Vol. 148, No. 4 — February 12, 2014

Registration

SOR/2014-8 January 29, 2014

CONSUMER PACKAGING AND LABELLING ACT

Regulations Amending the Consumer Packaging and Labelling Regulations

P.C. 2014-18 January 28, 2014

Whereas, pursuant to section 19 of the Consumer Packaging and Labelling Act (see footnote a), a copy of the proposed amendments to the Consumer Packaging and Labelling Regulations, substantially in the form set out in the annexed Regulations, was published in the Canada Gazette, Part I, on June 15, 2013 and a reasonable opportunity was afforded to consumers, dealers and other interested persons to make representations with respect to them;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to subsection 18(1) of the Consumer Packaging and Labelling Act (see footnote b), makes the annexed Regulations Amending the Consumer Packaging and Labelling Regulations.

REGULATIONS AMENDING THE CONSUMER PACKAGING AND LABELLING REGULATIONS

AMENDMENTS

1. (1) The definition “principal display surface” in subsection 2(1) of the Consumer Packaging and Labelling Regulations (see footnote 1) is amended by striking out “and” at the end of paragraph (e), by adding “and” at the end of paragraph (f) and by adding the following after paragraph (f):

• (g) despite paragraphs (a) to (f) of this definition, in the case of a container of wine in which the wine is displayed for sale to consumers, any part of the surface of the container, excluding its top and bottom, that can be seen without having to turn the container; (principale surface exposée)

(2) Subsection 2(1) of the Regulations is amended by adding the following in alphabetical order:

“wine” is an alcoholic beverage that meets the standard for wine set out in section B.02.100 of the Food and Drug Regulations.

2. Section 14 of the Regulations is amended by adding the following after subsection (4):

(5) Despite subsections (2) to (4), in the case of the label on a 750 millilitre container, no taller than 360 millimetres, in which wine is displayed for sale to consumers, the declaration of net quantity may be shown in letters of not less than 3.3 millimetres in height.

COMING INTO FORCE

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

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Executive summary

Background

Canada is a founding member of the World Wine Trade Group (WWTG), a group of eight new world wine producers including Argentina, Australia, Canada, Chile, Georgia, New Zealand, South Africa and the United States who are working towards harmonizing wine regulations in order to promote wine trade. With this in mind, in 2007, Canada signed the WWTG Agreement on Requirements for Wine Labelling (the “Agreement”) which promotes harmonization of wine labelling practices among participating countries. This Agreement is a positive force for the Canadian wine sector, as it is anticipated that the Agreement can help sustain current markets.

The Agreement stipulates that only wine made exclusively from grapes that have been naturally frozen on the vine may be labelled as icewine. For Canada, icewine is the main wine export in terms of dollar value. It provides 45% of Canada’s wine export revenue while consisting of only 1.2% of Canada’s wine export volume. Canadian exports of icewine reached $13.4 million in 2011. Over 85% of Canadian icewine exports are from Ontario, followed by British Columbia (8.5%), Quebec (4.5%) and Nova Scotia (0.5%).

Canadian icewine, as a high quality luxury product, is expensive because the production process makes it risky to make. The risks lie, for the most part, in the fact that grapes can be destroyed by birds, animals and the weather as they are on the vine after their usual harvest time. The icewine industry has requested that the Government of Canada support them through domestic regulations and international agreements. Canada has already demonstrated its support by successfully negotiating the inclusion of an icewine standard in the Agreement, stipulating that icewine is wine made exclusively from grapes naturally frozen on the vine, and signing the Agreement on January 23, 2007. The inclusion of an icewine standard in Canada’s regulatory framework assists in keeping icewine not meeting the national standard out of the domestic market as well as in demonstrating to our trading partners that icewine produced in Canada meets a national standard.

Issues

In order for Canada to be in a position to ratify the Agreement, changes to Canada’s regulatory framework relating to wine labelling were required, as was the introduction of a national icewine standard.

Objectives

The objective of these regulatory amendments is to place Canada in a position to ratify the Agreement. By having a national icewine standard in regulations, more protection will be afforded to Canadian icewine producers seeking international collaboration to stop the sale of counterfeit icewine. Amending the relevant regulations to allow SFV and other minor changes allows better harmonization of wine labelling requirements between Canada and some of its major trading partners in the WWTG.

Description

In order to be in a position to ratify the Agreement, Canada is implementing three regulatory initiatives:

1. Creating a Standard of Identity for icewine with a determination as such by a provincial entity, as new regulations under the Canada Agricultural Products Act (CAPA).
2. Allowing for Single Field of Vision (SFV) labelling for mandatory information on wine containers in the Consumer Packaging and Labelling Regulations (CPLR).
3. Making minor text amendments to the Food and Drug Regulations (FDR) and the CPLR to harmonize their provisions with the Agreement.

