Inclusion in the TPP May Come at a Cost for Canada

Contributors: Ed Farrell, Jerry Chapin

As President Obama signed Trade Promotion Authority into law he removed a major stumbling block to completion of the Trans-Pacific Partnership (TPP) trade negotiation when chief negotiators, and then Ministers, meet in Maui July 24-31.  However, a sticking point for many of the countries in the negotiation may be Canada’s reluctance to nix their protectionist supply management system for dairy and poultry.

With respect to dairy, the system dates back seventy years to when Canada faced significant surpluses following World War II, as the strong profits realized by Canadian dairy farmers from their trade with the U.K during the war evaporated with the normalization of trade within Europe after the war. In an attempt to align production with demand, Canada adopted a system that established floor prices for certain dairy products, which in turn supported on-farm milk prices. In further pursuit of price stabilization, the government established a supply control system that targeted specific dairy products.  These policies eventually gave way to Canada’s current supply management system.  While this system has propped up Canada’s milk producers, it could now exclude Canada from the largest trade deal since NAFTA.

The Canadian system is best understood as comprised of three parts: Price setting, control of supply, and protection from foreign competition. Prices are set by the Canadian Dairy Commission and ultimately result in significant income for dairy farmers. To avoid overproduction, farmers are allotted a production quota, which is a transferable asset currently valued at about $28,000.00 per dairy cow. Thus, an average Canadian dairy farm of around 70 cows has about $2,000,000 worth of quota. The final component to Canada’s supply management system is protection from foreign competition, which brings us to the TPP.

Canada’s ability to regulate their market is dependent on keeping competitively priced imports out, and to this end Canada has very restrictive tariff rate quotas on dairy products, with over quota tariffs ranging from 246% for cheese to 300% for butter. The result of these supply management policies is that Canadians are currently paying just over C$7.87 for a gallon of milk, or nearly twice as much as the average U.S. consumer.

There is no question that as negotiators meet in Maui, all eyes will be on Canada, which is under pressure to open their dairy market to imports from TPP countries such as Japan, Australia and New Zealand, as well as the U.S. Some believe this pressure will be enough to bring the nation out of its protectionist mind set. However, Canada has long stood behind their supply management program and is not showing much indication that they plan on bending to foreign pressure, regardless of whether the pressure is coming from powerhouse neighbors such as the U.S. or allies half way around the world. As recently as last month, a spokesman for Canadian Trade Minister Ed Fast said Canada would defend dairy supply management in its negotiations.

Faced with elections in October, will the Harper administration de-regulate the dairy and poultry industry as they did their wheat industry in 2011, or will they hold firm in support of their unique and dated regulatory system? And if they hold firm on dairy and poultry, will the US and others take a hard line and exclude Canada altogether? Or will some middle ground be found? Whether preserving Canada’s regulatory system for dairy and poultry is worth losing inclusion in the TPP — a deal that will ultimately benefit Canada in a wide range of sectors — may ultimately be a decision the Harper administration has to make.

Salmonella in Raw Products – Can FSIS Request a Recall?

By Barbara J. Masters, D.V.M.

I am often asked whether or not the Food Safety and Inspection Service (FSIS) can request a recall for meat or poultry products merely because the products test positive for Salmonella.  The answer to that question today is no.  However, there are times FSIS can request a recall of raw meat and poultry products for Salmonella.  If at any point FSIS determines there is specific product (specific lot, specific product date) in commerce making people sick, it will ask for a voluntary recall of that specific production of product, regardless of whether there is a positive test result.

What is important to understand is that for outbreak recalls, FSIS will use the same thought process regardless of whether the pathogen is considered an adulterant or not.  FSIS would look for the following four factors as part of the outbreak investigation:

  • There are related illnesses (an outbreak) as determined by the DNA analysis of samples from case patients;
  • The evidence supports the conclusion that the likely source of the illnesses was a specific product;
  • The plant produces that specific product; and
  • A specific production of that plant’s product was purchased by, or available to, the case patients at the time and location of the illnesses.

If all of these criteria are met, FSIS will request a recall of the product implicated in the outbreak.  In this circumstance, FSIS is not relying on a positive test result (from the product) to request the product be removed from commerce, rather they are relying on evidence that the specific product has been implicated in causing an outbreak.

In summary, today, FSIS can request an establishment to conduct a voluntary recall for products that test positive for an adulterant (e.g., E. coli O157:H7), but not for product that tests positive for Salmonella.  However, in the case of a foodborne outbreak, FSIS applies the same rules to all pathogens.  If the evidence supports that a specific production of product is the likely source of the illnesses in the outbreak, FSIS will request a voluntary recall (not based on test results of the product).

