BACKGROUND ON THE REGULATORY COOPERATION COUNCIL……………………...2  

QUESTION AND ANSWER SESSION.…………………... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4  

PRESENTATION OVERVIEWS – AGRICULTURE AND FOOD..…………………..………..7

BREAKOUT SESSION…………………………………... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

PRESENTATION OVERVIEWS – TRANSPORTATION.…….. .…………………..………...13

BREAKOUT SESSION.……………………………………... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17  

AGENDA……………..……………………………….………..………………………..…….. . . .19

PRESENTERS………………………………….……………….……..……..………..…..….…20

PARTICIPANT L IST…………………………………………..….…………………………..……..…..…23

 

 

 

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Comments  from  the  RCC  Secretariat   Regulatory Cooperat ion Counci l (RCC): A New Era in Canada-U.S. Regulatory Partnership Presenter: Bob Hamilton, Senior Associate Secretary, Treasury Board of Canada Secretariat Shared Vision for Perimeter Security and Economic Competit iveness In February 2011, Prime Minister Harper and President Obama established the Shared Vision for Perimeter Security and Economic Competitiveness; a new long-term partnership between Canada and the U.S. to accelerate legitimate flows of people and goods, while strengthening security and economic competitiveness. The Shared Vision aims to make it easier for Canadian and American firms to do business on both sides of the border through greater regulatory alignment without compromising the health, safety, environmental protection, sovereignty or privacy rights in either country. Leaders created the Beyond the Border Working Group (BBWG) and Regulatory Cooperation Council (RCC) to realize the Shared Vision goals. The Canada-U.S. RCC Joint Action Plan On December 7, 2011, the Prime Minister and the President announced the RCC Joint Action Plan. It includes 29 specific initiatives for greater regulatory alignment in four key sectors: agriculture & food, health & consumer products, transport, environment and two cross cutting issues - nanotechnology and small business lens. Each initiative represents an opportunity to resolve existing issues while setting precedent for future solutions and lasting regulatory cooperation mechanisms to ensure ongoing alignment. Implementat ion: A dedicated RCC secretariat established in Canada and reporting directly to the Prime Minister is tasked with: • Working closely with bilateral Working Groups on the initiatives identified in the RCC Joint Action Plan • Sharing best practices and lessons learned amongst Working Groups • Focusing on development of systemic changes to ensure regulatory alignment Bilateral Working Groups established to implement initiatives and led by senior representatives from regulatory departments on both sides of border are tasked with: • Developing and delivering work plans with ambitious, tangible outcomes • Engaging implicated stakeholders throughout the process Progress to Date:

The development of joint Canada-U.S. draft work plans supporting: • Implementation of initiatives • Establishment of permanent alignment mechanisms to effect systemic change • Completed work plans posted on the website • Extensive stakeholder engagement • Significant interest and support by both Canadian and U.S. stakeholders • Input on draft work plans • Ongoing engagement

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In it ia l Steps towards Systemic Ongoing Change:

General areas for enhanced regulatory cooperation or partnership are emerging, including: • Cooperation in Regulatory System Reliance - to reduce and eliminate duplicative requirements by recognizing the

success of each others’ work • Cooperation in Regulatory Standard-Setting - to partner on regulatory standards development, conformance (e.g.

testing), and implementation / enforcement tools • Cooperation in Product Reviews and Approvals – to collaborate on aligning submissions, analysis, and approval

processes • Cooperation at the Perimeter – to jointly focus efforts on challenges from offshore and reducing requirements at the

Canada-U.S. border Stakeholders can support the RCC by:

• Engaging with government agencies and departments in Canada and the U.S. on regulatory cooperation • Developing concrete examples of positive impacts in the context of North American manufacturing efficiency and

competitiveness • Providing insights into the supply chain and how regulatory cooperation could facilitate Canada-U.S. trade • Providing data to improve our ability to assess the benefits of enhanced regulatory cooperation Assessment of Benef its of the RCC:

• Estimates of benefits early in the RCC’s work demonstrated limited information • Some data exists on overall regulatory costs related to business competitiveness and market competition (e.g.,

OECD’s Product Market Regulations Index) • Potential benefits of regulatory cooperation can only be partially estimated by using the OECD data • This year, the RCC is undertaking an assessment of broad macro-economic impacts as well as specific estimates

of potential benefits in certain regulated subsectors Est imates of Potent ia l Benef its for Some Regulated Subsectors:

• Identification of benefits categories (e.g., Regulators, Regulated Party, Associated Industries) • Conduct company specific case study analysis on potential regulatory cooperation benefits • Extrapolate findings to sub-sectors of the industry

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Respondent: Bob Hamilton, Senior Associate Secretary, Treasury Board of Canada Secretariat

In Canada, time, money and human resources are being applied towards reexamining things. Tests and inspections performed in the U.S. are conducted again once goods cross the border. By removing unnecessary testing requirements, resources can be made available to address areas of risk and potential exposure that are currently ignored. Building risk-based assessment into impacts is difficult. One of the outcomes we hope to achieve from this exercise will be to identify areas of great or catastrophic risk and become more skilled at informed and intelligent risk management. Funds saved in one area can be used to build a macro-level approach to overall system risk. The focus tends to be on operational benefits that can be measured and quantified, while thinking of risk-based issues qualitatively. Going forward, numbers and their order of magnitude must be brought to risk-based issues. Initially however, developing a sense of operational costs, with any confidence, would be a major step forward.

The RCC’s Terms of Reference outline a two-year mandate to develop a Joint Action Plan. Early on, Canada and the U.S. agreed to identify regulatory issues of mutual concern to both countries that could deliver fairly immediate results, rather than wrestle with long standing disagreements or trade irritants likely to take 4 or 5 years to resolve. While we don’t have the ability to fully quantify the potential economic benefits from these initiatives, industry representatives have recognized the Action Plan as balanced in its approach. The RCC exercise is one of cooperation rather than classic-style negotiations where Canada or the U.S. tables an issue and fights fiercely for it. It is also about slowly shifting a mindset. U.S. regulators are beginning to take note of Canada’s sophisticated regulatory regime. The current fiscal environment works in our favour as increasing importance is placed on the ability to govern and regulate efficiently. For some, regulatory cooperation might entail photocopying each other’s regulations. Fortunately, our American colleagues don’t subscribe to this theory. We’re confident with the progress being made on the Action Plan and the current balance of issues. This will be watched closely as future initiatives are identified.

The RCC has chosen to focus on federal areas of regulatory alignment. A number of issues involving provincial-state regulation were suggested for consideration in the Action Plan. They have been noted, alongside financial regulatory issues, for consideration in future initiatives. Unless already well worked out, the alignment of many, large provincial-state issues won’t be achievable within the two-year mandate. We felt it was important, in this first step, not to become embroiled in federal-provincial-state exercises. The provinces have offered to help with cooperation initiatives within Canada and have shared certain approaches with the RCC. The provinces and states have been encouraged to review our process to the extent that lessons may be learned or applied to inter-provincial/state issues. If the RCC is successful initially, some things not possible today will be possible down the road, through a demonstration effect.

Quest ion #1: The Ontario Greenhouse Vegetable Growers are excited about this initiative, not necessarily for the operational benefits, though potentially significant, but in terms of mitigating risks that can suddenly devastate the industry. Risk-based benefits require a different calculation than operational benefits. How should they be amortized?

Quest ion #2: Relative to the appreciation of the Canadian dollar, is there concern that regulatory reform might inadvertently advantage Americans as opposed to Canadians? How can we ensure that the RCC’s approach is working for the benefit of the Canadian economy and community?

Quest ion #3: It’s sufficiently tough to negotiate deals between Canada and the U.S. at the federal level. How do inter-provincial/state issues factor into the work of the RCC?

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As part of the selection process, we avoided choosing issues we knew would lead to prolonged fights, either between Canada and the U.S. or within our respective countries. To some extent we have saved those for another day. For the most part, we have not experienced domestic backlash against the types of actions we have chosen to undertake. I like to think it’s because we’re skilled strategists and implementers, but frankly it’s been, in part, as a consequence of not taking on some of the issues we knew could be controversial and take years to resolve. In certain areas we know the changes will help some and not others. If, through this exercise, momentum develops, credibility grows and progress is made on regulatory alignment, it will make a stronger case for continuing the process and addressing some of the more complex issues in the future.

