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On April 25, 2015, after two rounds of comment solicitation and revision in 2013 and 2014, the Standing Committee of the National People's Congress of China passed the amended Food Safety Law (“Law”). The Law, which will enter into force on October 1, 2015, is considered the most stringent Food Safety Law ever passed in China. One official from the China Food and Drug Administration (CFDA) stated that the amended Law mandates “the most precise standards, the strictest administration, the harshest accountability system, and the gravest punishment” to regulate food and food related products in China.
This finalized Law contains 154 articles, as compared to 104 articles in the currently effective Food Safety Law, which was last revised and updated in 2009. It reflects an overall trend toward strengthening food safety regulation in China by introducing many new regulatory requirements. These include not only general requirements applicable to food and food additives, but also specific requirements for food-related products and other product categories (e.g., GM foods, health foods, infant and young children formula, formulated food for special medical purposes, etc.). The Law, compared to the 2009 version, extends its regulatory scope to food storage and transportation. New requirements also are raised targeting food catering service providers. These revisions reflect the importance of these issues in the eyes of the Chinese authorities. We provide below an overview of the amended Food Safety Law by focusing on the provisions not included in the currently effective version.
I. Regulatory Structure and Mechanisms
The Law focuses on creating innovative food safety supervision mechanisms. For example, Article 21 provides that the National Health and Family Planning Commission (NHFPC) along with CFDA and quality inspection departments, will use the results of food safety risk evaluations as the scientific basis for establishing and amending Food Safety Standards and for implementing food safety supervision. In addition, FDAs above county level are now charged with holding “responsible meetings” with the legal representative or key responsible person of a food producer or trader in instances when safety risks are identified but not immediately eliminated in manufacturing and trading.
Notably, the Law also establishes a reward system for whistleblowers, provided that the case is ultimately verified. Governmental agencies which have the authority to handle the tip-off must nonetheless protect the personal information and legal rights of the whistleblower. The employer cannot, by any means, retaliate against the whistleblower, especially via labor contract termination or modification.
The Law also requires trade and consumer association representatives to serve as members on the National Food Safety Standard Review Committee. However, given that Chinese industry and consumer associations are quasi-government organizations, involvement of these associations in the development of national Food Safety Standards may be limited.
II. All Food Business
In the spirit of “the strictest administration”, the Law lowers the threshold of commencing a recall to “when having evidence to prove the food is potentially hazardous to human health”. As “traceability” has become a popular buzzword when talking about food safety, the new Law mandates a food traceability system in food production and trading.
With regard to the production of food additives, the Law specifies the scope of producer responsibilities in Article 59 and 60. Notably, the Law eases the burden on producers by allowing their products to be tested by a contracted third party. At present, some Chinese provinces require the producer to be equipped with all necessary testing facilities and conduct out-of-factory tests in-house.
For imported food which does not have any established Chinese standard, the Law authorizes NHFPC, upon request from the overseas producer, exporter, or local importer, to review and refer to international standards or standards adopted in other jurisdictions. This new Article may suggest a reform of the existing application system of imported food with no applicable Chinese standard.
III. Food-Related Products
The Law introduces a number of new requirements applicable to food-related products (e.g., food packaging). Food-related products are now subject to food safety risk evaluations with regard to biological, chemical and physical risks. Chinese authorities are obligated to conduct risk assessments for potentially hazardous food-related products. There will be no fees associated with the assessments, and the authorities will also pay market price for any samples they obtain. In cases where the food-related products are shown to be unsafe for use, relevant authorities under CFDA and/or Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) have the authority to stop the production of these products.
We further note that newly added Article 40 requires that higher risk food-related products (e.g., food-contact materials) to acquire production permits per relevant administrative measures regarding production licenses for industrial products. The Law suggests that “high risk” materials include those in direct contact with food. This will need to be clarified by the authorities, as it would seem unduly burdensome to require all producers of packaging materials in direct contact with food to acquire product permits. Imported food-related products would also be subject to closer monitoring and stricter quality control.
Importantly, although the draft revision to the Law released in October 2013 included a provision explicitly prohibiting the use of recycled materials in the manufacture of food-related products, this provision has now been removed. However, the absence of an explicit ban on the use of recycled materials in the production of food packaging in the Law should not suggest that the Chinese authorities will generally permit the use of such materials in food packaging. Indeed, there are existing regulations and Standards that prohibit the use of recycled content in certain applications. Although, the use of recycled content may be permitted in some cases, our understanding is that such uses must be specifically authorized by the Chinese authorities.
IV. Highly Toxic Pesticides
According to the new Law, the use of all highly toxic pesticides is banned in specified agricultural products (e.g., vegetables, fruit and tea leaves, traditional Chinese herbal medicines).
V. Genetically Modified Food
Under the new Law, producers and traders of genetically modified food must label the food prominently following the rules required by law. The current legal framework regulating GMO is the Administrative Regulations of Agricultural Genetically Modified Organisms Safety, and the accompanying regulations, which were promulgated by the State Council and the Ministry of Agriculture a decade ago. These regulations establish an inventory of products subject to mandatory GM labeling. As Chinese consumers become more and more sensitive to GMO-derived foods, the implementing regulations of this GM labeling provision in the new Law should be closely monitored to see whether there is any intention to expand the inventory.