About Dr. Masters

Mixed in with the attorneys at OFW Law is the former USDA Food Safety Inspection Service’s (FSIS) Administrator, Dr. Barbara Masters.  Dr. Masters is a veterinarian who spent eighteen years with FSIS – the final three years as Acting Administrator and Administrator.  During her rise to the Administrator’s position, Dr. Masters served as the Deputy Assistant Administrator for Office of Field Operations.  While in these key leadership positions at FSIS, Dr. Masters’ primary focus was on the implementation of science-based policies for the protection of public health.

John Block: Bird Flu

By John R. Block

There is no industry more volatile or more uncertain than agriculture. The drought came and Texas and Oklahoma ranchers had to sell their cattle – not enough feed. Beef prices shot up. We still don’t have enough beef. The pork industry was hit with a swine disease. Thousands of baby pigs died. That resulted in a pork shortage and those prices shot up.

Now, we have bird flu. Who would have predicted? The H5N2 virus has killed 47 million chickens. We should be producing enough eggs to meet domestic demand and be able to export more than 30 million eggs per month. Not now. Iowa has been hurt the most – losing 30 million birds. That’s half the laying hens in the state.

The price of eggs has doubled. Egg processors making cakes, cookies, Krispy Kreme donuts, etc. are crying for eggs. For the first time in 10 years, we have authorized imports. Seven European countries have been approved to import shell eggs. Government officials say it will take as long as 2 years to get our production of eggs back to where it was before the virus.

This is not the first time we have been hit with a bird flu virus. When I was Secretary of Agriculture in the early 80s, we had our last bad bout with bird flu. That was a disaster then. But this time is much worse.

The Department of Agriculture oversees these problems. Farmers are compensated for the birds that die or are destroyed. According to Secretary Vilsack, the cost could exceed a half billion dollars. We are losing a lot of birds, including egg-laying hens, broilers, and turkeys. It will take a lot of money and time to rebuild the business.

Stopping the spread of the virus will not be so easy. Canadian geese in the state of Michigan have tested positive. They fly everywhere. In the meantime, the industry is looking for a vaccine to protect against the virus. None approved as of yet.

There is no industry more essential to mankind than food production. There is no industry more uncertain. And yet, our farmers and ranchers persist and get the job done. Did you know that this spring world food prices fell to their lowest level since 2009?

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

Device Firms: What You Should Know About The 21st Century Cures Act

By Mason Weeda

Last month, legislation that would affect, among other things, FDA’s regulation of medical devices and the manufacturers of such devices took a considerable step forward when it was introduced and then unanimously approved by the House Energy and Commerce Committee by a vote of 51-0 on May 21.  Known as the 21st Century Cures Act (“Act”), the stated aim of the legislation is to modernize and personalize health care, encourage innovation, support research, and streamline the U.S. health care system to promote the delivery of better and faster “cures” to more patients.

In support of this goal, the Act would change the review of medical devices determined to be “breakthrough,” establish a third-party option for the inspection of medical device manufacturers, make changes to certain Humanitarian Device Exemption (“HDE“) requirements, institutionalize FDA’s ongoing efforts regarding the regulation of medical software applications, and loosen some clinical investigation requirements.  Significantly, the legislation also indicates an ongoing Congressional interest in the restrictions FDA has placed on the dissemination of truthful and nonmisleading off-label information.

Breakthrough Device Pathway

The Act would support faster “cures” by creating a “priority review” pathway for those devices that meet the definition of a “breakthrough device.”  These “breakthrough devices” include those that “represent breakthrough technologies… for which no approved alternative exist,” offer “significant advantages over existing approved or cleared alternative,” and are “otherwise in the best interest of patients.”

Upon a sponsor’s request, FDA would determine whether a device meets the “breakthrough device” designation using specified criteria.  If a device receives such designation, it would be eligible for expedited review by a team of staff that will interact with the device sponsor.  During this process, the Act would require FDA to “take steps to ensure that the design of clinical trials is as efficient as practicable, such as through adoption of shorter or smaller clinical trials, application of surrogate endpoints and use of adaptive trial designs and Bayesian statistics.”  Likewise, the agency would also be required to “facilitate … expedited and efficient development and review of the device through utilization of postmarket data collection.” Although these are laudable goals, the Act does not impose any specific timelines in which an “expedited review” must be completed or otherwise quantify how much existing review times will be reduced.

