Regulations Amending the Food and Drug Regulations: SOR/2022-143

Canada Gazette, Part II, Volume 156, Number 14

Registration
SOR/2022-143 June 21, 2022

FOOD AND DRUGS ACT

P.C. 2022-707 June 20, 2022

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

Regulations Amending the Food and Drug Regulations

Amendments

1 Paragraph A.01.016(a) of the French version of the Food and Drug Regulations footnote 1 is replaced by the following:

2 (1) The definition close proximity in subsection B.01.001(1) of the Regulations is replaced by the following:

close proximity,
in respect of information that is shown on a label or a sign, means immediately adjacent to the information and without any intervening printed, written or graphic material; (à proximité)

(2) Paragraph (c) of the definition common name in subsection B.01.001(1) of the Regulations is replaced by the following:

(3) Subsection B.01.001(1) of the Regulations is amended by adding the following in alphabetical order:

Common Names for Ingredients and Components Document
means the document entitled Common Names for Ingredients and Components, prepared by the Canadian Food Inspection Agency and published on its website, as amended from time to time; (document sur les noms usuels d’ingrédients et de constituants)

3 (1) Subsections B.01.005(3) and (4) of the Regulations are replaced by the following:

(3) Despite subsection (2), if the container of a prepackaged product is an ornamental container and the label is applied to the bottom of the container, the information required to be shown may be shown on the label that is applied to the bottom of the container.

(4) Despite subsection (2), the information required by subparagraph B.01.007(1.1)(b)(i) and paragraphs B.24.103(g), B.24.202(d), B.24.304(h), B.25.020(1)(h) and B.25.057(1)(f) and (2)(f) may be shown on that part of the label that is applied to the bottom of the package if a reference to where that information is located on the label appears elsewhere on the label.

(4.1) Despite subsection (2), the information required by paragraph B.27.005(a) may be shown on that part of the label that is applied to the bottom of the package.

(2) Subsection B.01.005(5) of the English version of the Regulations is replaced by the following:

(5) Despite subsection (2), the nutrition facts table may be shown on that part of the label that is applied to the bottom of the food or container if the available display surface includes the bottom.

4 The Regulations are amended by adding the following after section B.01.006:

B.01.006.1 Except as otherwise provided in these Regulations or in the Safe Food for Canadians Regulations, if a prepackaged product is likely to be mistaken for another food, words describing the true nature of the prepackaged product so as to distinguish it from the other food shall appear on the principal display panel and may be in regard to

5 (1) Paragraph B.01.008(1)(a) of the Regulations is replaced by the following:

(2) Paragraph B.01.008(2)(b) of the Regulations is replaced by the following:

(3) Subsection B.01.008(3) of the Regulations is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

6 (1) Paragraph B.01.008.2(3)(a) of the Regulations is replaced by the following:

(2) Paragraph B.01.008.2(4)(a) of the Regulations is replaced by the following:

(3) Paragraph B.01.008.2(5)(b) of the Regulations is replaced by the following:

7 (1) Paragraph B.01.008.3(2)(a) of the Regulations is replaced by the following:

(2) Subparagraph B.01.008.3(3)(b)(i) of the Regulations is replaced by the following:

8 Items 4 and 5 of the table to subsection B.01.009(2) of the Regulations are replaced by the following:

Item

Preparation/Mixture

4

spice or herb mixtures

5

seasoning mixtures, other than those set out in item 4 and salt added separately, if the total weight of those seasoning ingredients is no more than 2% of the total weight of ingredients used in the manufacture of the prepackaged product excluding added water used as an ingredient that has been removed during its manufacture

9 (1) Subsection B.01.010(1) of the Regulations is replaced by the following:

B.01.010 (1) In this section, common name includes a name set out in the Common Names for Ingredients and Components Document.

(2) Paragraphs B.01.010(3)(a) and (b) of the Regulations are replaced by the following:

(3) Subparagraph B.01.010(4)(b)(ii) of the Regulations is replaced by the following:

10 Paragraph B.01.010.1(6)(e) of the Regulations is replaced by the following:

11 (1) Subsection B.01.010.2(1) of the Regulations is replaced by the following:

B.01.010.2 (1) In this section and in sections B.01.010.3 and B.01.010.4, sulphites means the food additives that are set out in the Common Names for Ingredients and Components Document and are present in a prepackaged product.

