Canada: ManufacturingMatters @ Gowlings - May 10, 2010

Last Updated: June 7 2010

Edited by Gary D. Graham

  • "Made in Canada" and "Product of Canada" Claims
  • The Raw Milk Debate
  • Made In Canada zero-emission all-electric commercial fleet vehicle makes its North American debut

"Made in Canada" and "Product of Canada" Claims
By: Laurent Massam

1. The Competition Bureau's Enforcement Guidelines

The Competition Bureau has released Enforcement Guidelines relating to when "Product of Canada" and "Made in Canada" claims may be made in association with non-food products sold to Canadian consumers ("Guidelines"). Food products that are associated with "Made in Canada" and "Product of Canada" claims are subject to different guidelines created by the Canadian Food Inspection Agency.

Although the Guidelines are not legislation, they do describe the general approach of the Bureau to assessing "Made in Canada" and "Product of Canada" claims under the false and misleading representations provisions of various Acts, including the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

The Guidelines come into effect on July 1, 2010. After this date, all non-food products that are associated with a "Made in Canada" or "Product of Canada" claim, including inventory that is already on-shelf, must meet the conditions set out in the Guidelines. In certain circumstances, it may be necessary to consider options such as over-stickering to make product packaging compliant post July 1, 2010.

A summary of the requirements under the Guidelines is set out below.

2. "Made in Canada" Claims

  1. To use a "Made in Canada" claim, the last substantial transformation of the product must have occurred in Canada and, 51% or more of the total direct costs of producing or manufacturing the good must have been incurred in Canada. (Guidelines, Section 3.2.2)
  2. All "Made in Canada" claims must now be accompanied by a qualifying statement such as "Made in Canada with imported material". It is not necessary to indicate the proportion of imported material in the qualifying statement.
  3. A representation that a product is "Made in Canada" may be made either implicitly or explicitly. Depending on the context, implicit declarations of domestic origin may include the use of logos, pictures, or symbols such as the Canadian flag or the maple leaf. Implied declarations of domestic origin will be interpreted by the Bureau in the same manner as "Made in Canada" claims, and will be therefore have to meet the requirements of section 3.2.2 of the Guidelines. (Guidelines, Section 3.2.4)

3. "Product of Canada" Claims:

  1. To qualify for a "Product of Canada" claim, the last substantial transformation of the product must have occurred in Canada and, 98% or more of the total direct costs of producing or manufacturing the good must have been incurred in Canada. (Guidelines, Section 3.2.1)

4. Identifying "Substantial Transformations" and "Total Direct Costs":

According to the Guidelines, goods are "substantially transformed" where they undergo a fundamental change in form, appearance or nature such that the goods existing after the change are new and different goods from those existing before the change. (Guidelines, Section 2.4)

The Guidelines provide that the costs of production/manufacturing which will be considered by the Bureau in assessing "Made in Canada" and "Product of Canada" claims are "expenditures on materials incurred by the producer/manufacturer in the production or manufacturing of the goods" and "expenditures on labour incurred by the producer/manufacturer that relate to the production or manufacturing of the goods and can reasonably be allocated to the production or manufacturing of the goods". (Guidelines, Section 2.1)

General overhead is not usually included in the calculation of the cost of production and manufacturing; however, overhead expenditures may be eligible if they relate directly and can be reasonably allocated to the production of the goods in question.

The analysis of direct costs of manufacturing is a complex calculation, which will typically require input from an accounting group before a conclusion can be reached. As a practical matter, if more than 2% of the total direct costs of producing or manufacturing the product is spent on foreign materials or labour, the "Product of Canada" claim cannot be used.

The Raw Milk Debate
By: Ronald Doering

There is a broad scientific consensus that any supposed benefit of consuming raw milk is far outweighed by the clear and serious public health risks of its consumption. In the United States, the Food and Drug Administration (FDA), the Center for Disease Control and the American Medical Association all strongly endorse pasteurization. The FDA recently sent out a warning to consumers regarding the dangers of drinking raw milk, no matter how carefully produced. Kansas State University recently published a list of the 39 known outbreaks associated with unpasteurized milk or cheese between 1998 and 2005, which resulted in an estimated 831 illnesses, 66 hospitalizations and one death.

Health Canada has been consistent: "Any possible benefits are far outweighed by the serious risk of illness from drinking raw milk." Ontario is equally clear: "Raw milk is unsafe to drink because it could contain bacteria that cause illnesses." There have been a number of recent high-profile cases in Ontario alone – in 2006 there were two confirmed cases in Haldimand and Norfolk; a Waterloo girl was hospitalized with kidney failure after eating raw milk cheese contaminated with E. coli (the cheese had been given to the girl's family as a gift); another hospitalization in Waterloo of a 15-year-old; and five residents of Peterborough County ill from campylobacter. In 2007 outbreaks resulted in two seriously ill infants in Grey-Bruce (one from versinia infection and one from listeriosis) and two-dozen people ill in eastern Ontario from raw milk cheese made by a mobile cheese maker.