When the Prime Minister and President established the RCC, the thinking around it was that if the exercise wasn’t making progress, the program could be sunset. The view now is, if it is to be successful, regulatory cooperation will need to continue beyond two years. Otherwise, it will be difficult to achieve the kinds of measures we’ve discussed and avoid falling back into proposing a minimalist fix for a given problem or situation. Canada and the U.S. will make this determination at the end of the term. Our recommendation to move forward will be based on an evaluation of areas where we’ve made tangible progress, evidence of where systemic, ongoing change would be beneficial, and the economic benefits that could be gained from pursuing further initiatives. What form this might take is unclear, but legislative and institutional arrangements would need to be considered in determining how to build these cooperative frameworks. The perception now, is that we’ve started to build momentum. We’ve seen the impact that the executive order has had on the regulatory agencies and we have a willing partner and ally in the central regulatory oversight agency in the U.S. In speaking to the Working Group leads in November, 2011, Cass Sunstein, my U.S. counterpart, invited the agencies to communicate any barriers they saw to greater cooperation with the Canadians. We, in turn, have assisted in thinking, writing papers and pushing the agenda forward. They see it as helping their work and are excited by it. The process is challenging but a few things are working in our favour. There is impetus at the Prime Ministerial and Presidential level to push the streamlining agenda forward. Public interest in the U.S. is greater than we’ve seen in a long time, partly due to the current domestic fiscal climate. Since February, 2011, the RCC has made more progress than the U.S. achieved in longer standing regulatory cooperation efforts with other countries, including Mexico and Europe. The President recently issued an executive order that sets in place regulatory cooperation with additional jurisdictions. Where the U.S. establishes areas of regulatory agreement with the Asian Pacific countries, Mexico or Europe there is an avenue open to Canada to participate in the regulation making process through this executive order. In the regulatory world, Canada is often lumped in with other third party interests. In order to have lasting impact, Canada will need to prove to the U.S., through the RCC exercise, that unlike other countries, it is a special partner, based on our ability to make progress and move forward.

Quest ion #4: Have you detected pushback from the domestic industry, over the process undertaken to date, related to non-tariff barriers and protectionism?    

Question #5: With respect to the RCC’s ambition to both deliver results quickly in order to demonstrate progress while aiming to build something enduring and give life to this exercise beyond the two-year mandate, what distinguishes the RCC from the Free Trade Agreement (FTA), North American Free Trade Agreement (NAFTA), Security and Prosperity Partnership (SPP), Smart Border Declaration, or North American Competitiveness Council (NACC)? How do you foresee making this mandate lasting, given that new legal obligations or institutional arrangements are not part of the plan, or might that be proposed at the end of the two-year period in order to make this process a “game changer”, long term?

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We have asked the agencies to outline in each of their Work Plans expectations for 3-6 months, 6-12 months, 12-18 months, and beyond. We are pushing for early deliverables but some of the more systemic, ongoing change will not be achieved within the first six months. Certain initiatives will take time. We’ve been specific about the time frames we’re expecting without dictating terms. In order to achieve buy-in we worked with the agencies in asking them to define their goals and what they thought was possible to accomplish. We have pushed in instances where we thought something could be addressed sooner. Part of our modus operandi has been to realize some early deliverables and concrete deadlines.

Regulators will report to the RCC internally and a high level report will be produced. It hasn’t been decided whether the report will be made public. We are considering creating further accountability and transparency measures. The stakeholder commitments are public. The RCC website currently displays the initiatives and action items each working group intends to achieve within the various timelines. A dashboard may appear periodically to marry progress against the objectives and remind regulators of their commitments. We think it’s worthwhile to communicate progress, and where things may have slipped a little, indicate the reasons why.

Quest ion #6: Within the two-year mandate is there a reporting timeline for these initiatives? I realize there are different lengths involved in the various action items, but if agencies aren’t told to report back by a certain date won’t the initiatives continue indefinitely?

   

Question #7: In the interest of transparency, will reporting deadlines be made available to the public?

 

 

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Panel on Regulatory Coordinat ion in Agriculture and Food Presenter: Bob Seguin, Executive Director, George Morris Centre The  George Morr is Centre is  a  Canada-wide, not-for-profit charitable organization, founded in 1990. As an independent think tank, the Centre provides industry decision makers with critical information and analysis on issues affecting the Canadian agri-products sector. The Centre's products and services assist public and private sector clients who are adjusting to change, as well as those leading the change. RCC Action Plan and Canadian hort iculture, f lor iculture and greenhouse sectors Regulatory harmonization is important as it relates not only to the flow and efficiency of trade, but to the efficient allocation of resources. If this activity is not done successfully, under-investment in certain areas will continue and will affect the overall efficiency of the economy. There is a need to learn from past efforts at harmonization in order to understand why certain past efforts failed and how best to make current efforts successful. The process outlined by the RCC includes the right measures, but the looming question of how to maintain momentum remains, particularly in a downturned economy. Border Thickening: The Canadian horticulture, floriculture and fresh, processed-food sectors are important to the national and provincial economies. They continue, however, to face many longstanding issues. The floriculture industry faces regulatory misalignment on issues of chrysanthemum white rust, grower certification processes and the importation of bulbs. In 2011, floriculture sales in Canada totaled $1.3-billion, of which $721 million emanated from Ontario. The U.S. represents 98% of the Canadian export market and 45% of Canada’s imports in floriculture. Sales in the greenhouse industry reflect a similar scale and regional impact. The products in both sectors are highly fragile, perishable, and any thickening of the border will limit firm/farm viability. On the horticultural side, similar efforts to engage with industry and support regulatory cooperation measures have occurred in the past. Efforts, including the Perishable Agricultural Commodities Act and Financial Risk Management, have not always been successful. The issue of Financial Risk Management is crucial to the industry. Financial institutions must be engaged in any process on harmonization. Thickening of the border is a critical constraint to firms crossing the border. There is a need for dynamic solutions and practical technological applications. For example, border documentation processes need to move away from requests for “originals” to embrace electronic formats. The lens of Lean Manufacturing should be considered in identifying ways to reduce or replace paper documents for cross-border trade administration. The greatest economic impacts will occur in relation to direct investment. Canada is a small market. When the burden of cross-border sales becomes too great, investment is likely to occur in other markets. This will impact new market growth as well. Even subtle impacts build over time and affect sales in small and large firms. Recommendations • The RCC Action Plan and Work Plan needs to specify measurable results in order to engage industry and ensure

their long-term commitment. • The RCC has made efforts to be transparent, but even greater transparency measures are required to

communicate effectively with producers, retailers and financial institutions/credit unions, that each plays an important role in the industry.

• Regulatory reform needs to be dynamic and responsive to technology. • The impacts of ongoing shifts in the industry must be analyzed when dealing with other international markets, such

as Colombia. • The RCC should consider building a case study around small, entrepreneurial firms in examining how they respond

and adapt to regulatory changes, as regulations will impact firms of various sizes differently.

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Presenter: Nancy Tout, Head Regulatory and Biological Assessment, Syngenta Canada  Syngenta is a global company working in 90 countries. Syngenta is working internally to harmonize its Canadian and U.S. businesses but their goal is global harmonization. In Canada, Syngenta’s Research and Development (R&D) team has 55 full time employees. They are all devoted to navigating the regulatory environment in Canada and its interface with the U.S. market. In essence, the R&D unit is diverted from core R&D innovation to paperwork and overcoming regulatory hurdles. The Regulatory Environment We have only scratched the surface in terms of Canada-U.S. regulatory cooperation. As a member of CropLife Canada, Syngenta has long supported the harmonization goals with the U.S. and activities of Health Canada’s, Pest Management Regulatory Agency (PMRA), which dates back to the 1990s and progressed within the North American Free Trade Agreement, Technical Working Group (NAFTA TWG) on Pesticides, and the Organization for Economic Co-operation and Development (OECD) Working Group on Pesticides. Dwindl ing Resources: Deep federal budget cuts and their impact on the PMRA have some concerned, given that submission numbers have been steadily increasing. PMRA’s budget will have shrunk by over 25% since 2010. As all of their operating expenses are related to human resources, significantly fewer people will be on staff to manage and assess a steady or growing number of submissions in the future. Dupl icat ion: The regulatory system in Canada is highly scientific, complex and resource intensive. It is also duplicative in its efforts. Every attempt should be made to harmonize with major Canadian trading partners, particularly given the increasing globalization of agriculture and crop protection. At present, pesticides must undergo pre-market approvals in each country before any product can be sold. While Canada represents 3-4% of the global market in pesticides, the U.S. represents roughly 30%. Canada, therefore, must have a regulatory system that is efficient and aligned to a great extent with the U.S. Through NAFTA, the pesticides sector has made tremendous strides in harmonization. That success has been exported to the OECD level where data requirements and protocols have been largely aligned. Harmonizat ion Requirements Crop Protect ion: The RCC Joint Action Plan and the four initiatives that relate to Crop Protection Products involve no new concepts, making implementation and execution of the plan relatively straightforward. The RCC initiatives can act as a catalyst for swift movement towards regulatory cooperation between Canada and the U.S. on these issues. Data requirements: Our industry would like to see the elimination of country-specific regulatory differences that can act as a disincentive to new product introductions. For example, significant differences exist between Canada and the U.S. for changing crop protection formulations, adding new Use Site Categories (USC) or new uses. These should be streamlined to be more like the U.S. system. The requirements to make these changes in Canada are much more onerous and require significant evaluation time by the PMRA compared to the much simplified process for making these changes in the U.S. Mixed Results: Coming up with different answers using the same data is a problem and is common in highly scientific areas. Whether determining toxicological endpoints or risk assessment methodology, disagreement among the regulatory scientific community is common. Canada and the U.S. have different approaches to risk assessment that results in R&D teams devoted solely to this task.

