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The Canada Consumer Product Safety Act ("CCPSA")

Presented at: Trade Representatives Seminar – TFO Canada

October 20, 2011

Presented by: Ms. Laura MurrayAssociate, International Trade and Investment Group at Bennett Jones LLPOne First Canadian Place, 34th FloorToronto, Ontario, Canadamurrayl@bennettjones.comTel: 416-777-5395

Outline

1. Overview of the CCPSA

2. Prohibitions

3. Reporting Obligations

4. Record Keeping Obligations

5. Enforcement Powers

6. Shifting Liability to Foreign Exporters

7. Compliance Strategy Checklist

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Overview of the CCPSA

The CCPSA came into force on June 20, 2011

Key Objective - strengthen laws to better protect the health and safety of Canadians

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Overview of the CCPSA

Applies to "consumer products" (e.g., toys, apparel, and furniture)

Products regulated under other legislative schemes (e.g., food) are exempt

Applies to Canadian manufacturers, sellers, advertisers, and importers, but will also have implications for foreign exporters

Key Changes

Prohibition on unsafe and potentially unsafe products

Prohibition on misleading advertising

Reporting and record keeping obligations

Mandatory recalls, increased fines, and penalties

Existing prohibitions under the Hazardous Products Act (“HPA”) will continue

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Prohibitions Prohibition against the manufacture, importation, advertisement or

sale of consumer products that pose an unreasonable danger to human health or safety

Prohibition on false and misleading packaging, labelling or advertising in connection with claims relating to the safety of a consumer product

Proposed Exemption Regulations – allow non-compliant products to enter into the market if the product will not be sold to general public Products exported to Canada for exhibition and participation in trade shows Products brought into compliance after entry into Canada Products exported to Canada for further manufacturing and subsequent

re-export

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Record Keeping Obligations Mandatory Record Keeping: Manufacturers, importers, and sellers must maintain accurate records of their product sources and customers

Required Information:Name and address of supplier from whom they obtained the productsInformation on where and to whom products are sold

Implications for Foreign Exporters: Canadian Government will be able to trace products back to foreign

exporters so that unsafe or recalled products can be stopped and/or refused entry at the border Canadian importers may impose corresponding record keeping

obligations on their foreign suppliers

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Reporting Obligations Mandatory Reporting: Manufacturers, importers, and sellers must report incidents and defects involving their products that are sold in Canada

What must be reported? Death or serious adverse effects on health (illness or injury) Defects that may reasonably be expected to result in death or serious adverse effects on

health Incorrect or insufficient information on label or instructions that may reasonably be expected

to result in death or serious adverse effects on health Product recalls initiated in another jurisdiction

What will be the timeframes for reporting? Two days: must report within two days after becoming aware of an incident or defect Ten days: must provide a written report within 10 days after becoming aware

of an incident or defect

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Reporting Obligations What information must be reported?

Within two days: all information available

Within 10 days: more detailed information

Number of people affected and details of any injuries

Product serial and model numbers

Information on dates of sale, importation, and distribution

A risk assessment and proposed corrective measures

What are the implications for foreign exporters?

Canadian importers/purchasers will facilitate their own compliance by requiring foreign exporters to report and maintain detailed records on all product defects and health and safety incidents involving their products

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Enforcement Powers

Mandatory Recalls for Unsafe Products

Ministerial Orders for Test/Study Results

Administrative Monetary Penalties for Non-Compliance

Penalties based on gravity of violation, ranging from $1,000 to $25,000

Each day is considered a new violation

Criminal Prosecutions

Inspection Powers, Seizure, and Detention

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Shifting Responsibility and Liability to Foreign Exporters

Canadian importers will respond to the CCPSA by insisting on contractual conditions that shift responsibility and liability up supply chain to foreign exporters

Canadian importers may impose contractual conditions requiring foreign suppliers to:

share in the costs of monetary penalties, legal fees, and/or administrative costs associated with having the goods inspected and/or refused entry at the Canadian border

compensate importers for lost profits associated with re-exporting banned merchandise

conduct product performance testing

permit on-site inspection by the importer or a third-party and provide evidence of inspection on request

cooperate fully with investigations by the Canadian Government by supplying information

provide refunds and/or cancellation of orders in the case of recalled or banned merchandise

Foreign exporters should protect themselves by insisting on contractual conditions that similarly shift liability up the supply chain to their suppliers

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Compliance Strategy Checklist

Establish and implement testing procedures and performance standards to ensure products exported to Canada do not have the potential to cause death, injury, or illness

Review product packaging and labelling on products exported to Canada to ensure there are no misleading claims relating to product safety

Implement record keeping systems to ensure information is available on any defects and/or health and safety incidents involving consumer products, if requested by Canadian importers.

Review supply agreements with suppliers and/or manufactures and consider the inclusion of conditions that shift liability up the supply chain in circumstances of defective products

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Concluding Remarks

The CCPSA prohibits products that pose potential safety hazards, requires reporting and record keeping, and provides for additional enforcement mechanisms

Foreign exporters are affected by the changes to Canada's consumer product safety regulation

Products posing potential safety hazards may be precluded entering the Canadian market

Canadian importers may shift their responsibilities up the supply chain by imposing reporting and record keeping obligations on foreign exporters

Canadian importers may also insist on contractual conditions that impose liability on foreign exporters for non-compliant products and provide for refunds in the case of banned or recalled merchandise

Foreign exporters should prepare now by implementing compliance strategies and considering contractual mechanisms to protect themselves from liability

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THANK YOU

Laura MurrayAssociate, International Trade and Customs Group

Bennett Jones LLPOne First Canadian Place, 34th Floor

Toronto, Ontario M5X 1A4 Tel.: 416-777-5395

murrayl@bennettjones.com

Toronto Office3400-One First Canadian PlaceToronto, ON M5X 1A4

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