One Year Later: A Practical Guide to the
Canada-U.S. Equivalency Agreement

By Matthew Holmes


When U.S. Deputy Secretary of Agriculture Kathleen Merrigan announced the Canada-U.S. equivalency arrangement last June, a cheer resonated through the All Things Organic conference in Chicago. It quickly spread from the conference to the North American media, where organic once more displayed its progressive vision. From there, cell phones, blog sites, and international meetings became abuzz with the world’s first full trade deal between two organic systems.

The equivalency arrangement established full reciprocity—essentially free trade—between the Canada Organic Regime (COR) and U.S. National Organic Program (NOP), recognizing a common approach to organic agricultural production and processing. Many now hope that this will be the first domino to fall in what has become a long line of global organic non-tariff trade barriers.

Equivalency agreements facilitate international trade while protecting the integrity of organic food and honoring the publicly developed standards of each domestic market. The historic agreement between the United States Department of Agriculture (USDA) and the Canadian Food Inspection Agency (CFIA) offers a new model for further expansion of North American organic products into the significant European and Asian markets, and the continued growth of the global organic movement.

Without the agreement, all USDA-certified organic food exported to Canada after June 30, 2009 (when the COR came into effect) would have been required to receive an additional certification to bring it into compliance with the mandatory Canadian standards and regulations. Likewise, any food certified organic under the Canadian guidelines and exported to the United States would have continued to have to also be certified by the NOP in order to be sold on the U.S. market. This double certification would have been an unnecessary financial and administrative burden for producers and manufacturers, and would have introduced more trade obstacles between the two countries.

Instead, the agreement allows the smooth flow of organic products between the two countries, without requiring farmers or manufacturers to certify twice to two separate standards and compliance systems. Although there are some small differences between what is required of a certified organic producer in Canada and the United States (see “variances” below), the guiding principles of the two organic standards, the basic methods of production, and the governments’ enforcement of those standards are effectively the same.

Developments Since Chicago
Most significant since the equivalency announcement in Chicago has been the launch of Canada’s Organic Products Regulations on June 30, 2009. Years in the making, the regulations spell out the responsibilities, enforcement and implementation of the COR; they also reference Canada’s organic standards and permitted substances lists. As of June 30, organic products grown or made in Canada (crossing provincial boundaries) and any organic products being imported into the country must be certified to Canada’s standard by a CFIA-accredited certifying body—or meet the terms of the equivalency agreement.

Following the OPR launch is a two-year “Stream of Commerce” period, which lasts until June 30, 2011. During this time, CFIA will take an “educational approach” to enforcement actions. This means that non-compliant products for sale in Canada will not be removed from shelves or blocked entry—however, manufacturers will be informed of their non-compliance and asked to provide CFIA with a plan and timeline under which their products will meet all of the requirements and standards necessary to be sold as organic in Canada. After June 2011, products not certified to the Canadian standards or to the terms of the equivalency will no longer be able to enter the Canadian market as organic.

There have also been some significant changes in the United States since the announcement of the equivalency arrangement. First, the USDA issued a series of directives to its domestic sector that effectively enforced the terms of the equivalency agreement immediately for exports to Canada. Even though Canada has a two-year “soft” enforcement period in effect, there has been little or no fresh produce sent to Canada that was grown with “Chilean” sodium nitrate (one of the agreed-to variances). Although the relatively short lead-time of this notice caught many in the sector off guard, it is seen as consistent with the focus of USDA’s new administration on strict enforcement and the meeting of its regulatory obligations. The message has been sent repeatedly that both USDA and CFIA are committed to making this agreement work.

Also significant is the newly announced pasture rule in the U.S., which in many ways brings the U.S. approach to livestock pasturing much closer to Canada’s standards. Although it can be debated whether Canada’s standards or the equivalency influenced this new directive, what is clear is that the U.S. and Canada are moving towards greater harmonization—a vision expressed by Kathleen Merrigan at her announcement of the equivalency agreement in Chicago.

