The current concerns about the spiking of dairy products in China with melamine have expanded into concerns about the state of Chinese food safety generally.


The problem does not appear to be a lack of regulations as there are a myriad of  relevant laws, regulations and rules (including PRC Food Hygiene Law, PRC Product Quality Law, PRC Agricultural Product Quality Safety Law, PRC Consumer Rights Protection Law, Special State Council Rules on Strengthening Supervision and Management of Food Safety, National Plan for Major Food Safety Emergencies to name a few).


Mark Schaub, Partner, FDI


Perhaps the myriad of laws and regulators are part of the problem and not part of a solution. The existing PRC laws can cover the main points but it seems that problems remain due to a failure to enforce the regulations and not due to a failure to have enough of them. In addition there are so many authorities involved (Administration for Industry and Commerce, the Food and Drug Administration, the Administration of Quality Supervision, Inspection and Quarantine, the Standardization Administration, the Ministry of Health, the Ministry of Agriculture, the Ministry of Commerce, etc.) it may be difficult to determine the correct authority to be addressed in case of a problem and there are also co-ordination issues. Also it seems that local authorities have not fully enforced the regulations. As is often the case only the central authorities appear to be willing to take effective action.


Another problem appears to be that a number of large dairy companies were given inspection-free status by the General Administration of Quality Supervision, Inspection and Quarantine (China’s product quality watchdog). As we have seen in Wall Street self-regulation or de-regulation is not always the right answer.


What’s Next from a Legal Perspective


The PRC central authorities are now moving quickly to take action and calm consumers concerns including:


Cancelling Exemptions from the Inspection System – as mentioned above a major problem was a system of “trusted” companies being largely unsupervised. This system was cancelled on September 18, 2008 by the State General Administration for Quality Supervision, Inspection and Quarantine. On the same day, the State Council declared that the System of Exemption from Inspection for food quality was cancelled.


Draft PRC Food Safety Law – The government currently has a draft PRC Food Safety Law being circulated since April 20, 2008. This law will replace the PRC Food Hygiene Law, which is no longer considered suitable for today’s China. The Draft law is an umbrella law which aims to establish a comprehensive supervision system for food safety and resolve turf fights between supervision authorities. It is expected that the Draft or its implementing regulations will be strengthened further in light of the dairy industry problems. One area of controversy is whether the food safety administration should still be done by a number of authorities (current method) or be done by one authority is still full of controversy.


Administrative Responsibility System – Up to now, 7 senior officials have been dismissed or have resigned due to the milk incident, including the Head of the State General Administration for Quality Supervision, Inspection and Quarantine (Mr. Li Changjiang) and the Mayor of Shijiazhuang (Ji Chuntang) resigning, the CCP Secretary of Shijiazhuang (Wu Xianguo) being dismissed, etc. Accordingly the government is taking responsibility. This distressing incident may be a spur to better and more effective regulation. Hopefully other governments facing different types of regulatory problems will also take specific action.