(2) Subparagraph B.01.010.2(6)(a)(ii) of the Regulations is replaced by the following:

12 (1) Paragraph B.01.011(1)(e) of the Regulations is replaced by the following:

(2) Paragraph B.01.011(2)(b) of the Regulations is replaced by the following:

13 Paragraph B.01.080(2)(c) of the English version of the Regulations is replaced by the following:

14 Paragraph B.01.101(4)(a) of the Regulations is replaced by the following:

15 (1) The portion of subsection B.01.102(3) of the French version of the Regulations before paragraph (a) is replaced by the following:

(3) Les aliments qui sont sources de protéines dans un produit de viande avec allongeur ou dans un produit de volaille avec allongeur doivent figurer dans le nom usuel de ce produit, où ils sont désignés par leur nom usuel, à la fois :

(2) Paragraph B.01.102(3)(a) of the Regulations is replaced by the following:

16 Subsection B.01.103(1) of the Regulations is repealed.

17 Paragraph B.01.305(3)(e) of the Regulations is replaced by the following:

18 Subparagraph B.01.401(2)(c)(ii) of the English version of the Regulations is replaced by the following:

19 Paragraph B.01.502(2)(b) of the Regulations is replaced by the following:

20 Section B.09.010 of the Regulations is replaced by the following:

B.09.010 Despite the common name set out in the Common Names for Ingredients and Components Document, if a vegetable fat or oil is an ingredient of any cooking oil, salad oil or table oil, the fat or oil shall be shown in the list of ingredients by its common name.

21 Section B.11.204 of the Regulations is repealed.

22 (1) The portion of section B.12.002 of the Regulations before paragraph (a) is replaced by the following:

B.12.002 The label on a container of water represented as mineral water or spring water shall carry a statement

(2) Section B.12.002 of the Regulations is amended by adding “and” at the end of paragraph (b), by striking out “and” at the end of paragraph (c) and by repealing paragraph (d).

23 Section B.12.003 of the Regulations is repealed.

24 Section B.12.006 of the Regulations is repealed.

25 Section B.12.009 of the Regulations is repealed.

26 Section B.14.039 of the Regulations is repealed.

27 Section B.22.024 of the Regulations is repealed.

Coming into Force

28 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.)

Executive summary

Issues: Elements of the regulatory framework for food labelling reflect decades-old food production patterns and supply chains. Internal and external trade patterns have changed significantly since the regulations were last amended. As a result, current requirements do not reflect current market realities. This includes requirements for standard container sizes, ingredient names, test market foods and commodity-specific labelling requirements. All of these factors necessitate a modernized Canadian food labelling regulatory framework that responds to this new environment, and that is flexible enough to adapt to innovation and future industry needs. Following the COVID-19 pandemic, these amendments were adjusted to further focus on innovation supporting measures that will assist with post-pandemic economic recovery.

Description: The amendments will simplify and reduce duplication of labelling requirements by harmonizing certain food commodity-specific requirements and by repealing others. Requirements for container sizes will be found in the applicable document incorporated by reference. Common names for ingredients, which are applicable to food products and edible cannabis products, will also be incorporated by reference. A definition for “test market food” will be introduced to clarify the intent of an exception for the purpose of test marketing foods. This streamlined and adaptable framework will support industry innovation, now and in the future. These amendments will also provide consumers with clearer information to guide their purchasing decisions.

Rationale: The amendments will benefit industry, including small businesses by supporting innovation, competitiveness and business recovery, all at no cost. The main driver of benefits for industry is the avoidance of application fees due to reduced Ministerial Exemption (ME) applications and the general reduction of burden on industry associated with both ME and Test Market Authorizations (TMA) applications. The main driver of benefits for the Canadian Food Inspection Agency (CFIA) is resource savings associated with processing fewer TMA and ME applications.

There are additional benefits to industry and consumers. These include increased flexibility for businesses to innovate and serve new markets, improved consistency and clarity of regulations, and increased alignment with Codex standards and labelling requirements of major trading partners. There will be increased availability of useful, credible information on food; improving consumers’ ability to read and understand food labels, and compare products.

CFIA has been consulting with Canadians on a modernized food labelling framework since 2013 as part of an overall approach to modernizing the Government of Canada’s food regulatory framework. In 2017, CFIA consulted on proposed regulatory approaches. The consultations informed the regulatory amendments that were pre-published in the Canada Gazette, Part I, on June 22, 2019. The amendments were also adjusted based on stakeholder comments received during the pre-publication consultation period.

The amendments respond to an early action item listed in the 2018 Fall Economic Statement and CFIA’s Regulatory Stock Review Plan to address issues and support innovation in the agri-food sector. The amendments will also continue CFIA’s shift to outcome-based food rules.

