ARCHIVED — Vol. 147, No. 1 — January 2, 2013

Registration

SOR/2012-292 December 14, 2012

FOOD AND DRUGS ACT

Regulations Amending the Food and Drug Regulations (Rum)

P.C. 2012-1725 December 13, 2012

His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to subsection 30(1) (see footnote a) of the Food and Drugs Act (see footnote b), makes the annexed Regulations Amending the Food and Drug Regulations (Rum).

REGULATIONS AMENDING THE FOOD AND DRUG REGULATIONS (RUM)

AMENDMENTS

1. Section B.02.030 of the Food and Drug Regulations (see footnote 1) is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) if it is imported in bulk for the purpose of bottling and sale in Canada as imported rum, may only be
    • (i) modified by adding distilled or otherwise purified water to adjust the rum to the strength stated on the label applied to the container,
    • (ii) modified by adding caramel, or
    • (iii) blended with other imported rum or, in the case of rum sold as Caribbean rum, with other rum.

2. Sections B.02.033 and B.02.034 of the Regulations are repealed.

COMING INTO FORCE

3. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

1. Background

This regulatory initiative amends the Food and Drug Regulations (FDR) to address the recommendation from the Standing Joint Committee for the Scrutiny of Regulations (SJC) to repeal section B.02.034 of the FDR, which, in the opinion of the SJC, went beyond the mandate of the Food and Drugs Act (FDA).

Section B.02.034 of the FDR, related to Caribbean rum, was written as an exception to section B.02.033 of the FDR, which sets out conditions for blending and modifying rum that is intended for sale in Canada when imported in bulk. Specifically, section B.02.034 allowed for rum from Commonwealth Caribbean countries to be imported in bulk, be blended and bottled with small percentages of Canadian rum or with rum from a Commonwealth Caribbean country, and then be sold in Canada as Caribbean rum.

The SJC also noted that item 14 of the schedule to the Spirit Drinks Trade Act (SDTA), enacted in 2006, was intended to replace section B.02.034 of the FDR. Following analyses, the Canadian Food Inspection Agency (CFIA) therefore recommended the repeal section B.02.034 of the FDR.

In the light of this observation by the SJC, consequential amendments to the FDR are necessary to avoid inconsistencies between the SDTA and paragraph B.02.033(a) of the FDR which stipulated, subject to section B.02.034, that imported rum to be sold in Canada as imported rum, such as Caribbean rum, could be blended only with other imported rum. Contrary to this restricted blending allowance, item 14 of the schedule to the SDTA allows Caribbean rum to be blended with a small amount of Canadian rum.

2. Issue

Section B.02.034 of the FDR was, in the SJC’s opinion, extending beyond the mandate of the FDA. The SJC further noted that item 14 of the schedule to the SDTA had been intended to replace section B.02.034 of the FDR. The SJC therefore recommended its repeal.

The repeal of section B.02.034 of the FDR could not, however, have proceeded on its own without consequential amendments in support of the repeal. In repealing section B.02.034 of the FDR, section B.02.033 of the FDR had to be amended to ensure that it did not conflict with item 14 of the schedule to the SDTA. The previous wording of paragraph B.02.033(a) of the FDR allowed for rum, including Caribbean rum, imported in bulk for the purpose of blending and sale as imported rum to be blended only with other imported rum whereas item 14 of the schedule to the SDTA allows for Caribbean rum to be blended only with imported rum that is from a Commonwealth Caribbean country, as well as with small amounts of Canadian rum. Hence, it was necessary to delete the requirement in paragraph B.02.033(a) which would conflict with item 14 of the schedule to the SDTA regarding Caribbean rum. In addition, there were certain aspects of section B.02.033 that had to be maintained.

3. Objectives

The objectives of the current regulatory amendments are to

  • Repeal section B.02.034 of the FDR to address the issue raised by the SJC; and
  • Make consequential amendments to allow current blending practices to continue.

