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### Viewing cable 07BEIJING6264, CHINA'S NATIONAL RECALL SYSTEM: AN UNFUNDED MANDATE

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07BEIJING6264 | 2007-09-24 22:04 | 2011-08-23 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Beijing

`

    VZCZCXRO2227
    PP RUEHCN RUEHGH RUEHVC
    DE RUEHBJ #6264/01 2672204
    ZNR UUUUU ZZH
    P 242204Z SEP 07
    FM AMEMBASSY BEIJING
    TO RUEHC/SECSTATE WASHDC PRIORITY 2150
    INFO RUCPDOC/USDOC WASHDC
    RUEAUSA/DEPT OF HHS WASHINGTON DC
    RUEATRS/DEPT OF TREASURY WASHINGTON DC
    RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
    RULSDMK/DEPT OF TRANSPORTATION WASHDC
    RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
    RUEHRC/DEPT OF AGRICULTURE WASHDC
    RHEHNSC/NSC WASHDC
    RUEAEPA/HQ EPA WASHDC
    RUEHOO/CHINA POSTS COLLECTIVE

` `

    UNCLAS SECTION 01 OF 03 BEIJING 006264

    SIPDIS

    SENSITIVE
    SIPDIS

    EAP/PD FOR NIDA EMMONS
    HHS FOR OGHA/STEIGER AND PASS TO FDA/LUMPKIN
    USDA FOR FSIS/RAYMOND
    USDA FOR FAS OA/YOST, OCRA/ALEXANDER, OSTA/BRANT AND SHNITZLER
    COMMERCE FOR ITA/HIJIKATA AND CINO
    STATE PASS TRANSPORTATION FOR NHTSA ABRAHAM/KRATZKE
    STATE PASS CONSUMER PRODUCTS SAFETY COMMISSION RICH O'BRIEN/INTL
    PROGRAMS
    STATE PASS USTR CHINA OFFICE/TIM WINELAND
    STATE PASS OMB/INT'L AFFAIRS
    STATE PASS HOMELAND SECURITY COUNCIL
    STATE PASS IMPORT SAFETY WORKING GROUP

    E.O. 12958: n/a
    TAGS: TBIO EAGR ECON HHS ETRD BEXP CH
    SUBJECT:  CHINA'S NATIONAL RECALL SYSTEM: AN UNFUNDED MANDATE

    Ref: A. Beijing 5797
    ¶B. Beijing 5899
    ¶C. Beijing 6018

    BEIJING 00006264  001.2 OF 003

    SUMMARY
    -------

    ¶1. (SBU) China unveiled its new national recall system for toys and
    processed food on August 31, a program spearheaded by the General
    Administration for Quality Supervision, Administration, and
    Quarantine (AQSIQ), the regulatory agency in charge of inspection
    for some aspects of domestic production and consumption of food as
    well as all aspects of export product certification and safety.  An
    AQSIQ contact subsequently told Econoffs that the new toy recall
    system is not significantly different from the previous one, but the
    food recall system has been strengthened.  The new rules now codify
    the definition of unsafe foods and defective toys and also establish
    requirements for manufacturers and the rest of the supply chain in
    the recall process.  Local and provincial governments shoulder
    responsibility for regular-sized and voluntary recalls, and AQSIQ at
    the national level takes control of larger and compulsory recalls.
    Our contact said that no new funds would be allocated to support the
    rollout of the national system, but the agency will request
    additional funds if needed.  The recall system is expected to
    utilize existing staffing.  The new rules do not address the recall
    of food and toys intended for export.  END SUMMARY

    A NEW AND UNFUNDED RECALL SYSTEM
    --------------------------------

    ¶2. (SBU) China announced its new national recall system for food and
    consumer products on August 31, a program spearheaded by the General
    Administration for Quality Supervision, Administration, and
    Quarantine (AQSIQ), the regulatory agency in charge of testing any
    product certified for export and some production sectors related to
    domestic consumption.  (The recall regulations were promulgated on
    August 27.)  AQSIQ Department Policy and Legislation Director
    General Liu Zhaobin told Econoffs September 10 that the new food and
    toy recall systems were not different from the ones that existed
    before -- China has conducted food product recalls for years, and an
    automotive recall system was implemented in 2005 -- but the new
    rules now codify the definition of unsafe foods and defective toys
    and also establish requirements for manufacturers and the rest of
    the supply chain in the recall process.  The new rules do not
    address the recall of food and toys intended for export, areas for
    which Liu said AQSIQ would later issue detailed guidance.

    ¶3. (SBU) The food recall system establishes voluntary recalls in
    Categories I, II, and III for decreasing severity of harm to human
    health, and the affected products must be banned for sale within
    one, two, and three days, respectively.  Compliance is monitored at
    the provincial level.  When producers fail to respect the terms of
    voluntary recall or fail to remedy violations, AQSIQ can mandate a
    compulsory recall and take charge of monitoring the recall from the
    national level.  For toys, manufacturers are required to take
    voluntary, prompt action when they discover defects.  No specific
    deadline is imposed for implementing a ban on their sale, and AQSIQ
    can escalate the voluntary recall to a compulsory recall. The new
    rules establish fixed criminal penalties of 10-30,000 RMB (USD 1,300
    - 4,000) for failure to stop the sale of hazardous food or toys,
    comply with recall procedures, or rectify violations.  Corruption by
    officials is subject to both criminal and administrative penalties
    in cases of hazardous food and administrative punishment in cases of
    defective toys.

