Regulations on labeling and recycled content of plastic products in Canada

This framework document is Canada's effort to become the first country to thoroughly implement a plan to eliminate plastic waste. However, this framework document will pose many obstacles for imports into Canada in general and pose many legal challenges for future implementation not only for foreign manufacturers and exporters but also for foreign manufacturers and exporters. including for Canadian domestic businesses. The article below summarizes the main noteworthy contents of the framework document, especially the points that are likely to impact Vietnam's exports and opinions assessing the impact of these regulations. 

1. Labeling regulations and recycled content of plastic products

The promulgation of regulations on labeling and recycled content of plastic products is an effort of the Canadian Government to move towards a circular economy. These regulations will be enforced under the Canadian Environmental Protection Act and both the provincial and federal governments will have an enforcement role. Accordingly, in the circular economy, all Canadians have the responsibility to participate and have the ability to participate, meaning that packaging must be designed and have clear information for people to choose from the moment of purchase. products, to the ability to classify packaging for recycling. The regulation aims to effectively deploy the circular economy through increasing classification, recovery and recycling rates, specifically that by 2030, Canada will reach at least 50% recycled content in plastic packaging; recover and reuse at least 55% of plastic packaging by 2030 and reach 100% by 2040; Achieve 100% of recyclable packaging and zero plastic waste by 2030.

The main contents of these regulations are mainly: 1. setting the minimum recycled content in disposable plastic products and plastic packaging; 2. Regulations on recycling labeling to accurately classify plastic products; 3. Regulations prohibiting the use of the words "biodegradable"; “biodegradable” on disposable plastic products and plastic packaging and limit the use of the term “compostable”. Subjects covered by these regulations are parties involved in the design, consumption of plastic products and plastic packaging and brand owners (i.e. manufacturers or importers) and the wholesaler/distributor in case of authorization or if there is neither importer nor distributor, the final retailer.

For enforcement, in addition to the Canadian Environmental Protection Act, provincial and federal Extended Producer Responsibility (EPR) policies will be implemented to hold manufacturers/importers accountable for recalls. and manage plastic products and plastic packaging at the end of the product's life cycle, through activities such as: refunding packaging deposits, exchanging products, installing packaging collection systems... Responsibilities Expanded production forces manufacturers to incur operating costs to manage their packaging and invest in improving packaging design and reusing/processing old packaging. This program is expected to be implemented in all provinces by 2030 at the latest.

Regulations on the application of the term "plastic packaging":

Canada's packaging concept is according to the international standard ISO 18604, which covers all products for containment, preservation, storage, display and transportation. Packaging is classified into original packaging (directly related to the product); secondary packaging (packaging used to contain the original packaging). In addition, there is also packaging in e-commerce, also known as level 3 packaging. In addition, packaging is also classified according to intended users: household packaging and industrial/commercial packaging. Household packaging is a type of packaging that is required to comply with regulations on recycling labeling; Industrial/commercial packaging is not subject to labeling regulations but must comply with regulations regarding recycled content.

The draft sets out a number of exceptions such as: packaging that can be reused many times in the system can be exempted from regulations on labeling and/or minimum recycled content to encourage product innovation. Reusable replacements, for example parent company packaging for delivery that will be reclaimed for further use; or plastic products reused many times in households (trash baskets, tool boxes, DVD boxes...); or packaging shipped cross-border (importers are less likely to control the recycled content of packaging in e-commerce); packaging intended for export to another country and not recyclable in the Canadian system; and goods transited through Canada to third countries. Plastic packaging that is the final product, not "pure packaging", is also classified as an exception: headphone cases, lighter cases, printer cartridge cases... Products related to health, nutrition or safety (dairy products, infant food, drugs, medical equipment, etc.) will also be excluded from the requirements for recycled content except for beverage bottles. Because these products are strictly regulated by various laws such as: Food and Drugs Act and Regulations, Animal Health Act, Cannabis Act, Transportation of Dangerous Goods Act , 1992, Dangerous Products Act, Assisted Human Reproduction Act and Human Toxins and Pathogens Act…; Accordingly, there is not much recycled plastic that meets food packaging standards.