In December 2009, USDA and CFIA held a two-day meeting in Niagara, Ontario, to establish the “Technical Working Group,” a committee of the two agencies to manage ongoing administrative and communications issues relating to the equivalency agreement. At the time of this writing, the full minutes of the meeting had not been distributed, but it is anticipated that a number of interpretive clarifications will be issued in the near future.

One possible area of further discussion is maple standards, which in Canada are very specific, while the U.S. approaches certification of maple products under its general standards. There has also been some confusion on both sides of the border as to whether processed products are subject to Canada’s prohibition on products grown with sodium nitrate. Last summer, CFIA announced that processed products must also meet the requirements of the agreement, but it is anticipated that a new joint statement will describe the governments’ common understanding and provide clarification for the organic sectors in both the U.S. and Canada on this and a number of other outstanding subjects.

The “Variances” and How to Comply
During their negotiations on equivalency and in consultation with their domestic sectors, the USDA and CFIA determined that certain technical differences (“variances”) between the two standards needed to be maintained by the importing country. Therefore, to be deemed “equivalent” under this trade arrangement, organic products traded between the U.S. and Canada must meet their domestic certification but also be verified to the following additional requirements (italics denote text from the actual agreement).

Regarding products entering the U.S. under COR certification:

• “Agricultural products derived from animals treated with antibiotics shall not be marketed as organic in the United States.” Although Canada allows a limited application of antibiotics to dairy cows in certain situations, no products from these cows can be sold as organic in the U.S.

Regarding products entering Canada under NOP certification:

• “Agricultural products produced with the use of sodium nitrate shall not be sold or marketed as organic in Canada.” As described earlier, USDA has taken immediate action to adhere to this requirement.

• “Agricultural products produced by hydroponic or aeroponic production methods shall not be sold or marketed as organic in Canada.” Canada defines and prohibits hydroponic and aeroponic production within its standards; however, container-based growing methods that include a biologically active growing medium are acceptable, as is the sprouting of seeds in water (without the addition of soluble fertilizers).

• “Agricultural products derived from animals must be produced according to livestock stocking rates as set out in CAN/CGSB-32.310-2006 (amended October 2008).” The USDA has indicated to CFIA that it does not currently have the necessary information in order to assess its stocking densities in organic livestock operations and so has instructed certification agencies to collect this information and will provide it to CFIA by August 2010, at which time the variance will be reviewed. Due to this review, at this time, U.S. livestock products can still enter Canada under the terms of the Stream of Commerce policy. In the meantime, the U.S. pasture rule is a significant move closer to Canada’s standards, which themselves are also undergoing a review of their livestock sections.

Not described in the actual agreement, but relevant, is the difference in scope of the two systems. Currently, Canada only regulates organic food, feed, livestock and primary crops. Therefore, personal care or other items that qualify for the USDA organic seal or third-party organic claims may continue to be marketed in Canada but will not be eligible to bear the “Canada Organic” logo. As long as a product meets the aforementioned requirements, it may be marketed as organic in both countries.

The singularity of this agreement is that it’s a system-to-system equivalency rather than simply a country-to-country equivalency. Unlike the one-way U.S. to Japan agreement, in which NOP products exclusively from the U.S. are allowed to flow into the Japanese market, this arrangement allows NOP- or COR-equivalent products from any country to flow into either market. The importance of this “third-country” aspect of the equivalency agreement between Canada and the U.S. cannot be understated: it makes Canadian and U.S. organic products among the world’s most accessible, and it brings the world’s organic supply within reach of our processors, while maintaining the controls and requirements of our domestic regulatory systems and standards.

Therefore, if you are NOP-certified by a USDA-accredited certifier anywhere in the world, and your certifier has also reviewed your ingredients and production methods to be in compliance with the terms of the arrangement, then you can send your product to Canada without any additional certification. The same goes for COR-certified products destined for the U.S. Always speak with your certifier about appropriate documentation or statements to include with your certification so that it is clear the product meets all the terms and requirements of the Canada-U.S. equivalency.

