility rests with the Forum of Labour Market
Ministers, a ministerial committee co-chaired between the Minister of Employment
and Social Development and a rotating provincial co-chair serving two-year
terms. The current co-chair is from Quebec. Within the committee, we have a
Labour Mobility Coordinating Group responsible for implementing chapter 7. We
work together through a number of subcommittees that review and talk about
policy interpretations, mobility exceptions between jurisdictions and
communication strategies to ensure that the information is available to
regulators as well as workers.
The FLMM reports annually to the Committee on Internal Trade on the status of
implementation. Generally there is consensus that the chapter is working well. I
can't comment on the state of the negotiations currently are, but there is no
indication by jurisdictions that there is a desire to make fundamental changes
to the way that chapter works. It's based on that negative list approach, which
I'm sure you've heard a lot about during these hearings, that covers all
regulated occupations and is seen as a model that could be or should be
reflected in the broader agreement.
I would like to talk about the Red Seal Program. In general, it is Canada's
standard of excellence for the skilled trades, making it possible for
tradespeople to have their skills recognized across Canada.
Apprenticeship training and trade certification is an industry-driven system
under provincial and territorial jurisdiction. The Red Seal has been in place
since the early 1950s and has been instrumental in developing pan-Canadian
standards and examinations that provide the foundation for skilled trades
mobility. There are 57 Red Seal trades, which account for 77 per cent of all
Employment and Social Development Canada works with the provinces and
territories to manage and deliver the Red Seal Program through the Canadian
Council of Directors of Apprenticeship (CCDA).
The core of the Red Seal Program lies in quality interprovincial standards
for industry, against which tradespeople can be trained and assessed. The CCDA
collaborates with industries and other professionals across Canada to build
The Red Seal Program's collaborative approach to setting national standards
and examinations enables all provinces and territories to train apprentices to
the same standard for certification in the skilled trades.
This creates a solid foundation to facilitate labour mobility, since trade
certificates bearing the Red Seal endorsement are automatically recognized
across Canada. Furthermore, chapter 7 of the Agreement on Internal Trade
provides for certified workers in non-Red Seal trades to have their
certification recognized across jurisdictions.
To further improve mobility in the trades, the Government of Canada and the
provinces and territories are now working together with industry to harmonize
apprenticeship training. We've covered journey persons and certifications, and
now we're going down to the apprentices themselves to better harmonize the
training that's happening and improve the mobility of apprentices.
There are four areas that the provinces are focusing on: use of the trade
name so everyone uses the same name; the total number of training hours; the
number of technical training levels, which is typically three or four for each
trade; and the sequencing of the in-school training, where the same course is
given in the same year.
This is one of the priorities of the Forum of Labour Market Ministers. They
announced significant progress last July when the first 10 trades will be
implemented by September of this year in most jurisdictions, in 2016, and we're
looking forward to harmonizing two thirds of Red Seal occupations by 2017, which
would be 30 of the 57. There is strong momentum and collaboration with industry,
and it is a continuing progress.
In conclusion, the mobility in Canada under the AIT generally works well.
It's a strong example of intergovernmental collaboration, both in the way it has
evolved and in the way it's being implemented.
The Red Seal Program, which is older than chapter 7, continues to be vital
and relevant due to strong industry buy- in to manage and deliver the current
program and to move forward on harmonizing the apprenticeship training. Overall,
these measures are helping to build a stronger and more effective labour market.
I'm happy to answer any questions.
The Chair: Thank you, Mr. Massé.
Senator Wallin: Mr. Carberry, I just have a point of clarification. If
I understand correctly, you're saying the American regulatory approach — how
they deal with the states, et cetera — should be used or could be used as a
template here, that it works better. On the other hand, the Canadian model for
discussing it is held as the gold standard, and that's the one on which you have
the pen or others have the pen. Am I correct on that?
Mr. Carberry: Not quite. Our work has been strictly federal to
federal. I'd have to say, when I look at the array of state regulations and
those kinds of things, that the U.S. probably has a tougher row to hoe than
But I have talked to the provinces about opportunities that are related to
what we're trying to do federally between Canada and the U.S. There are two
things. One is in terms of how you would feed a provincial or territorial
agenda, and the other is how you might approach this.
Our formula has been successful, which has been a surprise to a lot of folks.