Recycled content requirements

Recycled content is posing a major challenge for products using rigid plastic packaging because there are still technical barriers to using recycled content in flexible packaging. All companies that produce and import products with hard packaging (including beverage bottles, cosmetic boxes, etc.) must be responsible for reporting the sanctions content for each product. For flexible packaging, although companies do not have to report recycled content, they must still report the total amount of plastic used and recycled plastic if any and are responsible for the truthfulness of the report. Companies are required to track recycled content metrics and ensure submission of Annual Reports. From 2028, all products using recycled content must be tested and certified by a third party. The role of third-party inspection is very important because it must be an honest, reputable agency to avoid abuses of power in inspection and certification. 

Specific regulations on recycled content for each type of product and timeline:

Although compostable plastic packaging is also exempted due to the technical incompatibility of biodegradable plastics with recycled content regulations. However, compostable plastic packaging is still subject to the same labeling requirements as conventional plastic products because Canada believes these products still pose the same problems as conventional plastic products.

Regulations on recyclable and degradable labeling:

Since July 2022, Canada has published a consultation document on regulations to manage recycling labeling and labeling of compostable plastic products. The subject of this labeling is products intended for final consumption, meaning products that will be disposed of by individuals after use. The current draft stipulates that labeling is mandatory for all products, including products traded via e-commerce (except for a very few products that are granted exceptions such as: products with packaging surface is less than 25cm2; products are packaged by individuals, for example at flea markets, farms...). Labeling of plastic products is intended to inform consumers about whether the packaging is recyclable and how to handle it after use. By 2030, all single-use plastic products and plastic packaging must be clearly classified as recyclable or non-recyclable.

Canadian law intends to prohibit arbitrary use of the circular recycling symbol (chasing arrow), except in cases where labeling guidelines are followed; ban the use of plastic identification codes that incorporate the “chasing arrow” symbol; Prohibit the use of recycling terms, symbols or recycling instructions contrary to labeling rules...; Prohibit the use of the terms “biodegradable”, “degradable”, “can be used as fertilizer” that cause misunderstandings that the product will decompose, fragment or biodegrade in the environment; Prohibit the use of green labels that cause confusion with organic waste... (the current misunderstanding is that these plastic products can be thrown away with organic waste). Products labeled as compostable must undergo field testing in Canada and demonstrate the ability to decompose to at least 90% in the composting cycle. Only when inspected will these products be marked as “degradable” (and will be marked as not recyclable) and will be given a green label to distinguish them from non-compostable plastic products.

Requirements for additional labeling: currently imported goods use many additional adhesive labels. However, these secondary adhesive labels have the risk of generating methane gas when mixed with biodegradable products and will contaminate the soil. Secondary labels are therefore also expected to be subject to regulations requiring them to be compostable.

In addition to labeling, businesses are also required to provide QR codes on product surfaces so consumers can learn more about the product's recyclability; This information must be presented in two languages; clearly state each province's regulations for the product concerned and each province's recycling guidelines; Recyclable/non-recyclable/returnable explanations with each department of product...). Currently, it is unclear whether this QR code will refer to a website built by Canada or whether each business will have to build it themselves because Canada requires access to information to be free and free, without requiring visitors. must register an account.

Deadline for recyclable labeling regulations and is biodegradable

2. Federal agency responsible for monitoring the plastic issue and receiving reports

To implement plastic waste control, from July 2022, Canada plans to establish a Plastic Issue Monitoring Agency at the federal level. This agency has the function of controlling compliance with plastic waste regulations to achieve Canada's goal of zero plastic waste. This agency is also responsible for standardizing EPR programs across provinces. The Agency's data is expected to be publicly available for everyone to access.

