China: Food Safety Legislation: A Continuing Concern Of The Canadian Government, Importers And Chinese Suppliers

Copyright 2009, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on International Trade & Investment – China Focus, January 2009

Earlier in 2008, the Canadian government introduced legislation that would impose onerous requirements on companies that import consumer products from Chinese and other foreign suppliers. This legislation, referred to as the Consumer Products Safety Act, followed several recent high-profile recalls affecting toys, food, toothpaste and pharmaceuticals, many of which were imported from China. As a result of the proposed legislation, Chinese and other non-Canadian suppliers would have been faced with an increasing number of requests for detailed product information, including documentation of safety testing, from Canadian importers and distributors. Although the Consumer Products Safety Act, also referred to as Bill C-52, did not become law because of the recent Canadian election, the government's election platform indicates that protecting Canadians from unsafe imported products remains a high priority. Accordingly, the government is likely to re-introduce a bill in Parliament in the coming session.

Although it is unknown at this point whether the bill, when introduced, will be identical to or amended from what was originally put forward, prudence suggests that now may be a good opportunity for importers and their Chinese and other foreign suppliers that may be affected by the eventual legislation to consider how they may play a role in shaping the legal framework for such consumer product law. In the meantime, it may be wise for importers, manufacturers and suppliers and others potentially affected by the legislation to begin implementing compliance mechanisms so that when the legislation comes into effect, they will have established appropriate best practices and due diligence mechanisms to avoid any future liability.

CERTAIN OBLIGATIONS LIKELY TO RESURFACE IN NEW LEGISLATION

Although no one can be certain exactly what the new legislation will contain, there are certain broad prohibitions and obligations that are likely to be included in any new bill when re-introduced in this session of Parliament.

Consistent with the government's election platform, any new consumer products safety legislation is likely to prohibit Canadians from importing, manufacturing, advertising or selling consumer products that are identified as posing a danger to human health or safety. There likely will be mandatory recall provisions empowering the government to prohibit in Canada the importation, manufacture, advertisement or sale of products that pose health or safety risks to consumers. The legislation may also require those who sell consumer products in Canada to advise the government of any deaths, injuries, serious adverse effects or recalls occurring in Canada and abroad related to the product. These obligations could be onerous for importers, manufacturers and distributors as they will essentially be required to continuously monitor the products they sell, both in Canada and elsewhere in the world.

Under the previously introduced legislation, the Minister of Health was given the power to order importers and Canadian manufacturers to conduct testing on consumer products and to provide documents, within a pre-determined time-frame, containing the results of such tests. These burdensome obligations may resurface in the new legislation. Considering that international suppliers may not be required to comply with equivalent standards in their home country, there is no guarantee that such information or records even exist.

Any new legislation is likely to impose steep penalties on importers and manufacturers who knowingly expose Canadians to danger, as well as on directors, officers, or agents who have directed, authorized or acquiesced in such corporate activity.

COMMENTARY

Given the level of criticism in the marketplace on Chinese imports in light of recent recalls, it is important that Chinese suppliers understand the responsibilities the new legislation may impose on Canadian importers. Prudent Chinese suppliers may want to consider reviewing their safety testing procedures and consider engaging in increased safety information-sharing with Canadian importers if they have not already done so. Providing Canadian importers with documentation regarding safety testing and informing them of any product recalls will not only help to shield their Canadian importers from liability, but it may help maintain and strengthen existing business relationships.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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