Issues

Many food labelling requirements have not changed in decades. At the same time, industry practices and international standards have evolved, creating a need for appropriate changes to Canada’s food labelling regulations. Since 2013, CFIA has conducted three phases of public consultation that identified the following issues in food labelling:

1. The need to support industry innovation and the evolution of regulatory approaches

Changes in technology and trade patterns have increased the diversity of food and increased the need to differentiate one food from another. In response to this, food businesses develop new recipes or formulations to meet new consumer demands (for example, for taste, quantity, health and safety). However, some food labelling requirements reflect decades-old consumer demands and supply chains, which can be a barrier to change. For example, the current requirements that prescribe acceptable container sizes in regulations do not reflect current market realities and might limit consumer choice and industry innovation. The COVID-19 pandemic has also created the need to modernize regulations such that they support innovation and economic recovery. In adding flexibility to the regulations, minor amendments to the Cannabis Regulations are required as a consequence.

2. The need for streamlined rules

Before the Safe Food for Canadians Regulations (SFCR), food labelling provisions were found in multiple regulations that had prescriptive rules such as having to specify whether canned peaches are “freestone” or “clingstone”. While the SFCR addressed some of these issues, the existing requirements are inconsistent as some foods are subject to these prescriptive labelling requirements and others are not. This has prompted stakeholders to ask for more streamlined and consistent rules.

3. Increased consumer demand for information to make purchasing choices

Consumers are buying more diverse and innovative foods, and are more aware and knowledgeable about food and food labels. They are interested in more information on food labels (for example, clearer information about the ingredients in food) and wish to buy food in new package sizes.

4. Unintentional requirements for restaurants and similar businesses

Incidentally, the introduction of the SFCR in 2018 unintentionally introduced licencing and related requirements for restaurants and similar businesses, which were not previously subject to these requirements. These types of businesses are regulated by provincial governments, municipalities, and/or regional public health authorities, and not by the federal government. Corrective amendments are required to clarify that these businesses are indeed not subject to the new requirements.

Background

The food label gives consumers important information that helps inform purchasing decisions. This information includes a food’s name, its quantity, its ingredients, its nutrient information, as well as various voluntary claims. Food labelling is also an important tool for industry. It allows industry to communicate and promote the content and characteristics of their products, and to differentiate their products from others on the market. In light of this, it is important that Canadian food labelling rules are modern, and flexible enough to adapt to present and future needs.

CFIA began a Food Labelling Modernization (FLM) initiative by reviewing its food labelling regime in 2013 with a public consultation to identify issues for resolution. This was followed in 2014–15 with a consultation to seek views on regulatory options, and in 2016–17 with a consultation on specific pre-regulatory proposals. As a result of these efforts and through the Canada Gazette, Part I, pre-publication consultation, CFIA is amending the Food and Drug Regulations (FDR) and the SFCR.

In summer 2020, CFIA re-examined the FLM initiative in the context of the COVID-19 pandemic and the need to support economic recovery. As a result, adjustments were made to the scope of the initiative to remove provisions that imposed mandatory label changes, and the initiative was renamed Food Product Innovation (FPI). This adjusted package will reduce burden on industry in a time of economic uncertainty. While the FPI will still enhance consumer protection and improve some label information for consumers, the mandatory label changes that were removed from the package will be revisited at a future date.

Legislative and regulatory context

CFIA and Health Canada provide regulatory oversight on food labelling, including establishing policies, developing legal requirements, assisting regulated parties through compliance promotion, performing inspections, laboratory testing, and enforcement. This helps protect consumers and contributes to a fair marketplace for food businesses.

Health Canada administers legislation, policies and standards relating to the health, safety, and nutritional quality of food sold in Canada. This includes labelling requirements about the nutrients in food, claims, the presence of food allergens, and other health and safety-related aspects such as expiration dates as set out under the Food and Drugs Act and the FDR. Health Canada is also responsible for regulating edible cannabis products under the Cannabis Act and Cannabis Regulations.

CFIA administers the non-health and safety food labelling provisions in legislation, policies and standards. This includes those related to labelling and advertising, and food compositional standards under the FDR. CFIA is also responsible for food-related matters under the FDR relating to business contact information, ingredient labelling, and quality-related best before dates.

As of January 15, 2019, food commodity-specific requirements under different legislation, as well as labelling provisions as they related to food under the Consumer Packaging and Labelling Act, have been consolidated under the Safe Food for Canadians Act (SFCA) and its Regulations. This includes regulations pertaining to the representation, labelling, composition, grade, and packaging of food.

