DRC answers: Will there be a PACA trust in Canada?

08/05/2012 09:34:00 PM
Tom Karst

National Editor Tom KarstThis "Frequently Asked Questions" release is from the Dispute Resolution Corporation in Canada about recent talks to bring risk mitigation tools for produce sellers. Here it is, as I received it.


From DRC:

As a result of increased interest in the Harper/Obama Regulatory Cooperation Council’s (RCC) initiative on financial risk mitigation, DRC (Ottawa, Canada) answered a few commonly asked questions to help its members understand its positive implications for both Americans and Canadians in the supply chain.

Question: What is the goal of the Regulatory Cooperation Council’s (RCC) working group on Financial Security for Produce Sellers?

· Answer: In nearly every way, its goal is the same as the one pursued by the tri-national founders of the DRC two decades ago: a North American approach that would provide tools for sellers of produce in order to manage slow pay and no pay accounts. At that time, Article 707 of NAFTA provided the forum for change, the RCC is the forum for today. The DRC provides those tools for sellers of produce when the buyer is solvent and able to pay. What remains to finish the job is a tool that sellers can utilize when the buyer is insolvent and unable to pay. That tool is the stated goal of the RCC.

Question: It sounds like you are talking about something like the PACA Trust available to sellers in the US. Will there be a PACA trust in Canada?

· Answer: Wow, you got right to it and the answer is not an easy one. There are significant differences in the Constitutions of the US and Canada which makes implementing a copy of the PACA Trust model challenging in Canada. We can say that Industry and Government are engaged and agree that the produce industry needs a tool that matches its unique credit and marketing needs. Industry has made it clear that the Canadian tool needs to provide comparable benefits to sellers in Canada that are available to those sellers in the US (and accessible by Canadians). Frankly, it is embarrassing that the US treats Canadian sellers better than Canada does in this regard.

Question: Is the RCC only about trade between the US and Canada?

· Answer: I see your email has a “.ca”, so I will assume you are asking from a Canadian perspective. All 29 RCC initiatives are to address regulatory/trade challenges between the US and Canadian governments. However, the produce related initiative is geared mainly towards providing Canadian producers and sellers access to financial risk mitigation tools not currently available, given the limitations of the current Canadian legislative and regulatory framework. The DRC along with the CHC and CPMA are supporting solutions based on Canadians being able to access two basic tools:


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