The Retail Committee appreciates the government’s stated aim to minimize regulatory limitations that hamper Taiwan’s business environment. Our members view this goal as essential for advancing Taiwan’s economy.
The Committee therefore urges the authorities to enhance rulemaking transparency on a variety of fronts, including issues regarding dietary supplements, special dietary foods (SDF), and foods for special medical purposes (FSMP), as well as the management of Chinese medical herbs and the integrity of imported alcoholic beverages.
International best practices provide sound solutions for all these issue areas for Taiwan to study and potentially adopt. Following those examples will allow Taiwan to align its market with the global community and enable retailers to provide safe, innovative, and high-quality products for Taiwan’s citizens to enjoy. We urge the government to implement regulations and standards based on sound science and international best practices to avoid contradictory or inconsistent interpretations of the law.
The Committee looks forward to fruitful discussions with the authorities in the coming year as we work together to tackle these issues and reach a positive conclusion for both the government and industry.
Suggestion 1: Permit SDF-formula amendment instead of re-registration and remove the requirement to prove the ethnic compatibility of FSMPs.
Under current SDF-related regulations, a product must be re-registered if any ingredients or additives are changed, even though such changes require only a minor adjustment to the formula to maintain the same product profile. In the case of FSMPs, new clinical studies may even be required to complete re-registration. In line with international best practice, we recommend that the regulations be revised to give manufacturers the option of amending the product formulas by applying for a change of registration details instead of going through re-registration. This revision could significantly shorten the regulatory lead-time involved – from the 320 days required for re-registration to 60 days for a revision of registration details.
FSMPs are food products meant to fulfill the nutritional needs of patients with specific conditions, not to provide treatment for those conditions. Yet under Taiwan’s current regulations governing FSMPs, manufacturers are required to demonstrate the ethnic compatibility of their products, despite the absence of scientific evidence to support this requirement. Our understanding is that no other country requires demonstration of the ethnic compatibility of FSMPs. We therefore recommend removal of this unique-to-Taiwan regulation and instead permit acceptance of the results of foreign clinical studies of FMSPs.
When the Committee raised this issue in last year’s White Paper, the response was that the government planned to continue to collect information regarding ethnic compatibility and would make a decision on whether to remove the requirement at a later time. We hope to see concrete progress made on this suggestion this year.
In 2018, the Taiwan Food and Drug Administration (TFDA) issued the “Procedure for Proposing Product Claims Under the Regulations Governing the Criteria for Determining Whether the Labeling, Promotion, or Advertisement of Foods and Food Products is False, Misleading, or Implies Medical Efficacy (Example Sentences of the Physiological Function of Specific Food Ingredients)” – the Procedure for short. One of the aims was to enable the food industry to better promote functional foods (products offering health benefits that extend beyond their nutritional value) and to satisfy consumers’ need to understand the effects and benefits of such products.
The private sector took advantage of this new framework, submitting ample requests for new product claims to be allowed on labels. But now, three years after promulgation of the Procedure, only one claim (equal to less than 5% of the total submissions) has passed TFDA’s rigorous review process. Importantly, no claims belonging to the “Specific Food Ingredients” category have been approved – a matter of particular concern to the dietary supplements industry as a low approval rate dissuades new applicants from submitting claims. The list of legitimate, science-based claims remains extremely limited.
We understand that the typical reason for rejection of a claim is that TFDA wishes to avoid infringing on privileges granted only to products labeled “Health Food,” a term that carries a certain legal weight and is represented by an easily identifiable logo. While the Committee respects the authority’s desire for prudence in this matter and agrees that the “Health Food” label and its related privileges should be protected, we note that dietary supplements are categorized as foods rather than “Health Food.” We urge the TFDA to consider claims applicable to (1) Specific Food Ingredients and (2) the physiological effects of products, in accordance with Article 4, Clause 3 of “Regulations Governing the Criteria for Determining Whether the Labeling, Promotion, or Advertisement of Foods and Food Products is False, Misleading, or Implies Medical Efficacy” (the Regulations).