Reporting process of Canadian manufacturing and import businesses to this agency: businesses must have a name and address, have a business code issued by the Canadian Revenue Agency and have a NACIS code. In the report, it must clearly state which provinces and which manufacturers the EPR program related to plastic products belongs to. The reporting representative must be an authorized representative of the manufacturer with name, title and the ability to bind the manufacturer's responsibilities when issuing the report. Reports and related documents must be kept at the registered place of business in Canada for at least 3 years. Information required to be reported includes: amount of plastic put into the market (import and export); amount of recovered and classified plastic, amount of reused plastic, amount of reconditioned or refurbished plastic, amount of recycled plastic, amount of plastic burned to recover energy and amount of plastic thrown into landfills. Information is also required to be submitted in detail according to the provincial unit for the product; Grouping plastic products, types of resin and types of household or industrial plastic.

The implementation roadmap and report content for each group of plastic products is expected to be as follows:

• Packaging: hard packaging of beverage products, hard packaging of non-beverages, disposable plastic products of hard plastic, soft plastic of beverage products, non-beverage and disposable plastic products once. The roadmap for this reporting for the Packaging Product Group is from June 1, 2025 (reporting on the amount of plastic put into the market and from June 1, 2026, full content related to the amount of plastic recovered). and classification; reused plastic, amount of recycled plastic and amount of plastic used for energy recovery).
• Electrical and electronic equipment that uses plastic: information technology, telecommunications, audio-visual equipment, lighting equipment, sports and play equipment, decorative products, entertainment, art, and household appliances. measuring instruments, medical devices, cables, connectors, charging sockets... The electronic device group also begins to report from June 1, 2025 (reporting on the amount of plastic put into the market) and from June 1, 2026 reports the amount of plastic recovered and classified and from June 1, 2027, content related to the amount of reused plastic, the amount of recycled plastic and the amount of plastic used for energy recovery.
• Construction materials that use plastic: windows, doors, floors, insulation films, paint products, roofing materials, pipes... These products begin to be reported from June 1, 2026 on the amount of plastic brought into the market and from June 1, 2028 other related content.
• Automotive industry and vehicles: motorbikes, cars, trucks, buses... This product group must start reporting from June 1, 2026 on the amount of plastic brought into the market and from June 1, 2026. /2028 remaining related content.
• Household products: refrigerators, freezers, air conditioners, water purifiers, washing machines, dryers... This product group must start reporting from June 1, 2026 on the amount of plastic brought into the market and from the amount plastic recovery and classification and from June 1, 2027 the remaining related content.
• Agricultural plastic products: containers, bags... This product group must start reporting from June 1, 2026 on all 6 contents.
• Textile plastic products: clothing, interior fabrics, shoe leather materials... This product group must start reporting from June 1, 2026 on the amount of plastic put into the market and from June 1, 2028 on the contents. remaining related content.

3. Assess the impact of regulations and issues of concern:

Immediately after Canada published the above Framework Document, the Trade Office had a working session with Mr. Warrington Ellacott, Chairman of the Canadian Association of Importers and Exporters on issues that these drafts may pose for Canadian importers and foreign manufacturers. From the Association's perspective, Mr. Ellacott believes that the 30-day comment period is too short for documents that have such a big impact on businesses (according to him, the regulation in the USMCA is 60 days). He said that the Association's view is that there needs to be such harmonization of regulations and standards between G7 and G20 countries, especially on labeling and EPR issues, especially on standardization. materials used/not used because there are some plastic materials that are essential in the automotive industry and have no alternative inputs. He believes that setting these regulations without considering the possibility of enforcement and clarifying how the regulations are understood/applied will risk further clogging Canada's seaports. He also assessed that the United States and some countries may have opinions with Canada on the content of these regulations.