    ¶4. (SBU) Liu said that no new funds would be allocated to support a
    nationwide rollout of the recall systems.  At the provincial level,
    the rollout will utilize existing staffing.  However, AQSIQ is
    expanding its headquarters office in Beijing to manage the recall

    BEIJING 00006264  002.2 OF 003

    system from the center and has said it will request additional funds
    from the Ministry of Finance if needed.  Recalls for products not
    under AQSIQ's purview, such as fresh fruits and vegetables, are
    handled separately by the Ministry of Agriculture or other
    responsible agencies.  This division of labor is necessary, Liu
    commented, because one single agency would be unable to manage every
    recall.  The State Council Leading Group on Food Safety and Product
    Quality is studying interagency coordination. (Note: The Leading
    Group, Liu said, was meeting across the hall at the same time as our
    own meeting.  This is the first unpublicized meeting of the Leading
    Group.)  The Leading Group meets every ten calendar days to resolve
    "friction" between agencies and improve coordination on food and
    product safety matters, Liu said, adding that he usually
    participates in the Leading Group meetings.

    AUTO RECALLS AS A MODEL
    -----------------------

    ¶5. (SBU) AQSIQ introduced China's first official recall system, for
    automobiles, in 2005, resulting in the recall of 125,000 vehicles
    from 40 manufacturers since that time, and then used it as a model
    for the food and toy recall systems now in place.  The major
    difference between the food/toy recalls and auto recalls is the
    introduction of the new concept of compulsory and voluntary recalls,
    the former managed by AQSIQ national headquarters and the latter
    managed by local Technical Supervision Bureaus (TSBs).  (Note: TSBs
    are the 31 mainland province legacy inspection agencies that were
    folded into AQSIQ at the agency's creation in May 2001 and now
    co-exist with and complement AQSIQ's provincial CIQ offices. End
    Note)

    NEW REGULATIONS AND LEGISLATION
    -------------------------------

    ¶6. (SBU) Regulators are now discussing the establishment of a
    general method for recalls in any product area, under the direction
    of the State Council Legislative Affairs Office.  Food, toys,
    medicines, and agricultural products will continue to have their own
    recall systems, but a general system will cover everything else.
    Officials are also planning strengthened recall systems for
    medicines and building materials.  China is still interested in
    learning from U.S. experience, Liu said, as it expands and improves
    its own recall systems.

    ¶7. (SBU) China is amending the Law on Standardization and the Law on
    Metrology, and will also contribute to a new Law on Food Safety.
    Follow-up conversations with AQSIQ revealed that this new Law on
    Food Safety would supplement the existing 1995 Law on Food Hygiene,
    which deals with the implementation of a food sanitation license
    system.  AQSIQ will submit initial proposals/amendments on all three
    laws to the State Council. Liu did not indicate when the Food Safety
    Law draft would be completed.

    FOUR-MONTH CAMPAIGN MAKES PROGRESS
    ----------------------------------

    ¶8. (SBU) Liu said that the State Council-initiated four-month
    special campaign from August through the end of the year targets
    "important" products, regions, industries, and large-scale safety
    problems.  Across AQSIQ's 30,000 employees, Liu said that 150,000
    inspection work shifts had checked the certifications of 1,830,000
    companies.   (Note: A follow-up call to AQSIQ to confirm the types
    of companies inspected and the time period over which such an
    incredible number of inspections were conducted revealed no new
    information.  According to the State Council White Paper "The
    Quality and Safety of Food in China," China has 448,000 food
    production and processing enterprises, so the 1,830,000 figure for
    inspected companies likely includes a wide range of consumer and
    perhaps even industrial product manufacturers. End Note.)  When

    BEIJING 00006264  003.2 OF 003

    asked by Econoff how progress in the campaign would be measured, Liu
    said that auditors would be dispatched to local CIQ offices to
    measure local CIQ and manufacturer compliance with the range of new
    rules that cover everything from registration of firms to management
    of inspection records.

    COMMENT
    -------

    ¶9. (SBU) While this regulation provides for clarifications to
    AQSIQ's role in the existing comprehensive food recall system, it
    does not provide details about the competent authorities for each
    action.  This is an important omission because AQSIQ is responsible
    for only one portion of China's domestic regulation and enforcement
    of food safety.  By not including the duties and responsibilities of
    the other ministries, the impact of this new regulation must be
    questioned.  By inference, this change in regulation only applies to
    the recall of food that is regulated by AQSIQ.  If this is the case,
    a significant part of China's food will not be covered by the
    regulation.

    ¶10. (SBU) The rollout of strengthened recall systems for food and
    toys amounts to an unfunded mandate for AQSIQ.  The ability of the
    central government to punish violators will depend on the
    professionalism of local CIQ officials and perhaps a heavy hand from
    the national AQSIQ office, rather than an infusion of new inspectors
    to canvass each province.  Regulators are relying on that same sense
    of professionalism -- and new penalties on corrupt practices -- to
    crack down on violators in the four-month special campaign.

    ¶11. (SBU) Meanwhile, it appears that a broad awareness of food and
    product safety is trickling down from the center to provincial
    authorities.  AQSIQ Minister Li Changjiang, Party Secretary Li
    Chuanqing, and a third official (Ref. A) are visiting local offices
    around the country for the next several months.  AQSIQ auditors are
    expected to visit local CIQ offices in December.  Officials at the
    WTO Center in Shanghai and academics at the Chongqing Academy of
    Social Sciences indicated to a Beijing Econoff in early September
    that China is taking food and product safety very seriously.

    RANDT

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