Regulation and the U.S.–China Dynamic

In the past, within living memory, food processing was largely a localized system with production facilities located near the source of the food product supply, the two linked by short and relatively simple logistics. Today the global food processing industry is estimated at more than $2 trillion in annual sales, with approximately 25% directly involving international import/export sourcing. Highly perishable foodstuffs like produce or seafood can reach processing facilities from other continents. New geopolitical demands are driven by food product safety fears about Salmonella contamination or terrorism, and these demands have created an extremely complex food supply and regulation dynamic.

Failure to understand the regulatory landscape can have dramatic repercussions on the food supply chain. Food product exporters must be well informed about food safety and the customs rules and regulations of every country to which their products are shipped, particularly any chemical tolerance, quarantine, or inspection requirements. The uninformed can incur significant, unexpected expenses, ranging from storage charges for quarantine to actual loss of a shipment that is rejected by inspectors or customs and safety officials.

China’s Importance in the Food Chain

China’s export of food to the United States clearly illustrates these dynamics. Of the $80 billion in food that the United States imports each year, about 15% of total U.S. food consumption, food and food products from China play an increasingly important role. China and the United States recognized the continuing increase in Chinese food imports with the negotiation of a Memorandum of Agreement in 2007. The agreement covered food and feed and called for wide-ranging initiatives by the two governments.

The European Union, Canada, and Mexico are the top food exporters to the United States, but China’s share is growing rapidly. In the past decade, the value of Chinese processed food and commodity imports has more than tripled, according to the U.S. Department of Agriculture (USDA). Nearly 3.5% of the total food supply sourced outside the United States comes from China, which has more food facilities registered with the U.S. Food and Drug Administration (FDA) than either Canada or Mexico. In the last year, the FDA established three new offices in Beijing, Shanghai, and Guangzhou, and dedicated food regulatory staff there.

Chinese food exporters need to understand the details and implications of the U.S. food regulation approach, which focuses on quality at the production end and compliance at the import end.

U.S. Production Standards

All food manufacturing facilities exporting to the United States must comply with the FDA’s good manufacturing practices (GMPs), which include standards for worker sanitation, plant construction, and cleanliness. When the FDA conducts surveillance and investigation of a food processing facility for GMP compliance, it may review everything from production history and firm management to direct observation of “objectionable conditions” and “deficiencies,” terms used in FDA Form 483 inspection reports. Inspection is carried out by a complex regulatory system that includes the FDA center that regulates most processed food products, the Center for Food Safety and Applied Nutrition, and FDA’s Office of Regulatory Affairs, as well as the USDA’s Food Safety and Inspection Service and the Animal and Plant Health Inspection Service, which inspect meat and poultry.

The FDA may reject any food for import if it appears to be adulterated, misbranded, or in violation of the law. The agency may also require food that is noncompliant to be relabeled, reconditioned, refused, detained, seized, or destroyed. This rejection can be based on examination, the food producer’s prior history, or even the appearance of being in violation of FDA standards. Therefore, food producers in China and other countries who export to the United States should meet, as closely as possible, FDA production and safety standards in their own country.