“Specific Food Ingredients” are widely used by Taiwanese consumers, yet to date very few legitimate claims have been attached to them in this market. Omega-3 fatty acids and polyphenols in tea are examples of such ingredients that have not received TFDA approval for specific health claims.
The Committee requests that TFDA expedite and clarify its review process by developing a more transparent, efficient, and effective mechanism for the substantiation of claims. We suggest the following procedural adjustments:
Disclose the claims review criteria used by the Food Advertisement and Label Consultative Committee (FALCC), which is identified as the key decision-making unit under the Regulations.
Confirm to the submitting company that FALCC has received its claim application and specify which FALCC members have been assigned to review the submission, so as to facilitate communication in case further details or scientific substantiation are needed.
Set up a face-to-face meeting to allow the applicant to provide supporting evidence in the event that a claim submission is incomplete or FALCC has further questions. This step will reduce unnecessary misunderstandings.
Adopt a mechanism for administrative remedy, based on Articles 92 and 102 of the Administrative Procedure Act, to provide applicants an opportunity to state their opinions regarding TFDA decisions on product claims. As of now, such decisions are final, and applicants are unable to make appeals.
Suggestion 3: Increase rulemaking transparency and reduce inconsistencies in regulatory interpretations and related practices.
To better attract foreign direct investment, it is essential for the Taiwan government to ensure the predictability of its regulatory environment. Rulemaking transparency and consistency of enforcement are the main ways to achieve that goal.
Although the Committee has made similar recommendations in past White Papers, and some notable progress has occurred, we continue to find examples of regulatory inconsistencies and lack of transparency.
Ensure the consistency and relevance of border food-inspection practices. Some improvement has been seen in what was generally the most serious issue in the past – the inconsistent interpretation of the rules by different inspectors. This year, however, the biggest problem has been a slightly different issue: the tendency for new border inspectors to deviate, without forewarning, from what had been established inspection practices.
For example, regarding the review of Chinese-language labels and food packaging, new inspectors have been requesting information that is not directly related to food safety, but rather codes intended for internal traceability or identification purposes. The additional communication has extended the importation procedures by up to two to three working days. We understand that the TFDA has the power to request any documents it deems necessary for food inspection, but we urge it to train inspectors to focus on matters actually pertaining to food safety.
Continue efforts to create a more reasonable food safety regulatory regime. Although the “Regulations on Nutrition Claims for Pre-packaged Food Products” clearly define nutritional claims as descriptive wording used to show the amount of nutrients in pre-packaged food products, TFDA somehow still considers the listing of the number of “grams [of a nutrient] per serving” on a food package as a form of “nutrition claim,” even if the information is identical to what is shown in the nutritional table.
Over the past year, our member companies have devoted countless hours, manpower, and money to revise packaging to comply with such confounding demands. However, we note that the packaging of several local products continues to indicate protein value without any issue. As this matter has already been communicated to the TFDA multiple times in meetings convened by the National Development Council (NDC), we sincerely hope that a solution allowing accurate nutritional information to be shown on product packaging artwork is put in place without further delay.
Continue efforts to make FAQs regarding the TFDA’s interpretations of food-related regulations transparent to the public and codified when required by law.We are pleased that TFDA pledged in 2020-2021 meetings at the NDC to review FAQs or interpretations of food-related regulations that may be inconsistent with or exceed the scope of the relevant regulations, and that any changes to the FAQs that could impact the industry would be made through a public release process. We look forward to seeing notable progress on this issue in 2021.
Suggestion 4: Prohibit the sale of imported alcoholic beverages for which the original manufacturing lot code has been changed or removed.