While most healthy people will recover in a week or so from small exposure to the pathogens that can be present in raw milk, for people with weakened immune systems such as the elderly, children and people with cancer, organ transplants or HIV/AIDS, exposure is dangerous, even fatal. The germs can be equally dangerous to pregnant women and unborn babies. There is a clear scientific consensus that these people should never drink raw milk or eat its products.

In spite of the scientific consensus on the danger of raw milk, the regulation of it is somewhat uneven. It is illegal in all states and territories in Australia. It is illegal in Scotland, but legal in England, Wales and Northern Ireland. In the U.S., 28 states do not prohibit sales of raw milk, but they impose restrictions on suppliers. In Canada, the sale of raw milk directly to consumers is prohibited by a variety of provincial provisions and it is a crime to sell unpasteurized milk in Canada under B.08.002.2(1) of the Food and Drug Regulations.

The issue has come to the fore again recently with the conviction of a raw milk supplier in British Columbia and the acquittal of Michael Schmidt in Ontario. In both cases the issue was whether a co-op structure or cow share scheme could be used to get around the ban on sale and distribution. The B.C. case involved the wording of its public health law ("willingly causing a health hazard"). In the Ontario case, a Justice of the Peace, in a rambling, fulsome judgment, held that Schmidt's cow share scheme did allow him to achieve indirectly what he could not do directly. The decision is being appealed by Ontario. Strangely, no one has commented on why the Canadian Food Inspection Agency is not laying charges under the federal regulations.

Again, like organic and GMOs, the raw milk debate is more about ideology than science – always a tough situation for food regulators.

Made In Canada zero-emission all-electric commercial fleet vehicle makes its North American debut

Rapid Electric Vehicles (REV) of Vancouver has delivered its first all-electric light duty SUV for use in a North American commercial fleet.

REV's advanced modular electric drive system is used to electrify today's most popular short-haul fleet chassis found in Ford Escapes and F-150s, transforming them into advanced, highway-capable electric vehicles.

Burlington Hydro Inc. (BHI) is first to own the REV 300 ACX, a retrofit Ford Escape producing zero tailpipe emissions and complete with smart grid and wireless telemetry capabilities. The ACX features a 160-kilometre range, a 144-kph top speed, with no compromise to performance or safety.

"The REV 300 ACX is not a hybrid nor is it a concept vehicle – it is a fully electric vehicle that will be in daily use in the Burlington Hydro and GridSmartCityTM fleet," said Jay Giraud, REV's CEO and president.

"This is a first for Canada, made possible by Burlington Hydro's leadership and REV's vehicle architecture designed by our electric vehicle veterans who have more than 30 years experience developing proprietary drive systems and electric energy storage technologies."

The SUV is the focal point of BHI's Pure Electric Vehicle Demonstration Project, also the first of its kind. The one-year study will be conducted by the University of Waterloo, with funding from Transport Canada. It is designed to increase understanding of the operating characteristics of an all-electric fleet vehicle in practical, working applications. Characteristics to be monitored include recharging patterns and requirements; optimizing the usage and recharging cycle in a real life setting; overall vehicle performance; drive-cycle; battery state-of-health and electricity grid impacts.

"Ontario leads the world in the development of the emerging Smart Grid, and Burlington Hydro is committed to be the leading distribution utility in Smart Grid development within the province," said Gerry Smallegange, president of Burlington Hydro. "This electric fleet vehicle demonstration project with REV and our partners is proof of that leadership pledge."

The vehicle's motor and drive system technology was developed specifically for fleet applications by REV, an international private company that offers complete modular drive systems, transforming light-duty Ford trucks into advanced all-electric zero-emission vehicles.

The Burlington study will be supervised by Roydon Fraser, Professor of Mechanical Engineering and Michael Fowler, Associate Professor of Chemical Engineering at the University of Waterloo, from February 2010 to February 2011. The findings will be useful to designers and prospective operators of electrified fleet vehicles.

REV and Burlington Hydro believe "hub and spoke" fleets, like the one operated by Burlington Hydro, potentially represent the best opportunity for initial widespread vehicle electrification. These fleets typically operate from a central point and deploy vehicles with predictable usage patterns. They are therefore ideal in respect to centralized re-charging infrastructure.

"There are thousands of fleets comprised of millions of vehicles across North America alone and they represent a significant proportion of vehicles on our roads, most of which are in daily use," Mr. Giraud said. "They include utility, couriers, mail, municipal vehicles and numerous other kinds of fleets. Therefore, using electric vehicles will deliver major, immediate environmental benefits for the fleet market today and other OEM platforms in the future."

About Rapid Electric Vehicles

Rapid Electric Vehicles of Vancouver, British Columbia's mission is to become the leading supplier of grid smart, zero emission electric vehicle drive systems to global fleets and OEMs.

About Burlington Hydro

Burlington Hydro Inc. is an energy services based company in the power distribution business. The company serves over 58,500 residential customers, and approximately 5,500 commercial and industrial customers. It maintains 32 substations and almost 1,300 kilometers of low voltage distribution lines throughout the municipality and employs 95 people.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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