RMD-12-01: Importation of Wood Packaging Material from the Continental United States

Issued: 2012-02-24

Preface

As described by the International Plant Protection Convention (IPPC), Pest Risk Analysis (PRA) includes three stages: initiation, pest risk assessment and pest risk management. Initiating the PRA process involves identifying pests and pathways of concern and defining the PRA area. Pest risk assessment provides the scientific basis for the overall management of risk. Pest risk management is the process of identifying and evaluating potential mitigation measures which may be applied to reduce the identified pest risk to acceptable levels and selecting appropriate measures.

This Risk Management Document (RMD) includes a summary of the findings of a pest risk assessment and records the pest risk management process for the identified issue. It is consistent with the principles, terminology and guidelines provided in the IPPC standards for pest risk analysis.

Table of Contents

• Executive Summary
• 1.0 Purpose
• 2.0 Scope
• 3.0 Definitions
• 4.0 Background
• 5.0 Pest Risk Assessment Summary
• 6.0 Pest Risk Management Considerations
  • 6.1 Phase-out of existing CFIA pest specific import directives related to WPM from the U.S.
  • 6.2 Economic impacts
  • 6.3 Upcoming regulation in the United States
• 7.0 Pest Risk Management Options
  • 7.1 Pest Risk Management Option 1
  • 7.2 Pest Risk Management Option 2
  • 7.3 Pest Risk Management Option 3
  • 7.4 Preferred Option
• 8.0 Pest Risk Management Decision
  • 8.1 Decision
  • 8.2 Next Steps
• 9.0 References
• 10.0 Consultation
  • 10.1 Initial Consultation
  • 10.2 Proposed Phase-in Strategy for implementation of ISPM 15: 2009
• 11.0 Communications Plan
  • 11.1 Initial Consultation
  • 11.2 Implementation of ISPM 15: 2009
• 12.0 Endorsement

Executive Summary

Both the Canadian Food Inspection Agency (CFIA) and the United States Department of Agriculture, Animal & Plant Health Inspection Service (USDA-APHIS) have agreed to terminate the International Standard for Phytosanitary Measures (ISPM) (2009)15 Regulation of wood packaging material in international trade exemption for wood packaging materials (WPM) between Canada and the United States (U.S.). Currently, WPM produced in the U.S. and Canada moving between these two countries is exempt from the requirements specified in ISPM 15: 2009. In November 2007, CFIA completed a Pest Risk Assessment to evaluate the plant health risk associated with the importation of wood packaging material from the United States. Scientific evidence throughout the 1990's and early 2000's demonstrated that many quarantine pests are directly associated with international movement of WPM. The introduction of the Asian longhorned beetle (Anoplophora glabripennis), the emerald ash borer (Agrilus planipennis) and other exotic pests, now established in parts of Canada, has been linked to international shipments containing WPM. It is likely that at least 25 species of invasive pest reported in the continental U.S. between 1985 and 2005 entered the U.S. on WPM. A number of those pests are not known to occur in Canada. Three pest risk management options were considered by the Pest Risk Analysis and are as follows:

1. Maintaining the status quo whereby ISPM No. 15: 2009 is not implemented for WPM coming from the continental U.S. even though the U.S. will implement the standard for WPM exported from Canada.
2. Implementing ISPM No. 15: 2009 for WPM moving across the Canada-U.S. border to the same standard as is required for international trade.
3. Exploring and implementing phytosanitary measures other than those prescribed in ISPM No. 15: 2009 for WPM even though the U.S. will implement ISPM No. 15: 2009 for WPM exported from Canada.

The CFIA Economic Analysis Unit assessed the economic impact on the Canadian wood packaging industry in relation to the removal of the ISPM No. 15: 2009 exemption between Canada and the US. This analysis concluded that the additional cost to produce ISPM No. 15: 2009 compliant wood packaging material would not have a significant impact on establishments producing wood packaging material. Due to the number of newly introduced quarantine pests which may spread from both countries, the CFIA and the USDA-APHIS believe that it is necessary to implement Option 2, terminating the exemption with respect to ISPM No. 15: 2009 for WPM. The CFIA and USDA-APHIS are collaborating on the development of a strategy that would involve a phase-in period for the eventual full implementation of ISPM No. 15: 2009 for WPM that moves between both countries.