In terms of feeding the agenda, I told them two things. First, if there are
things we have gone to the trouble of aligning federally between the two
countries, such as electrical efficiency standards for appliances, move and
adopt those. Creating a new one provincially is not particularly helpful. If you
can follow the federal lead in some of these things where there is a
predominance of federal jurisdiction and federal agencies, that would be
extremely helpful. Those are things like environmental and emissions standards
and so forth.
Second, we had a lot of things that we had industry asking us to take on that
we weren't able to do because there was too much state and provincial
legislation and regulation involved, such as trucks. They wanted us to look at
trucks on highways. We couldn't go there; there was just too much. There is a
federal aspect to that as well. So we would ask they clear the track and set
that as a priority so that the federal side can work on it with the U.S.
counterparts. That would be helpful as well.
In terms of the lessons that I think are applicable in both situations and
probably with other countries, we took on things where there was willingness.
You're not going to be able to force any of this stuff on anyone. You need two
willing partners on both sides, whether it's provinces, territories or federal
We also looked at trying to avoid adopting a standard from one country over
the other one. We looked for opportunities where both needed to improve, because
then you can work on it together and end up in the same place and no one is
accused of adopting the other's standards and losing sovereignty or sliding to
some lower level that someone interprets. We've been very careful in our
exercise to always make it about improving it and doing that together. That has
been quite helpful as well. We've avoided the whole concept of adoption and it
has worked well.
The third point is that it doesn't have to be everyone. I know I shocked
someone when I said that. We have a situation now before us — in the cosmetics
industry. You have six countries that represent 65 per cent of the market:
Canada, U.S., Japan, Brazil, EU, and China as an observer. They have come up
with a standard that would work well for everyone. That isn't confined by any
individual FTA, so you don't have to force every country in the FTA to get into
it. It's not an international standard; it's a bit of a bundle. If we can get
willingness for that, you no longer need six product approvals and six different
formulations and all those kinds of things. We're looking for where there is
willingness and a real opportunity. That's where we're trying to press our work.
Senator Wallin: That is most helpful.
Mr. Schwanen, you talked about the role of the federal government, and we've
heard lots of testimony that sometimes they are part of the problem rather than
part of the solution, and now we've seen the decision in New Brunswick, et
cetera. You, however, seem to me to be quite optimistic about the potential of a
deal. Did I misread that, or were you just hopeful?
Mr. Schwanen: No, you didn't misread me.
Senator Wallin: At what point, though — we've had this discussion with
a couple of witnesses — would we determine you have had all the time in the
world and this doesn't seem to be working, so let's try some other things like a
Supreme Court reference, or whatever it is, on either the larger question or the
specific issue to try to push it?
Mr. Schwanen: Thank you. I think I was optimistic about a deal on some
of the issues outstanding. I was referring to government procurement, and I did
mention that on labour mobility in particular, I think that is a single
achievement of the Agreement on Internal Trade, albeit it took us so long to get
to the point where we are now.
To answer your question, first indirectly, when the Agreement on Internal
Trade was signed, it was one of those situations where all the provinces,
including at the time Mr. Parizeau, signed on the dotted line and said, "We're
not going to discriminate,'' et cetera.
As things dragged on, whether it was on labour mobility, of course, we got
there on procurement and regulatory harmonization, particularly with the colour
of margarine and so forth, there were panels that actually opined on provincial
rules, but the rulings of the panels were not observed because they didn't have
the power to force them to implement the findings of the panels or the
With respect to the AIT, I was thinking we have all these governments that
have signed on the dotted line, and the agreement they signed also says that it
doesn't change any of their constitutional responsibilities, which then goes
back to the federal government. They've all signed on, and now you even have the
moral authority to actually exercise your constitutional power on trade and
commerce. This is a major impediment to trade here, especially in line with our
international agreements. Let's implement what we all said we would implement. I
would argue that that goes to transport and so on.
In answer to your question, the time was maybe in 1994 but it's even more so
now that we do have cooperation and so on. We don't have the carrot of money as
some of the governments in Australia and the U.S. have. Our provinces are big
spenders and big revenue raisers on their own. But since you guys all agreed on
the principles, we are going to be in charge and make sure you do follow up and
enforce the Constitution essentially.