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Maximum Residue Limitat ions (MRL): Harmonization of MRL between Canada and the U.S. would signify a “game changer”. Canada and the U.S. should work together to ensure harmonized MRL in order to prevent unnecessary trade disruptions not only between the two countries but globally. Harmonization would facilitate compliance, trade and cross-border movement. This is not about harmonizing safety standards but rather about determining a common methodology for assessing the science that goes into MRL (including definitions of residues and calculation tools). Growers have clearly indicated to Syngenta that unless MRL is harmonized around the world they will not adopt new technologies for fear of rejection at time of export. Regulatory misalignment serves as a disincentive for industry to invest in Canada. Joint Submissions: Many joint submissions and pilot projects have been completed. These actions need to be sustained. An approach should not be localized to a few special projects but rather opened up to Canada and the U.S. working closely on issues (e.g. new uses on labels). Foreign Evaluat ions: In Canada, regulatory submissions require that all foreign evaluations be included in the internal review package and assessment by PMRA. Canada and the U.S. both have strong, sophisticated regulatory regimes. An open, trusted approach is required on the part of Canada, to science emanating from the U.S. Media messaging has played a role in creating a negative association with foreign data and evaluations, and has portrayed cooperation efforts as a lessening of Canada’s standards.

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Presenter: Rory McAlpine,  Vice President Government and Industry Relations, Maple Leaf Foods Inc. Maple Leaf Foods is a leading consumer packaged food company, headquartered in Toronto with operations across Canada and in the United States, United Kingdom, Asia and Mexico. Harmonizat ion in the Meat Sectors In considering regulatory cooperation, it is important to ask three questions: 1. Why is regulatory harmonization relevant and important to the meat sectors in Canada and the U.S.? 2. Where are the current impediments in the system? 3. What would the optimal level of alignment look like? Regulatory cooperation is important simply due to the sheer volume of commercial activity conducted in this sector between Canada and the U.S. The value of trade in beef is greater than $1 billion for shipments from Canada and even greater for U.S. beef entering Canada. In 2011, the value for pork exported from Canada to the U.S. was close to $1 billion, and over $400 million for U.S. pork coming into Canada. These numbers are steadily increasing and represent a significant volume of trade occurring in the North American environment. There is extensive supply chain integration between Canada and the U.S. in value added processing, distribution and retailing, as well as a common science-based approach to food safety, animal disease management, consumer labeling and meat grading. Regulatory Misal ignment: Nonetheless, regulatory disconnects still occur around food safety and non-food safety issues. With respect to food safety, differences occur in approaches to meat hygiene standards, plant licensing and registration requirements, test methods for pathogens and approvals for food safety interventions. Non-food safety issues involve differences in labeling (e.g. claims on labels and definitions of terms like “natural”), standards of identity, and methods of production. Mandatory country of origin labeling represents a large, costly regulatory disconnect. Desirable Regulatory Al ignment: The Canadian Meat Council and American Meat Institute jointly developed a submission for both the Canadian and U.S. governments that was clearly captured in the RCC Work Plan and positively viewed by the industry. The Work Plan includes a pilot to eliminate re-inspection of meat at the border, an alignment of food safety standards and approaches to nomenclature for meat, a commitment to harmonize veterinary drug approval processes, recognition of animal disease zoning decisions and development of electronic export certificates for meat and livestock. Trust in Science: Institutional cooperation and legally binding commitments need to be considered in order to secure positive, long term outcomes. More science needs to be conducted jointly. Implicit in the foundation of a science-based system is that trust is placed in the science brought forward by proponents seeking registration in another jurisdiction. If the science is not trusted and hasn’t been jointly conducted, the likelihood of having the work repeated is introduced, resulting in duplicate efforts. Areas of emerging risk, such as food safety or animal health, need to be tackled together. Domestic Regulatory Reform: Industry is increasingly encouraged, by efforts in Canada toward regulatory simplification (e.g. the Red Tape Reduction Commission; ‘one in, one out’ rule for new regulations; proposed amendments in the Food and Drugs Act, to establish a more rapid approval process for Health Canada; and measures to consolidate commodity legislation under the Canadian Food Inspection Agency). While this legislative and regulatory modernization is not directly related to Canada-U.S. trade, it is fundamental to harmonization. Without a simplified domestic regulatory system, Canada’s ability to harmonize with the U.S. (especially with the new U.S. Food Safety Modernization Act) or achieve mutual recognition of regulatory approvals will be constrained.

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Being Strategic is Important: Canada is one-tenth the size of the U.S. If a company like Maple Leaf Foods decides to pursue an opportunity in the U.S. for which we have to overcome a regulatory barrier, we have ten times the motivation based on the size of the U.S. market opportunity. Conversely, with a par dollar, the small Canadian market is vulnerable. If Canadian regulators are strategic, they can align with some U.S. standards while being careful to take a uniquely Canadian approach where appropriate. The recent unilateral decision on the part of Canada to eliminate container size differences was not part of the Canada-U.S. Action Plan and essentially grants easier access for U.S. food products to the Canadian market with nothing in return. This is not strategic. Such actions bring to light the question of why a “standstill commitment” was not included as part of the RCC negotiations, to prohibit changes to regulatory measures during this period that could upset the balanced – and agreed to – work plans. Communicat ion: At the end of the day, issues of health and safety, and environmental protection are advanced by politicians to meet the demands of consumers or citizens. Therefore, the benefits of harmonized regulations must be communicated back to ordinary individuals. For example, a pesticide regulation that impedes Canadian farmers from adopting a safer, more effective product, that has been available in the U.S. for many years, is bad for Canadian citizens and for businesses; similarly, various food safety interventions provide public health benefits to U.S. citizens years sooner than in Canada. Canadian consumers and businesses both lose in this situation.  

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Agriculture and Food    

Chair: David Sparl ing, Professor and Chair of Agri-Food Innovation, Richard Ivey School of Business

The RCC Process The RCC process to date was discussed, including the Work Plan and Working Groups and their respective departmental leads and co-leads. The RCC is seeking companies to participate in case studies designed to assess the economic impact of differences in regulations and regulatory processes. The goal of the case studies is to identify elements of company cost structures that are impacted by regulatory misalignment. The information, to be gathered by the Secretariat, is intended to inform economic impact assessments, work plans, and recommendations to be implemented by leads and co-leads.

Case Studies: The RCC has begun working with Agriculture and Agri-Food Canada (AAFC) on a new border study that will identify impediments to two-way trade between Canada and the U.S. The study, which will be limited to meat and poultry, will map regulations at various points of the supply chain and help identify where regulations result in costs to companies. Company specific case studies will add clarity around the impacts of regulations on costs, but must seek to address larger questions around compliance, time and other regulatory impacts that can be hard to measure.

Work Plan Goals: Concern was expressed over the scope and ambition of some Work Plans posted to the RCC website, given the tight timelines. The commitment to proceed to a joint approval process for veterinary drugs was held as an example of a clear and desirable goal. Others, especially those related to food safety, were said to lack the same level of ambition. Concern was expressed that lead institutions have become entrenched, thus limiting the potential impact and outcome of the RCC exercise.

