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Chemical harmonization bill would level playing field
June 25, 2003

By Roger Johnson, North Dakota Agriculture Commissioner

U.S. Senate Bill 332 - the Pesticide Harmonization Act introduced by U.S. Senator Byron Dorgan, (D-N.D.) - is a measured, reasonable and timely response to the increasingly intolerable situation that thousands of American farmers face, namely the disparity between the prices they pay for pesticides and the prices paid by their Canadian counterparts for essentially the same products.

Every day, Canadian grain and other commodities move freely south across the U.S. border to compete with domestic commodities on the open U.S. market. Much of that Canadian grain has been produced using pesticides that are identical or substantially similar in chemical composition to pesticides registered for use in the U.S. but they are offered at  substantially lower prices in Canada.

Federal statutes forbid American growers or pesticide dealers from legally importing Canadian pesticides without the consent of the product registrant (usually the manufacturer), even if the products are identical in composition to pesticides registered with EPA for the desired use. Thanks to this twist in the law, product registrants have created two separate pesticide markets, the U.S. and Canada.

This unfair segmentation of pesticide markets has resulted in significant economic impacts to American farmers. Pricing studies have repeatedly shown that U.S. producers pay significantly higher pesticide prices than do Canadian producers. Studies by the Northern Plains Trade Research Center in 2001 and the North Dakota Department of Agriculture in 2002 estimate that North Dakota farmers would save approximately $24-million if they could purchase pesticides at Canadian prices.

In some cases, pesticide companies have actually used the law to force legal action against their own customers. Last year, representatives from Bayer Cropsciences reported that a group of North Dakota farmers had illegally imported Canadian Liberty¨, a broad-spectrum herbicide. The North Dakota Department of Agriculture determined that the EPA and the Customs Service had erroneously allowed the farmers to bring the chemical across the border. None of the chemical had been applied, so it was returned to Canada.

Why would North Dakota farmers travel to Canada and haul back thousands of gallons of herbicide, when a virtually identical product from the same manufacturer is available from their local dealer? The answer is simple: Canadian-registered Liberty cost $9.55 per acre less than the U.S.-registered version at that time. Today, it is about $4.40 less per acre.

In short, U.S. producers pay more for the same chemicals, yet Canadian commodities Ð wheat, barley, canola, etc. Ð produced with those chemicals continue to pour across our border without any sort of regulation. This issue has nothing to do with food safety or environmental quality Ð the Canadians are as finicky as we are about food and the environment.  This issue is purely economic. The pesticide manufacturers know they can charge U.S. farmers more for the same products, and the law enables them to do so.

This is an intolerable situation and demands remedy.

SB 332 would enable the states to register Canadian pesticides that are identical or substantially similar to products already registered with the Environmental Protection Agency for use in the U.S.  An independent party could apply for and hold the state registrant for certain Canadian pesticides without the consent of the primary registrant, usually the manufacturer. These independent registrants would most likely be established pesticide wholesalers and dealers. A state registrant would be necessary since it ensures that someone would be responsible for distributing and re-labeling the product to meet EPA requirements.

Our experience at the North Dakota Department of Agriculture demonstrates why this provision for issuing state registrations without the consent of primary registrants is crucial. My staff and I have attempted repeatedly to work with product registrants to import Canadian pesticides for use in the U.S. For example, we asked at least five  agricultural chemical companies in the fall of 1999 for their support to issue Section 24(c) Special Local Needs registrations for certain Canadian pesticides that were allegedly identical to more expensive products registered for use in the U.S. Not one of those companies would allow access to their products at Canadian prices. Yet Canadian commodities, produced with those products, continue to flow unimpeded across our border.

Unfortunately, it is this provision for state registrations that is currently holding up action on SB 332. Some members of Congress, as well as the National Association of Wheat Growers, want the registration process to remain exclusively with EPA. They say that state agencies might not have the manpower to deal with the requests and that they might not properly handle proprietary information about pesticide formulations in complete confidence.

Neither of those objections stands up under scrutiny.  It is the EPA that is currently snowed under with a backlog of several hundred pesticide registration requests; having the states handle the Canadian product registrations would benefit the EPA.  State agencies already have considerable experience in dealing with sensitive information Ð dealing with proprietary pesticide formulations would not present any difficulty. Furthermore, state agencies already have long experience cooperating with one another in the issuance of Section 24(c) registrations and Section 18 exemptions and would draw upon this experience in registering Canadian pesticides.
Finally, if states are allowed to issue registrations, I believe market forces will kick in, eliminating many or most of the price disparities.

American farmers produce the safest, highest quality food in the world. To compete in today's markets, however, they need a level playing field with their competitors. Unfortunately, American farmers compete in a free market with their outputs, while being forced to purchase pesticide inputs in a segmented, unfair and often higher-priced market. SB322 is the avenue for American farmers to purchase pesticides at prices now only available to their Canadian counterparts. That levels the playing field.


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