1.0 Purpose

• to inform stakeholders
• to record a pest risk management decision

2.0 Scope

This document pertains to wood packaging material (WPM), which includes but is not limited to dunnage, pallets, boxes, and other crating material made from non-manufactured wood entering Canada from the continental United States (U.S.)

3.0 Definitions

Definitions for terms used in the present document can be found in the Plant Health Glossary of Terms.

4.0 Background

The CFIA and the USDA-APHIS have agreed to implement the International Standard for Phytosanitary Measures (ISPM) No. 15: 2009 Regulation of wood packaging material in international trade for WPM produced in North America moving between Canada and the U.S. in order to further prevent the introduction and spread of forest pests of quarantine concern associated with WPM.

Currently, WPM imported into Canada from countries other than the U.S. must be heat-treated or fumigated with methyl bromide and then marked to indicate that it has been treated prior to entry. A Phytosanitary Certificate that specifies the treatment details may be used in lieu of the internationally approved mark. To date, the movement of WPM between Canada and the continental U.S. has been exempt from the provisions of ISPM No. 15: 2009.

Due to the number of newly introduced quarantine pests to both countries, it is necessary to terminate the exemption with respect to ISPM No. 15: 2009 for WPM. The CFIA and the USDA-APHIS have jointly developed a strategy which progressively increases enforcement over a period of time culminating in full implementation of ISPM No. 15: 2009. Ultimately, all non-manufactured WPM moving between Canada and the U.S. will require treatment in accordance with the requirements of ISPM No. 15: 2009 (including marking with an officially approved mark).

The implementation of ISPM No. 15: 2009 on WPM moving between Canada and the U.S. enhances protection of forests from quarantine pests, and allows for more opportunities for the use of WPM in the international marketplace, where the provisions of ISPM No. 15: 2009 are already a requirement.

5.0 Pest Risk Assessment Summary

WPM including dunnage, wood packaging, pallets and crates, are traded freely and continuously moving between Canada and the U.S. These materials are imported from the U.S. as a stand alone commodity or in association with a wide variety of commodities. They are often manufactured from green, rough-sawn wood of a variety of species, typically lower value material and often of poor quality not suited for use and sale as lumber or in other forms. Quite often the outside surfaces of logs remaining after initial shaping for timber sales are used in the construction of pallets and other support frames. Many pests often live in the area of the cambium (the region of living tissue between the bark and wood) and therefore are more likely associated with the wood used in wood packaging. For these reasons, WPM poses a great phytosanitary risk as they can be infested with pests, insects in particular. WPM may be manufactured from wood that originates from any forested region of North America, excluding Mexico.

WPM moving between Canada and the U.S. are commonly reused after arrival in one location and shipped out to another, making it virtually impossible to identify the true origin or species of the wood used. They are also difficult to inspect and verify as being pest free due to the volumes in trade and the fact that the commodities that they carry are often moved in containers limiting access.

More than 419 plant pests have invaded Canada, of which over 60% have spread from the U.S. Many of these are wood borers that cause significant economic or environmental damage and are of relevance to the movement of untreated WPM. Since the 1970s, WPM has been the vector for 85% to 97% of the forest pests detected by the U.S. Furthermore, there is an additional potential for WPM to vector novel pest combinations which are poorly understood, but tend to lead to substantially greater damage to host trees than has been known for these organisms in the past.

Currently, the movement of many non-manufactured wood products from the U.S. to Canada is regulated. For example, a Permit to Import is required for all species of firewood. Movement of wood products with bark, such as logs and bark chips, may be restricted depending on the wood species, the origin of the product (e.g. from an area known to be infested with a regulated pest), and the Canadian destination (e.g. to an area that is not known to be infested with a regulated pest). Although pest-specific regulation of WPM was considered as an alternative to treatment, this option is difficult and impractical implement for a number of reasons:

• cost of enforcement of multiple areas of regulation exceeds a uniform policy of regulatory management of the commodity;
• specific pest requirements may vary based upon pest biology, available mitigation tools, etc. which may create difficulties for industries in meeting the varying requirements as commodities are produced and move through multiple regulated areas;
• inconsistencies between measures applied for specific pests and those required by the international standard create difficulties for industries which ship products universally;
• natural spread of pests would necessitate ongoing administrative burdens both on industry and government.

