This advisory updates our March 2009 advisory with recently promulgated implementation regulations.
Following a wave of tainted food scandals that rocked public confidence, the Standing Committee of China’s National People’s Congress enacted the Food Safety Law (FSL). The FSL, along with its implementing regulations, creates nationwide standards for everything from nutritional specifications of baby food to pesticide usage.
Effective since June 1, it is a result of years of drafting and revision. Hallmarks include a requirement for detailed record keeping at each step of the food production and distribution process as well as an expansive joint liability structure.
The FSL, which regulates food quality, food-related products and food additives, covers the following industries and processes:
- Food producers and processors (collectively, “Food Manufacturers”), food distributors and caterers (collectively, “Food-Business Operators”)
- Manufacturing and processing of food additives
- Manufacturing and processing of (i) packaging materials, containers, detergent and disinfectant used with food; and (ii) tools and equipment used in production and processing of food (collectively, “Food-Related Products”)
- Food Manufacturers’ and Food-Business Operators’ usage of food additives and Food-Related Products
China’s State Council will establish a national food safety commission to coordinate and oversee the new food supervision apparatus. Additionally, the FSL requires formulation of national food safety standards. The food safety standards are to include: limitations on hazardous ingredients; prescription for type and dosage of food additives, labeling and instruction requirements; hygiene requirements, food inspection methods and procedure; and even nutritional specifications for baby food.
The food safety standards will be formulated and published by the Ministry of Health (MOH) and must pass review and examination by an expert committee on the national food safety standards, which is to be composed of experts in medicine, agriculture, food and nutrition, as well as representatives from various departments of the State Council.
Inspection and record keeping
Under the FSL, Food Manufacturers, Food-Business Operators and food importers face new obligations for training, quality inspection and record keeping.
When purchasing raw food materials, food additives, Food-Related Products and edible agricultural products, they must inspect the seller’s relevant permit and inspection certificate of product quality. They are to maintain records of purchase details and inspection results including product name, specification, quality, purchase date, and the seller’s name and contact information, as well as all information relating to raw food material procurement and food processing. Food Manufacturers cannot purchase or use substandard raw ingredients, food additives or Food-Related Products. They are required to effect and record final inspection when food products exit the factory.
Food-Business Operators must inspect a seller’s permit and certification documents evidencing a food’s compliance with safety standards. They are to maintain records of purchase details and inspection.
Finally, food importers need to maintain record of the import and sale of food. Records are to be maintained for at least two years.
Previously, Food Manufacturers and Food-Business Operators needed only a food production permit issued by the General Administration of Quality Supervision, Inspection and Quarantine as well as a food hygiene permit issued by MOH. The FSL revamps China’s food safety permitting system by requiring Food Manufacturers and Food-Business Operators to obtain, where necessary: (i) a food production permit; (ii) a food distribution permit; and (iii) a catering service permit, with an effective term of three years. Before registering with the Administration for Industry and Commerce (AIC), Food Manufacturers and Food-Business Operators must obtain the permits.
Foreign Food Manufacturers that export food to China should register with the Administration of Inspection and Quarantine (AIQ) for an effective registration term of four years. Exporters or agents, which export food to China, should file with AIQ.
Imported, pre-packaged food and food additives must have Chinese-language labels and instructions, containing information on the place of origin, name, address and contact information of the domestic agent. Chinese-language instructions should satisfy the requirements under Chinese law, including the forthcoming food safety standards.
If the food to be imported is a variety which is not subject to the food safety standards in China, or if imported food additives or Food-Related Products are a new variety in China, the food importer should submit safety evaluation documents to MOH to apply for approval before importation.
The FSL codifies a food recall system, which was previously regulated under administrative rules. Food products proven to be substandard are subject to: (i) cessation of production; (ii) recall; (iii) notification of Food-Business Operators and consumers; (iv) record keeping of the recall; and (v) report to the county-level (or above) quality supervision authority.
If a Food Manufacturer or Food-Business Operator fails to effect a recall accordingly, the county-level (or above) quality supervision authority, the AIC, or the State Food and Drug Administration (SFDA) can order a recall or suspend the violator’s business. If the violator fails to recall the food or fails to suspend business after a government authority’s official order, the substandard food products, the income earned therefrom, and any tools, equipment and raw materials used therein will be forfeited. If the value of the substandard food products is less than ¥10,000, the violator can be fined up to ¥50,000; if the product value is more than ¥10,000, the violator can be fined at 5 to 10 times the value. Relevant food permits may be revoked in serious cases.
Joint and several liability
Under the FSL, an expansive liability structure will be implemented. Food-related businesses need to take measures to prevent food safety accidents. For instance, organizers of food markets, lessors of counter space and exhibition organizers should inspect Food-Business Operators’ permits, clarify food supervision responsibilities of Food-Business Operators participating in the market, and periodically inspect the premises and conditions of Food-Business Operators. In the case of a violation, they should report immediately to the county-level AIC or the SFDA. Where a food market organizer, counter space lessor or exhibition organizer fails to perform any of the above obligations, they may be held jointly and severally liable for any food safety incident in their market.
Further, any social group, organization or individual that promotes a food product in misleading advertising that causes harm to consumers may be held jointly and severally liable with the Food Manufacturer and Food-Business Operator.
Punitive damages and priority of civil liability
The FSL provides that if a Food Manufacturer produces, or a seller knowingly sells, substandard food, consumers can claim for punitive damages equaling 10 times the original product price, in addition to normal compensation (ordered by a court) for losses caused to the consumer.
In the past, some food industry giants were able to obtain inspection exemptions. The FSL abolishes any exemption for inspection.
Food products claimed to have specific health benefits are subject to stricter supervision. Labels and instructions cannot claim a product’s function to be prevention or treatment of disease. Further, labels and instructions must list ingredients and information prescribing who should and who should not consume a product. Also, misleading advertising of food products is banned, and advertisements cannot claim that a product may prevent or treat disease.
China’s Food Safety Law, along with its implementing regulations, appears to be as much a consequence of recent food safety scares as it is the result of protracted consideration and drafting. On top of the establishment of a national food safety commission and forthcoming safety standards, producers and distributors will be subject to increased penalties if they produce or sell substandard food. Even celebrities who endorse a product may be held jointly liable. Businesses will be required to maintain detailed inspection and purchase records and to obtain particular permits. Although compliance is likely to increase the cost of production, the FSL promises to improve food quality and safety for consumers of Chinese food products.