On Oct 19, 2010, in our International Trade News section, we published information about the New Requirements for Importing Fresh Fruits and Vegetables. Under the Licensing and Arbitration Regulations, Canadian purchasers of fresh fruit and vegetables are required to be licensed with the CFIA and/or be a member of the Dispute Resolution Corporation (DRC), if they are not exempt from the Regulations.
On December 1, 2010, the CFIA federal produce license number, or alternatively the Canadian DRC membership number, or a declaration of exemption, will be required to be part of the submission of import documentation for shipments of fresh fruits and vegetables coming into Canada. This will improve the information available regarding the identity of the importers and traceability of product.
What Is A Federal Produce License?
A federal produce license is issued by the Canadian Food Inspection Agency (CFIA) under the Canada Agricultural Products Act in the Licensing and Arbitration Regulations (SOR/84-432). These regulations define the terms used in the fresh fruits and vegetables trade as well as creating arbitration rules and standards by which every licensee must abide.
What Is The Dispute Resolution Corporation (DRC)?
The Fruit and Vegetable Dispute Resolution Corporation (DRC) is a private, non-profit organization comprised of produce and transportation companies from the three NAFTA countries established in 1999 pursuant to Article 707 of the North American Free Trade Agreement (NAFTA), which provides for the creation of private commercial dispute resolution organizations for agricultural goods.
The DRC is the result of efforts by the North American produce industry and the governments from Canada, Mexico and the United States to create such an organization for fresh fruit and vegetable trade. The DRC was designed to build on existing services in the U.S. and fill a gap for international and domestic transactions in Canada and Mexico. At the outset, membership was reserved to companies whose place of business was in Canada, Mexico or the United States. An "Associate Member" category was added to extend the benefits of the organization to produce companies from outside North America when they are dealing with DRC members in North America.
The DRC's goal is to provide the North American produce trade with harmonized standards, procedures and services necessary to avoid and resolve commercial disputes in a timely, cost-effective manner. A declaration of exemption from the above requirements may be obtained from the CFIA if the importer is a retailer selling directly to consumers with sales under $230,000 per year. A CFIA license and/or membership with the DRC provides a mechanism for dispute resolution of any quality or payment issues in produce transactions. The bottom line is that if you are not a member of the DRC, do not have a federal produce license or a declaration of exemption after December 1, 2010, you will not be able to import produce classified in Chapters 7 and 8 of the Customs Tariff into Canada.
The CFIA is enforcing these requirements in order to provide and maintain a standard of quality and safety to Canada's Produce Industry as well as ensuring that all imports of produce are made by qualified parties.