Frustration with Canada’s slow progress in risk protection - The Packer

Frustration with Canada’s slow progress in risk protection

03/19/2014 03:36:00 PM
Tom Karst

Both growers and retailers believe that insurance isn’t equivalent to a PACA-like trust, McInerney said. Insurance is inadequate and unfeasible for the industry, he said, adding premium cost, coverage variabilities, deductibility and the complex logistics of accounting for people coming in and out of the industry.

“With the greatest of respect, we didn’t need the Regulatory Cooperation Council on risk mitigation to devise this innovative concept of account receivables insurance,” McInerney said. “It has been around for hundreds of years and it doesn’t work for the produce industry.”

Fowlie also said it is unlikely insurance will find favor with the Canadian or U.S. industry because of the added costs.

The RCC process may have only a few months before it expires and Canadian officials have not taken up the issue of a PACA-like deemed trust, where sellers would be given priority in bankruptcy proceedings, McInerney said.

“Prior to the clock running out on the RCC process we must have a PACA-like trust placed on the table for meaningful consideration and for discussion and debate to occur,” he said.

McInerney said there will not be another chance in this generation where the U.S. president and the Canadian prime minister come together to resolve trade issues.

Fowlie said Canada’s bankruptcy and insolvency law is reviewed every five years, and it is scheduled later this spring or summer.


If Canada doesn’t make progress, McInerney said the U.S. could move to place Canada in the same position as all other countries, requiring sellers from Canada to post bonds before they can bring any PACA actions against U.S. buyers. Currently, Canada is the only country exempt from the bond requirements. For example, if a seller from Chile brings a formal claim against a U.S. buyer for $30,000, the seller must post a double bond of $60,000 before a formal complaint can be heard. That is in place to discourage frivolous clams and provide a source of funds if a counterclaim against the supplier is made.

Historically sellers in Canada have had the bond requirement waived, but McInerney said the lack of progress may put that exemption in question. Continued Canadian access to the PACA trust doesn’t seem fair when the U.S. has been seeking similar protection but has not seen any momentum from the Canadian government, he said.

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usa  |  March, 20, 2014 at 09:19 AM

It seems the produce door at the border only seems to swing one way. Canada benefits from all the protections for their suppliers that they will not provide for anyone else. They benefit tremendously from the "friendly" policies of the U.S. Why are they any different than any other importer? Am I wrong? I could be.

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