Through the 2018 Fall Economic Statement (FES), the Government of Canada proposed to introduce measures to facilitate business growth by modernizing federal regulations and encouraging consideration of economic competitiveness when designing and implementing regulations. CFIA’s FPI initiative forms part of the 2018 FES as an early action item under the Agri-Food and Aquaculture Regulatory Review. Both Health Canada and CFIA continue to work closely together to modernize food labelling as part of an overall coordinated approach to modernize the federal food regulatory framework.

International context

Canada is a member of the Codex Alimentarius Commission (Codex), an intergovernmental body under the World Health Organization and the Food and Agriculture Organization of the United Nations. The member countries in Codex develop international food standards to protect the health of consumers and support fair practices in food trade.

This collaborative work is important because the increase in consumer demand, in terms of quantity and variety of foods, has globalized food trade. Increased consumer demand for information has also created the need for Codex to keep standards, codes of practice and guidelines relevant. Codex has developed standards that have guided many of these amendments.

Some of Canada’s trading partners have built, or are building similar regulatory frameworks that reflect this approach, and that balance innovation while maintaining public trust and addressing food safety risks. It is important that Canada’s food labelling system reflects, where appropriate, Codex guidance and the regulatory approach of our trading partners. The FPI amendments were developed with this goal in mind.

Objective

The objective of this FPI initiative is to develop a more modern food labelling system that addresses and responds to current and future challenges as follows by:

Description

Overall, the regulatory amendments will remove inconsistencies in labelling requirements and will provide a more flexible framework that facilitates industry innovation. Specifically, changes include:

Separate amendments to the Cannabis Regulations will take into account the incorporation by reference of ingredient and component common names. Finally, amendments to the SFCR will clarify to stakeholders that the licensing and related provisions of the SFCR do not apply to the preparation of food by restaurants and similar enterprises, maintaining the status quo.

Standard container sizes

Standard container sizes have been prescribed for a number of foods (for example, honey, fresh and processed fruits and vegetables, and meat). The original intent was to help consumers compare similar products and to standardize some manufacturing processes. Over time, new practices such as unit pricing and advances in food processing methods have achieved these objectives, and the existence of prescribed container sizes for weight, net quantity, dimensions, and maximum capacity is affecting innovation and consumer offerings.

The regulatory change will repeal certain requirements for standard container sizes from the SFCR, and incorporate by reference the remaining list of sizes. The repealed container sizes will be based on those identified in a previous round of consultations that occurred in 2017 and verified during the pre-publication consultation. Examples of food products that will no longer have prescribed container sizes include prepackaged beets, onions, and parsnips. This will create a more flexible framework that facilitates industry innovation.

Incorporation by reference of ingredient and component common names

Certain foods and classes of foods, when used as ingredients or components, are set out in the FDR by common names and collective common names. The collective common names are often referred to as “class names” (for example, “vegetable oil” and “seasonings”). These common names and class names provide consumers with information about the content of foods while allowing industry some flexibility respecting the size of the list of ingredients on the label and product formulations. Consumers have indicated that certain common and class names may not be sufficiently clear in the list of ingredients, and some industry members have suggested that the current lists of common and class names need to be flexible to address current and ongoing modifications to common and class names of ingredients and components.

The regulatory changes will repeal separate lists of mandatory and optional common and class names from the FDR and incorporate them by reference. This will allow these lists to more readily respond to industry innovation and changes in consumer preferences, and enable greater alignment with Codex standards and those of trading partners. No changes to the requirements for common names and class names are being made as a result of these amendments.

The requirements for common names and collective common names (or class names) are also relevant to edible cannabis products. The Cannabis Regulations currently make references to the provisions in the FDR that set out the lists of common names or class names. As a result of the repeal of the lists of common and class names, the Cannabis Regulations will be amended only to refer to the new document being incorporated by reference.

Definition of test market food

Under limited circumstances, foods may be eligible for a Ministerial Exemption (ME) from certain non-food safety related regulatory requirements for the purposes of test marketing a food on the Canadian market. This type of ME is referred to as a Test Market Authorization (TMA). Food businesses are increasingly seeking TMAs as a means to obtain exemptions from prescriptive regulatory requirements such as standard container sizes. This goes beyond the original intent of the TMA, which is to allow businesses to test product viability on the Canadian market, and has resulted in products being sold for years under TMAs. Since the SFCR provides a maximum two-year period for TMAs, they must be applied for and regularly re-evaluated. This creates burden for industry and Government.

The regulatory changes will introduce a definition for “test market food” into the SFCR to clarify the intent of an exemption for the purpose of test marketing. This definition will limit the application of TMAs to foods that differ substantially from others sold in Canada and that were not sold previously in Canada in that form.

