U.S.-China Food Safety Deal Could Give China Preferential Treatment

WASHINGTON DC – A Memorandum of Agreement (MOA) signed by the U.S. and China this week to improve the safety of Chinese food exports opens the possibility that the U.S. government will ultimately ease scrutiny for the covered high-risk Chinese food items in a way that it has refused to offer such trading partners as Canada, according to former Food and Drug Administration (FDA) official Benjamin England.

Under the agreement, China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) will establish a mandatory registration system for exporters and set up an export certification program for four product categories such as farm-raised fish and pet food. If AQSIQ determines a shipment meets the requirements of the FDA, it shall issue a certificate that contains a unique identifying number. This will be done electronically to prevent counterfeiting.

The gist of the program is to establish a quality control mechanism for the covered foods, and the text states specifically that neither party is obligated to make decisions on imports based on this new system.

But a provision in the attached annex states that FDA could use the information generated by the system to ultimately reduce U.S. border inspections, according to England, now an attorney with Jones Walker. Annex Provision B, Section II, Paragraph 2 says the success of the new program could “inform HHS/FDA import entry decisions, which may include a reduction in the rate of examination of Designated Covered Products that are part of the registration and/or certification program.”

If implemented, it would give special treatment to products from China that the U.S. has refused to such trading partners as Canada and Mexico, who have unsuccessfully pressed the U.S. government to reduce border scrutiny for their exports in exchange for a certification program to ensure safety, according to England.

England also pointed out that the Chinese items in question have had serious food safety problems in the past, to the point of killing U.S. pets earlier this year. “The only way you get a certification program out of the FDA is to import bad stuff and kill some cats and dogs,” England said.

An Health and Human Services spokesman said that the administration’s interagency working group on import safety had developed new approaches to import safety that include creating a risk-based system for inspections. The spokesman said, “Our months-long review of the U.S. system contributed significantly to seeing new ways we might work with our trading partners to improve import processes. Our ongoing negotiations with China at the time presented a timely opportunity to integrate some of these new approaches, such as a certification system.” He also confirmed that the covered products from China may eventually be subject to less scrutiny if the program proves successful.

The spokesman held open the possibility that similar approaches could extended to other countries as well, but said “it’s premature to attempt to characterize what future arrangements or agreeements may look like that we might pursue with other countries.”

The agreement now covers food and feed ingredients such as wheat gluten, low-acid canned products or acidified food such as canned mushrooms, pet food and farm-raised fish other than molluscan shellfish. The details of which exact products will be included will be determined by the parties later, according to the text. Jean Halloran of the Consumers Union criticized the agreement for excluding other Chinese products that have had safety problems in the past, such as apple juice.

John Connelly, president of the National Fisheries Institute, says his members welcome the direction of the agreement but have questions about its implementation. He also said that his group is prepared to work with Congress to get the FDA the authority it needs to make the agreement more effective.

According to Connelly, a Hazard Analysis and Critical Control Point (HACCP) certificate is already required for seafood exports from China, and that further oversight by Chinese authorities would be positive to address the problem of antibiotics present in some seafood.

England also raised a question about the legality of the information sharing provisions of the new MOA, which says the U.S. will provide to the Chinese government “a list of all establishments registered with HHS/FDA.” This is to help China in its efforts to ensure the safety of U.S. foods imported into its market.

Under the Bioterrorism Act, the information in the FDA’s food producer registration system is not subject to the Freedom of Information Act, according to England. He said it is possible that FDA may share the information with China under some other legal authority, but questioned whether U.S. food companies would be comfortable with this.

More fundamentally, other observers besides England said it is unclear how much weight the FDA can give to the Chinese certificates in its handling of these specified imports, since it has no legal authority to require such certificates as a condition for entry into the U.S. Tony Corbo of Food and Water Watch wondered how shipments of specified products without a certificate will be handled by the FDA.

Halloran also said that considering less than one percent of food imports are actually inspected by the FDA, it is likely to have discretion within its current authority to scrutinize shipments on whatever criteria it may want to use.

Several observers said that the MOA leaves open a number of key questions that will be critical in determining whether it can create an effective system to increase food safety of Chinese imports. One of the issues is how China will implement the obligations of the agreement. For example, Halloran pointed out that while China has very strict lead standards in its domestic laws, it has yet to implement them.

