Getting to Know the U.S.-China Trade Agreement: Obtaining a Chinese Standard for an Imported Food

In December 2019, China and the United States agreed to a Phase One Economic and Trade Agreement[1] ("the Agreement"), which entered into force on February 14, 2020. While there are many components to the Agreement, the food industry should take a close look at Chapter 3, titled Trade in Food and Agricultural Products. The chapter covers various food sectors, including dairy products, infant formula, poultry, beef, pork, processed food, aquatic products, and food made from agricultural biotechnology. If Chapter 3 is executed as written, there will be regulatory changes that will allow the import of foods into China that are currently not permissible. Over the coming months, we will share our observations on China's implementation of the Agreement that will impact the regulation of certain imported foods.

In this article, we focus on the administrative Procedure to Grant a Product Standard for an Imported Food Not Subject to a Chinese National Food Safety Standard ("the Procedure"), which is laid down in the Management Rules of Permitting the Importation of Food Not Subject to Chinese National Food Safety Standard ("the Management Rules").[2] This is a critical procedure for companies who cannot import food into China because the product is not subject to a food safety standard. The Agreement now sheds additional light on how to navigate and overcome this challenge.

Under China food law, an imported food will be examined by the General Administration of Customs (GAC) in accordance with China's national food safety standards. The examination will likely fail, however, if the importer cannot point to an applicable national food safety standard. Many foreign companies learn this the hard way when the authority holds their product at port because of the inability to point to an applicable food safety standard. It is not an adequate response to point to the product's ability to be lawfully sold in the country of origin or another foreign jurisdiction. So, what can be done?

In 2010, the Management Rules were issued by the authority to help further open the door to the import of foreign products by allowing companies to apply for a product standard when one did not exist. The standard would also serve as a compliance checklist at the port of entry. Although the Management Rules were well intended, the procedure was only used on one occasion, i.e., to clear the import of Tequila from Mexico[3] that may contain a higher level of methanol (3.0g/L) compared with other distilled alcoholic products.[4] Such limited use of the Procedure is because China has developed a relatively comprehensive food standard system over the years wherein many foods are already captured by existing Chinese standards. However, the Management Rules were repealed in 2016, leaving companies without the option to use the Procedure if needed.

In recent years, product innovation in the food industry has exploded and the need to provide a mechanism to obtain food safety standards for new food products has resurfaced. In the amended Food Safety Law[5] 2015, Article 93 resuscitates the Procedure to allow one to seek a Chinese standard for an imported food that is not subject to a food safety national standard by filing a petition with the health administration. More good news followed in 2017 when the National Health and Family Planning Commission (i.e., the predecessor of the current National Health Commission) announced the notice GuoWeiBanShiPinFa [2017] No.14[6] which provided further guidance for industry to prepare a request for a product standard for an imported food that is not subject to an existing standard, including the necessary data requirements.

The Procedure to obtain a new standard picked up steam earlier this year when the U.S. and China signed the Agreement and specified under Annex 2.2.(h) that, within 60 working days of the date of entry into force of the Agreement, China shall complete the approval process for U.S. dairy permeate powder for human consumption consistent with GuoWeiBanShiPinFa [2017] No.14. Low and behold, on March 6, 2020, the Chinese government published a notice[7] seeking comments on the applicable Chinese product standard for U.S. dairy permeate powder upon the Procedure to review an imported food that is not subject to any Chinese national food safety standard. This is one of the first steps taken by China to fulfill its commitment under Chapter 3 of the Agreement and it is the first food to be approved since the release of GuoWeiBanShiPinFa [2017] No.14. This not only marks an important step toward permitting the importation of U.S. dairy permeate powder into China, but also demonstrates the start of China's commitment to satisfy its obligations outlined in Chapter 3 of the Agreement.

For now, the dairy permeate powder announcement suggests that China is serious about putting a mechanism and transparent procedure into place to allow food companies to obtain a national food safety standard when one does not exist. If you face the same issue and have an imported food that is not subject to a proper Chinese national food safety standard and need one, this is an opportune time to explore whether the Procedure can be a vehicle to help bring your product into China. If you are interested in further details or have questions, please do not hesitate to contact David Ettinger (ettinger@khlaw.com) or Jenny Xin Li (li@khlaw.com) or your ordinary contact at Keller and Heckman LLP. Stay tuned for more reporting, updates, and progress on the implementation of the U.S.- China Phase One Agreement.

[1] http://www.gov.cn/xinwen/2020-01/16/content_5469650.htm

[2] http://www.gov.cn/zwgk/2010-08/17/content_1681809.htm

[3] http://www.gov.cn/jrzg/2013-06/21/content_2431594.htm

[4] Max. 0.6g/L for distilled alcohol from grains and 2.0g/L for other distilled alcohol per national food safety standard GB2757-2012.

[5] http://www.gov.cn/zhengce/2015-04/25/content_2853643.htm

[6] http://www.nhc.gov.cn/sps/s3593/201704/15031a65db34492eab8fb5819e9cb466.shtml

[7] https://www.cfsa.net.cn/Article/News.aspx?id=AF2771F49947C25CCC2B38F9FA0697383690B305BC142B63