Talking to the Association, the Trade Office said that the EPR Program has a huge difference between the provinces and the federal government in terms of defining what a manufacturer is, especially in the case of imported goods: an importer. exporting plastic products or plastic packaging or being a brand owner; What is the responsibility between the brand owner, distributor, retailer, etc. How is EPR enforcement between provinces when there are conceptual differences between provincial and federal manufacturers (expected that if there is a difference, provincial law applies). Currently the definition of manufacturer proposed in the draft is a manufacturer if the company owning the brand is located in Canada; If the product is imported, the importer and distributor at the beginning of the chain are responsible for implementing EPR; If there is not both an importer and a distributor, the retailer is ultimately responsible for implementing the EPR. For example: A supermarket chain imports plastic-packaged noodles under its own brand or imports directly, the supermarket chain will be responsible for implementing EPR. If that supermarket chain sells noodles imported by the distributor, the distributor will be responsible for implementing the EPR. Such binding liability regulations are actually a form of protection for domestic manufacturers. Because only local manufacturers can carry out classification, collection, recycling, data tracking and reporting. Retail chains themselves, out of fear of liability, will also prioritize choosing domestic products to avoid EPR enforcement, placing the ultimate burden on consumers because they have few choices of goods and bear high costs.

Although the draft does make exceptions for EPR responsibility and recycled content for small businesses with pre-tax revenue of less than 5 million CAD or using less than 10 tons of plastic packaging in the Canadian market. However, this exception is not clear about whether this exemption period is permanent? Does this exception apply to foreign manufacturers? The fact is that even when small businesses are exempted from EPR, they are still required to submit reports on the amount of plastic entering the market, which also increases costs for businesses. The draft stipulates that before being put on the market, products will be required to be assessed for decomposition/recyclability in each province where the product is sold. Current examples given are products: disposable PET plastic packaging and products; packaging that cannot be normally classified (for example, packaging with many layers of plastic, paper, aluminum film, etc.); These products have different recycling processes/capabilities and will have to clearly state regulations for each part (non-recyclable lid, recycled body, etc.). The draft also sets out regulations on secondary labeling, QR codes and responsibility for reporting recycled content (reporting the total amount of plastic used and recycled plastic for flexible packaging), responsibility for information retention. reports, regulations that products using recycled content must be tested and certified by a third party..., these regulations pose difficulties for both the party authorized to submit reports (importers) and increase costs. Fees for the authorizing party (manufacturer, exporter). The deal proposed that the Association raise these questions for Canadian lawmakers to answer or have a more reasonable approach, avoiding unnecessary costs for both producers and consumers.

In general, according to the assessment of the Trade Department, at the present time, the regulations in the draft are disadvantageous "non-tariff" barriers for Vietnamese export products in particular, especially businesses. Vietnam's domestic industry due to difficulty in implementing or authorizing the implementation of EPR. As for Canadian importers and retailers, it is likely that because of fear of liability, they will prioritize using products made in Canada or products of multinational corporations due to their cuteness. EPR quality. In addition to the increased costs of redesigning packaging to comply with labeling and recycled content regulations, Canada's regulations also incur additional costs related to testing for recycled content; costs for monitoring and calculating data to prepare reports or authorize reports; EPR implementation costs; the cost of building a QR code... Vietnamese manufacturing businesses need to carefully monitor the upcoming regulations not only of Canada but also of related industrialized countries to ensure the control of plastic waste and progress to zero. and plastic waste will be the general trend. In the current production process and new packaging design process, businesses need to pay attention to record keeping to ensure supply when the importer requests: 1. Packaging plastic weight (in addition to product weight) Products); 2. Type of resin used; 3. Recycled plastic content, if any... To have a long-term export strategy (most regulations begin to take full effect in 2030, businesses need to prepare to develop a packaging design strategy and labeling in accordance with new regulations (especially recycling regulations and recycling instructions, QR codes guiding waste classification and recycling...), strategies for using recycled plastic in plastic products and Develop coordination mechanisms to authorize report submission and implement EPR/inspection authorization between Vietnamese exporters and a joint authorized partner in Canada to reduce costs...