On August 14th, 2017, China Food and Drug Administration (CFDA) submitted the Revised Draft Regulation on the Implementation of the Food Safety Law (hereinafter "Draft Regulation") to World Trade Organization (WTO) for comments by October 13th, 2017. Compared to the previous draft announced in December 2015 (see: Keller and Heckman China Regulatory Matters), the revised Draft Regulation has streamlined the regulation from 200 to 98 articles.
Food labeling and cross-border E-Commerce (CBEC) are among the most significantly changed areas. Notably, the new Draft Regulation no longer contains labeling requirements such as the prohibition of sticker use on imported food products and that all prepackaged foods must be directly printed with a Chinese label before being imported into China.
Below we highlight a few other areas that could be impacted by the Draft Regulation.
- Removal of Third Party Safety Assessment Requirement
Under Article 36 of the previous draft regulation, when applicants submit safety assessment information to NHFPC for new food ingredients, food additives and food related products, they must include proof of technical necessity from relevant industry associations, safety assessment opinions from professional technical institutes, and development status of related standards. This requirement has been removed from the new Draft Regulation. The removal of this Article could greatly relieve the potential burden industry will bear when introducing new varieties of food into China.
- Food Production and Operation
After the publication of the Food Safety Law in 2015, CFDA issued two administrative measures implementing the food licensing system, i.e., Measures for the Administration of Food Production License and Measures for the Administration of Food Operation Licenses.
Now, instead of being called a "food operation license", it is now called a "food sales and catering service license" in the Draft Regulation. In addition, the valid period for the food sales and catering service license (currently food operation license) is revised from 5 to 3 years.
- Food Import and Export
According to the previous Draft, imported foods will be managed and controlled based on a number of factors such as food safety risk, enterprise safety control capacity and food safety conditions in the exporting countries (regions). Specifically, foods of higher risk are subject to more comprehensive inspection at ports. Although this language no longer exists in the current Draft, the same spirit of risk management endures. Specifically, China's General Administration of Quality Supervision, Inspection and Quarantine (referred to as "AQSIQ") is authorized to promulgate inventories of imported foods for designated ports. However, the regulatory importance of these inventories remains unclear to the public. We hope that these risk-based food inventories will help clarify the inspection and enforcement procedures for imported foods at ports.
It is important to note, however, that in June 2017, AQSIQ notified WTO for comments re the Administrative Measures on General Certification of Imported Food (hereinafter "Administrative Measures"). Under the Administrative Measures, all imported foods shall be accompanied with a certificate issued by authorized agencies or designated organizations in the exporting country. The certification is designed to prove that all imported foods are produced, processed, stored, transported and exported under appropriate supervision and suitable for human consumption. The Draft Regulation echoes the new AQSIQ certification requirements in Article 49, which states that food importers shall report and attach qualified certification materials to the entry-exit inspection and quarantine authorities.
AQSIQ's new Administrative Measures, scheduled to become effective on October 1st, 2017, is causing quite a stir in the food industry because it places a new burden on every imported food, regardless of risk category. In fact, many government officials from around the world have raised objection to the authorities in Beijing on various grounds. For example, foreign agencies do not typically issue certificates for specific products that address how the product is produced, stored and transported and whether such product for a particular shipment is suitable for human consumption. Government officials also have asserted that the certification requirement is too burdensome and should not be necessary for each and every shipment of food that is exported to China.
On a related note, on September 13th, 2017, AQSIQ notified WTO regarding the draft Measures for the Supervision and Administration of Import and Export Food Safety. According to Article 15 of this draft Measures, the following documents can be accepted as the "quality proof document": declaration of compliance, inspection reports and certification documents issued by exporting country/region's authorities in charge or authorized agencies. Article 15 also states that when certification documents are required to be issued by government authorities of exporting countries, the format, content and conclusion of the documents shall be negotiated and determined by AQSIQ and the foreign government authorities. While it remains uncertain how this draft Measure will impact the certificate requirement that is scheduled to become effective on October 1st, we will likely soon see more guidance from AQSIQ, since many countries have expressed their concern about being able to meet AQSIQ's new Administrative Measures. This is particularly important because, as noted above, various jurisdictions around the world do not issue the types of "quality proof documents" on specific products or specific shipments of exported foods.
- Third-party Online Food Trading Platform and Liabilities
Both Food Safety Law (FSL)and Consumer Protection Law (CPL) mandate responsibilities and liabilities for third-party online food trading platform providers. The Draft Regulation reinforces that third-party online food trading platform providers have the obligation to maintain registration and trading information regarding all food traders on the platform. When CFDA carries out supervision activities, investigations or handles complaints, the third-party platform providers are required to provide information as requested; such information will be kept confidential by the authorities.
- Personal Liabilities
Article 77 of the Draft Regulation imposes fines on employees who are primarily responsible for a company's food safety violations. Specifically, those who are in charge may be fined one to five times their annual salary. While imposing civil liabilities like this on personnel is rather novel in China, it remains to be seen whether this provision will survive in the final version and how it will be enforced in real situations.