The standard of identity for icewine and the other amendments will come into force upon registration.

1. Icewine

To support the Agreement, the Government of Canada, in consultation with the provinces, territories, provincial liquor authorities and Canadian wine associations, has developed a standard of identity for icewine to be in regulation under CAPA, i.e. icewine is only wine made exclusively from grapes naturally frozen on the vine. By having domestic legislation that defines icewine, Canada is better able to control icewine labelling in Canada and have the regulatory reference when seeking collaboration from WWTG countries in stopping the sale of icewine not meeting the Agreement.

2. Single Field of Vision (SFV)

By signing the Agreement, Canada indicated its support for allowing the placement of common mandatory information (country of origin, product name, net contents, and alcohol content) anywhere on a wine container, excluding the top and bottom, provided it can be seen without having to turn the container. This was inconsistent with Canadian regulations, which required that this information be displayed on the principal display panel on the front of the bottle. Regulatory amendments are required to allow SFV labelling for wine containers. It should be noted that all previously compliant wine labels meet the requirements.

3. Other regulatory amendments

In order to ratify the Agreement, minor changes to the FDR and CPLR were made as well.

These changes include

• a change to allow a particular type size to be used on a very specific size of bottle;
• an allowance for the use of abbreviations in the alcohol content declaration; and
• a definition of wine in the CPLR needed for the wording of the Single Field of Vision (SFV) exemption.

These changes are expected to have no impact on industry practices or on Government compliance verification activities.

Regulatory and non-regulatory options considered

Canada has signed the Agreement. The Agreement requires that parties allow required information to be displayed on wine bottles in the SFV format and that they permit imported or domestically produced wine to be labelled as icewine only if it was made exclusively from grapes naturally frozen on the vine. These requirements can only be met through regulation.

Benefits and costs

Costs

The amendments related to the icewine standard require that wine labelled as icewine be made exclusively from grapes naturally frozen on the vine, and determined as such by a provincial entity.

Prior to implementation of these regulations, there was no federal standard for icewine. More than 95% of the icewine produced in Canada is from Ontario, British Columbia and Nova Scotia. These provinces have all established regulatory frameworks governing their wine quality systems that include a provincial icewine standard. Producers of icewine in these provinces are not expected to incur any costs related to the implementation of this regulatory amendment.

At this time, Quebec does not have a mandatory provincial regulatory framework governing icewine production, although a voluntary framework with a certification body does exist. It is estimated that there are 22 Quebec icewine producers. According to the Quebec certification body, as of October 2012, 16 of the 22 Quebec icewine producers are already participating in a voluntary certification program and will not incur additional administrative costs due to the regulations. They will also not incur additional cost to comply with the national icewine standard.

Quebec is currently working on introducing a reserved designation (Quebec icewine) with which icewine producers will have to comply. The six producers who are not yet participating in the certification program would incur additional administrative costs in order to comply with the icewine regulations. Quebec producers will incur some incremental administrative costs. It is expected that the incremental administrative costs per winery in Quebec to obtain certification would be approximately $1,050, with $550 per year paid to the certification body, and an additional $500 paid by the winery for an agronomist to inspect the vineyard. The total estimated costs potentially imposed on Quebec icewine producers will be $3,758 annualized and $26,392 in present value. Any icewine producers in Canada who choose not to meet the standard will have to re-brand their products, labelling them as “dessert wine,” for example.

The enforcement of the regulatory amendments is not expected to have additional costs for, or increase the enforcement costs to, the CFIA. It is expected that current resource levels at the CFIA will be sufficient to properly enforce the new regulatory requirements.

Benefits

If Canada ratifies the Agreement, the participating countries will permit wine to be labelled as icewine only if it meets the definition included in the Agreement, namely wine made exclusively from grapes naturally frozen on the vine. This requirement would prevent sales of wine labelled as icewine not meeting the definition in their respective markets.

Canada is a global leader in icewine production. With the national icewine standard, Canada will provide a regulatory reference when seeking international collaboration in controlling the growing sales of counterfeit icewine. Should the Agreement be ratified, some of the import requirements amongst Canada’s trading partners will be eliminated and trading of wine and icewine products with participating countries will be facilitated.