So it does need leadership, and it has to be at the federal level. There is
an opportunity now that there is an agreement on principle on so many of these
Senator Day: Mr. Carberry, I understood from your presentation and
what you have just indicated to Senator Wallin that this isn't United States to
Canada and that level of regulatory overlap, but we have been hearing here — and
we're looking at interprovincial trade — that the major problem is regulatory
overlap and incompatibility within the provinces in Canada. You indicated the
United States has a major challenge there as well. Is there any equivalent
multiple state organization in the United States similar to your Regulatory
Cooperation Council? Can you tell us a little bit about that if there is such a
thing going on?
Mr. Carberry: As far as I know, there is no equivalent to what
industry is trying to do right now with the Agreement on Internal Trade.
As a corollary to what we're doing, we have had a lot of industries come to
us that were primarily governed at the provincial level, such as plumbing,
heating and electrical things. They came to us, and there has been quite a
movement hitching their tail onto our kite by saying this is a new thrust
between the countries, and there has been considerable work going on on
voluntary standards. Voluntary standards are the ones being adopted into codes
at the provincial level. I've seen good progress, but it has been the Canadian
organizations that have taken that to the U.S. and are trying to drive it.
There is a linkage with what the SCC and their various accredited bodies are
trying to do, so there is effort going on, but not directly through ours; it's
really being driven by industry. But in terms of a federal-state construct in
the U.S., no, there is nothing similar going on right now. At the federal level,
this is an incredibly target-rich environment, so there are already a lot of
positive things that can happen.
Senator Day: Did you make the comment that Canada is a model?
Mr. Carberry: Yes.
Senator Day: I understood that. Is that in the area of the
industry-driven side of things?
Mr. Carberry: No, mostly in terms of what we're doing federal to
federal. There are a couple of other models. There is an EU model, but that's
where they put an overarching control over the member countries. We're not going
to do that with anyone, and it's not sustainable in terms of getting going with
other countries. Australia and New Zealand made physical changes to the some of
the departments. They have their departments report jointly to both parliaments.
We can't do that with the U.S. It would be hard to turn them into
Westminster-style governments. That would take me weeks.
Ours is focused on the regulator and the market channels in a big role for
the stakeholders. I think that's applicable everywhere. Every time I go to the
U.S., the EU Commission is all over us: "Where is your thinking now?'' The
Canada-U.S. model is seen as being the most successful exercise in this space in
the last five or ten years, and there are a lot of folks interested in what
we're doing, but I'm talking about the federal-to-federal aspect.
Senator Day: Mr. Massé, in one of your comments as you were developing
the new initiative with respect to apprenticeship, similar to the Red Seal
Program for tradesmen, and then you move into the apprenticeship program in a
similar coordinated fashion, I found this in your statement: "As registered
apprentices are not covered under chapter 7 of the AIT,'' then things can move
faster. I found that quite interesting. Can you tell us what's the problem with
chapter 7 of the AIT? This Red Seal Program has developed through industry
initiative outside of chapter 7. Do we need chapter 7?
Mr. Massé: It's a question now that chapter 7 exists, and the Red Seal
existed since 1959, so it predates chapter 7. It was at the desire of industry
to get together to develop those national standards and identify the standards
and the basic competencies required to exercise a trade in Canada. Provinces and
the federal government got together to try to support it at that time, and over
the years it's grown to 57 trades. These are trades that are national in scope
and that have a significant number of individuals involved in them, and chapter
7 only came after. These are all people that are certified. They've completed
their apprenticeship, so they're certified journey persons, fully certified, and
there was a desire to allow that mobility to occur in the trades. It hasn't
evolved in the same way in other fields, so chapter 7 covers the rest. There is
still value in the Red Seal because technically the Red Seal is not required.
Any worker with their trade certificate, whether they've done the Red Seal exam
which is on top their provincial certification, can work in any province. But
because it's so long-standing and employers recognize it, they actually look for
Senator Day: You seem to be suggesting that things can be done faster
and better outside of the AIT chapter 7. Am I misreading your comment, where you
say, "As registered apprentices are not covered under Chapter 7, harmonization
will make it easier for the apprentices to move . . .''
Mr. Massé: There is a distinction to be made between the apprentices
and the journey persons who have received their certification. As the
apprentices are not certified, they don't have a certification that could apply
to a different location. They are employees. They need to have a job. They need
to be a registered apprentice in the province. They can work in another
province. That's not a problem. With the chapter 7, because they don't have a
certification, there is nothing yet to recognize.