The risk associated with the import of untreated WPM is apparent and continuing. However, heat treatment and fumigation with methyl bromide should be effective in mitigating the transport of pests and diseases associated with WPM moving between Canada and the US. Through treatment as required in ISPM No. 15: 2009 the majority of risk associated with wood boring insects and diseases associated with WPM can be successfully mitigated.

6.0 Pest Risk Management Considerations

6.1 Phase-out of existing CFIA pest specific import directives related to WPM from the U.S.

Currently, wood products originating in the continental U.S., including WPM, are regulated through policy directives that regulate quarantine pests that may be moved with the specific commodity. For example, if the WPM has some ash components and is shipped as a stand-alone commodity, the policy directive which applies to commodities which may move the emerald ash borer applies. As both countries implement specific import requirements, pest specific policies for wood packaging material imports will no longer be required.

6.2 Economic impacts

The CFIA's Economic and Analysis Unit assessed the economic impact on the Canadian wood packaging industry in relation to the removal of the ISPM No. 15: 2009 exemption between Canada and the U.S. In 2010, Statistics Canada estimated the value of the Canadian Wood Container and Pallet Manufacturing Industry's exports to the U.S. was approximately CAN $97 million. It is estimated that over 90% of Canadian exports to the U.S. by land move on wood packaging material.

In 2007, approximately 6 million units of wood packaging material manufactured in Canada, representing about 90% of the total supply, were not ISPM No. 15: 2009 compliant. Production costs were driven by the cost of materials and supplies which accounted for ~74% of the total manufacturing cost with wages and other manufacturing cost such as fuel and energy accounting for the remaining cost at 24% and 2%, respectively.

The CFIA estimates that the added cost to produce heat treated wood packaging materials that comply with ISPM No. 15: 2009 is between CAN $2.00 and CAN $3.00 per unit. Further, it is estimated that there will be a demand for an additional 1.2 million units of ISPM No. 15: 2009 compliant wood packaging material once the exemption is removed.

Assuming the manufacturing cost represents 70% of the average selling price of CAN $12.75 per pallet, it is estimated that it would cost a minimum of CAN $12 million in treatment costs raising the average selling price to $14.20 per unit. It is expected that the additional cost to produce wood packaging material will not have a significant impact on establishments producing large volumes of wood packaging material. The CFIA estimates that the impact on establishments producing small volumes of wood packaging material will be greater, but it is also not expected to be significant.

6.3 Upcoming regulation in the United States

During a bilateral meeting between the USDA-APHIS and the CFIA held in February 2009, the USDA informed the CFIA that the drafting of a regulation in accordance with initiating requirements in keeping with ISPM No. 15: 2009 for untreated WPM from Canada had started. On December 2nd, 2010, the USDA-APHIS published a rule proposing to remove the exemption that allows WPM from Canada to enter the U.S. without first meeting the treatment and marking requirements of ISPM No. 15: 2009. The USDA-APHIS has also completed a Pest Risk Analysis of the risk posed by the movement of WPM from Canada into the U.S. The assessment concluded that there are high risks associated with the movement and establishment of pests from Canada on untreated WPM. The implementation of ISPM No. 15: 2009 will mitigate many pests associated with WPM and assist both the U.S. and Canada by reducing the risk of pests in WPM (USDA PRA, 2009). On the other hand, the Environmental Assessment done in the U.S. states that there is little or no environmental impact to implementing this regulation.

7.0 Pest Risk Management Options

7.1 Pest Risk Management Option 1

Status quo, i.e. not implementing ISPM No. 15: 2009 for WPM coming from the continental U.S. even though the U.S. will implement the standard for WPM exported from Canada.

7.2 Pest Risk Management Option 2

Implementing ISPM No. 15: 2009 for WPM moving across the Canada-U.S. border to the same standard as is required for international trade.

7.3 Pest Risk Management Option 3

Exploring and implementing phytosanitary measures other than ISPM No. 15: 2009 to reduce the risk of introduction and spread of quarantine pests via WPM even though the U.S. will implement the standard for WPM exported from Canada.

7.4 Preferred Option

Option 2 is the preferred option. From a regulatory point of view, as there are a number of pests of concern associated with WPM which are present in the U.S. that may potentially establish and spread in Canada, the implementation of ISPM No. 15: 2009 would ensure an appropriate reduction in pest risk. Additionally, the U.S. will implement import requirements which would place Canadian exporters at a competitive disadvantage if Canadians would be required to treat and mark exported WPM but U.S. producers would not be required to treat WPM entering Canada.

