FDA Food Safety Modernization Act Might Raise Trade Concerns?

By Ching-Fu Lin

At the World Trade Organization (WTO) committee dealing with food safety and other issues under the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) held approximately three weeks ago, China raised several trade concerns about the Food Safety Modernization Act (FSMA).  Other WTO members, such as Brazil, Belize, and Korea, supported China’s concerns.  One of the major points of contention was the FSMA’s import certification requirements and whether its outsourced third-party auditors will conduct food safety inspections in a manner consistent with the SPS Agreement.

Before we dig into the trade implications of the FSMA, two important questions must first be answered.  What are the FSMA import food safety requirements?  And what is the underlying rationale for such requirements?

Food imported from outside the United States (U.S.) comprises 15% of the total U.S. food supply in value ($76 billion).  This figure represents a 12% increase from 2010 and almost doubles the amount in 1998.  For instance, more than 80% of the seafood in U.S. markets is imported from an estimated 13,000 foreign suppliers in about 160 nations.  Although contaminated seafood accounted for about 15% of the documented foodborne illness outbreaks in the U.S., the Food and Drug Administration (FDA) today still inspects and samples only a very small percentage (less than 2%) of imported seafood at U.S. ports of entry and inspects very few seafood producers in other seafood-exporting countries annually.

Recognizing the FDA’s administrative inability and relevant costs to rely almost solely on border inspection on a sufficient portion of food imports, the FSMA significantly strengthened the FDA’s power over food imports in Title III, “Improving the Safety of Imported Food.”  Under its “Foreign Supplier Verification Program,” the FSMA requires food importers to assess and verify that their partner suppliers in other countries have designed and implemented risk-based preventive control plans to maintain a level of safety equivalent to that in the U.S.  The FDA is also allowed to require certifications from importers as a condition for entry, where such certifications may be issued by accredited third-party auditors (which can be foreign governments, foreign cooperatives, or other third parties).  In addition, the FSMA also authorizes the FDA to establish a “Voluntary Qualified Importer Program,” under which some importers can be rewarded for taking more stringent food safety measures by receiving  expedited review and entry of their shipments.

The FSMA undoubtedly expands the FDA’s regulatory authority over imported food products, but the law outsources the implementation authority to third party auditors.  When such third-party audits in effect constitute a more stringent requirement on imported food products than that on U.S. products, there might be WTO inconsistencies (such as the violation of the principles of non-discrimination).  However, as the FDA just published proposed rules to implement the FSMA – which are still open for comments from all stakeholders (interested WTO members are eligible to participate in the process) –  the nature, scope, and possible justification of such potential WTO inconsistencies are still to be ascertained.

[Ed. Note: Stay tuned for details regarding the Petrie-Flom Center’s upcoming conference on February 21, 2014: “New Directions for Food Safety: The Food Safety Modernization Act and Beyond.”]

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