The Committee continues to seek possible solutions to this longstanding issue impacting food hygiene and safety – a subject that is more urgent than ever in view of the current global health crisis posed by COVID-19. The crux of the issue is that Article 32 of the Tobacco and Alcohol Administration Act (TAAA) explicitly stipulates that packaged alcoholic products for sale must bear a lot code – a number indicating the quantity of a certain product manufactured at a specified time on a specific production line. Article 3 of the Consumer Protection Act underscores the government’s responsibility to enforce such labeling legislation.
Lot codes are vital for protecting consumer interests and safety by ensuring that alcoholic products in the market can be traced and recalled in case any issue arises. Some parallel importers have been removing the original lot codes and replacing them with their own serial numbers, which do not contain the information needed for tracing. Yet the Ministry of Finance (MOF), the competent authority for regulating alcohol sales, has never adequately enforced the law requiring lot codes by conducting inspections and imposing administrative fines on violators.
The MOF has offered various explanations for the inaction. One is an argument raised by the parallel importers: that a crackdown on the removal of lot codes would constitute a violation of the Fair Trade Act by interfering with business competition. The dubious nature of that argument aside, the MOF is not the authority administering the Fair Trade Act and cannot avoid its obligation to enforce the law in protection of consumer interests.
Another fallacy is questioning whether international practice requires the use of lot codes. In fact, quite a number of countries require such labeling. According to information collected by the MOF from foreign trade offices in Taipei, the UK, France, the European Union, Canada, and Italy all require alcoholic products to bear lot codes. In addition, Directive 2011/91/EU expressly orders all European alcohol businesses to display the lot code from the original manufacturer on their products.
In some countries that do not currently forbid the scratching off of lot codes, discussions have been underway about amending the law. In addition, Japan’s Ministry of Economy, Trade and Industry has explicitly stated that a lot code number is significant information for recalling problematic food products, and that imported alcoholic products with scratched-off codes could erode consumer trust. The fact that some countries do not forbid the scratching off of lot codes no way justifies the practice or Taiwan’s lax enforcement of the law.
Yet another misconception harbored by some officials is that the Certificate of Age and Origin for Scotch Whisky (C&E 94J) issued by UK Customs can serve as a substitute for the lot code. The C&E 94J, however, is merely a form of certification and is not an integral part of the packaging of alcoholic products. It therefore cannot replace lot codes as a tool to protect consumer health and safety by ensuring traceability. Further, cases have occurred of a forged C&E 94J for imported name-brand alcoholic products.
A serious anomaly in the system is the existence of a voluntary reporting system through which importers can notify the authorities when they receive shipments of alcoholic beverages lacking lot codes. The fact that such reporting is not mandatory and that no penalties are imposed for failure to report missing lot codes renders the system entirely meaningless – and makes any figures cited for the percentage of alcoholic products with scratched-off lot codes completely unreliable.
Nevertheless, the MOF has calculated that just 1.73% of the lot codes for imported whiskey were scratched off in the first half of 2019. That figure may appear low, but even if accurate it equals around 1 million bottles or more without even taking domestically produced whisky products into account.
If a safety incident should occur in the future, how would the MOF inspect, trace, and recall the imported whisky when the original lot codes have been scratched off? If it cannot do so effectively, what explanation will it give the public?
In addition, prohibiting the scratching off of original lot codes would not contradict the spirit of free trade, as some have alleged. Parallel importers could continue to import alcoholic products as long as they keep the original lot codes on the bottles as the law requires.
At a meeting convened by the NDC on May 13, 2019, representatives of the Retail Committee spoke with the MOF in an effort to make progress in resolving the lot code issue. But it appears that the MOF has not yet followed up on the agreed-upon action items, including:
Contacting the British Office Taipei to obtain a definitive opinion on whether a C&E 94J is sufficient to enable traceability.
Confirming whether the U.S. and Japan permit the sale of imported alcoholic products with scratched-off lot codes.
Providing a draft of the “actual enforcement mechanism for Customs authorities to monitor the scratching off of lot codes.” More than two years after the 2019 meeting, the MOF continues to say that it is still researching the matter.