4. Description

The SJC has noted that item 14 of the schedule to the SDTA was intended to replace section B.02.034 of the FDR. However, contrary to the FDR, item 14 of the schedule to the SDTA stipulates that Caribbean rum can be blended with a small amount of Canadian rum and still be labelled and sold as “Caribbean rum.” Therefore, the repeal of section B.02.034 of the FDR could not proceed on its own if current blending practices were maintained.

To ensure there would be no contradictions between the FDR and SDTA, section B.02.033 of the FDR was repealed and consequential amendments were made to other FDR provisions to ensure the continuance of current blending practices.

The ability to add distilled water and caramel is usually required to adjust imported bulk spirits in general. Bulk spirits are typically shipped with much of the water removed. The product is then reconstituted with water in the receiving country, thereby saving on shipping costs. Caramel is also added to restore the proper colour. Therefore, to ensure that current practices could continue, the intent of the FDR provisions related to the ability to reconstitute the products in this manner was moved to section B.02.030.

5. Consultation

These amendments do not imply changes in practice for industry and, therefore, did not warrant extended consultations. However, as a precautionary measure, CFIA sent information advising stakeholders of the upcoming changes to Agriculture and Agri-food Canada (AAFC), the Canada Revenue Agency (CRA), Health Canada (HC), the Canadian Association of Liquor Jurisdictions (CALJ), Spirits Canada, also known as the Association of Canadian Distillers (ACD), and the Canadian Association of Importers and Exporters (I.E. Canada).

A single supportive response was received.

6. “One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there are no changes in industry practices and, therefore, no administrative costs to business.

7. Small business lens

These amendments do not result in any changes in practice for the distillery industry with respect to Caribbean rum. The amendments do not have any incremental impacts on the industry in terms of compliance practices and therefore will not impose any compliance costs or administrative costs on small businesses in distilleries.

8. Rationale

There will be no incremental costs for industry, businesses, trade, and consumers as a result of these regulatory amendments.

AAFC administers the SDTA, which will continue to have the authority to enforce the requirements regarding Caribbean rum under item 14 of the schedule to the SDTA. The Minister of Agriculture and Agri-food Canada (the Minister) has designated certain officials of the Canada Revenue Agency (CRA) and the Canada Border Services Agency (CBSA) as inspectors and analysts respectively for the purpose of administering and enforcing the SDTA. Since there will be no change in practice as a result of the regulatory amendment, there will be no impacts on CRA and CBSA.

Health Canada (HC) is responsible for the public health and safety and nutritional quality of all foods including alcoholic beverages through the FDA. There are no health and safety aspects to the amendments and, therefore, no impact on HC.

The amendments will have no impact on the spirits and the distillery industry. Industry that is involved with Caribbean rum will be able to maintain the same operational requirements in dealing with trade and sales as the current status quo.

In conclusion, there will not be any incremental impacts on industry, consumers or government departments.

9. Implementation, enforcement and service standards

Under the SDTA, the Minister of Agriculture and Agri-food Canada has designated certain officials of the Canada Revenue Agency (CRA) and the Canada Border Services Agency (CBSA) as inspectors and analysts respectively for the purpose of administering and enforcing the SDTA. Excise duty officers with the CRA who presently conduct audits under the Excise Act, 2001 will carry out inspections under the SDTA, while CBSA analysts will carry out the analysis of samples as may be required in enforcing the SDTA.

More information on compliance under the SDTA, can be obtained in the Spirit Drinks Trade Act Compliance and Enforcement Policy by visiting the AAFC Web site.

10. Contact

Mark Burgham
Director
Imported and Manufactured Food Division
Canadian Food Inspection Agency
1400 Merivale Road, Tower 2, Floor 6, Room 223
Ottawa, Ontario
K1A 0Y9
Telephone: 613-773-6533
Fax: 613-773-5617
Email: mark.burgham@inspection.gc.ca