Third-Party Inspections of Device Manufacturers

The Act also contains provisions that could allow FDA to conserve its inspectional assets and speed up approval of modified versions of existing devices by allowing for the use of third party inspectors to conduct the necessary establishment inspections.  The theory being that creating a “quick” method to inspect facilities in these circumstances would promote the earlier availability of improved “cures.”

Under the provisions of the Act titled “Medical Device Regulatory Process Improvements,” Congress would require FDA to establish a “third-party quality system assessment” program, where accredited third parties would inspect manufacturers for compliance with the Quality System Regulation (“QSR”) (21 C.F.R. Part 820).  However, use of such third-party inspections would be limited only to QSR inspections necessary as the result of submissions involving “device related changes” and would not be available in other types of establishment inspections.

Changes to Humanitarian Device Exemptions

This section of the Act would double the number of patients that must suffer from a disease in order for FDA to consider it a “rare disease.”    Presently, the HDE pathway is intended to incentivize and encourage the development of devices to treat “rare” diseases or conditions affecting small patient populations when the device manufacturer`s research and development costs would otherwise exceed its market returns.  It does so by significantly reducing the clinical data that would be necessary for the manufacturer to generate to support the efficacy of the device that would otherwise be required by FDA in a traditional marketing application. To qualify for an HDE, the disease or condition must presently affect fewer than 4,000 individuals in the United States per year. The Act seeks to encourage additional development making “cures” more widely available by increasing this number to 8,000 individuals.

Medical Software

In an apparent effort to “modernize” the technology involved in health care, the Act would create a definition of “health software,” which generally would not be regulated unless it:

  • is intended for use to analyze information to provide patient-specific recommended options; or
  • FDA determines that it poses a significant risk to patient safety.

This provision continues to allow FDA some flexibility as to how it may regulate software.  The Act also would require the agency to review existing regulations and guidance regarding software, including the classification of software, standards of verification and validation, review of software, and quality system for software, among others.

Clinical Trials

The Act would also make it easier for sponsors conducting clinical investigations by requiring the Department of Health and Human Services (“HHS”) to harmonize its requirements applicable to clinical investigations with FDA’s own requirements. This supports the Act’s goals by significantly reducing the regulatory burden imposed on sponsors who must presently ensure that their clinical investigations meet the often duplicitous requirements imposed by both HHS and FDA controls.  The Act also would make it easier for sponsors to meet Institutional Review Board (“IRB”) requirements by allowing the use of non-local IRBs to review medical device trials, including Investigational Device Exemptions (“IDE”) and HDEs. Permitting the use of non-local IRBs support the Act’s goal of “quicker cures” by eliminating the “log jam” and delays sometimes associated with the use (and overuse) of local IRBs by giving sponsors additional options that are potentially faster than the traditional ones.


Lastly, and without limitation, the Act’s section on “Facilitating Responsible Communication of Scientific and Medical Developments,” provides that FDA “shall, within 18 months, issue draft guidance on facilitating the responsible dissemination of truthful and non-misleading scientific and medical information not included in the approved labeling of drugs and devices.”  This provision appears to be in response to the Coronia Case (U.S. v. Caronia, 703 F.3d 149 (2d Cir. 2012)), which holds that representatives of pharmaceutical manufacturers have a right under the First Amendment to make truthful statements regarding their products, even if such statements indirectly promote drugs for uses not approved by FDA.  The Act does not provide further direction on this topic, but Congress is clearly nudging FDA to update its position on off-label promotion which may affect medical device manufacturers.

It may be an uphill battle for Congress to agree on all topics involved in the 308 pages of 21st Century Cures Act.  However, as reported by the House Energy and Commerce Committee Press Releases, the bill appears to have support from industry and consumer groups, which may help bring Congress together.

How Much Rain Has Fallen In Texas?

By Charles W. Stenholm

In the month of May, Texas received over 35 trillion gallons of rain.  See the graphic, below, to put that into perspective.

Many prayers were answered as we went from extreme drought to an overabundance of rainfall.  Truly a blessing!  It is much more difficult to do without water than deal with having too much.  Just wish the loss of life and property could be avoided.  We did, however, see many of the benefits of investing in flood control pay some dividends.

TX Rainfall

Click graphic to enlarge.

Why Adesina’s Election is Important for Agriculture

By Marshall L. Matz, as published in Agri-Pulse

In a surprise upset, Dr. Akinwumi (Akin) Adesina was elected to be the next President of the African Development Bank (ADB), defeating seven rivals in six rounds of voting.  Adesina holds a PhD in agriculture economics from Purdue and has been serving as the Minister of Agriculture in Nigeria since 2011.

