FOOD SAFETY CAMPAIGN WON, BUT THE REAL BATTLE IS JUST

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E.O. 12958: N/A
TAGS: TBIO EAGR ECON HHS ETRD BEXP CH
SUBJECT: FOOD SAFETY CAMPAIGN WON, BUT THE REAL BATTLE IS JUST
BEGINNING

Ref: A. 07 Beijing 4561

B. 07 Beijing 4808

C. 07 Beijing 5255

D. 07 Beijing 5271

E. 07 Beijing 5899

F. 07 Guangzhou 1270


1. (SBU) Summary: Chinese officials claimed success January 16 at
the official wrap-up meeting for the four-month food and product
safety "rectification campaign" and announced plans for a long-term
regulatory structure to continue monitoring production quality of
the nation's industries. Despite shutting down hundreds of food and
consumer product manufacturers, revoking export permits, and
inspecting tens of thousands of factories, Vice Premier Wu Yi and
AQSIQ Minister Li Changjiang emphasized at the event that much work
remains to be done. Regulatory agencies will now seek to solidify
the campaign's achievements and develop a culture of quality and
safety through more effective supervision and enforcement. An AQSIQ
official told ECON Mincouns that his agency has recommended to the
State Council that it preserve the Leading Group on Food Safety and
Product Quality, however, a decision is not expected until February.
End Summary.


2. (SBU) AQSIQ Policy and Legislation Director General Liu Zhaobin
met January 18 with ECON Mincouns and econoff to discuss the results
of the food and product safety campaign and pending Chinese
legislation (septel),as well as the future of the Leading Group on
Food Safety and Product Quality.

Campaign's Key Achievement:
Improving Food Safety
--------------


3. (SBU) According to Liu, the food and product safety campaign
yielded three primary achievements: it established a method for the
implementation and enforcement of food safety measures; it provided
a survey of China's food industry; and it achieved the "twelve
one-hundred percent" goals for conformity with regulations. In the
campaign's aftermath, national regulators will continue to oversee
large-scale food enterprises through certification systems, while
local food safety authorities will be responsible for "Tracing and
Filing Systems" that oversee small, local enterprises. DG Liu said
that AQSIQ now has a better grasp of the structure and development
of China's food industry, particularly small-scale food enterprises
with 10 or fewer employees, which comprise 79 percent of the 448,000
food enterprises, according to the August 2007 White Paper on Food
Quality and Safety.


4. (SBU) Official Chinese statistics from the campaign suggest
impressive strides were made; however, there is no comparable
historical data to gauge what was actually achieved. The official
numbers include: of 98,000 food enterprises, 100 percent are now
registered for production; of 120,000 small scale food workshops,
100 percent signed quality safety commitments; 100 percent of 2.8
million supermarkets and grocers established food supply
verification practices; and 10 percent of 33,000 consumer product
manufacturers have conduct quality record-keeping. (Begin Comment:
This data suggests the campaign covered the larger food enterprises,
i.e., thos 20 percent with more than 10 employees, and perhaps also
represents the majority of those which might be exporting products.
There are still 353,000 small food processors producing for the
local, China market. However, this "report card approach" is not
really useful for gauging China's progress as food safety is clearly
not a one-time event but rather a long-term, continuous process.
Other kinds of data, such as a demonstrated lower incidence of
substandard goods, would be more relevant indicators of improvement

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but would take longer than a four-month campaign to demonstrate
success. Increased registration and supervision, while steps in the
right direction, are means to an end, not ends in themselves.
Inquiries with AQSIQ to clarify campaign results and place them in a
historical context, including confirmation of the number of food
processing firms yet to be licensed, have not yet been answered. End
Comment)


5. (SBU) There is also some unfinished toy business to address.
AQSIQ revoked toy manufacturer export certifications last fall and
required new factory inspections before factories could be
recertified. According to a Beijing-based exporter, while some of
the larger and politically well-connected manufacturers have been
inspected and recertified, smaller to medium-sized firms are still
waiting for inspectors to show up. In some instances, when
inspections have taken place, firms have been waiting more than four
weeks for their certificates to be issued. With exporters worried
about their 2008 pricing strategy amidst importer demands for costly
testing, delayed recertification only adds to their business
uncertainty.