Canadian icewine producers and exporters are facing challenges arising from the counterfeit Canadian icewine in other countries. According to the Canadian Anti-Counterfeiting Network (2007), Canadian icewine producers estimated that legitimate sales have dropped by more than 50% in some markets because of counterfeit icewine. The anticipated reduction in the sale of counterfeit icewine in WWTG participating countries is considered as another potential benefit of the regulatory initiatives.

Allowing for SFV labelling on wine and icewine containers will provide a consistent and harmonized set of requirements for labelling and will facilitate trade among WWTG participants. Wine exporters will be able to sell wine to trade partners without having to redesign their labels for each individual market. The elimination of some of the import requirements and a consistent labelling system among participating countries of the WWTG will result in lower labelling costs to Canadian wine and icewine importers in the future.

Cost-benefit statement (see reference 2)

		Implementation Year (2014)	Final Year (2023)	Total (PV) (see reference 3)	Annualized Average (see reference 4)
A. Quantified impacts (in 2012 constant dollars)
Benefits	By stakeholder	N/A	N/A	N/A	N/A
Costs	Quebec icewine producers	$4,302	$2,187	$26,392	$3,758
Net benefits
B. Quantified impacts in non-$ (e.g. from a risk assessment)
Positive impacts	By stakeholder	N/A	N/A	N/A	N/A
Negative impacts	By stakeholder	N/A	N/A	N/A	N/A
C. Qualitative impacts
Short list of qualitative impacts (positive and negative) by stakeholder Positive impacts: To Canadian wineries 1. Facilitation of wine and icewine products trade with WWTG participating countries. 2. Canada will be able to uphold its international icewine reputation and enhance the image of Canadian icewine as a high quality and luxury product. 3. Elimination of some of the import requirements among Canada’s trading partners, resulting in lower labelling costs to Canadian wine and icewine importers in the future. 4. Prevent counterfeit icewine from entering the Canadian market. 5. A Canadian icewine standard established in law could also be used to support Canada’s negotiation position in future icewine-related trade negotiations. 6. Provide regulatory reference when seeking international collaboration to stop the sale of counterfeit icewine. 7. For countries not participating in the WWTG, the icewine standard could be used as an educational tool to increase consumers’ awareness of Canadian icewine’s standard. To Canadian icewine consumers 1. With a better knowledge of Canadian icewine, consumers may be more willing to buy these types of icewine products. 2. Increased consumer confidence in Canadian icewine. To government and provincial authorities 1. Allows the Government of Canada to proceed with the ratification of the Agreement. 2. Harmonization of labelling requirements for wine and icewine among provinces could facilitate enforcement by the Government and provincial wine authorities.
Notes: (Reference 2) The time period for the regulatory impact analysis of the regulatory amendment is 10 years with the implementation year of 2014 and the final year of 2023. (Reference 3) The present value and annualized value of the impact is calculated using a 7% discount rate. (Reference 4) The results are derived using the Treasury Board Secretariat (TBS) Regulatory Costs Calculator.

Assumptions adopted in the cost estimation:

• There are 22 Quebec icewine producers.
• One Quebec icewine producer had been confirmed to meet the proposed icewine standard.
• The remaining 21 Quebec icewine producers will produce their icewine products at no increased compliance cost after the regulations come into force.
• Sixteen of the 22 Quebec icewine producers are already participating in the voluntary certification program and will not incur additional administrative cost with the regulations. The other 6 Quebec icewine producers will apply for certification.
• All 22 Quebec icewine producers will continue to produce and sell icewine rather than re-brand their icewine products.
• As part of the certification process, the inspection of the vineyard is done every three years.
• It would take about one hour for an agronomist to inspect the vineyard.
• All icewine producers in Quebec are assumed to be small in size.

“One-for-One” Rule

The “One-for-One” Rule applies to these regulatory amendments. They will add a small amount of administrative burden, and will therefore be considered an “in.”

The incremental administrative costs will occur annually in the case of the certification fee and once every three years in the case of the inspection cost for Quebec icewine producers. The regulatory impact is analyzed over the 10-year analytical horizon starting from the first year of the implementation of the regulatory amendments using the 7% discount rate.

The present value of the incremental administrative costs to Quebec icewine producers generated from the option is estimated at $3,758 and $171 as annualized average administrative costs per business. The cost estimates also represented the total incremental costs to the Quebec icewine industry as a result of the regulations.

Small business lens

The majority of icewine producers are small businesses. Over 95% of Canada’s wineries that are producing icewine are already determined as such by a provincial entity. This includes producers in Ontario, British Columbia and Nova Scotia. Therefore, there will be no incremental compliance and administrative costs for icewine producers in those three provinces as a result of the implementation of the regulations.