The Committee considers the lot code issue to be so important because of the need for certainty that alcoholic products are traceable and recallable when food or alcohol safety is in doubt. In order to safeguard consumers’ interests, we again ask the MOF to:
Conduct systematic inspections and quickly and effectively enforce the law when alcoholic products without lot codes are found being imported or sold.
Establish a robust and effective reporting mechanism to replace the current voluntary reporting procedure.
Suggestion 5: Regulate Chinese medicinal herbs used as foods or food ingredients under the “Act Governing Food Safety and Sanitation” and its implementation rules.
Nowhere in the Pharmaceutical Affairs Act does the legislation authorize a government agency to regulate such matters as material terminology, labeling, formulation, and dosage for plant materials that could be used as foods, food ingredients, or Chinese medicinal herbs. As a result, no legal basis exists for the draft “Positive List and Management Principles of Chinese Medicinal Herbs for Use as Food Ingredients” being proposed by the Ministry of Health and Welfare (MOHW). Moreover, the draft does not meet the Judicial Yuan’s stipulation that regulations must include the “constitutive elements” of penalties for violations.
The basic problem with the draft stems from the arbitrary broadening of its scope to include Chinese medicinal herbs, which are already covered by the Pharmaceutical Affairs Act and do not require any inspection or registration as a pharmaceutical. When this Committee previously raised the question, however, the reply from the authorities indicated that Chinese medicinal herbs should be regarded as pharmaceuticals because they “are used to prepare Chinese medicinal preparations.” This statement has no legal basis, as “Chinese medicinal herbs” clearly do not have the status of pharmaceuticals under the Pharmaceutical Affairs Act. Those materials commonly called “Chinese medicinal herbs” are not “Chinese medicinal preparations” but are simply used in preparing those medicines.
In fact, Article 15-1 of the Act Governing Food Safety and Sanitation has long authorized the government to regulate the manufacturing and processing conditions of materials for food use. That Article is thus already available if MOHW wishes to regulate those materials commonly called “Chinese medicinal herbs” in terms of allowing their use both in food and Chinese medicine preparations. No additional regulation is needed.
MOHW has also cited Article 75, Item 2 of the Guidelines on Drug Registration to explain its position on Chinese medicinal herbs. Using a “guideline” – which ranks much lower than a law in the regulatory hierarchy – to interpret the Pharmaceutical Affairs Act seems improper.
MOHW indicated its intention to provide legal authorization under the Pharmaceutical Affairs Act to regulate “Chinese medicinal herbs” that “may be used as food ingredients” and impose associated restrictions on their use. The proposed regulation presupposes that Chinese medicinal herbs are considered “drugs” under the Pharmaceutical Affairs Act, yet MOHW has repeatedly excluded these materials from registration under the Pharmaceutical Affairs Act, as well as exempting them from requirements governing the packaging and labeling of drugs.
If the draft “Positive List and Management Principles” is put into effect to control Chinese medicinal herbs used as food ingredients, it would be a misuse of the legal system and a departure from constitutional procedures for rulemaking. The content contravenes the principle of proportionality (for example, no objective scientific basis has ever been presented for restricting these ingredients) as well as the principle of equality (if a producer in the food industry violates the regulations governing the use of Chinese medicinal herbs for food, the case would be based on the Act Governing Food Safety and Sanitation, not regulations under the Pharmaceutical Affairs Act.)
Therefore, the Committee recommends recognition that “Chinese medicinal herbs” are actually food raw materials, discarding the erroneous notion that they should be treated as “drugs” under the Pharmaceutical Affairs Act. We suggest backing any restrictions on the scope of use, dosage, safety assessment, etc. of “Chinese medicinal herbs” with scientific evidence and reserving such restrictions to those herbs that are allowed to be used in “Chinese medicinal preparations.” This distinction will help promote the public’s health and well-being and foster the development of the Taiwan food industry in line with international standards.