The biggest barrier to apprentice mobility is the fact that the training
itself varies from one province to another, so some of the curriculum in some
provinces means you learn one task or one aspect in your first year of your
apprenticeship; in others, it's the second year. So an apprentice who moves to a
different jurisdiction sometimes has to take courses over or their prior
learning is not recognized adequately. The idea is for the apprentices to be
able to move. We're trying to harmonize both the number of hours they need to
take, the sequencing of those training courses and the number of levels to be
achieved. For an electrician, it's four years.
Senator Day: Outside of AIT?
Mr. Massé: Yes. AIT covers certified workers. Apprentices are still in
their studying period, even though it's very much a work-based occupation. I'm
sorry if that wasn't clear.
Senator Massicotte: Congratulations, Mr. Massé. I think we are making
real progress on workforce mobility in Canada, and that's very important.
Economically, too, it is very important to help newcomers integrate in Canada.
We heard from engineers about a month and a half ago, and they explained the
procedure to follow for engineers who come from abroad. They can visit the
website of the Ordre des ingénieurs du Québec, where a program can tell them,
according to the type of degree they have, whether they have to attend classes
to become members of the Ordre des ingénieurs and what the requirements are, or
whether they have academic gaps.
Coincidentally, I happened to talk with an engineer from France, who is
staying elsewhere at the moment. We tried the exercise. I recommended that he
visit the Ordre des ingénieurs website and put in his information to determine
whether he had any gaps in his academic record. However, the program did not
work at all. We contacted the Ordre des ingénieurs du Québec, and they confirmed
that it does not work. They required $900 for reviewing his résumé and giving
him a report. I think this approach is not very welcoming to immigrants. It
seems that we are missing the mark on something very important. Do you have any
comments on that?
Mr. Massé: As you say, recognizing foreign qualifications is very
important to help immigrants integrate. Every year, we select skilled immigrants
who hope to work in their field of study or professional qualification.
Our department has run a program for ten years known as the Foreign
Credential Recognition Program. We work with professional bodies to help them
develop systems and mechanisms to improve their credentials recognition process
and enable them to be more transparent with respect to requirements in Canada,
including what that means in terms of the steps to be followed. It is still an
ongoing process. We are holding further discussions in areas where provincial
jurisdictions differ. We try to get national associations to come to the table
and work with their partners.
It's not perfect, and this approach is more developed in some areas than in
others. All I can say is that the example you mentioned is not familiar to me,
but this is an issue we are trying to advance. Labour market ministers are aware
of this and are allocating resources to support professional bodies and to
achieve better outcomes. However, things are still not perfect, and it is very
frustrating for immigrants to not be able to work in their occupation using the
skills they acquired abroad. This represents a productivity loss and an economic
loss for Canada.
Senator Massicotte: As reported in the newspapers, in Quebec, and
particularly in the case of medical doctors, professionals have a natural
tendency, which is understandable if selfish on their part, to protect
themselves. If people with the right qualifications are allowed to practice
their occupation in Canada, this increases supply, which could have financial
consequences. It should not be assumed that professionals will always act in an
absolutely correct and open manner. There should be a government incentive,
possibly accompanied by penalties. The federal and provincial governments have
an important role to play here.
Mr. Massé: In fact, the provinces are responsible for regulating
occupations in Canada. We act as facilitators and motivators, and we try to find
ways to support the systems. We try to work together to keep moving in the right
Still, many occupations have seen progress over the last 10 years. Nurses, in
particular, have organized at a national level and are able to provide a single
point of entry for immigrants, instead of 12 or 13. Of course, there is still
work to be done, and we are cooperating with all professional bodies and the
provinces to move things forward.
Senator Massicotte: Good luck, and thank you.
The Chair: Are there any other questions? Thank you very much,
witnesses. That was very good and, amazingly, we actually ended on time.
This is the last of the hearings on interprovincial trade. Next Wednesday, we
will have a working session for putting the report together. I think we'll be
sending out a list of all the recommendations for you to sort through at once,
either Friday or Monday, but certainly before the Wednesday meeting. If you
could have a look, it would be helpful to give direction to begin putting the
Senator Greene: There was a recommendation made by somebody — I can't
remember who — this afternoon about section 121 and how the federal government
should investigate to see if their laws are consistent with it. I thought that
was an excellent idea.
The Chair: I'm sure it will be part of the comprehensive package, but
we won't be able to include all of them. We will have to set priorities, which
is what we will start doing Wednesday. Give it some thought before Wednesday so
that we all come to the table prepared.
Witnesses, thank you very much.
(The committee adjourned.)