Work plans outlined on the RCC website have been posted to solicit input and feedback. Some noted that a 6-month time frame was not sufficient to meet the Work Plan activities. Participants were encouraged to interact with leads and co-leads. Discussion around the proposed financial protection for horticulture producers in Canada highlighted the need to have this topic on the agenda of the FTP meeting planned for September and to ensure that all players are included in discussions (financial institutions, ministries, producers/industry). Speed was noted as a critical factor for this work plan. As the lead agencies move to address implementation challenges (at 12-18 months) there is a need to institute a feedback loop that ensures implementation is practical. Canada-U.S. Regulatory Pr ior i t ies in Agriculture

Maximum Residue Limits (MRL): Harmonization of MRL was considered a “game changer” and identified as a top priority by the group. Syngenta and CropLife Canada agreed to follow up with the RCC and identify additional businesses that might be interested in participating in a case study. The full spectrum of costs associated with the current approach to MRL at the producer, processor and agricultural levels needs to be captured and presented by industry in a unified voice from both sides of the border, with consumer groups and NGOs (e.g. Canadian Cancer Society) included. It was noted that some costs of regulations, though difficult to quantify in a case study, are important to explore, for example, the entry of new firms into the Canadian market and their impact on competitiveness and pricing. The issue was raised as to whether Canada should first set harmonization targets at international level standards (e.g. Codex), and then ensure they are captured in the harmonization of Canada-U.S. regulations. It was suggested that Canada needs to move in the direction of highly integrated North American supply chains to be competitive in international markets.

Re-inspection: This topic relates to all sectors, though the infrastructure around meat inspection is more complex. It is important to understand why the differences in various sectors exist and the reasons for the underlying lack of confidence that leads to re-inspection. The most ambitious goal in this area would entail the creation of a Canada-U.S. Food Inspection Agency with joint standards and common science, using other joint regulatory/oversight bodies as examples. This could be piloted first as joint projects using shared science. A systems approach, such as the one used in the horticulture industry, could serve as a model.

Technology: The exercise of harmonizing regulations must take into account the role of technology as an enabler and as vehicle for streamlining processes.

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Panel on Regulatory Coordinat ion in Transportat ion

Presenter: Ray Haight, Chief Executive Officer, TransRep Inc. TransRep Inc. is dedicated to bringing quality products and services to the transportation industry through sales and marketing strategies. The executive team includes long time industry veterans who have led companies, committees and associations, including the Truckload Carriers Association (TCA) and developed a lifetime of relationships with industry leaders and decision makers as well as government representatives. Regulatory Regime for Cross-border Truckload Operat ions Cross-border truckload operations in North America are defined by a few dominant paradigms. While trade in goods has been liberalized in recent years, trade in transportation services is impacted by non-tariff trade barriers that impede the reliable shipment of goods, while raising the cost of North America’s transportation system. Those working as long-haul, irregular road carriers, the majority of the trucking undertaken in Canada, may haul a load to the southern states and utilize the spot market to search for inbound freight to move trucks home. Striking the right balance for truckloads crossing the border is a large part of company operations. Cabotage Rights: Cabotage in the trucking and transportation industry refers to the point-to-point movement of domestic goods by foreign-based commercial operators. It is illegal for a carrier registered in Canada to move an empty trailer between two points in the U.S. after dropping a load at a U.S. destination. The Bill of Lading must indicate a place in a province or state, to a place in a foreign country (Canada-U.S., U.S.-Canada, U.S.-Mexico). For example, once a load has been delivered to Waco, Texas the driver is restricted from picking up a load in Dayton, Ohio for shipment to Detroit, en route to Canada. The Director of MacKinnon Transport brought trucks home empty on many occasions in order to secure the driver and generate new revenue once home. Conversely, a large volume of American trucks that ship to Toronto, return to Detroit empty and pick up a load once there. Where a repositioning move in the destination city could generate immediate revenue, MacKinnon Transport operated at an 8% empty mile ratio: at 30 million miles per year that equates to 2.4 million empty miles. The company I worked for in Waco, Texas, owned by Redpath Industries, sold their Texas facility. In order to operate the business, Canadian carriers had to find shipments to haul back home. Drivers would travel 400 miles, empty, from Waco, Texas to Little Rock, Arkansas because that was the closest load. They would also use the spot market to bring goods back. Drivers would unload in Waco and drive refrigerator trailers to the Rio Grande Valley, a large source of food products. The spot market either paid well or very little. If the weather was inclement and fruit was not picked that day, the driver would not be returning home. As most Canadian markets lie within 200 miles of the U.S. border, a Canadian truck may travel on average 400 miles in the U.S. to reach the border or another load. Changes in regulatory policy to permit cabotage would signify a “game changer” for the Canadian trucking industry in terms of increasing its profit margin and reducing its carbon footprint. Border Wait Times: The average crossing time for a truck at the Windsor-Detroit border is 1.5 hours compared to 30 minutes, prior to 9/11. Salaries in the trucking industry, particularly for irregular road carriers, are on a cent per mile (cpm) basis. The driver is compensated at a good rate while the truck is moving but when a truck is delayed at the border the driver is typically not paid. The logic on the part of the trucking industry is that the wage per mile will compensate for the wait times. Through the mid 2000’s, our company’s operational goal was to generate $900 per day in revenue per truck. The hour of wait time that could otherwise generate $2.00 per mile at 60 miles per hour equates to $120 in lost revenue and $240 for a cross border return trip. Border wait times signify a great expense to the cost of business. The truckload industry works within a 97.5% operating ratio. For every $1.00, 2.5 cents is generated in revenue. Incremental changes such as one-hour wait times on two days out of a five-day trip lead to driver frustration. The driver is responsible for paperwork associated with the load of freight on the trailer, as well as permits for products requiring oversight by various government bodies. If not in order, the wait times increase.

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The U.S. Federal Motor Carrier Safety Administration (FMCSA) is the governing body that oversees road transit. The Canadian trucking industry relates to this ruling body more than any other because 75% of its transit time is in the U.S. The FMCSA’s proposed rule requiring mandatory Electronic On-Board Recorders (EOBR) for interstate commercial trucks removes the gray area from log-books used to record drivers’ hours-of-service. Data concerning the truck and driver is downloaded into an officer’s hands. Using EOBR’s, there is no leeway. Once the clock starts it is continuous. A lapsed hour in border wait time is an hour gone. Labour Shortage: The average age of the trucking industry’s workforce is over 50 years old. The lifestyle involved in being a long haul, irregular road carrier is difficult. The wage is no longer sufficient to offset the ongoing friction and aggravation experienced by drivers at the border. The looming driver shortage outlined in a 2008 White Paper prepared by the Truckload Carriers Association (TCA) for President Obama’s transition team and presented to the U.S. FMCSA remains unchanged. The public won’t be aware of this until they are unable to find the product they seek at the local market, not because it hadn’t been produced, but because the truck wasn’t able to reach its destination. That time is near and has much to do with border regulations that drivers are forced to deal with. Canada-U.S. Regulatory Dist inct ions The trucking industry must comply with a myriad of existing regulatory requirements as well as a number of new ones coming down the pike. Proposed new rules have the potential to further restrict the industry, raise the cost of operating Canada’s trucking system and the cost of moving goods to the consumer. In-Transit Moves: A submission was made by the Canadian Transportation Association (CTA) to the RCC to harmonize the process for moving domestic “in-transit” goods. In the past, trailers bound for Michigan from Washington state could proceed via Vancouver with simple paperwork and Canadian loads could be driven south of the border en route to their Canadian destination. Since 9/11, cross-border in-transit shipments have become almost prohibitive and are being treated as international shipments by U.S. Customs. The majority of trucks moving between southern Ontario and B.C. pass over the Lakehead in Ontario, adding 280 miles to a trip and increasing their carbon footprint and costs to Canadians for shipped goods. Bi l l of Lading: In Canada a $2.00 per pound fee is excised on the Bill of Lading crossing the border. A different restriction exists for the U.S. Bill of Lading, related to the declared value versus the exposure. Drivers must be educated as to what they are assigning. Boat Tai l Extensions: The U.S. Environmental Protection Agency (EPA) has approved a device called a “boat-tail” – an aerodynamic fairing attached to the back of a tractor-trailer combination that improves fuel efficiency by 6–8%. No standard currently exists in Canada. The application of a common standard will reduce trucking costs and produce environmental benefits as well as ensure the unimpeded flow of vehicles bearing these devices, across the border. Entry-Level Driver Training: The U.S. FMCSA is in the final rule making stages of new legislation that will pass into law, mandated minimum entry-level truck driver training standards. Although the Canadian trucking industry supports the initiative, there is concern that mandating driver licensing through school training programs will impact the funnel of drivers entering the industry. Drivers have traditionally come from rural areas where they’ve operated heavy equipment and can make an easy transition into the industry. Only 50% of Canadian drivers receive school training at present. Minimum Driver Age: In Canada, individuals 18 years of age and older are permitted to drive a commercial truck across the country. Drivers in the U.S. must be over 21 years of age to legally cross state lines with commercial goods. The regulatory discrepancy hurts the Canadian industry, as the majority of Canadian drivers are involved in cross-border trucking. Consequently, young Canadians applying to a trade directly from high school are discouraged from investigating a career in trucking. Those entering the industry are typically in their second career.