The use of incorporation by reference of grades, standards, and container sizes will reduce the need for TMAs in the future, as permissions granted through widely accepted TMAs will be added to documents incorporated by reference. Existing TMAs will continue until their expiry date. The new definition will strengthen consumer protection and market fairness by providing TMAs only under certain circumstances.

Streamlining SFCR and FDR commodity-specific labelling requirements

The SFCR and FDR include a number of food commodity-specific labelling requirements, which are sometimes inconsistent between foods, and can limit the flexibility of the terms that can be used on labels. For example, “carbonated” was permitted on carbonated bottled water but “sparkling” was not.

This proposal will maintain the food commodity-specific labelling requirements necessary for health and safety reasons, to protect consumers from false and misleading information, or for trade reasons. The rest will be streamlined by either repealing requirements or introducing a single requirement that applies to all food. For example, a new provision in the FDR requiring certain foods to include words that distinguish them from other similar foods, when necessary to avoid purchaser confusion, will replace several existing labelling requirements. This will, for example enable tuna packed in brine to be distinguished from tuna packed in oil. In addition, some food descriptors in the SFCR (for example, “soft,” “semi-soft,” “firm,” and “ripened” terms for cheese) will be incorporated by reference to allow these requirements to change over time in response to marketplace changes or innovation. This outcome-based and flexible approach will align Canadian standards with Codex standards and those of Canada’s trading partners.

Application of SFCR licensing requirements on restaurants and similar businesses

Restaurants and similar businesses (for example, food trucks and caterers) prepare food for consumption without further preparation required by the consumer. In addition, many restaurants offer a delivery service. Consumers who live close to a provincial border can request a customized food order from a restaurant or caterer in another province and have it delivered.

While it is clear in the SFCR that licensing requirements do not apply to the preparation of food that remains within a provincial border, it unintentionally applies to restaurants and similar businesses where the prepared food is delivered from one province to another. The SFCR did not intend to subject these businesses to federal food licensing requirements and provisions applicable to licence holders, such as preventive control requirements.

Before the SFCR, restaurants and similar businesses were not subject to CFIA oversight. A strict application of the SFCR as currently written would impose unintended obligations on these businesses to comply with the licensing requirements of the SFCR. The amendment to the SFCR will clarify that these businesses are not subject to SFCR licensing requirements and applicable provisions and will maintain the pre-SFCR status quo as intended.

Regulatory development

Pre-regulatory consultations

CFIA has conducted three phases of pre-regulatory stakeholder engagement on the FLM initiative since 2013, with the latest round of engagement taking place in 2016–2017. The overall response has been positive, with support from both consumers and industry.

The first phase of engagement (2013–14), during which approximately 2300 external and internal stakeholders participated, helped identify key issues in the food labelling system. These key issues were published in an “Engagement Summary Report”.

The second phase of engagement (2015) proposed options to address the issues identified in Phase I, with the purpose of gathering additional feedback. Nearly 1600 stakeholders participated. A “Phase II What We Heard Report” was published for this second phase of engagement.

The third phase of engagement sought stakeholder views on proposed regulatory approaches. These approaches reflected feedback from the previous consultation phases. Over 2500 stakeholders participated in this phase, which consisted of a combination of face-to-face discussions, webinars, and an online questionnaire to seek additional feedback. As part of this round of consultation, the World Trade Organization was notified to solicit additional feedback from trading partners. A detailed summary of this round of consultations, including areas of support and suggestions for changes, can be found in the “Phase III What We Heard Report.”

Canada Gazette, Part I, consultations

The FLM amendments were pre-published in Canada Gazette, Part I, on June 22, 2019. During the 75-day consultation period, CFIA received 150 individual submissions from a variety of stakeholders. This included consumers, businesses, industry associations, trading partners and different levels of government. Consumers and industry continued to support the FLM, and some industry comments noted areas where rules could be more outcome-based or flexible.

Following pre-publication, CFIA conducted additional consultations which reached more than 600 consumer, industry and government stakeholders. These events included six public webinars and two sector-specific technical sessions. In addition, CFIA’s web-based consultation documents reached an additional 15 773 stakeholders during the pre-publication period.

