Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.
The Impact of the Canada Consumer Product Safety Act on Advertising, Packaging, Labelling, Distribution and Testing of Consumer ProductsFriday, January 28, 2011 > 11:28:51
(Lexology – LuAnne Morrow and Michael C. Smith, Borden Ladner Gervais LLP)
On December 15, 2010 the new Canada Consumer Product Safety Act (CCPSA) received royal assent. It is expected to come into force in the next few months under an accelerated schedule for implementation.
The CCPSA makes very sweeping changes to the way product safety will be dealt with in Canada. The CCPSA will replace Part I of the Hazardous Products Act (Canada)and is intended to strengthen and modernize the 40 year old product safety law and to provide Canadian consumers with a similar level of protection as that which consumers in the United States and Europe currently enjoy. According to Health Canada, the government department responsible for the implementation and management of the CCPSA, the purpose of the CCPSA is to “protect the public by addressing or preventing dangers to human health or safety that are posed by consumer products, including those made in and that circulate within Canada and those that are imported”.
Broad scope of the Act
The CCPSA is very broad in its scope and will apply to “consumer products” which includes a product, its parts, accessories or components that may be reasonably expected to be obtained by an individual to be used for non-commercial purposes – for example: the manufacture, distribution, sale, and advertising of pens, key chains, cameras, jewellery, clothing and virtually any other consumer product you can imagine (with some specific exceptions such as vehicles, cosmetic, drugs, weapons, food, and agricultural related products).
The wording of the CCPSA is so broad that even companies that distribute consumer products to one or more persons whether or not the distribution is made for consideration will be required to comply with the legislation. This would include any company that gives away promotional items for free.
The new legislation will have significant impact on the manufacturers, importers and retailers of consumer products as well as those who advertise, test, package or label consumer products and those that distribute products for free. It also gives the Federal Government the ability to recall products.
What you need to know if you advertise, package, label, test or give away consumer products
In addition to the impacts on those in the distribution chain for consumer products, any person that advertises, packages or labels products and those that distribute products for free will have significant new obligations and responsibilities. For example:
• It is an offence under the CCPSA to package, label, or advertise consumer products in a manner that creates “an erroneous impression regarding the fact that it is not a danger to human health or safety” or that is misleading “regarding its certification related to its safety or its compliance with a safety standard or regulations”. It is also an offence to sell such a product.
• It is an offence for a person to advertise or sell (including giving a product away for free) a consumer product that they know is a danger to human health or safety, or is the subject of a recall or order under the CCPSA.
• Any person who advertises or tests a consumer product (along with those that manufacture, import or sell consumer products) for commercial purposes must prepare and maintain documentation concerning the product as provided in the CCPSA and Regulations.
• Any person who manufactures, imports or sells a product for commercial purposes has a positive obligation to report “incidents”. “Incidents” include actual and possible serious adverse health effects resulting from the product, mislabelling, and recalls in other jurisdictions.
The penalties for offences under the CCPSA are significant including fines of up to $5 million and prison terms of 2 years. In cases where the offence is committed by a corporate entity any directors, officers, agents or mandataries who directed, authorized, assented to or acquiesced in or participated in the commission of the offence are liable on conviction to the punishment provided even if they were not individually prosecuted for the offence.
Recommendations to businesses
Businesses should start reviewing their advertising, packaging and labelling practices and policies, as well as internal policies for due diligence procedures when choosing suppliers and promotional products for distribution, to determine how to comply with the CCPSA. In addition, the terms of existing third-party contracts for advertising, packaging, labelling and promotional product supply should be reviewed and re-negotiated if required to ensure risks and obligations under the CCPSA are dealt with and new standard clauses for such agreements should be considered for further risk mitigation. Steps need to be taken now as efforts to effect compliance could require substantial lead time.