Labeling
Unique to this agreement is that NOP or COR organic products deemed equivalent can use either or both organic seals interchangeably (the “USDA Organic” seal is available from the NOP, while the “Canada Organic” logo must be provided by the certifier of the product).

It is important to understand that products sold within a given market must meet domestic labeling requirements (such as language requirements, different nutritional labeling requirements, as well as product grades), including those that fall under organic regulations.

Note that Canada does not permit a “100 percent organic” claim, while the U.S. “made with” claim for products containing 70 to 95 percent organic ingredients is treated as a percentage claim in Canada. That is, products must state “XX percent organic ingredients” rather than name specific ingredients in the product which are organic. The formula for calculating this is contained in Section 8 of the Canadian organic standards.

Further, U.S. companies looking to sell in Canada under the equivalency agreement need to be aware that, as per the Regulations, organic claims must to be made in both English and French (in addition to other bilingual requirements) and any use of the “Canada Organic” logo must also indicate in close proximity to the logo (i.e. beside it) that it is “Imported” or a “Product of U.S.A.” All labeling should always be reviewed by both your certifying body and the destination market’s regulatory authority.

A final labeling difference relates to wine. As Canada has no labeling provision to indicate wine products that are “made from organically grown grapes,” this claim is not possible within Canada. Therefore, any imported wine should be certified at both the production and processing stages.

Additionally, Canada allows sulfites to be added to organic wine (up to maximum threshold levels) and still carry the “organic” claim. These wines cannot be sold to the U.S. market as organic, and must instead indicate they are “made from organically grown grapes,” even though they are considered organic in Canada.

What It All Means
As many who attended Chicago’s announcement will tell you, cell phones lit up once the word of the Canada-U.S. equivalency got out to the world organic community. There continues to be considerable interest in seeing this and similar agreements help in dismantling some of the barriers to trade that our movement has inadvertently set up for itself through mutually exclusive, market-based standards.

Since the agreement was announced, the U.S. and the European Union (EU) have reinitiated long-stalled talks towards a possible equivalency. And negotiations between Canada and the EU have advanced considerably since the arrangement was reached with the U.S.—the two sides have already reviewed each other’s standards and will hold a final peer-assessment soon.

Meanwhile, a number of other regulated markets are beginning to talk to both Canada and the U.S. about direct equivalency arrangements, signaling a possible end to the considerable trade barriers we’ve built for ourselves.

Think of this: according to IFOAM, 97 percent of the world’s $51 billion in organic sales are concentrated in North America and the European Union.

If we could actually trade directly with each other, and bridge our differences in organic standards, the potential for growth would be considerable—for these two regions, for the countries that supply them, and for the many emerging markets around the world that are seeking a supply of organic products. All of sudden, harmonization seems like something worth talking about.

Of course, part of this relates to market access to sell more product, but it’s also about supply and market support: being able to find available products or ingredients that your market needs, and facilitating the development of organic supply chains in other parts of the world.

Through all of this “trade talk,” we need to remember that the organic movement is just that: an alternative vision for the world’s agricultural system.

Many of our commodities and ingredients in fact originate in the developing world, where producers have fewer options than many of us reading this article do. Multiple, expensive and redundant organic certifications to our country-specific systems do not help the coffee, cocoa or banana growers in developing countries. If anything, this sort of duplication makes organic production less appealing to those who need it the most, and therefore erodes our promise of environmental and social benefit. In many respects, we are the victims of our own success in developing the organic sector so broadly. To counter such pessimism, equivalency can offer the hope of greater global cooperation in the organic sector, and prosperity for all. Embrace it.

Matthew Holmes is managing director of the Organic Trade Association in Canada. He serves on Canada’s Standards Technical Committee, Standards Interpretation Committee, and the Organic Value Chain Roundtable. Among others, his writings on the organic sector have appeared in IFOAM’s World of Organic Agriculture, Gastronomica and The Canadian Organic Grower Magazine.