September 2020 technical consultation

In light of the COVID-19 pandemic, and to ensure that objectives of the FLM will still be met in the new context of post-pandemic economic recovery, CFIA made adjustments to the FLM amendments and renamed the initiative “Food Product Innovation” (FPI). These adjustments included focusing the amendments on provisions that support industry’s ability to innovate and that would also offer consumer benefit. The various components were evaluated in light of the reduced capacity of industry stakeholders to make substantial label changes in the coming years and the need to focus the regulatory initiative on supporting innovation, competitiveness and business recovery. With this in mind, the scope of the initiative was adjusted to remove components that would have mandated changes to food product labels and imposed costs on industry to implement. Components that were removed will be considered for inclusion in future CFIA regulatory initiatives.

To validate this approach, CFIA held an additional technical session with industry stakeholders. There was broad support for postponing provisions that would affect the food product label to a later date and moving forward with the remaining components that will sustain innovation and decrease burden for industry. Stakeholders indicated that this was a prudent course given the challenges faced by their sector and that CFIA should take steps to coordinate future label changes with Health Canada as part of a predictable cycle of labelling changes.

Concerns

This section provides an overview of the areas of stakeholder concern.

1. Alignment with Health Canada regulatory labelling initiatives

Stakeholders continued to note the need for coordination of effective dates of CFIA’s labelling changes with those of Health Canada which include changes to nutrition labelling and lists of ingredients as well as changes from the healthy eating initiative.

CFIA Response

The FPI initiative does not include mandatory label changes so there is no longer a need to align effective dates with Health Canada’s label changes. CFIA and Health Canada recognize the need to coordinate future labelling changes to facilitate implementation. While the FPI initiative no longer results in mandatory labelling changes that require coordination with Health Canada, any future changes to labelling requirements will be coordinated as appropriate with Health Canada in accordance with a predictable cycle.

2. Making implementation resources available

Stakeholders requested that CFIA make available detailed guidance material to support the implementation of these regulations.

CFIA Response

CFIA has developed guidance for industry to support implementation of the new requirements. CFIA will notify stakeholders and Canadians of the regulatory changes to the areas of greatest interest, before the coming into force of the regulations.

Modern treaty obligations and Indigenous engagement and consultations

No impact on Indigenous Peoples is expected as a result of these regulatory amendments.

Instrument choice

1. Status quo

These regulatory amendments were developed based on broad consultations that began with identifying issues experienced with the status quo. Through these consultations, examples were provided of situations where the status quo had been questioned, such as the need to remove outdated and duplicative commodity-specific label requirements.

If food labelling requirements remain as is, they would continue to increasingly be viewed as outdated and would likely not respond to changes in industry practices and marketing techniques or to consumer preferences and requests for additional relevant information on a label. For example, with respect to industry, retaining requirements for standard container sizes may affect the ability to foster innovation in packaging.

2. Non-regulatory option

Non-regulatory options to achieve the FPI objectives were considered, including:

While these actions would be expected to have a positive impact on consumer and industry awareness, it is unlikely that they would fully meet the objectives of the FPI. For instance, non-regulatory options would not be enforceable and so would not necessarily achieve a level playing field for industry.

In addition, this option would not increase alignment of Canada’s regulatory regime with other jurisdictions. Similarly, a non-regulatory option would maintain prescriptive regulations that may hinder innovation, and would not introduce modern regulatory tools (such as incorporation by reference) that enable updates and modifications to keep pace with and effectively respond to changes such as consumer requests for information on labels. While this non-regulatory option would not meet the need to amend the applicable labelling regulations, these non-regulatory tools are recognized as complementary to the FPI regulatory initiative.

3. Regulatory option

The regulatory option was chosen because it is the most effective way to simultaneously keep pace and effectively respond to changes contemplated by FPI, and harmonize food commodity-based requirements to limit hindrances to industry.

The regulatory option has been supported over three phases of public consultation, and the Canada Gazette, Part I, consultation. The amendments primarily use an outcome-based and flexible approach to facilitate compliance and maintain overall trust in the food safety system.

Regulatory analysis

Benefits and costs

In consideration of stakeholders’ feedback and the impact of the COVID-19 pandemic to the economy, all the labelling amendments presented in Canada Gazette, Part I, that would have generated additional costs to industry were removed and those amendments that will be beneficial to industry, consumers and the government were kept.

I. Affected stakeholders

The following stakeholders will be affected:

II. Baseline versus regulatory scenario

The key elements of the baseline and regulatory scenarios are described below.

1. Incorporation by reference of common and class names

The FDR prescribes certain names of foods when declared in the list of ingredients, such as “vegetable oil”. The regulatory amendments will move the list of common and class names in the FDR to a document to be incorporated by reference in the FDR.

