Canadian Regulatory World: Evolving for the Better

The forgoing outlines the regulatory process that has been in place since Confederation. Over the past 5-8 years there have been a number of advancements in the way regulations are made in Ottawa with the creation of the Beyond the Border Initiative, the Regulatory Cooperation Council and the Red Tape Reduction Action Plan. This was precipitated by the nature of globalization with increasing mergers and acquisitions in all sectors, especially paints and coatings; the economic downturn heightening the awareness of the impact of regulations on the economy; the increasing demand for closer ties with other countries related to trade and commerce (given 40 percent of Canada’s GDP depends on trade); and the fact that 74 percent of Canada’s trade is with the United States and 40 US States have Canada as their number one trading partner.

The first initiative, Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness, established a long-term partnership and a definitive action plan between Canada and the United States to accelerate the legitimate flow of people, goods and services. The ‘trusted traders’ program has made secure border processes more efficient. The private sector, including suppliers and distributors of coatings materials, provided government with data about its supply chain in exchange for expedited clearance across the border. This has benefited both large as well as small and medium sized enterprises. This initiative was a precursor to the two others that followed, which address regulatory development in Canada more specifically.

Regulatory Cooperation Council

Early in 2011 Canada and the United States announced the creation of the Regulatory Cooperation Council. When the initiative was announced the President of the United States drew the link between Canada and small business, “which create most of the new jobs here in America. And when they look to export, typically, Canada is one of the most likely places they are to start getting a foothold in the global economy.” He went on to say that, “we are going to strike a better balance with sensible regulations that unleash trade and job creation, while still protecting public health and safety … our two nations are going to be going further, streamlining, eliminating and coordinating regulations, slashing red tape.” This sentiment further supports the main precepts of Canada’s Red Tape Reduction Action Plan, which seeks to reduce the administrative burden via a ‘small business lens’ with respect to regulations.

Canada’s Prime Minister echoed the sentiments of the US President saying, “every rule needs a reason. Where no adequate reason exists for a rule or standard and that rule hinders us from doing business on both sides of the boarder , then that ruled needs to be reexamined.” We must be mindful in this regulation of the RCC’s 29 specific initiatives for greater cooperation that includes workplace chemicals, the alignment of dangerous means of containment for motor vehicle safety standards; globally harmonized system for classification and labeling of chemicals (workplace hazards); nanotechnology; manufacturing sector competitiveness; regulatory efficiency, to name a few.

Creating more openness at the land border for legitimate travel and trade will allow for the free flow of goods and services between Canada and the United States. This creates immense economic benefits for both countries, benefits Canada will need to secure trade with our largest trading partner. This is now more important than ever as Canada’s trade with the U.S. plummeted since 2000 when exports to the U.S. were 86 percent of total trade, while today it’s less than 75 percent . The government is taking these measures to ensure the impact of regulations do not further erode Canada’s ability to do business with the United States.

Red Tape Reduction

Early in 2012 the Government of Canada made cutting red tape a key priority and launched a regulatory reform package that is among the most ambitious of its kind today. The Red Tape Reduction Action Plan, the product of business community input to a year-long commission , not only targets specific irritants to businesses, but “the systemic barriers that unnecessarily frustrate and burden Canadian business with additional delays, costs and bureaucracy”.

The President of the Treasury Board, Tony Clement, noted that,

The federal government introduced six fundamental, systemic reforms supported by 90 department-specific changes; common sense solutions to problems identified by businesses in areas ranging from tax and payroll, to labour, transport and trade. The vast majority of these changes will be implemented over the next three years. These include the following:

• A ‘one-for-one’ rule requiring regulators to offset new administrative burden costs imposed on business with equal reductions in administrative burden from the stock of existing regulations.
• Removing a regulation when a new one increases administrative burden costs on business.
• A ‘small business lens’ will be used to ensure regulators take into account the impact regulations have on small business. This assessment will include the publication of a 20-point checklist that drives efforts to minimize burden on small business, avoidance of bureaucratic duplication and the communication of regulatory requirements in clear, plain language.
• The publication of departmental ‘forward plans’, which will highlight upcoming regulatory changes over a 24-month period, providing businesses with critical predictability.
• Creation of ‘service standards’ that will set targets for the timely issuance of high volume licenses, certifications and permits. Regulators will also establish a feedback mechanism for business users in these areas.
• An ‘annual scorecard’ that will report publicly on implementation of systemic reforms, particularly the One-for-One Rule, Small Business Lens and Service Standards.

This approach is drastically changing the way officials are handling regulatory development. All departments are in the process of developing metrics to ensure they comply with the red tape reduction action plan.

As part of this initiative Environment Canada, as one of the government’s most active regulators, embarked on a continual improvement initiative “to strengthen the processes by which the Department selects, develops and implements regulatory instruments, with the objective of operating as a World Class Regulator.” In 2012 Environment Canada conducted an internal assessment of its regulatory activities against five ‘world class regulator’ criteria: evidence-based decision making, effectiveness, efficiency, transparency and adaptability. A report of its findings was produced and an action plan has been put in place to address deficiencies.

Conclusion

The foregoing is meant to address the Canadian regulatory environment. Clearly, there can only be one conclusion, that is, there is a recognition by governments that regulations are a burden in many cases and there must to more vigilance in decisions to regulate. When a decision is made to regulate it must be done with minimal negative impacts on the economy as well as preserving the laudable goals of regulation to protect the health, safety and environment. More importantly, the government is serious about it by legislating red tape reduction in the regulatory process.