8.0 Pest Risk Management Decision

8.1 Decision:

Due to the number of newly introduced quarantine pests which may spread from both countries, the CFIA and the USDA-APHIS will terminate the ISPM No. 15: 2009 exemption for WPM originating in and moving between both countries. The CFIA and USDA-APHIS are collaborating on the development of a strategy that includes a phase-in period towards full implementation of ISPM 15:2009. The CFIA import policy for WPM (D-98-08) has been updated to remove the current ISPM No. 15: 2009 exemption on WPM moving from the U.S. into Canada.

8.2 Next Steps:

The CFIA will continue to inform the Canadian industries and stakeholders about the upcoming new requirements to ensure the vital flow of cross-border trade is not disrupted. The phase-in strategy should allow industry and stakeholders time to adjust their operations to comply with ISPM No. 15: 2009. The CFIA will provide update on the situation as soon as new information is available

9.0 References

Haack, R.A. 2006. Exotic bark and wood-boring Coleoptera in the United States: recent establishments and interceptions. Canadian journal of forest research, 36(2): 269-288.

ISPM No. 5 – Glossary of Phytosanitary Terms, 2010, FAO (updated annually).

ISPM No. 15: 2009 Revised – Regulation of wood packaging material in international trade, Rome, FAO.

USDA-APHIS Risk analysis for the movement of wood packaging material (WPM) from Canada into the United States, August 2009.

10.0 Consultation

10.1 Initial Consultation

On July 24, 2008, a 90 day period was allowed for industry, stakeholders, exporters, importers, brokers, wood packaging manufacturers and interest groups to provide comments on the proposed phase-in approach to CFIA. A phased in approach was proposed to ensure sufficient time for wood packaging facilities and exporters to become compliant with requirements.

Phase-in approach proposed in the consultation:

Phase 1: Will consist of a 12-month period to allow industry and stakeholders to adjust their operations to comply with the ISPM No. 15: 2009 requirements for WPM circulating between Canada and the U.S.

Phase 2: Following the first 12 months, there will be a one year period where industry will receive notices (informed compliance) to indicate that they will have to comply with the requirements in the future. Notices will be delivered to importers/brokers in connection with any cargo found to contain non-compliant WPM.

Phase 3: A subsequent 8-month period of enforcement action on non-compliant pallets and crates will follow Phase 2. Shipments containing non-compliant WPM will not be allowed to enter Canada. Importers/exporters with cargo containing other types of non-compliant material (dunnage, spools, blocking and bracing) will receive notices (informed compliance) to indicate they will have to comply with the requirements in the future.

Phase 4: At the beginning of the fourth phase, full enforcement will commence on all articles of regulated WPM including dunnage moving between the U.S. and Canada. Shipments containing non-compliant WPM will be refused entry.

10.2 Proposed Phase-in Strategy for implementation of ISPM 15: 2009

Many bilateral meetings have been held between the USDA-APHIS and the CFIA since the initial proposal to consider revising requirements. The need to update the phase-in approach was discussed. The following phase-in approach was agreed to by both sides:

Phase 1: Effective immediately, information on the new requirements will be provided to industry. Importers are encouraged to seek sources of compliant wood packaging material. No punitive action will be taken during this period. However, existing policies will still apply as such, if live pests are detected, the shipment will be refused entry and ordered removed.

This period will allow industry and stakeholders to adjust their operations to comply with ISPM No. 15: 2009 for WPM circulating between Canada and the U.S.

Phase 2: Importers of non-compliant wood packaging material will receive written notice from the Canada Border Services Agency to indicate that their shipment will have to comply with the requirements of ISPM No. 15: 2009

Phase 3: All wood packaging material, including dunnage wood used for packing cargo, will be required to comply with ISPM No. 15: 2009. Shipments with non-compliant wood packaging material will be refused entry and ordered removed.

11.0 Communications Plan

11.1 Initial Consultation:

Consultation of stakeholders via various forms of communications is proposed.

11.2 Implementation of ISPM No. 15: 2009

In December, 2010, an update related to this initiative was posted on the CFIA external Web site. The CFIA had also set up a working group with other federal government departments and agencies to respond to the U.S. proposed ruled posted for comments on December 2nd, 2010. The Government of Canada's response is available in Appendix 3.

12.0 Endorsement

Approved by:

Chief Plant Health Officer