The members of AmCham’s Retail Committee share the Taiwan government’s dedication to enhancing consumer safety and welfare. We are also pleased by the steps the government has taken in the past several years to increase public participation in policy formulation and regulation-making, including the area of food and commodity safety. The establishment of a 60-day notice and comment period for new regulations was a major step forward. Better communication and consultation between the government and the public and all stakeholders in the rules-making process will lead to better, more thoroughly considered regulations.
Improvement in the system is already evident. Among the several positive examples over the past year was the process involved in drafting the Regulations of Food Allergen Labeling & Criteria of the Labeling. During the comment period, the Taiwan Food and Drug Administration (TFDA) held hearings inviting stakeholders to provide suggestions and information on common practices in other markets. After taking scientific evidence into account, the TFDA deleted sunflower seeds from the list of allergens.
Because of industry’s understanding of general business practices and technological advances, its participation in the rules-making process will provide government with a broader perspective, enabling it to more accurately select the optimum regulatory approach to meet the needs of the society at large.
Regulation-making is a power and also an obligation of government. As required under the Constitution, regulations need to be proportionate, which means that regulatory interventions are justified only if they are necessary to achieve the regulatory goal and are the least burdensome means available to achieve that end. Deviation from these principles not only raises Constitutional issues, but may also cause undue burden on industry.
In accordance with these principles, we suggest that the government communicate even more frequently with stakeholders, so that policies and regulations can be formulated on a more informed basis.
The Committee notes that in 2000, a private organization, the Global Food Safety Initiative (GFSI), was created by food industry leaders from around the world to seek collaborative solutions to reduce food safety risks, while building trust throughout the supply chain. GFSI strongly believes that a safe and efficient food supply chain cannot be built without the support of local and national public partners. It strives to enable industry stakeholders and governments to “work more effectively together to ensure that there are safeguards in place along the entire value chain, from origination to the end consumer.”
In line with those objectives, the Committee offers the following suggestions aimed at furthering industry-government collaboration for the sake of enhancing the lives of the people of Taiwan.
Suggestion 1: Conduct proper risk assessment before setting MRLs for organic products.
According to Article 4 of the Act Governing Food Safety and Sanitation (AGFSS), “actions taken by the competent authority in the governing of food safety shall be based on risk assessment.” It is apparent that the law requires the government to fully understand the risks associated with the prospective target of regulation so that it can properly determine how to deal with such risks. Unfortunately, when it comes to setting proper maximum residue limits (MRLs) for organic food products, we have not seen the conducting of reasonable risk assessments.
Since neighboring contamination and background residue are usually inevitable, it is unreasonable to expect that no pesticide whatsoever will be detected in organic products. In the United States, for example, it is permissible for organic products to contain traces of pesticides as long as they were not applied directly to the product and the volume of the pesticide residue is lower than 5% of the MRLs of regular products.
We urge the Taiwan government to recognize the existence of neighboring and background contamination in organic products and to determine reasonable MRLs by conducting actual food risk assessments as the law requires.
Suggestion 2: Establish a dedicated regulatory category for dietary supplements to promote development of the industry.
In view of the worldwide phenomenon of aging populations, the dietary supplement industry is expanding in leading markets such as United States, Japan, and Korea to aid consumers with health maintenance. Earlier this year, the Industrial Development Bureau under Taiwan’s Ministry of Economic Affairs established an industry classification for “functional foods,” a positive move that reflects the government’s increased attention to this burgeoning industry. More broadly, however, Taiwan needs holistic policy solutions to foster development of its dietary supplement industry. Besides the question of product classification, the regulation of product claims needs to be made less restrictive so that consumers are able to be informed about the benefits their supplements provide. In addition, the current process of licensing health foods is complicated and the registration process time-consuming, which hinders the availability of supplement products in the market. Consumers in Taiwan have difficulty accessing the dietary supplements they wish to use to meet their needs.
The Committee urges the Taiwan government to consider the creation of a dedicated category of “Dietary Supplements,” clearly defining the scope of this class of food product and the permissible health-function claims associated with it. Dietary supplements are distinguished from conventional foods, which are consumed primarily for reasons of taste rather than for nutrition or health-related purposes. If products can display appropriate science-based information regarding their nutritional and health effects, it would allow manufacturers to clearly communicate the characteristics and benefits of the dietary supplements to consumers to assist them in making the right choices for their particular needs.