Preparing for the Long Term
--------------


6. (SBU) According to Liu, the next phase of China's food and
product safety regulation will encompass "two chains, two systems,
and one network." The first "chain" is Product Whole Process
Supervision covering product design, material procurement,
manufacturing, sales, and service. The other "chain" is Food Whole
Process Supervision, covering farming, processing, distribution,
retailing and consumption. The "two systems" are a food safety
Quality Traceability System and a Responsibility Accountability
System. The "network" refers to a national Product Quality and
Safety Supervision Network. The goal with this concept is to create
a more comprehensive and systematic approach to the regulation of
food and product safety at all levels of government and within
business supply chains. While details are not yet available, Liu
said that this regulatory framework reflects the nature of China's
system where government regulates a process, unlike the U.S. system
which assigns regulation of products to particular federal agencies.
(Comment: These "chains" perhaps represent a similar approach to
that elaborated by the U.S. Import Safety Working Group in their
November 2007 Import Safety Action Plan, where a major
recommendation is to focus on risks over the entire life cycle of a
given product to assure quality.)


7. (SBU) Vice Premier Wu Yi and AQSIQ Minister Li Changjiang in
their remarks at the January 16 campaign wrap-up meeting
acknowledged the challenge of implementing new safety rules. The
2007 campaign was a one-off program to resolve critical problems in
specific areas and industries, they noted, but future campaigns will
follow. The goal now is to prevent any backsliding and address areas
that fell outside the scope of this recent campaign, such as
agricultural goods and wholesale food markets. While 120,000 small
food shops may have signed "food safety pledges" during the
campaign, for example, Wu Yi noted that many seasonal shops are
still not certified and illegal advertisements still proliferate.
Furthermore, while food and toy recall regulations were released
August 2007, there is still no mechanism for implementing them or
deciding which agency under what circumstances takes charge of
recalls.

Whither the Leading Group?
--------------


8. (SBU) AQSIQ has recommended to the State Council that it preserve

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the Leading Group on Food Safety and Product Quality chaired by Vice
Premier Wu Yi. If the State Council in February approves the
continuation, DG Liu said, Wu Yi's replacement as the Chair of this
leading group could then be announced. Liu said that AQSIQ was an
important player in the Leading Group, but not important enough to
offer up a Chair. AQSIQ, in his opinion, would not become part of a
"super ministry" for food and product quality in the same way that
energy, transportation, and environment-construction ministries
might be restructured, as some observers expect.

Comment: The Future of
Food and Product Safety
--------------


9. (SBU) The key achievement of China's food and product safety
campaign is that it elevated the issue of food and product safety to
the national stage and committed political and economic resources to
addressing the system's shortcomings. (In this sense, it is very
similar to the various IPR campaigns that China has launched and
"won.") The notion of "safety" is now an accepted topic in public
debate, as evidenced by the government's lead in using mass media to
drive home its message. Broad, official statements even indicate
that regulators want help exposing problems in the future and want
government to communicate more with the public. The August 2007
White Paper on Food Quality and Safety acknowledges a role for media
(albeit undefined) in reporting violations, while the new food
safety law (septel) includes whistleblower clauses and requires
agencies to notify consumers about food safety risks (although it
does not specify how nor in what timeframe). Somewhat surprisingly,
the campaign itself did not contribute to the drafting or tweaking
of China's new food safety law.


10. (SBU) While AQSIQ and other government agencies have yet to
define all of the elements of a beefed up regulatory system, United
States engagement and foreign media attention on the issue has
helped accelerate the process of reform and supervision. As a
Beijing CIQ official remarked to Econoff, United States pressure
following the 2007 food and toy safety problems pushed China to take
remedial measures it would not have taken voluntarily. Although
this safety crisis was sparked by substandard Chinese exports, the
reforms that China now wants to put into place will target quality
of both exported and domestically consumed goods; Chinese consumers
will benefit. However, from the perspective of the U.S. manager of a
major food processing firm in China, food safety is a "continuous
process, not a one-time hit." Ensuring safety will depend on how
well Chinese regulators implement reforms as well as on an
attitudinal shift by producers and manufacturers about the value of
product safety to their business success, rather than on the
political success of a campaign. Post will continue to stay engaged
with key Chinese agencies as they move forward on their regulatory
reforms.

RANDT