Sources also had questions on whether China has the capacity to inspect exporters of these products yearly, as it has pledged, or accurately certify them as being compliant with FDA standards.

AQSIQ also is working on a trace-back system to help find the source of food contamination. However, it is unclear if FDA will receive a list of subcontractors with whom registered exporters do business.

The agreement does encourage faster processing of U.S. requests to inspect facilities in China, but it is unclear whether the FDA has enough resources to do more inspections abroad, sources said. In addition, it is unclear whether FDA has the resources to ensure compliance with FDA standards by doing more testing at the ports, they said.

FDA has only a small amount of its total funds reserved for food inspections, and key senators and private-sector groups called on the President last week to increase funding for the FDA in next year’s budget (Inside U.S. Trade, Dec. 7).

Under the agreement, audits of the new program can only take place when both countries agree.

Halloran criticized the agreement for not giving U.S. inspectors immediate access to Chinese plants it may want to inspect in China. The agreement says the two sides will develop a streamlined process for facilitating inspections in five days after receipt of a request from a party to inspect facilities. Under the agreement, both China and the U.S. shall notify each other within two days of the discovery of a significant risk to public health or gross deception of consumers.

Halloran pointed out that when U.S. inspectors wanted to inspect Chinese facilities after melamine was found in wheat gluten, China took several days to approve their visas. Once the visas were granted and inspectors arrived in China, they had to wait for some days for being allowed a site visit, as the Chinese government insisted there was a holiday that made an inspection impossible, Corbo said.

When the inspectors finally arrived at the sites, all production had ceased, he said. According to Corbo, the FDA “has to study the Chinese holiday calendar very closely” to make sure its inspectors will be allowed access.

The MOA does set out a specific time line for implementation. Within 15 days of the signing, China and the U.S. must notify in writing the primary point of contact for the MOA. A working group of experts must hold its first meeting within 60 days to determine what each side will be responsible for in a work plan; what each must do within the first 12 months of the agreement; and to determine performance measures “as appropriate” to evaluate success.

The work plan must be finalized within 120 days of the entry into force, and the parties will meet to review progress in 180 calendar days of the date of entry into force.

England called these time lines unrealistic given that China has taken on a large responsibility of certifying that its exporters meet FDA standards.

The FDA, for several years, has had a similar certification program for Chinese ceramic containers. But the possibility of chemicals in ceramic containers leaching into food poses less of a risk than contaminated food and problematic drugs and devices. Also, the volume of products covered under the MOA far exceeds the number of Chinese ceramic container imports.

Also unclear is how the success of the agreement will be measured, sources said. Article VIII of the MOA defines possible performance measures for the two countries. It says that HHS and FDA “may base its evaluation” on, among other factors, whether the rate of refusal by HHS or FDA of covered products is comparable to the overall rate of refusal from another “relevant” time period. However, since the FDA does not have the authority to refuse shipments based on the certificates alone, sources questioned how this method would work.

It also mentions that the two agencies could look at the overall percentage of items covered by the agreement that are exported by companies that are not registered as meeting U.S. standards. Finally, HHS and FDA may use the “volume, frequency, and significance in terms of public health hazard” of recalls of covered products, including counterfeit products, from China, the article says. AQSIQ may evaluate the U.S. on similar criteria.

The food safety MOA is one of two HHS signed with China at the Joint Commission on Commerce and Trade (JCCT) meetings in Beijing. The second one focuses on ensuring the safety of drugs and medical devices. The MOA on drugs and medical devices will require exporters from China to register with the Chinese government to prove that they are in compliance with FDA regulations and certified by the State Food and Drug Administration (SFDA) of China.

SFDA will also notify the U.S. “within 24 hours” of “any determination that a product sent to the United States could cause serious adverse health consequences, and also provide the tracking information necessary to identify the shipment and supplier.” It also includes similar possible performance measures to the food and feed MOA.

Following the announcements, U.S. affected industry groups began scrambling to review their details in order to gauge their impact on both imports to and exports from China. AdvaMed, the medical device trade group, said it was “concerned about the nature and extent of several of the provisions on information sharing,” according to a Dec. 11 statement. “We hope to meet with officials from HHS to share our concerns and obtain a better understanding of the scope of this agreement.”

By Erica Lee Nelson

Published in US Inside Trade, December 14, 2007