Many of Taiwan’s leading trade partners, including the United States, Japan, and Korea, already allow suppliers to post functional health claims and benefits to consumers, based on scientific evidence. The Committee recommends that the TFDA reference the dietary supplement definition under the U.S. Dietary Supplement Health and Education Act to create a clear scope for supplements that contain vitamins, minerals, botanicals, and other functional ingredients. In addition, the United Nations’ Codex Alimentarius Commission in 2009 amended the “Codex Alimentarius guidelines for use of nutrition and health claims” to assist national authorities in their evaluation of health claims in order to determine their acceptability for use by industry.
We urge the Taiwan government to work with the industry to develop appropriate regulations for facilitating the availability of dietary supplement products and functional ingredients, as well as the ability of suppliers to make reasonable functional claims.
Suggestion 3: Prohibit the sale of imported alcoholic beverages for which the original manufacturing lot code has been changed or removed.
The 2014 amendments to the Tobacco and Alcohol Administration Act (TAAA) stipulate in Article 32, Paragraph 1, Item 6 that all alcoholic products (including parallel-imported products) must bear the original lot codes as an administrative measure to enable product tracing and emergency response in the event of a major sanitary or safety incident. Article 50, Paragraph 1 of the same Act states that alcoholic products without the mandatory lot code will be subject to penalty. Moreover, according to Article 3, Paragraph 17 of the Sanitation Standards for Alcohol Manufacturers, the reference to lot codes to in Article 32, Paragraph 1, Item 6 of the TAAA does not include serial numbers that importers themselves assign to their alcoholic products after the products are imported. Rather, it means the numbers originally assigned during the “production or manufacturing” process to identify the time, place, and quantity of production, so as to facilitate the tracking and tracing of each product batch if necessary.
Despite the clear language in the 2014 amendment, a loophole has developed, since importers have been allowed to apply their own serial numbers if alcoholic products arrive at the port of entry without bearing a lot code. This flexibility has opened the door to abuse, with lot codes purposely removed prior to import to Taiwan to avoid traceability.
In addition, some officials have asserted that the Certificate of Age and Origin for Scotch Whisky (C&E 94J) issued by UK Customs should be able to serve as a substitute for the lot code. But since the C&E 94J does not contain information that would enable the authorities to trace a given batch of alcoholic products in case of an incident, permitting the C&E 94J to substitute for the original lot code would severely jeopardize safety control over imported alcoholic products.
It has also been argued in some quarters that the lot code requirement constitutes a trade barrier, intended to block parallel importation and deprive consumers of the chance to purchase cheaper products. That argument falls flat in view of the need to protect consumers’ safety and welfare. Specific legislation has been put in place for various industries in Taiwan, not just alcoholic beverages, requiring the labeling of lot codes to ensure the proper tracking and tracing of products. Prime examples are the Pharmaceutical Affairs Act and the Act Governing Food Safety and Sanitation. The safety of alcoholic products is no less important than that of food and even medicine.
Besides the TAAA, other laws also apply to alcoholic products. If imported alcoholic products from unknown sources originally contained a production lot code, but the numbers were intentionally scratched off and replaced with the importers’ own serial numbers, such products will be deemed as violations of the Commodity Labeling Act and the Consumer Protection Act.
Two Interpretation Letters from the Ministry of Finance (MOF) are sometimes cited as providing leeway for the importation of alcoholic products without lot codes. But these letters – No. Tai-Tsai-Ku-Zi-09403066680 dated July 20, 2005 and No. Tai-Tsai-Ku-Zi-09503510310 dated June 12, 2006 – were issued before the 2014 amendments to the TAAA and should be considered as having been superseded by that legislation. We urge the MOF to clarify explicitly that the content of the Interpretation Letters is no longer valid, and to reiterate that the amended TAAA regulations will be fully applied and enforced for alcoholic product imports (with the exception of grape wine, as individual vineyards may not identify their products by lot code). This step is necessary to prevent any adverse impact on consumers and manufacturers should the lack of effective administrative measures prevent the urgent handling of a major sanitary or safety incident involving alcoholic products. Any such occurrence would seriously undermine the credibility of the regulator in charge.