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Presenter: Wendell Erb, President and Chief Executive Officer, Erb Transport Ltd. Erb Transport is a service provider that hauls customer goods. The company must comply with one set of regulations for drivers and trucks related to insurance, licensing, sizes and weights for domestic Canadian shipments, and another set of regulations in their role as service providers, managing customers’ cross-border requirements. Canada-U.S. Regulatory Dist inct ions Axle Weights: U.S. regulations tend to govern the truck size and axle weights for cross border loads because they are the lowest common denominator. While Canada permits a maximum vehicle weight of 86,000 lbs for a tandem axle 53’ highway trailer, a maximum gross vehicle weight of 80,000 lbs is permitted in the U.S. The 6000 lb variance in current weight restrictions affects the efficiency of all vehicles entering the U.S. market and increases the price of consumer goods on loads where a trailer reaches maximum weight capacity before the container is full. Additional driver training is required to address the differences in load requirements between the two countries. Hours-of-Service: In 2004, the U.S. instituted an hours-of-service rule change as part of a truck safety regulatory measure. The ruling has caused complication and frustration on the part of Canadian drivers, permitted to drive 13 hours per day in Canada, as compared with 11 hours in the U.S. For example, a driver returning to Buffalo from Philadelphia gains 2 hours of driving time once the truck crosses into Canada. Conversely, border cross delays into the U.S. translate to fewer than 11 driving hours in the U.S., and the potential for an unplanned stop in an out-of-the-way place. In addition, drivers entering the U.S. from Canada must be compliant with U.S. hours-of-service, log book rules at the time they enter the U.S. Driver Regulat ions: The regulatory file for Canadian drivers is relatively thin. Upon crossing the border into the U.S. the driver must comply with a host of additional regulations, whether for drug and alcohol testing or road certification. Of 1,200 employees at Erb Transport, 320 are qualified to drive goods across the border. These drivers have a separate file and undergo specific training on differences between Canada-U.S. regulations. Erb Transport hires roughly 40 drivers each year. The cost of training each new driver, travelling to the U.S., is between $350 and $400 above the cost of training a driver for the domestic market. The cost of updating training for each cross-border driver is an additional $15 to $20 per year. In total, Erb Transport spends roughly $19,000 annually in driver training on regulatory differences involved in cross-border trucking; $14,000 for new hires and $5,000 for updated training to keep drivers current. Based on company figures and a Statistics Canada estimate of the number of new hires in the transportation sector each year, new hire training for cross-border drivers costs approximately $9 million annually. An additional $2 million is spent on updated training courses for existing cross-border drivers. Minimum Driver Age: The average age of Erb Transport’s drivers is 48 years. The national average for truckers is 50 years of age. In Erb Transport’s international division, 7 of the 47 drivers are between 21 to 30 years of age, and 40 drivers are between 55 and 70. Drivers are retiring faster than they’re entering the industry. Requirements for drivers in the U.S. to be 21 years of age before they are eligible to haul goods across state lines, negatively impacts driver intake in Canada. The opportunity to attract drivers at age 18, upon their completion of secondary school, as they are first entering a trade, would attract more new hires whose primary career interest is trucking. Advances in Regulatory Al ignment In the 1980s, each province and state imposed a separate fuel use tax. Drivers would submit their miles and fuel tax receipts quarterly to the relevant province or state and the jurisdiction would issue a decal to be posted on the truck as proof of compliance. The door of a truck that had crossed 48 states would be laden with fuel tax stickers. As well, each province and state audited the trucking companies that conducted business in their respective jurisdiction. In 1997, the International Fuel Tax Agreement (IFTA), that began with a few states, was applied to all provinces and states for the collection and distribution of carriers’ fuel taxes. The IFTA compiles all fuel purchases and miles in one report and serves as a powerful example of how an onerous process can be simplified, while still delivering an important service.

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In 2001, the International Registration Plan (IRP) followed suit to become a bi-national registration reciprocity agreement for the provinces and states. Each jurisdiction determines a base rate for a license plate and depending on the total miles travelled, a pro-rated portion is paid to the province or state. These are two examples of regulatory changes that have been beneficial to the industry. Regulatory Chal lenges Border Faci l i tat ion and Dupl icate Inspection: Initiatives such as the NEXUS card and Free and Secure Trade (FAST) program were established in an effort to expedite the process of hauling customer goods cross-border. The shipper, carrier and driver must each be certified in order to qualify for FAST. A driver with numerous or particular violations is ineligible. Few, if any, companies’ drivers are 100% certified. Certification costs have dropped from $85 to $55 per driver. Regardless, certification doesn’t guarantee a faster border crossing. In the refrigerated trucking business, temperature controlled food products require border inspection by a number of agencies including the U.S. Food and Drug Administration (FDA) and U.S. Department of Agriculture (USDA). Delays occur as a result of inaccurate or incomplete paperwork. Increasingly however, delays are occurring despite paperwork being in order. In one such instance, a shipment of frozen poultry from North Carolina to Ingersol, Ontario took 67 hours to haul the final 3 hour distance. The meat entering Canada was not certified for export at the plant of origin, where it would typically undergo a full export inspection. The load was instead hauled to the Detroit area, arriving on Tuesday afternoon. Considered late for inspection, the Cold Storage facility Export Inspection began Wednesday at 6:00am. The inspection was complete by 4:00pm. The driver crossed into Windsor but was too late for re-inspection. Thursday morning the inspection began, but since the driver’s load was frozen, the samples needed to be defrosted. The samples cleared inspection by 4:00pm. The shipment was delivered to Ingersoll, Friday at 9:00am. In addition to the freight charge, $1,050 was added to the load to compensate for the driver’s detention. In the end, the driver may quit if asked to haul the same load the following week. The load is better hauled by a competitor. Refrigerated trailers cost 3 times more to operate than a dry van trailer. Wait times for duplicate inspections on both sides of the border are built into the customer’s freight transportation charge. The industry should develop North American meat inspection standards and protocols that remove meat inspections from the border and allow a driver to deliver anywhere in North America. Currently federal and provincial-state governments are involved in enforcing meat inspection standards. I would estimate that 75% of items rejected at the border have nothing to do with quality, but relate to incomplete paperwork. Local Prejudices and Interpretat ions: For the most part, an experienced driver is more knowledgeable about the border process than first inspectors at the U.S. border. Many shipments pass through the border improperly as a result of ill-informed border guards. Drivers are frequently told, “Clear and free to go” when various other agents and inspections are required to complete the process. In a recent example, a $15,000 penalty resulted from adhering to a border agent’s misdirect. A load was delivered that was scheduled for a meat inspection. The product was consequently located, returned to the border and destroyed. Cross-border trucking companies have to provide specialized training in order to protect their business. Wait Locat ions: In the past, when a driver experienced a problem at the border, the driver could wait at the border until the problem was resolved. Any more, trucks are no longer accommodated. Border guards send drivers out of the country once a problem is detected. A driver sent back from Detroit will wait in Windsor until the problem is resolved. In an act of reciprocity, Canadian border guards are refusing to allow drivers entering Canada to wait at the Canadian border as well, sending them back to the U.S. until the problem is resolved.