VI. Health Foods
Health foods, under the amended Law, are subject to the strictest regulation and supervision by the authorities. A catalogue of health food raw materials and permitted functional claims will be published by the Government, and subject to adjustment from time to time. Raw materials that are listed in the catalogue shall be restricted to use in health foods.
Moreover, separate registration and notification requirements will be imposed on different types of health food products. Specifically, if the health food imported for the first time is a nutritional substance such as vitamins and minerals, then only record filing with CFDA is required. Detailed management rules and material requirements for nutrient supplements were published for comments by CFDA in November, 2014. In addition, the revised Food Safety National Standard – Health Food (GB 16740-2014) was promulgated by the NHFPC and will become effective in May 2015. We anticipate seeing more regulatory news on health foods in the coming months.
With regard to the labeling and promotion of health foods, the finalized Law provides some detailed requirements in Article 78. For example, product label or instructional materials must not suggest any disease-prevention or healing function, it must be authentic and consistent with what is registered or notified with the authorities. In addition, health food advertisements must include the statement “this product cannot substitute for drugs”.
VII. Formulated Foods for Special Medical Purposes
Formulated foods for special medical purposes, according to the corresponding national standard (GB 29922-2013), refer to those formulations made for consumers who have problems with limited food intake, digestion, absorption or metabolic disorders, and those in special need for nutrients or diet due to medical conditions. Since the publication of GB 29922 in 2013, there has been debate as to whether this type of food shall be regulated as conventional food or more like drugs. The amended Law provides a clear response to this issue by subjecting formulated foods for special medical purposes to mandatory registration with CFDA.
VIII. Infant Formula
With the goal to make the administration and supervision of local industry more efficient, the Law has substantial revisions in the area of infant formula management. The most significant change is that, for domestic production of infant formula milk powder, while the Law upholds the ban on sub-packaging, which stems from the CFDA Announcement No. 43 of 2013, it does not include any language regarding the current prohibition of original equipment manufacturer (OEM) and sub-contracting. In the coming months, we expect to see further clarification as to whether the ban on OEM and sub-contracting is lifted.
Moreover, now domestic infant formula milk powder manufacturers are not only obligated to file with local FDAs their product information (e.g., formulation, used raw and auxiliary materials, food additives, product label and packaging), but also register their product formulations with CFDA for review and approval. Detailed rules for the registration procedures shall be published in the next few months.
The above changes, however, do not have much effect on manufacturers overseas, because, under the current system, foreign dairy processing plants exporting to China are required to register with Certification and Accreditation Administration of China (CNCA). This registration already requires information disclosure of product formulation. The authorities may further clarify whether a separate formulation registration is required for manufacturers overseas. Furthermore, under the current regulatory scheme, infant formula produced overseas have never been subject to bans on OEMs, sub-contracting and sub-packaging, but given the issues that have arisen in the past related to such products, it would not be surprising to see the Chinese government adopt further rules to avoid domestic enterprises from using registered foreign manufacturing plants to rebrand, outsource, or sub-package infant formula milk powder products to be sold in the Chinese market.
In order to promote healthier online trading of food products, and offer more protection to consumer rights, the Law mandates that third-party online food trading platform providers demand real-name registration by food traders on the platform, and clearly set forth the traders' responsibilities; the platform providers also have a duty to examine the licenses of food producers and traders where such licenses are applicable.
More severe penalties are imposed on food producers and traders for violating this Law. For example, the fine for a “serious violation” is increased from 5-10 times to 15-30 times the total value of the commodity (for commodities valued at over RMB 10,000). For commodities valued under RMB 10,000, the violator is subject to a fine of RMB 100,000-150,000. Of particular note is that, personal penalties (e.g., detention of the responsible person) are proposed for the first time to punish serious violations (e.g., manufacturing and trading of foods containing drugs, using recycled food as food raw materials, etc.) In addition, per Article 124 of the Law, use of expired food raw materials or food additives in production can be subject to a fine 10-20 times the total value of the commodity or even a license revocation.
A consumer who suffers personal, property or other damages may demand compensation 10 times the purchase price or 3 times the damage from the producer or the trader, with a minimum compensation set at RMB 1,000. Notably, in response to the more recent increase of "professional consumers" focusing on food labeling non-compliance, the Law distinguishes food labeling with defects from other non-compliant matters. For example, under Article 148 of the Law, for labels or instructional materials containing defects that do not affect product safety or mislead consumers, the compensation rule (10 times the purchase price) does not apply. Although, in practice, the authorities are granted significant discretion on interpreting what only amounts to a “defect”.
This China Regulatory Matters alert was sent to clients and contacts of Keller and Heckman’s Food and Drug Practice. If you would like to receive Food and Drug alerts in your email please contact optin_MailingList@khlaw.com and request Food and Drug Alerts
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