2. Streamlining commodity-specific labelling

Previously, there were a number of prescriptive labelling requirements that were applied to specific commodities. For example, wax beans had to be labelled with the term “Whole” or “Cut”. The regulatory amendments will streamline labelling requirements by replacing individual requirements for specific commodities with one horizontal requirement applicable to various commodities. For example, wax beans will not be subject to prescriptive requirements. Instead, they will be subject to a single outcome-based requirement to reflect the description of the true nature on the label.

3. Definition of test market food

Certain food labelling and packaging requirements may be eligible for an exemption from provisions of the SFCR for the purpose of test marketing a food product, such as container sizes. However, in the existing regulations, there is no definition of “test market food”, leading to concerns that the application of exemptions for test market foods could be inconsistent across food commodities. The regulatory amendments will introduce a definition of test market food that provides for a clear and consistent approach across food commodities.

4. Standard container sizes

The SFCR prescribed standard container sizes for a number of prepackaged food products (for example, fresh fruits and vegetables). However, businesses can submit TMA or ME applications to receive an exemption from the standard container size requirements. The regulatory amendments will repeal the standard container size requirements for several prepackaged food products (for example, certain fresh fruits and vegetables) and incorporate by reference the remaining list of sizes by new quantity by weight, net quantity by volume, dimensions and capacity, as applicable.

III. Benefits

1. Benefits for industry

The ongoing cost savings to the industry are generated from the avoidance of application fees and the reduction in administrative costs related to the preparation TMA and ME applications. Annually on average, CFIA receives 2271 ME applications and 40 TMA applications. It is estimated that the regulatory amendments will reduce the average number of annual ME applications by 9.6% or approximately 218 ME applications and the average number of annual TMA application by 97% or 39 TMA applications.

2. Benefits for CFIA

CFIA will see resource cost savings in processing applications for which feesfootnote 2 charged are not fully cost recovered.

The FPI regulations will also not result in a need for more CFIA inspections. In addition, removal of outdated requirements and repeal of some standard container sizes will result in fewer requirements for inspectors to verify.

3. Other benefits

Consumers are buying more diverse and innovative foods, and are more aware and knowledgeable about food. Therefore, there is an increasing demand for information that enables informed purchasing decisions. More informed purchasing decisions as a result of the regulatory amendments will increase consumers’ decision satisfaction. The incorporation by reference of common and class names will improve the information found in the list of ingredients.

The regulatory amendments will increase regulatory alignment with major trading partners (for example, the United States, the European Union and Australia) as they are based on international standards. For example, the incorporation by reference of certain common and class names is based on Codex guidance. Increased alignment with international standards is expected to create opportunities to expand market access.

The new definition for “test market food” into the SFCR will ensure all businesses seeking exemptions are subject to the same requirements, thereby improving market fairness.

Finally, the regulatory amendments will streamline labelling requirements by replacing individual prescribed requirements for specific commodities with a single outcome-based requirement that will require the description of the “true nature” of the food on the label. Businesses will therefore be able to choose how they want to label products to suit specific situations.

IV. Costs

There are no incremental costs expected for industry because these FPI amendments are innovation supporting measures that will assist with post-pandemic economic recovery.

Any costs to CFIA related to this regulatory amendment are limited to updating existing guidance for the inspectorate (including training) and industry (including external guidance and the Industry Labelling Tool).

There will be no incremental cost to the industry and the government associated with the amendments to remove the unintentional licensing requirements for restaurants and similar businesses introduced by the SFCR in 2018.

SFCR never intended to include these businesses within the scope of the licensing and related regulations, as they are already regulated by provincial or municipal governments. The proposed amendments to SFCR will exclude these businesses from the current licence requirements.

The amendments to the Cannabis Regulations are being made only to incorporate by reference the list of common names and class names, and therefore will also not result in any incremental costs to affected stakeholders.

Small business lens

The small business lens will apply as there are impacts on small businesses associated with the regulatory amendments. There will be an immediate reduction in administrative burden associated with TMA and ME applications and avoidance of ME fees to small businesses. According to Statistics Canada, small businesses account for 90% of the total number of businesses in the food and beverage industry. Given that the nature of the regulations are relieving in nature and impose no incremental costs to the industry, CFIA deemed it unnecessary to consider flexibility for small businesses.

One-for-one rule

The one-for-one rule will not apply to the FPI amendments to the FDR, or to the amendments to the Cannabis Regulations, as there would be no incremental change in administrative burden on businesses.

The one-for-one rule will apply to the FPI amendments to the SFCR. The impacted businesses would experience an incremental decrease in administrative burden from preparing and submitting the required documents for fewer TMA and ME applications. Therefore, the FPI amendments to the SFCR would be considered burden “out” under the rule.