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Transportat ion    

Chair: Dianne Cunningham, Director, Lawrence National Centre for Policy and Management, Richard Ivey School of Business

Four issues were identified in the breakout session as ‘low-hanging fruit’: cabotage rights, in-transit goods movement, boat tail extensions and axle weight limits. Disappointment was expressed that despite efforts by Canadian industry stakeholders, none of these issues, as identified in the CTA’s submission, appeared in the initial Joint Action Plan. Cabotage Rights: The U.S. cited legal precedents and the need for Congressional approval as well as timing during the U.S. electoral year in their decision to defer the issue of cabotage rights. Despite the CTA and ATA having lobbied for liberalized cabotage rules, no forum exists in North America to consider these matters, develop alternative policies or support change to the existing regulations. Axle Weights: The CTA, ATA, Canadian federal government, and FMCSA support the harmonization of Canada-U.S. regulation on axle weight limits. However, many provincial-state governments involved in this issue however, oppose regulatory alignment. Canadian stakeholders twice introduced axle weights for inclusion in the Joint Action Plan, latterly as a consequence of Highway Bill, H.R. 763, introduced in the U.S. House of Representatives. The bill proposes increases to U.S. federal gross vehicle weight limits from 80,000 to 97,000 pounds. The bill has since stalled in the Senate Appropriations Committee. The item was considered too complex for inclusion in the initial Action Plan. Companies can apply for special permits to haul heavy loads between Washington and B.C., and between Michigan and Ontario. If more states institute heavy haul permits, as advocated by the ATA, companies might take advantage of the opportunity, leading to an eventual interest by provincial-state governments in streamlining rules. Bureaucracy: Trucking companies have become the guardian of goods crossing the border. In the past, the shipper was responsible for generating cross border paperwork. The driver would present a Bill of Lading to the border guard and was either cleared immediately or stopped indefinitely. As part of homeland security efforts, Canada and the U.S. require trucking companies to submit paperwork to customs agents and brokers via electronic data interchange (EDI), on behalf of the shipper. The pre-notification system transmits the status of the shipment before the driver leaves the terminal. The trucking company receives a release and attaches the driver’s identification, and that of the tractor and trailer, to the load. Any portion of the load that is problematic is removed prior to the truck heading to the border, enabling the rest of the shipment to cross. Customs ensures the taxes and duties are paid on clients’ products, and the bill is incurred for the customer, as insured by the driver’s bond. For the dispatchers and drivers, the system works as well as ever. The trucking companies however have added tiers of administration to their operations to address the permits, paperwork, data entry and submissions required by government. Fewer problems exist once at the border, but the bureaucracy, in terms of border thickening, has increased. A return to shipper responsibility for border paperwork would remove a layer of administration from the trucking industry without affecting issues addressed by the Department of Homeland Security. Reactive Regulatory Environment: Canadian regulators often react to FMCSA rulings instead of developing rulings in advance of U.S. regulatory changes. Often Canada follows suit on new legislation. Alignment between Canada and the U.S. on auto sector emission standards resulted from the U.S. setting a standard that Canada happened to agree with rather than the countries working symbiotically. Mandatory entry-level driver training, first proposed by the FMCSA in 2007, will be implemented in the U.S., in 2012. Although the Canadian industry supports the initiative, it is not yet instituting similar measures. The FMCSA is in the process of considering legislation to mandate drivers operating commercial vehicles in the U.S. for sleep apnea testing. Present Canadian regulations require only those drivers with a certain body-mass index be tested for sleep apnea. Drivers in the U.S. must submit to a drug and alcohol random sampling program. Although compulsory employee drug and alcohol testing contravenes Section 8 of the Canadian Charter of Rights and Freedoms, certain Canadian trucking companies conducting business in the U.S. circumvent the law and enroll their drivers in a drug and alcohol program in order to comply with U.S. law. On issues where the two countries seem to be moving in a direction, the willingness of Canadian and U.S. regulators to engage in early dialogue would be of economic benefit to the industry, and preferable to discussing the issues once they’ve reached the public domain.

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Data Requirements: In order to build on early successes coming from transportation, agriculture and food and other sectors, and justify the case for moving forward, the RCC requires data to describe the benefits that might accrue from such actions. Qualitative and quantitative data that describe the operational cost of various regulatory differences will help to substantiate the RCC’s claims and establish it long term. An innovative approach to obtaining concrete, micro level numbers will be more useful than comparing gross figures between Canada and the U.S. which can be misleading due to the differences in the economies of scale. Aiming for the perfect estimate can hurt the objective. Even if flawed, an honest attempt can be started.

It is important to consider the numbers against a range of variables that include not only the impact on profit margin, but environment costs. For example, in the truckload industry, cabotage regulations force freight trucks to travel farther, empty. Calculations of empty miles correspond to an exact number in terms of GHG emissions. Although there is no official price on carbon emissions in Canada, a $10 per tonne estimate for carbon dioxide equivalent emissions could be considered. An estimate of empty truck miles has the power to translate into a meaningful story for decision makers and the general public. See Appendix A, Transportation Matrix and Appendix B, Driver Training Matrix.

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 Streamlin ing Canada - U.S. Regulat ions: How Can Business Help? May 29, 2012, 8:30am – 2:00pm Ivey ING Centre, Toronto, Ontario Program Agenda  8:30 – 9:00am Breakfast and Registrat ion

 9:00 – 9:10am Introduction and Welcome

Dianne Cunningham, Director, Lawrence National Centre for Policy and Management 9:10 – 9:30am Presentat ion - Update on the Regulatory Cooperat ion Counci l

Bob Hamilton, Senior Associate Secretary, Treasury Board of Canada Secretariat 9:30 – 9:45am Q & A Session   9:45 – 10:30am Agriculture Panel Discussing Proposed Questions

Session Chair: David Sparling, Professor, Richard Ivey School of Business Presenter: Bob Seguin, Executive Director, George Morris Centre Presenter: Nancy Tout, Head Regulatory & Biological Assessment, Syngenta Presenter: Rory McAlpine, VP Government & Industry Relations, Maple Leaf Foods Inc.

 10:30 – 10:45am Break 10:45 – 11:15am Transportat ion Panel Discussing Proposed Questions

Session Chair: Dianne Cunningham, Director, Lawrence National Centre

Presenter: Ray Haight, CEO, TransRep Inc. Presenter: Wendell Erb, General Manager, Erb Transport Ltd.

11:15 – 1:00pm     Breakout Sessions    1:00 – 1:45pm Report Back and Highl ights from Breakout Sessions 1:45 – 2:00pm   Summary and Concluding Remarks

David Sparling, Professor, Richard Ivey School of Business

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Dianne Cunningham, Director, Lawrence National Centre for Policy and Management, Richard Ivey School of Business Dianne has more than 30 years of experience in education, business and government affairs. She is the former Ontario Minister of Training, Colleges and Universities, Minister of Intergovernmental Affairs, and Minister with Responsibility for Women’s Issues. She chaired the Council of Ministers of Education, Canada, and was the Member of Provincial Parliament for the riding of London North Centre (1988-2003). As the Director of the Lawrence Centre, Cunningham’s extensive knowledge of both government and education strengthens Ivey’s continuing leadership position as one of the world’s top business schools, and builds upon its continuing efforts to further public policy research. She is a member of the National Roundtable on the Environment and the Economy, a member of the Board of Governors of the Canada School of Public Service and Chair of the Ontario Neuro-Trauma Foundation. With a focus on transportation, green energy, and water policy, the Lawrence Centre continues to bridge business strategy with government policy.

Wendell Erb, President and Chief Executive Officer, Erb Transport Ltd.

As the eldest son of Erb Transport founders Vernon and Viola Erb, Wendell Erb has learned the business from the ground up. The company, established in 1959, grew steadily over the years. Wendell joined the organization in 1980 where he began his career in trucking. The day after his 21st. birthday he embarked on a new Erb Transport initiative; Trucking into the U.S.A. After driving across the states for a 15 month period, Wendell entered the office and become the first International Dispatcher for the company. Over the next 17 years the International fleet grew from 5 trucks to over 200; along the way he was promoted to Vice-President of International Operations. In 1999 he was appointed General Manager of the Erb Group of Companies, signaling a successful transition between the generations, as his Father began to step back from daily business. In June 2011, Wendell was named the President and CEO of the Erb Group of Companies. Under Wendell’s guidance the Erb Group has enthusiastically developed modern best practices – bringing fresh

perspective to the ever-present goal of “profitability through superior service”. Today, the business which started with one truck has now become one of the largest family-owned refrigerated trucking companies in Canada, with a distribution network of ten terminals, over 1200 employees and a fleet of more than 700 power units. Wendell is a Board Member of the Erb Group of Companies, the Ontario Trucking Association, the Canadian Trucking Alliance and the OTA Finance Committee. He is also an avid member of the Truckload Carriers Association Benchmarking Group and a participant in many industry forums.

