China’s Rules on Registering Overseas Food Manufacturers Prompt Concerns over Trade Disruption at WTO

On November 2, China’s Customs agency issued the English version of the Provisions of the People's Republic of China on the Registration and Administration of Overseas Manufacturers of Imported Food. The Chinese version of the rules, 中华人民共和国进口食品境外生产企业注册管理规定, was issued on April 12, 2021 and will take effect on January 1, 2022. The new provisions have brought about discussions at the WTO, in which some Members have expressed concerns over the measures being trade-restrictive and burdensome.

According to the Provisions, all overseas manufacturers of foods that export to China are required to register with China’s General Administration of Customs (GACC), if they meet with the following conditions:

1. The food safety management system of the country/region where the manufacturer is located has passed GACC’s equivalence assessment and/or review;
2. The manufacturer was established with approval by the competent authority of the country/region, and the manufacturer is under effective regulation by the competent authority;
3. The manufacturer has an established, effective food safety and sanitation management system and protection system, legally produces and exports food in the country/region, and ensures that foods exported to China comply with relevant Chinese laws, regulations, and national food safety standards;
4. Food exporting to China conforms with relevant inspection and quarantine requirements that have been agreed upon after discussion by the GACC and the competent authorities of the country/region.

The Provisions seem to cover manufacturers of all food items, except for the ones engaging in the production, processing, and storage of food additives and food-related products. The scope is broader than the current rules, which only requires registration for producers of food items listed in a catalog.

Under the Provisions, companies that produce 18 categories of food can only register through recommendations of authorities of the country/region in which the companies are located. The 18 types of food include meat and meat products, casings, aquatic products, dairy products, bird’s nests and bird’s nest products, bee products, eggs and egg products, edible oils and fats, oilseeds, stuffed pastry products, edible grains, milled grain industry products and malt, fresh and dehydrated vegetables and dried beans, condiments, nuts and seeds, dried fruits, unroasted coffee beans and cocoa beans, foods for special dietary purposes, and functional foods.

Foreign agencies that recommend registrations shall examine and inspect the manufacturer and submit a list of application materials, including a statement that the recommended producer conforms with requirements stipulated in the Provisions and reports of examinations/inspections/review conducted by the agencies to relevant manufacturers.

Companies that produce food other than the above-mentioned categories may apply for registration with the GACC directly.

Once registered, exporting companies shall mark the registration number issued in China or the registration number approved by the local authority on the inner and outer packaging of the food.

Registration of overseas manufacturers of food will be valid for five years, one year longer than the current rules. The registration can be extended for another five years. But the GACC has the authority to revoke any registration if one of the following incidents happens:

1. Severe food safety incidents of imported foods caused by the manufacturer;
2. Food safety problems are detected in foods exported to China in the entry inspection and quarantine, and the circumstances are serious;
3. Significant problems exist in the manufacturer’s food safety and sanitation management, which cannot ensure its food export to China conforms with safety and sanitation requirements;
4. The manufacturer fails to meet the registration requirements after taking rectification measures;
5. The manufacturer provides false materials or conceals relevant facts;
6. The manufacturer refuses to cooperate with the GACC in reviews and incident investigations;
7. The manufacturer leases, lends, transfers, or resells its registration number, or claims another manufacturer’s registration number.

Similar to the current rules, the Provisions note that the GACC will suspend food imports from a country or region when “an international organization or a foreign competent authority issues a notification of a disease/epidemic, or the GACC detects a serious disease/epidemic outbreak or public health incident in its inspection and quarantine.” During the import suspension period, the GACC will not accept any applications from the country or region.

The Provisions also stipulate some new obligations for the government agencies of the foreign nation/region. For instance, it states that:

The competent authorities of the countries /regions shall have effective regulation of the registered manufacturers, urge them to continuously conform with the registration requirements. Finding non-compliance to the registration requirements, the competent authorities shall take control measures immediately, suspend food export by the relevant manufacturer to China, until the manufacturer conforms with registration requirements after taking rectification measures.

The Chinese government started formulating the new rules in July 2019. On November 16, 2020, China notified a draft of the Provisions to the WTO TBT Committee (G/TBT/N/CHN/1522) (the draft is slightly different from the final rules). The proposed measures have generated discussions at the WTO since June 2020, as some Members expressed concerns that the measures are more trade restrictive than necessary. According to an explanatory document (link in Chinese) issued by the GACC, the GACC responded to 14 comments from 12 nations/regions at the WTO.

The discussions at the WTO continued even after the rules were finalized. At an SPS Committee meeting in July 2021, Australia stated that the measures “might restrict trade more than necessary and be inconsistent with the SPS Agreement.” In addition, “[i]n Australia's view, the proposed Regulation would discriminate between local and imported foods." Furthermore, “Australia requested guidance for the registration of overseas manufacturers of food categories, and requested that establishments that had already completed the existing registration process be exempted from having to re-register. Australia sought timely and transparent feedback in order to continue the successful history of trade in food products with China.”

Similarly, the United States noted that it “feared that the food facility registration requirements established would create major trade disruptions by mandating documentation and procedures beyond what is currently required for higher-risk products.” As a result, it requested China to "identify the specific food safety risks it was attempting to address with these measures” and "postpone the proposed implementation date of 1 January 2022 and continue engaging with trading partners.” The United States reiterated these points in a recent submission and urged China to postpone the rules for at least 18 months and commit that trade will not be interrupted in the meantime.

Canada also expressed concerns over the measures being “overly burdensome” and “beyond the extent necessary to protect against food safety risks,” and that they “would create confusion for competent authorities and industry due to the lack of details and transparency regarding its implementation, and would create serious barriers to trade, including significant financial impacts.” It also urged China to “provide further clarity on these measures, specifically on the scope of the products impacted and the need of all imported food and food products to be registered with China” and delay the implementation of the new rules.

Along the same lines, Japan and the Philippines raised the point that the new measures would impose burdens on foreign authorities. Japan and Switzerland also sought further clarifications of the scope of the measures.

In response, China stated during the same meeting that it “had established an eight month transition period following publication of Decree 248 in April 2021” and “that this Decree would not affect the implementation of relevant agreements previously signed.”