The estimated decrease in administrative burden was based on information gathered from the survey, reasonable assumptions and consultation with CFIA subject-matter experts. Below are the assumptions used to estimate the administrative impacts:

The estimated total for the annualized decrease in administrative burden is $17,818. This equates to an estimated average annualized decrease in administrative burden per impacted business of $69 (see Table 1).

Table 1: Estimated administrative impacts under the one-for-one rule (Can$, 2012 prices)
 

Annualized Value table 2 note *

Decrease in administrative burden associated with TMA and ME applications

$17,818

Estimated number of impacted businesses

257 table 2 note **

Annualized decrease in administrative burden per impacted businesses

$69.33

Table 2 note(s)

Table 2 note *

Values were calculated using 2012 as the base year and a 7% discount rate.

Return to table 2 note * referrer

Table 2 note **

Total number of application reduction was estimated to be 257. It was assumed that one application equates to one business.

Return to table 2 note ** referrer

Regulatory cooperation and alignment

CFIA notified the World Trade Organization (WTO) of its proposal to modernize Canadian food labelling requirements in 2019. It did so by means of a notification to WTO bodies responsible for technical barriers to trade and sanitary and phytosanitary measures. This allowed Canada’s trading partners to provide comments and feedback which were taken into account as CFIA developed the final regulations.

As described below, these proposed amendments are consistent with Codex standards. They also minimize regulatory differences with the provisions of the United States and other major trading partners where it is appropriate to do so.

Canada and the United States (U.S.) are generally aligned in terms of adhering to overarching principles underpinning the provision of basic food labelling for consumer protection. There are some areas where FPI requirements will increase alignment with similar U.S. rules. As it relates to common names, the amendments contain new outcome-based rules for describing the true nature of food that will replace many prescriptive commodity-specific labelling requirements. This also aligns with the requirements of Codex and other trading partners such as Australia and New Zealand.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

The analysis considered impacts due to the regulatory amendments on stakeholders. The impacts are positive in nature.

The flexibility afforded through the incorporation by reference is expected to benefit consumers of food and beverages in the future because it will facilitate updates to the list of common names for ingredients and improve the information found in the list of ingredients. This flexibility will satisfy the demand for more information on labels, most important to those who have specific needs (e.g. parents and guardians purchasing for children) when it comes to using the list of ingredients as a source of information to make a purchase.

Rationale

Overall, Canada’s regulatory framework and system for food labelling is working well and is regarded as one of the best in the world. At the same time, this system must adapt to marketplace changes and improve. It must also evolve along with the systems of other countries and align with advances in international standards.

Consumers increasingly seek more information about the food they buy and food businesses introduce new products and marketing as consumer demand and technology change. In response to this, the FPI amendments attempt to balance these interests for continued market fairness, consumer protection, competitiveness and innovation, and food safety.

The FPI amendments will help fulfill the Government of Canada’s commitment to modernizing the food regulatory framework. Industry will benefit from reduced compliance costs in some areas, and the removal of prescriptive requirements that may hinder innovation. Indeed these amendments form part of the federal government’s FES (2018) and its interest to make it easier for businesses to grow by modernizing federal regulations. Consumers will also benefit from clearer information on food labels and increased choice.

In the summer of 2020, CFIA re-examined the Food Labelling Modernization initiative in the context of the COVID-19 pandemic and economic recovery. The assessment indicated that the initiative is well positioned to assist the food industry in a post-pandemic context as the amendments support industry innovation, competitiveness and business recovery, all at no cost to businesses.

Implementation, compliance and enforcement, and service standards

These amendments come into force once they are registered in the Canada Gazette, Part II.

Implementation of the regulatory proposal will include plain language guidance documents for industry available on the Industry Labelling Tool. This will facilitate understanding of requirements, and will be an avenue of continued communication and engagement with stakeholders. It will also help with continued coordination with other government departments and other governments to limit unnecessary impacts on industry and trade. CFIA will continue to maintain communication with stakeholders through the CFIA website, including through the Ask CFIA service.

As it relates to compliance verification, CFIA uses a range of tools, including preventive control inspections, sample collection, and commodity inspections (such as label reviews). When non-compliance is determined, CFIA normally takes enforcement actions commensurate with the seriousness of the non-compliance, following a standard regulatory response process and associated guidance.

Contact

Tammy Switucha
Executive Director
Food Safety and Consumer Protection Directorate
Canadian Food Inspection Agency
1400 Merivale Road, Tower 1
Ottawa, Ontario
K1A 0Y9
Email: tammy.switucha@inspection.gc.ca