Adesina is the first agriculture economist to become President of the ADB.  He is a dynamic leader with a passion for rural development (and bow-ties).  According to The Guardian, under his leadership in Nigeria, “food production increased by 22 million tons and food imports dropped more than a third,” creating some three million jobs.

The ADB is one of Africa’s largest lending institutions, making Adesina one of the continent’s most prominent financial leaders. Africa now has six of the world’s fastest growing economies and, as agriculture becomes more efficient, the economy will grow even faster. Over 65% of the population farms or is engaged in agriculture. However, yields are so low that feeding a family takes 70% the its disposable income and Africa must spend $35 billion to import food.

Adesina’s goal is to make Africa globally competitive.  Upon his election he said, “A big thing for us in Africa is to create an inclusive model with jobs for Africa’s youth, jobs for Africa’s women, revive Africa’s rural areas and have regional integration for shared prosperity.” He also noted that “there is no developing Africa without empowering women.”

The challenge Adesina faces will not be easy.  Political stability varies widely in Africa’s 54 sovereign nations as does infrastructure, education and health care, but things are clearly changing and changing fast.

Adesina will have some important allies to work with in his new capacity:

  • The Chairperson of the African Union, Dr. Nikosazana Diamini- Zuma, is asking all African countries to invest at least 10% of their respective national budgets in agriculture.  The program, called the Comprehensive Africa Agriculture Development Program (CAADP), is having an impact.
  • Dr. Agnes Kalibata, the new President of the Alliance for a Green Revolution in Africa (AGRA) holds a doctorate from the University of Massachusetts in entomology.  She was the Minister of Agriculture in Rwanda and was widely considered to be one of the most successful agriculture ministers in sub-Saharan Africa.  At AGRA, Dr. Kalibata is working with African experts in some 18 counties to fulfill the vision of food self-sufficiency.
  • Strive Masiyiwa, the Chairman and CEO of Econet Wireless, is the “Bill Gates of Africa” according to Forbes, but is focusing the attention of Africa’s private sector on agriculture through his work with AGRA and Grow Africa.
  • Former Secretary General Kofi Annan, Chairman Emeritus of AGRA,  says “it’s time to turn hoes into tractors,” and is committed to helping through the Kofi Annan Foundation.

These African leaders are working closely with the G-7, G-20 and key leaders closer to home here in the United States. Those leaders include: Gayle Smith, who is an Assistant to President Barack Obama and Senior Director at the National Security Council. In that capacity, Smith is responsible for global development and helped to craft the Camp David Accords creating a commitment to African agriculture.

During the Clinton Administration, Smith was Senior Director for African Affairs at the National Security Council.  President Obama has now nominated Smith to be the next Director of the Agency for International Development (AID). Smith is well-qualified for the AID position and hopefully, the U.S. Senate will quickly confirm her nomination.

While there are many others committed to growing Africa out of poverty, in the U.S., special recognition must also go to Pamela Anderson at the Bill and Melinda Gates Foundation and Judith Rodin at the Rockefeller Foundation.

All of these people are coming together for Africa. The Renaissance is underway and the election of Dr. Akin Adesina is the latest very important development. According to Dr. Adesina, “The kind of Africa we need today is an Africa where the young people want to stay, not a place they want to move away from…and an Africa we can all be proud to call home.”

As Adesina knows, agriculture development must be at the center of the African Renaissance. As modern seeds and inputs, along with education, reache the stallholder farmers, production and profitability will improve. That will drive the African economy to new levels of success and, in the process, move Africa and the world toward food security.

The African Development Bank made an inspired choice.

Marshall Matz specializes in agriculture and food security at OFW Law in Washington, D.C.  He also serves as the DC representative for the Alliance for a Green Revolution in Africa.

Former Consumer Products Safety Commissioner Nancy Nord Joins OFW Law

We are pleased to announce that Nancy Nord, former Acting Chair of the United States Consumer Product Safety Commission, has joined OFW Law as Of Counsel.  Nord is a nationally recognized expert on safety regulation and corporate compliance with a wealth of experience in both the public and private sectors.

Please click the announcement, below, to enlarge it.

Nancy Nord Announcement

CPSC Enforcement Action Against Michaels Highlights Importance of Proper Reporting

By Elliot Belilos

The U.S. Consumer Product Safety Commission (CPSC) recently filed an action in federal court against Michaels Stores, Inc., seeking civil penalties for allegedly untimely reporting injuries from a vase sold in the stores and, notably, for allegedly falsely reporting the incidents as a retailer rather than as the manufacturer of the product.  According to the Complaint, Michaels misrepresented to the Agency the company’s role in the distribution chain, allowing another company, The Gerson Company (“Gerson”) to report as the manufacturer even though Michaels was the importer of record (and, as a result, the statutory “manufacturer”).

