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Triclosan, which is used as a preservative and antimicrobial agent in hand soap and many other consumer products, is under a cloud of controversy because of concerns it could increase bacterial resistance and disrupt hormone function.

The federal government has determined triclosan is not hazardous to human health and will continue to allow the chemical to be used as an ingredient in hand soap and other personal care products, even as the United States implements a ban.

Triclosan is used as a preservative and antimicrobial agent in hand soap, body wash, toothpaste, lotion, deodorant, shampoo and many other consumer products and is under a cloud of controversy because of concerns it could increase bacterial resistance and disrupt hormone function. In September, the U.S. Food and Drug Administration announced that triclosan and more than a dozen other similar chemicals would be banned from hand and body washes because of a lack of evidence showing they are safe and effective.

Related: The FDA will ban antibacterial ingredients from soaps. What about Canada?

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The government's long-awaited decision on triclosan, released Friday, recommends triclosan be declared a toxic substance under the Canadian Environmental Protection Act. Triclosan is "highly toxic" to fish, algae, amphibians and other aquatic organisms because it can accumulate in them and lead to serious health consequences, according to an assessment report published Friday on Environment and Climate Change Canada's website.

But the decision only applies to triclosan as a risk to aquatic life. The ruling states triclosan is not a danger to human health or to the environment on which life depends.

The government is proposing new rules to limit the release of triclosan from soap and other consumer products into waterways. To do this, the government plans on requiring manufacturers to develop pollution prevention plans to reduce the release of triclosan into waterways from waste-water treatment plants.

The decision is vastly different from the recent action by the FDA to remove triclosan and 18 other ingredients from hand and body washes. In its decision, the FDA said the industry failed to provide evidence triclosan or similar chemicals work any better than plain soap and water and are safe for long-term use. The FDA noted some evidence shows triclosan could pose risks to humans because it may increase the risk of bacterial resistance and disrupt hormones.

"Consumers may think antibacterial washes are more effective at preventing the spread of germs, but we have no scientific evidence that they are any better than plain soap and water," Janet Woodcock, director of the FDA's Center for Drug Evaluation and Research, said in a September news release. "In fact, some data suggests that antibacterial ingredients may do more harm than good over the long-term."

Maggie MacDonald, toxic program manager at Environmental Defence, a Canadian advocacy group, applauded the move to label triclosan as toxic. But she questioned the decision to continue allowing triclosan in consumer products, particularly considering the safety concerns and recent ban by the FDA.

"It's not far enough," she said.

Darren Praznik, president and CEO of the Canadian Cosmetic, Toiletry and Fragrance Association said in a statement the industry is committed to working with the government to adopt the recommended proposals to reduce the potential threat of triclosan to aquatic life. He also said the Canadian response should not be compared to the U.S. because here, manufacturers submitted more data to support the safety of triclosan.

Triclosan is on Health Canada's "hotlist," which means manufacturers are supposed to limit concentrations used in cosmetics.

But mounting research suggests that chemicals like triclosan may disrupt hormone function even at very low exposure levels. And considering that hundreds of products on the market contain triclosan, many environmental advocates and researchers are concerned cumulative exposure could increase the risk of long-term health consequences.

For instance, a 2014 study published in the Proceedings of the National Academy of Sciences found that mice given triclosan in food and water for an extended period were more susceptible to liver damage and tumours.

The absence of a ban here means Canada could become a dumping ground for products containing triclosan once the U.S. measures take effect, Ms. MacDonald said.

"If we don't match what the U.S. is doing, that's a problem for us," she said. "We're still open to the sale of products that are not allowable for sale in the U.S."

The proposed measures are open to a public consultation period that ends Jan. 25.

With a report from Julien Gignac