On April 12, 2021, the General Administration of Customs of China (“GACC“) issued Ordinance No. 248, which sets new requirements for the registration of qualified foreign food producers who are allowed to export food products to China, effective January 1, 2022. This ordinance represents an important step forward towards strengthening the regulation of foreign manufactured food products imported into China.
The key changes
The main changes applicable to foreign food producers under the decree are as follows:
- In particular, Ordinance No. 248 extends the scope of food products subject to a registration obligation from limited categories of food products (for example, meat, dairy products, aquatic products, etc.) previously defined by a catalog published by the government to all food products produced abroad.
- Registration procedures under the new regime branch off between (i) the 18 types of food products that foreign producers can only register on the recommendation of the GACC counterpart in the exporting country (“the type category 18“), and (ii) those whose foreign producers can directly register with the GACC by submitting an online submission (“all other categories“).
- The decree imposes a new labeling requirement for all food products imported into China to include the registration number on the label of the inner and outer packaging of the food products, which Chinese customs would review and verify at the border before granting customs clearance. Depending on the food category concerned, the foreign parties involved in the supply chain to be recorded and identified on the label may include those who carry out agriculture, manufacturing, storage and / or transport outside the home. China.
As the date of entry into force of the Decree fast approaching, one of the main challenges facing foreign food producers is to ensure that the registration process can be completed in a timely manner so that they have sufficient time to take transitional measures such as reprinting product labels with the corresponding registration number under the new regime.
In this regard, we observe that some corresponding authorities of China’s trading partners in the food industry have already completed the first round of collecting applications from its local Category 18 food producers. However, it remains unclear whether the necessary negotiations between the GACC and its respective foreign counterparts have been completed. Such negotiations are essential, in particular for food category type 18, for which the required producer registrations cannot be obtained without a bilateral protocol between the authorities in charge to facilitate the exchange of documents and alignment with critical food safety criteria. The delay in completing such a negotiating process may force the GACC to designate a “grace period” for the smooth transition to the new regulatory system. It should be noted that although a number of China’s trading partners have requested and urged China to delay the implementation of the decree in order to allow sufficient transition time to comply with the decree in In order to avoid supply chain disruption for businesses, at the time of writing it was not suggested that an implementation or grace period be granted.
With the new regime scheduled to come into effect on January 1, 2022, we highlight a number of areas below that may merit special attention and consideration as companies make the necessary adjustments to comply with the decree:
- The term “food products” for the purposes of the decree is not clearly defined, although it expressly excludes food additives. It is likely that the GACC will interpret the term broadly to cover primary agricultural products and alcoholic and non-alcoholic beverages, in addition to dietetic foods, infant formulas and dairy products, which are expressly referred to as the category of. type 18 foods. Such an interpretation will have an impact on the immediate actions required of foreign suppliers of the affected products to ensure the sustainability of their supply chain after January 1, 2022. In this regard, further clarification of the scope and Discussions with the GACC may be necessary.
- A growing share of food imports into China is now done through cross-border e-commerce (“CBEC”), Which waives most licensing and registration requirements for regular imports. Therefore, an important consideration with respect to the order is whether the CBEC will continue to be a “safe haven” from restrictive trade measures, particularly those resulting from recent trade frictions involving China. It may be interesting to note that the status of CBEC as a “trade safe haven” has already been challenged recently, as China now subjects Australian wines imported through CBEC to anti-dumping and countervailing duties resulting from legal action. commercial decision decided in December 2020.
- Some fear that the decree creates non-trade barriers for imported food products. In fact, a number of countries, including Australia, Europe, the United States, Canada, South Korea and Japan, raised concerns at a meeting of the SPS Committee in the United States. WTO in July 2021, declaring that the new registration requirements may be too onerous to extend the scope of control. beyond high-risk food products to cover a wider range of imported food products. Other concerns raised include unclear implementation processes and rules as well as the short deadline for the decree to come into force. Given the broad implications flowing from the implementation of the ordinance, it will be interesting to see whether the concerns raised by WTO members can be adequately addressed by the Chinese government, or whether the new rules might do the trick. facing other challenges at the WTO level.
- In view of the evolution of trade relations involving China, there are also concerns that the decree may become a tool in the toolbox used by the Chinese government to deal with geopolitical or trade tensions, as the general provisions and the lack of Detailed implementing rules could potentially leave room for the exercise of discretion in the practical implementation of the College. On the other hand, it would be interesting to observe how the Chinese government balances the overall compliance regime for foreign food producers with American food producers covered by the Phase 1 agreement between China and the United States which provides for increased transparency and certainty with respect to non-tariff trade barriers for food and agricultural products of American origin, including the registration of American factories listed by the United States Food and Drug Administration (FDA) in its list of qualified producers sent to GACC.
- Last but not least, notwithstanding the controversy surrounding the rationale for the new order in the multilateral or bilateral trade framework, the Chinese government is obviously looking to expand its oversight over food supply chains to include operations outside of China. Accordingly, with respect to the Chinese market, the compliance strategy for multinational food suppliers should also take into account the risks and challenges of compliance with Chinese law involved in such pre-import operations. Non-conformities in products discovered at the stage of import customs clearance or local distribution (e.g. labeling of non-conforming products) may not only have legal implications for the Chinese importer and distributor, but also potentially have an impact on the credentials or registration status of foreign parties involved in the supply chain. A stricter and more comprehensive compliance program would be needed to ensure the sustainability of the entire supply chain.
To conclude, companies involved in the export of food products to China should carefully consider the requirements of the decree and keep abreast of developments in this regard in order to ensure continued compliance and non-disruption of its supply chain. supply.
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Frank Pan is a senior lawyer and Tina Li is a partner at FenXun Partners, a leading Chinese law firm. FenXun established a joint operations office with Baker McKenzie in China under the name Baker McKenzie FenXun, which was approved by the Shanghai Justice Bureau in 2015.
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