U.S. and Canadian Businesses Speak Out: Removing Wood Pallet Exemption Would Undermine Trade and Commercial Opportunities

By April 4, 2016Shopfloor Policy, Trade

President Barack Obama’s meetings last month with Canadian Prime Minister Justin Trudeau emphasized the value of open trade and investment between the two countriessome $2 billion per day between the two countriesas a linchpin of the relationship. Possible regulatory changes related to wood packaging, however, would impede that commercial relationship, adding unnecessary costs that would harm business and consumers in both the United States and Canada.

The NAM on Friday joined 37 other organizations on both sides of the U.S.Canada border in a letter urging the United States Department of Agriculture (USDA) and the White House Office of Information and Regulatory Affairs to halt efforts to impose these new rules. Our collective organizations represent companies that are supporting millions of jobs and hundreds of millions of dollars in economic activity, working for industries in nearly every area of bilateral trade, from aerospace to retail, from autos to food and beverages and from heavy equipment to cosmetics.

This is not a new battle, but it has taken on new urgency in recent months. The USDA’s Animal and Plant Health Information Service (APHIS) first proposed removing this exemption as far back as 2010, but it was met with widespread industry concern. In 2015, APHIS, ignoring that concern, pushed to include another proposal on the regulatory agenda for this year’s U.S.Canada Regulatory Cooperation Council (RCC), which is now scheduled to meet on May 45 in Washington.

Wooden pallets are used to transport a substantial portion of consumer and industrial products crossing the U.S.Canadian border each and every day. APHIS’s proposal would affect all of that trade by effectively requiring all wood pallets to undergo costly and unnecessary heat-treatment requirements to prevent invasive pests that come not from North America, but from Europe and Asia. This proposal not only would have highly negative commercial impacts on industries and consumers in both markets, but would also actually divert enforcement resources away from areas where they would do the most good: entry points from Europe and Asia that are the source for the targeted pests.

Furthermore, APHIS’s push is based on an outdated cost-benefit analysis that significantly underestimates the cost of these regulations to businesses, consumers and the overall economy.

As urged by both manufacturing and service industries across the United States and Canada, the USDA and APHIS must halt their current efforts to impose these new regulations on wood packaging and instead seek to engage actively with industry on both sides of the border to address invasive species problems in ways that do not cripple bilateral trade. Only a common, sustainable, inclusive approach by U.S. and Canadian officials can address these types of challenges while also strengthening our critical economic relationship.

Ryan Ong

Ryan Ong

Ryan Ong is the Director for International Business Policy at the National Association of Manufacturers (NAM), where he works with NAM member companies to develop and advocate the association’s positions and priorities on intellectual property, standards and regulatory concerns, and investment policy issues, as well as issues in China and India. Mr. Ong has on-the-ground experience on many of these issues in previous stints at the US-China Business Council and the Duke University's Center on Globalization, Governance & Competitiveness.
Ryan Ong

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