Sixteen of the 22 Quebec icewine producers are also already participating in a voluntary certification program and will not incur additional compliance and administrative costs with the regulations. Six Quebec icewine producers will be impacted, asthey are not participating in the voluntary provincial certification program associated with administrative costs.

To minimize the costs for small businesses, CFIA has considered a flexible option: not making regulations creating a standard for icewine and not requiring certification. With this option, icewine producers not currently under a certification system would be able to continue labelling their wine as icewine, without certification costs or administrative costs.

However, this flexible option would prevent Canada from ratifying the Agreement and hence prevent the entire Canadian wine and icewine industry from benefiting from the trade advantages provided by the Agreement. The preferred option is, therefore, the initial option.

	Initial Option		Flexible Option
Short description	Regulations require grapes to be naturally frozen on the vine and a determination as such by a provincial entity.		Regulations do not create a standard for icewine and do not require certification.
Number of small businesses impacted	22		22
Value	Annualized Average ($)	Present Value (see reference 5) ($)	Annualized Average ($)	Present Value (see reference 6) ($)
Compliance costs (potential foregone revenue)	0	0	0	0
Administrative costs (certification and inspection fee)	3,758	26,392	0	0
Total costs (all small businesses)	3,758	26,392	0	0
Total cost per small business	171	171	0	0
Risk considerations

(Reference 5)
The time period for the regulatory impact analysis of the proposed regulatory amendment is 10 years with the implementation year of 2014 and the final year of 2023.

(Reference 6)
The time period for the regulatory impact analysis of the proposed regulatory amendment is 10 years with the implementation year of 2014 and the final year of 2023.

The above small business lens (SBL) analysis has enabled CFIA to determine that the SBL does not apply.

Consultation

Before prepublication in the Canada Gazette, Part I, the CFIA engaged in online consultations with stakeholders on the proposed regulatory amendments in January and February 2012. The consultations generated 239 responses from across Canada, as well as some responses from international wine organizations. Responses were received from consumers (31), wineries (42), wine-making and agricultural associations (10), local development centres (4), tourism associations (2), liquor authorities (3), members of Parliament (4), members of the National Assembly (1), municipalities (1) and an email campaign (141).

At the time, results of that consultation indicated a geographic difference in concerns and opinions with respect to the wording of the proposed icewine definition. Consumer responses from Quebec indicated that the Quebec method of production should be accommodated. Of 15 responses from Quebec wineries, 14 supported an icewine standard that included the Quebec method of production, while the 27 responses from wineries outside Quebec supported the proposed definition.

The Consumer Association Roundtable expressed concerns regarding the potential impacts of the labelling changes on legibility.

In November 2012, consultations with Quebec representatives indicated that they could meet the icewine definition. It was also acknowledged that a provincial system was being established to ensure product integrity.

In February 2013, the CFIA undertook further consultations with provincial authorities of British Columbia, Ontario and Nova Scotia. British Columbia and Ontario indicated they were supportive of the icewine definition. British Columbia and Ontario communicated that there is a provincial regulatory entity in place that oversees the production of icewine (BC Wine Authority and VQA Ontario). Nova Scotia has the authority to create such an entity.

The proposed regulations were prepublished on June 15, 2013, in the Canada Gazette, Part I, for a public comment period of 75 days.

Nineteen comments were received regarding the definition of icewine. Stakeholders indicated their support for the addition of this icewine standard in federal regulation. In many instances, the support for the inclusion of the icewine standard was accompanied by a condition which stated that it should be in line with either the standard established by the Vintners Quality Alliance of Canada or be inclusive of the method of production in Quebec. However, as per the consultations, the Government of Canada recognized regional differences in climatic and agricultural conditions in Canada. As a result, the icewine standard was designed to provide flexibility in meeting the intent of the definition. The determination that the product is “wine made exclusively from grapes naturally frozen on the vine” will be made by the entity acting under the authority of the province.

Only one comment was received regarding the SFV and other minor regulatory amendments, and it was fully supportive.

Regulatory cooperation

The Agreement promotes harmonization of wine labelling practices within Canada as well as amongst the WWTG participating countries including Argentina, Australia, Chile, Georgia, New Zealand, South Africa and the United States.

Rationale

These regulations and, if ratified, the Agreement will facilitate trade between Canada and participating WWTG countries, and assist authorities when seeking international collaboration in controlling the sale of counterfeit icewine. The potential benefits of these regulations and the proposed ratification of the Agreement for the Canadian wine industry would outweigh the costs.

Implementation, enforcement and service standards

The standard of identity for icewine and the other amendments will come into force upon registration.