Ray Haight, Chief Executive Officer, TransRep Inc.

Mr. Haight is a second-generation trucker. His parents ran a small four-truck fleet operation that worked for a local shipper into the U.S. market. Ray was a driver and Owner Operator for 10 years, logging over one million accident free miles prior to starting his own company which serviced long haul cross border lanes from Ontario with both dry van and refrigerated equipment. In 1984 Ray and his wife Connie started Southwestern Express Inc. based in London, Ontario, which grew into a successful dry van and refrigerated 50-truck fleet. In 1990 MacKinnon Transport Ltd. became a partner and Southwestern Express moved from London to Guelph, Ontario. In January of 2000 MacKinnon Transport Ltd. and Southwestern Express Inc. were amalgamated. Ray held the Position of President and COO until May of 2005. At that time MacKinnon Transport Inc. was a 275-truck fleet Warehousing and Logistics Company. He currently resides in Lambeth, Ontario where, in addition to his duties as a partner at TransRep Inc, CEO of Haight Consulting Group and Executive

Consultant of NAL Insurance Inc., he lends his energies to many industry related nonprofit associations, most notably as past Chairman of TCA (Truckload Carriers Association).

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Bob Hamilton, Senior Associate Secretary, Treasury Board of Canada Secretariat

Bob Hamilton was appointed Senior Associate Secretary of the Treasury Board in March 2011 and named by the Prime Minister as the Canadian lead on the Canada-U.S. Regulatory Cooperation Council (RCC). The RCC was established by the Prime Minister and President Obama in February 2011 to find ways to better align regulatory systems in the two countries. Bob joined the Tax Policy Branch at the Department of Finance in 1985. He was a member of the team that developed and implemented the Good and Services Tax (GST). Following the introduction of the GST in January 1991, he was appointed Assistant Director of the Business Income Tax Division and Director in1992. Bob was appointed General Director of the Financial Sector Policy Branch in 1995 and the Assistant Deputy Minister of that Branch in 1996. During that time he oversaw the development of policies and legislation to establish the Canada Pension Plan Investment Board and to enhance Canada’s anti-money laundering and terrorist financing regime. Bob was appointed Associate Secretary of the

Treasury Board in August 2008, where he helped advance the public service management agenda and the government’s agenda to make government more efficient through initiatives such as the Web of Rules Action Plan and Strategic Reviews of departments. In January 2009, Bob was appointed Associate Deputy Minister of Environment Canada where he worked on Canada’s environmental policies, including aligning Canadian and U.S. greenhouse gas regulations for the automobile industry. Bob received his Honours B.A. and Master’s degree in Economics from the University of Western Ontario.

Rory McAlpine,  Vice President Government and Industry Relations, Maple Leaf Foods Inc.

Mr. McAlpine has more than 25 years of experience in government, trade and agribusiness. Prior to joining Maple Leaf Foods, he was Deputy Minister of the B.C. Ministry of Agriculture, Food and Fisheries, a position he held from 2002 to 2005. Previously, he obtained significant experience with the Federal Government as Executive Director and Director General, International Trade Policy Directorate; Director Grains and Oilseeds Division; and Deputy Director Multilateral Trade with Agriculture and Agri-Food Canada. He was also the former Executive Director of the National Farm Products Council, and was a Trade Commissioner with the Department of Foreign Affairs and International Trade, with postings in Kuwait, Bangkok, Brussels, Edmonton and Ottawa. Mr. McAlpine is on the boards of the Canadian Meat Council and the Canadian Agri-food Trade Alliance; the advisory boards of the Value Chain Management Centre (George Morris Centre) and Agri-food@Ivey at the Richard Ivey School of Business, and the international affairs committees of the

Canadian Chamber of Commerce and the Canadian Manufacturers and Exporters. Mr. McAlpine holds a Masters degree in Economics from the University of St. Andrews in Scotland.  

Bob Seguin, Executive Director, George Morris Centre

Bob joined the George Morris Centre in January 2010 as executive director. He has a wealth of public sector experience, having worked with the Ontario Ministries of Agriculture, Food and Rural Affairs, and Economic Development and Trade, the Cabinet Office - Intergovernmental Affairs, and Agriculture and Agri-Food Canada. Bob's expertise in economic development and his leadership in designing and implementing public, agricultural and food, and trade policies are of tremendous benefit as he directs the Centre's economic and policy research activities. Bob has also worked with a wide range of agri-products and economic development stakeholders across Ontario and Canada. He holds an Honours Bachelor of Arts Degree in Economics from the University of Toronto, and a Master of Science Degree in Agricultural Economics from the University of Guelph.

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David Sparl ing, Professor and Chair of Agri-Food Innovation and Regulation, Richard Ivey School of Business

Before joining Ivey, in 2009, David Sparling was Associate Dean, Research and Graduate Studies in the College of Management and Economics at the University of Guelph. Previously, he was seconded for two years as Executive Director of the Institute for Agri-Food Policy Innovation. He is also a Senior Associate at the University of Melbourne and has taught at the Australian Graduate School of Management and McMaster University. David has been president of a farming company, a biotechnology start-up and an agri-business insurance company. David has consulted for a wide variety of government and industry organizations and is frequently featured in television, radio and the press.

Nancy Tout,  Head Regulatory and Biological Assessment, Syngenta

Dr. Nancy Tout joined Syngenta in April 1999 working on product registration. She has held several scientific roles, ensuring studies into dietary safety, residues and risk assessments were performed to the highest of scientific standards prior to submission to the regulatory authorities within Health Canada. In May of 2005, she took on additional responsibilities and challenges as Technical Registration Manager in charge of Residue Chemistry to direct food safety studies to support product registration. In 2008, she was promoted to her current position as Head of the Regulatory and Biological Assessment team. Nancy holds a Ph.D. in microbiology and immunology from the University of Guelph and completed post-doctoral training in the Guelph Department of Environmental Biology in methods for the in vitro generation of pesticide-specific antibodies for environmental monitoring.

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Bertrand, El isabeth, Sectoral Lead, Transportation, Regulatory Cooperation Council Secretariat Best, John, Executive Director, Southern Ontario Gateway Council Bryan, Jeff, President, Jeff Bryan Transport Ltd. Casey, Mike, Team Lead, Goods Movement Policy, Ontario Ministry of Transportation Chancey, Glyn, Executive Director, Regulatory Cooperation Council, Treasury Board of Canada Secretariat Cheney, Er in, Research Associate, Richard Ivey School of Business Coates, Lesl ie, Policy Advisor, Lawrence National Centre for Policy and Management Cunningham, Dianne, Director, Lawrence National Centre for Policy and Management Di Emanuele, Ezio, Senior Advisor, Agri-Food Business Development, MNP Erb, Wendel l , General Manager, Erb Transport Ltd. Garner, Hi lary, Business Development Manager, Garner Enterprises Gerold, Ron, Director, Agriculture and Food, Regulatory Cooperation Council Secretariat Gomez, Juan, Director of Policy, Board Secretariat, Toronto Board of Trade Grachnik, Adam, Director of Communications, Food and Consumer Products Canada Gurr, Mike, Senior Policy Analyst, Goods Movement Office, Ontario Ministry of Transportation Haight, Ray, CEO, TransRep Inc. Hamilton, Bob, Senior Associate Secretary, Treasury Board of Canada Secretariat Huisman, Adrian, Regional Director, Ontario Fruit & Vegetable Growers’ Association Matt imoe, Daniel, Senior Program Manager, Campbell Company of Canada McAlpine, Rory, Vice President Government & Industry Relations, Maple Leaf Foods Inc. McCabe, Don, Vice President, Ontario Federation of Agriculture McCorquodale, Catherine, Faculty of Law, Western University McLaughl in, Murray, CEO, Sustainable Chemistry Alliance Muddei, Gibr i l , Director Industrial Biotechnology, BIOTECanada Porteous, Murray, President, Canadian Horticultural Council Renaud, Michel-Antoine, Policy Analyst, Flowers Canada Growers (Ontario) Seeber, Bobby, Senior Policy Advisor, OMAFRA Seguin, Bob, Executive Director, George Morris Centre Si l ls, Michael, Technical Manager, Casco Inc. Snoek, Glen, Marketing and Economic Policy Analyst, Ontario Greenhouse Vegetable Growers Sparl ing, David, Professor and Chair of Agri-food Innovation, Richard Ivey School of Business Surgeoner, Gord, President, Ontario Agri-Food Technologies Thorne, J im, CEO, Marsan Foods Tolton, Chris, Senior Market and Trade Officer, Agriculture and Agri-Food Canada Tout, Nancy, Head Regulatory & Biological Assessment, Syngenta Canada Trainer, Maria, Managing Director, Regulatory Affairs, CropLife Canada Wyl ie, Laura, Markets and Trade Officer, Agriculture and Agri-Food Canada Xu, J ing, Director, Regulatory Cooperation Council Secretariat, Treasury Board of Canada Secretariat

Added Work

Variables Carrier Type Total

Axle Weights Revenue (Payload differential per trip)

Approx. 20% of trucks reach maximum allowable limits before they run out of cube. At 82,000 lbs, a truck will drive north across Canada, instead of taking the shortest route through the U.S. Rail limits are set at 97,000 lbs.

