The renegotiation of the North American Free Trade Agreement—now tentatively known as the United States-Mexico-Canada Agreement—and tariffs on Canadian steel and aluminum have cast a cloud of uncertainty over the trading relationship between Canada and the United States that hasn’t been seen since 1988, when the Liberals and Conservatives fought a heated election battle over whether to implement the two countries’ original free trade agreement. But that does not mean there weren’t cross-border problems, even before U.S. President Donald Trump cast a pall over the bilateral relationship.
The impediments to cross-border trade are perhaps best epitomized by the simple jelly bean. While most people wouldn’t give these little candies a second thought, differences in regulations governing jelly beans in Canada and the U.S. has meant that manufacturers cannot simply package their confectioneries and sell them throughout North America.
For example, although jelly beans can cross the border tariff-free under NAFTA, different packaging and nutritional labelling requirements means that manufacturers need to create two separate production runs for candies intended for sale in the two jurisdictions. Having to store them in separate packages means higher costs and more warehouse space.
Some of the regulations that stop jelly beans from flowing freely across the border seem rather trivial, such as whether nutritional labels require a space between the number and the unit (“7 mg” vs. “7mg”). Yet even after the three NAFTA partners held a summit in 2008, during which the three leaders claimed they mostly discussed jelly bean regulations, many of them remain to this day.
What does any of this have to do with vaping? Bear with me.
At the beginning of September, The Canadian Vaping Association, Canada’s preeminent electronic cigarette trade association, and the American E-Liquid Manufacturing Standards Association announced the creation of the North American Vapor Alliance (NAVA). Since that time, the Smoke-Free Alternatives Trade Association has joined, as well.
NAVA’s stated goal is to “to jointly provide the U.S. and Canadian industry, and our respective national regulators, with a comprehensive framework to most effectively and efficiently regulate our industries.” This includes a number of laudable policy objectives, such as ensuring that e-cigarettes are regulated differently than tobacco products and that regulations are not so onerous as to prevent innovation, hinder adult access to the products or create barriers for small businesses to enter the market.
But most importantly, NAVA aims to come up with continent-wide standards for the manufacturing of devices and liquids that, it is hoped, regulators in both countries will eventually sign on to.
This is critical because, following the passage of Bill S-5 in Canada, we will be seeing a host of new regulations governing the manufacture and sale of vapour products. The U.S. Food and Drug Administration (FDA) has also stated its intention to place strict new rules on the burgeoning e-cigarette industry. If the regulations in the two countries diverge significantly, it will mean that manufacturers will have to create two separate products for sale in both markets.
This will significantly increase costs for the many small businesses currently competing in this space and reduce consumer choice, if some companies feel that exporting their products simply isn’t worth the hassle anymore.
On the other hand, if NAVA is successful in creating manufacturing standards that are adopted by both Health Canada and the FDA, we will see a vibrant vapour products market in Canada and the United States that will have totally avoided the pitfalls experienced by the jelly bean industry.
NAVA is currently planning a conference, at which industry stakeholders will get together to start coming up with the rules that the whole industry may one day have to abide by. But, as always, it’s pay to play. Anyone who wants a say in the future of the North American electronic cigarette industry will need to join one of the partner organizations, in order to get a seat at the table.