On 12 April 2021, the General Administration of Customs of China (“GACC”) issued Order No. 248, which sets out new requirements for the registration of qualified foreign food producers that are allowed to export food products to China, effective from 1 January 2022. This Order represents a significant move toward tightening up the regulation of foreign made food products imported into China.
As the date of coming into force of the Order is fast approaching, one of the key challenges faced by foreign food producers is in ensuring that the registration process can be completed in a timely manner so that they have sufficient time to take transitional actions such as reprinting of product labels with the relevant registration number under the new scheme.
In this regard, we observe that certain corresponding authorities of China’s trading partners in the food industry have already completed the first round of application collection from its local food producers of the 18-type category. However, a number of China’s trading partners have requested and urged China to delay the implementation of the Order to allow for sufficient transitional time to comply with the Order with a view to avoiding supply chain disruption for businesses. At the time of writing, there has been no suggestion that a delayed implementation or grace period will be granted.
We highlight below a number of areas that may warrant attention and specific consideration as businesses make necessary adjustments to comply with the Order:
- The term “food products” for the purpose of Order is not clearly defined, although it expressly excludes food additives. Further scope clarification and discussion with GACC may be necessary.
- An increasingly large share of food imports into China are now made through the cross-border e-commerce (“CBEC”) regime, which waives most licensing and registration requirements for ordinary imports. CBEC’s status as a trade “safe harbour” has already been challenged recently, as China is now subjecting Australia wines imported through CBEC to anti-dumping and countervailing duties resulting from a trade remedies action decided in December 2020.
- There are concerns that the Order may give rise to non-trade barriers for imported food products. In fact, a number of countries including Australia, Europe, United States, Canada, South Korea and Japan have raised concerns at a WTO SPS Committee meeting in July 2021, stating that the new registration requirements may be overly onerous in expanding the scope of control beyond high-risk food products to cover a greater scope of imported food products.
- In view of the evolving trade relationships involving China, there are also concerns that the Order may become a tool in the toolbox employed by the Chinese government to address geopolitical or trade tension, as the broad provisions and lack of detailed implementation rules could potential allow room for the exercise of discretion in the practical implementation of the Order. On the other hand, it would be interesting to observe how the Chinese government will balance the overall compliance regime for foreign food producers with American food producers covered under the Phase One Deal between China and the United States, which provides for higher transparency and certainty with respect to non-tariff trade barriers for U.S.-origin food and agriculture products, including the registration of U.S. factories listed by U.S. Food and Drug Administration (FDA) in its list of qualified producers forwarded to GACC.
- Last but not least, notwithstanding the controversy surrounding the justifiability of the new Order under the multilateral or bilateral trade frameworks, the Chinese government is obviously looking to expand its scope of supervision over food supply chains to include operations outside of China. As a result, insofar as the Chinese market is concerned, the compliance strategy for multinational food suppliers should also address the China law compliance risks and challenges involved in such pre-importation operations.
Businesses involved in the export of food products to China should carefully consider the requirements of the Order and keep abreast of developments with respect of the same to ensure continuous compliance and non-disruption of its supply chain.
Frank Pan is a senior counsel and Tina Li is an associate of FenXun Partners, which is a premier Chinese law firm. FenXun established a Joint Operation Office with Baker McKenzie in China as Baker McKenzie FenXun which was approved by the Shanghai Justice Bureau in 2015.