Foreign E-Commerce Firms Should Have a ‘Domestic Presence’ in Canada Before They Can Sell to Canadians: Federal Report

A person makes an online purchase in a file photo. Pexels

A federal Department of Health report is proposing an expansion of its authority via a consumer safety program that will require foreign internet vendors to have a “domestic presence” in the country before they can sell their products to Canadians.

In an internal report last June, Health Canada said the Consumer Product Safety Program (CPSP), which gets its regulatory authority from the Canada Consumer Product Safety Act (CCPSA) and the Food and Drugs Act (FDA), was facing increasing challenges to enforce safety requirements on consumer products and cosmetics with the growth of e-commerce.

“While online shopping is certainly not a new phenomenon, the recent and significant increase in consumer preference for online purchases will likely pose new challenges in the future, as this trend continues to grow,” said the report, titled “Evaluation of the Consumer Product Safety Program,” published by the federal department five months later in November 2022, as first reported by Blacklock’s Reporter.

“More consumers are turning to online retailers. Often, these retailers do not have a domestic presence and therefore it is more difficult to verify compliance with Canadian regulations and legislation.”

But “given the relevance and increasing importance of e-commerce as an issue in consumer product safety,” the report added, the program “should expand its efforts” in addressing consumer safety for online products.

Remedies included having online retailers, particularly foreign ones, sign a voluntary “e-pledge” to adhere to and support the CPSP in its enforcement of legislations and regulations on their online platforms, and “requiring a domestic presence to sell products in Canada.”

“If the seller does not have a Canadian presence, and if there is a health or safety concern with the product, Health Canada would be limited in the actions it can take against that company,” the report said.

Last August, the U.S. International Trade Administration reported that in 2022, there were over 27 million Canadians (75 percent of the population) buying goods and services on the internet, with electronics being the leading product category, followed by fashion and furniture.

Foreign internet vendors are currently not subjected to the CCPSA and FDA which mandate safety codes for products ranging from children’s toys, household products, and sporting goods to cosmetics.

“The CPSP does not currently conduct market-wide surveillance of consumer products for compliance with the CCPSA, FDA, TVPA [Tobacco and Vaping Products Act], and relevant regulations,” the report said.

“Market-level compliance surveillance is not feasible due to the broad scope of products considered ‘consumer products’ and ’cosmetics.'”

‘Importers’

The report also emphasized that Canadians who buy from foreign online vendors fall under the definition of “importers,” and will be subjected to regulations though it clarified that the CPSP currently focuses its attention on those who import “for the purpose of advertising or selling a product to others.”

“When Canadians make purchases from companies that are entirely outside of Canada, they are in fact both ‘importers’ and ‘consumers,’” the health department said.

“As such, these individuals would be considered to be importers under the CCPSA, with the duties and responsibilities that entails.”

The report did not elaborate further on how regulators would enforce the remedies.

“Increasing consumer purchases from online and international marketplaces (e-commerce) is an emerging issue that may require new approaches and dedicated attention in order to be addressed,” it said.