Contact

Rola Yehia
Acting National Manager
Consumer Protection Division
Canadian Food Inspection Agency
1400 Merivale Road
Ottawa, Ontario
K1A 0Y9
Telephone: 613-773-5476
Fax: 613-773-5603
Email: Rola.Yehia@inspection.gc.ca

Small Business Lens Checklist

1. Name of the sponsoring regulatory organization:

2. Title of the regulatory proposal:

3. Is the checklist submitted with a RIAS for the Canada Gazette, Part I or Part II?

A. Small business regulatory design

I	Communication and transparency	Yes	No	N/A
1.	Are the proposed regulations or requirements easily understandable in everyday language?
2.	Is there a clear connection between the requirements and the purpose (or intent) of the proposed regulations?
3.	Will there be an implementation plan that includes communications and compliance promotion activities, that informs small business of a regulatory change and guides them on how to comply with it (e.g. information sessions, sample assessments, toolkits, Web sites)?
4.	If new forms, reports or processes are introduced, are they consistent in appearance and format with other relevant government forms, reports or processes?
II	Simplification and streamlining	Yes	No	N/A
1.	Will streamlined processes be put in place (e.g. through BizPaL, Canada Border Services Agency single window) to collect information from small businesses where possible?
2.	Have opportunities to align with other obligations imposed on business by federal, provincial, municipal or international or multinational regulatory bodies been assessed?
3.	Has the impact of the proposed regulations on international or interprovincial trade been assessed?
4.	If the data or information, other than personal information, required to comply with the proposed regulations is already collected by another department or jurisdiction, will this information be obtained from that department or jurisdiction instead of requesting the same information from small businesses or other stakeholders? (The collection, retention, use, disclosure and disposal of personal information are all subject to the requirements of the Privacy Act. Any questions with respect to compliance with the Privacy Act should be referred to the department’s or agency’s ATIP office or legal services unit.)
5.	Will forms be pre-populated with information or data already available to the department to reduce the time and cost necessary to complete them? (Example: When a business completes an online application for a licence, upon entering an identifier or a name, the system pre-populates the application with the applicant’s personal particulars such as contact information, date, etc. when that information is already available to the department.)
6.	Will electronic reporting and data collection be used, including electronic validation and confirmation of receipt of reports where appropriate?
7.	Will reporting, if required by the proposed regulations, be aligned with generally used business processes or international standards if possible?
8.	If additional forms are required, can they be streamlined with existing forms that must be completed for other government information requirements?
III	Implementation, compliance and service standards	Yes	No	N/A
1.	Has consideration been given to small businesses in remote areas, with special consideration to those that do not have access to high-speed (broadband) Internet?
2.	If regulatory authorizations (e.g. licences, permits or certifications) are introduced, will service standards addressing timeliness of decision making be developed that are inclusive of complaints about poor service?
3.	Is there a clearly identified contact point or help desk for small businesses and other stakeholders?

B. Regulatory flexibility analysis and reverse onus

IV	Regulatory flexibility analysis	Yes	No	N/A
1.	Does the RIAS identify at least one flexible option that has lower compliance or administrative costs for small businesses in the small business lens section? Examples of flexible options to minimize costs are as follows: Longer time periods to comply with the requirements, longer transition periods or temporary exemptions; Performance-based standards; Partial or complete exemptions from compliance, especially for firms that have good track records (legal advice should be sought when considering such an option); Reduced compliance costs; Reduced fees or other charges or penalties; Use of market incentives; A range of options to comply with requirements, including lower-cost options; Simplified and less frequent reporting obligations and inspections; and Licences granted on a permanent basis or renewed less frequently.
2.	Does the RIAS include, as part of the Regulatory Flexibility Analysis Statement, quantified and monetized compliance and administrative costs for small businesses associated with the initial option assessed, as well as the flexible, lower-cost option? Use the Regulatory Cost Calculator to quantify and monetize administrative and compliance costs and include the completed calculator in your submission to TBS-RAS.
3.	Does the RIAS include, as part of the Regulatory Flexibility Analysis Statement, a consideration of the risks associated with the flexible option? (Minimizing administrative or compliance costs for small business cannot be at the expense of greater health, security or safety or create environmental risks for Canadians.)
4.	Does the RIAS include a summary of feedback provided by small business during consultations?
V	Reverse onus	Yes	No	N/A
1.	If the recommended option is not the lower-cost option for small business in terms of administrative or compliance costs, is a reasonable justification provided in the RIAS?

• Footnote a
  R.S., c. C-38
• Footnote b
  R.S., c. C-38
• Footnote 1
  C.R.C., c. 417