Sub-totalBill of Lading Border delay In Canada, if the declared ACV is not on the BoL, the

default of $2.00/lb is used under $100,00 value. The majority of goods are not declared using ACV.

Sub-totalBoat Tail

ExtensionsFuel efficiency

Sub-totalInspection Time $8,040 Most rejected goods are paperwork related.

Border Facilitation and Inspection Fees

Permits

Local Interpretation

Sub-totalLost revenue Fines are levied for non-compliance (illegal point to

point moves). Drivers may be expected to ignore this regulation as compliance represents a threat to business.

Fuel efficiency

Empty miles / Green House Gas (GHG) emissions

Sub-totalDriver earnings $120 or $240/

return crossingCoupled with Onboard Elecrtric Recorders, prolonged wait times result in lost hours, decreased wages and driver aggravation.

GHG emissions / carbon footprint Carbon footprint amortized @ 3h/return crossing.

Customer payment

Administration

Driver capacity for border waits Many new drivers are from South East Asia. Since 9/11, racial profiling has added to border delays.

Truck wear and tear

Revenue (company profit)

Fuel efficiency (costs)

Sub-totalCycles 70 hrs in 7 days Cycles 70 hrs in 8 days Canadian system allows for a 24 hour gain in

efficiency in cycles.

Driving Shift 13h Driving Shift 11h $240 On board electronic recorders (EOBRs) automatically enforce regulation.

Sub-totalDriving Age Restriction

Driver shortage Canadian graduates will choose trucking as a secondary, not primary, career. 50 year median age.

Sub-totalOther Impending Driver

Shortage

TOTAL

Empty Miles (GHG emissions)

Revenue $1 in revenue = 2.5 cents (granular) profitAxle Weights, BoL, Boat Tail Extensions, Bureaucracy, Cabotage, Crossing Times, Hours of Service, Driving Age Restriction, Drive Shortage, Driver Training

Increased wait times from standard 30 min to 1.5h average for long haul and more for short haul, over 20 years ago

Crossing Times

Driver Capacity (shortage)

Appendix A - Transportation Matrix

Wear and Tear on Truck mile wear & tear/ mile x (# of empty miles) Cabotage, Crossing Times

Cabotage # miles travelled = 1 tonne carbon @ $10 / tonne x total miles

Administration

BoL, Bureaucracy, Cabotage, Crossing Times, Hours of ServiceDriver Earnings (lost wages)

(2.4 million miles) x ($ gas/litre) = lost revenue

Fuel Efficiency Axle Weights, Boat Tail Extensions, Cabotage, Crossing Times Boat Tail Extentions = Greater efficiency/heavier load and 6% fuel efficiency if driving over 55mph / 100m

Minimum 18 years of age to obtain a Class A/Z Licence and operate a Commercial Motor Vehicle (CMV) across Canada

Minimum 21 years of age to obtain a Commercial Driver's License (CDL), A-Z equivalent, and operate a CMV across state lines

Median age of 50 Coupled with EOBRs, prolonged wait times result in lost hours, decreased wages, driver aggravation and shortages.

Hours of Service

2h @ $2.00 / mile @ 60mph / day

1 tonne carbon @ $25.00 / tonne x 3hrs

1 tonne carbon (@ $25.00 / tonne) x (# of empty miles)

30 million miles / year @ 8% empty mile ratio = 2.4 million miles x $ average haul rate = lost revenue

Adhering to Inspection Guard misdirective when shipment is not "All clear’ Fines @ $15,000 / missed meat inspection.

Extensive application of permits, i.e. noodles

Causes delays, time, money on both sides a 1 time, 3h crossing can become 67h in passing routine inspection

CTA proposed to RTC to increase boat tail extensions, to remove 6% of drag over 55 mph

Not allowed in all jurisdictions 6% drag over 55mph / 100m =

$2.00 / lb rule on the Bill of Lading (BoL) under $100,000 or declared Actual Cash Value (ACV)

Declared ACV only A BoL for goods entering Canada from the U.S. with no written declared ACV can lead to border delays of

several hours.

Calculation

86,000 lbs Gross Vehicle Weight (GVW)

80,000 lbs GVW (6000 lbs differential/trip) x (# of trips) =

Duplicate Inspection / Screening

Bureaucracy

Company: X Regulations Added Annual Cost Cost to Industry (Annually)

Canadian Regulations U.S. Regulations

Empty Trailers / FreightCabotage Legislation in Canada and the U.S. makes illegal point to point moves (the act of drivers repositioning an empty trailer or hauling freight) in each other’s countries after a load has been delivered

BoL, Bureaucracy (Duplicate Inspection, Fees), Permits

Bureaucracy, Cabotage, Crossing Times, Hours of Service, Driving Age Restriction

Variables - Elements of the cost structure that could be impacted by alignment.

1h @ $2.00 / mile @ 60mph / crossing $120 x 28,000 trucks/day = $3,360,000 / crossing

Added Work

New Hire Updated Training

Steer Axle 12,000 lbs Steer Axle 12,000 lbs

Tandem Axles 39,688 lbs Tandem Axles 34,000 lbs

Tandem Axles 39,688 lbs Tandem Axles 34,000 lbs

40 drivers @ $75/test $3,000 1 time fee

320 drivers @ 15 min = 80hrs @ $35/h

$2,800 Annual form to complete

413 (additional) forms/required for the U.S.

320 drivers @ 16h / year $560 Maintaining current copy

682,000 employed in Transportation & Warehousing / 400,000 in road transportation100, 000 drivers (25%) are qualified to drive in the U.S.

320 drivers @ $3.09 /month $988.80

Cycles 70 hrs in 7 days Cycles 70 hrs in 8 days New hire training

Driving Shift 13h Driving Shift 11h New hire training

On Duty Shift 14h On Duty Shift 14h

Required Off Duty

10h Required Off Duty

10h

40 drivers @ 5h = 200h @ $35/hr $7,000 One extra day, less HOS training, and Weights & Dimensions training

16h $560 Passport / FAST Card Maintenance

40 in 2011 x $355 / driver over training costs / domestic driver

$14,200.00 $15.34 / driver over training costs / domestic driver

$4,908.80 $9,000,000 $2,000,000

Company: Erb Transport Regulations Added Annual Cost Cost to Industry (Annually)

Canadian Regulations U.S. Regulations Annual New Hire Training Time & Cost (40 in 2011)

Annual U.S. Qualified Drivers Training Time & Cost (320 in 2011)

$700

Certificate of Road Test

Certificate of Violations

682,000 employed in Transportation & Warehousing, 400,000 in road transportation

Pre-Employment Drug Testing

Certificate of Compliance 40 drivers @ 30 min = 20h @ $35/h $700

40 drivers @ 30 min = 20h @ $35/h

Completed Drug & Alcohol

Copy of Driver’s Licence Copy of Driver’s Licence (Current)

Copy of Driver’s Licence Abstract Copy of Driver’s Licence Abstract

Driver Application Driver Application

Employee Drug & Alcohol Statement

Pre-Hire Reference Checks

Random Drug Testing

40 drivers @ 2 hrs = 80h @ $35/h $2,800

Regular Orientation Additional Orientation for U.S. Quaified Drivers

Cross Border Documentation

Appendix B - Driver Testing and Training Matrix

Axle Weights

Pre-Employment Drug Testing

Driver File - Min Requirements

Driver Hours of Service

Training - General

TOTAL