CSPC asserts that Michaels engaged Gerson to contract to have the vase made overseas exclusively for Michaels, but that Michaels was the importer of record, a fact that CPSC alleges Michaels withheld from the Agency in its 15(b) report.  CPSC asserts that Michaels purposefully withheld that information so that Gerson would be the recalling entity, and that the recall would have been more successful had the more well known Michaels been the recalling entity.

This case bears watching as it moves forward.  Certainly companies that are importers of record for products manufactured overseas need to understand that they are deemed to be the manufacturer of those products under the Consumer Product Safety Act (CPSA), and that any report to the CPSC should properly reflect their role in the distribution chain.

Elliot Belilos represents companies on consumer product safety compliance issues, including reporting obligations to the CPSC and corrective actions, up to and including recalls.  Elliot can be reached at

John Block: GMOs Under Assault

By John R. Block

We can’t seem to silence or satisfy the loud scream of opposition to GE crops. The reason probably is that up until now we have ignored them. It’s time to stand up and set the record straight.

GE food is safe and even beneficial according to 88% of scientists. We have conducted more than 1,000 studies. We have been eating GE food for more than 20 years – no one has gotten sick.

The fact is that for thousands of years, farmers have been improving crops through selective breeding. That process alters genes. We have found that in the laboratory we can do it faster.

Never mind the facts, the critics are beating the drums. Three states have passed labeling laws. Vermont is in the lead as they begin to implement their law. It sounds simple. Just label the food if it has GMO products in the food.

It’s not that simple. Vermont has a long list of exemptions. Animal products are exempt – beef, pork, chicken, dairy. But keep in mind the animals were fed GMO corn and soybean meal.

Trying to get out ahead of everyone, Chipotle recently announced that it has gone GMO free. But it’s not really free. The soft drinks are made with GMO corn sweetener. The burritos have GMO corn-fed beef, pork, chicken, and GMO sour cream.

The U.S. Congress is considering as many as 30 bills to deal with the GMO debate. You may wonder where all of this noise is coming from. Yes, there are individuals that sincerely are concerned about GMO safety. However, the organic companies (some of them are huge) are helping to push the false argument about risk. If they succeed, they can sell more product and make more money.

This debate is not over. You will soon read about the next step in plant technology – gene editing. Gene editing is a more precise way to alter plant traits.

The leading critics of GMOs are totally inconsistent. First, they support the science on global warming, but ignore the science on GMOs. Next, they pretend to care about the poor, but genetic engineering helps the poor by keeping the cost of food down. The world will not produce enough food without new technology. Finally, if they want to reduce the use of chemicals and energy, GE also does that.

Stay tuned.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

John Block: “COOL” Isn’t Cool

By John R. Block

As a farmer, we understand that if you have something that doesn’t work, you fix it. It will just cost you money if you ignore the problem. Somehow, the federal government doesn’t seem to understand that common sense fact.

The Country of Origin Labeling (COOL) law was first passed in 2002. Canada and Mexico have been challenging the law now for 13 years. The World Trade Organization (WTO) just this week ruled it to be a violation of U.S. international trade obligations. We are a member of the WTO and therefore should live within the rules. That is our obligation, and we expect other countries to do the same.

This week, for the third time, the WTO ruled against us. That ruling gives Canada and Mexico the legal right to retaliate. Canada already has a list of proposed restrictions, which will result in a dramatic cut in our exports to Canada and Mexico. That is serious. Canada and Mexico are our number 1 and 2 export markets. Besides, they are our closest neighbors.

Senator Pat Roberts (KS) had this to say: “If Congress doesn’t act swiftly, retaliation will wreak havoc on the U.S. economy.” I think we should be aware that if we don’t fix this law, it will cost us millions of dollars in ag exports as well as other exports.

The law today requires that meat from a calf born in Canada and shipped to the U.S. bare a label that reads “Born in Canada, raised and slaughtered in U.S.”  Just imagine the cost and confusion that can cause.  What about the Montana farmer who imports Canadian calves and mixes his own U.S. calves with the Canadian calves?  By law, he would have to keep track of them and market them separately. The U.S. processing plant would then have to process them separately. That would be the only way to ensure the Canadian label was on the Canadian steak.

Consumers say they have the right to know where that animal has been. Why? It isn’t worth the hassle. USDA just released new study results that point out the COOL labeling policy costs consumers nearly 8 billion dollars over 10 years.

We don’t need to try and change COOL. We’ve tried that before. COOL isn’t cool. Just get rid of it.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.