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I will speak today about exporting food and beverages to the US.
Although we help with other sectors, drugs and medical devices and cosmetics, as Gene
said these really are products the products you are interested in here today we'll focus
on regulations and we'll focus on the food and beverages factor.
So first off, I'll briefly touch on the jurisdiction and history of USFDA. Talk a little bit about
some of the other regulated agencies, the import and inspection procedures.
Some of the key requirements. What is the main thing you need to focus on? And then
we'll talk about regulation of all that just passed in January of this year, that will
have some significant changes coming ahead, or that you will need to understand and deal
with as you export to the US. There's some really some pretty monumental food safety
legislation that was signed into law in January of this year by President Obama.
Let's give a quick overview first. The US Food and Drug Administration. It is a federal
agency. We have federal, state and local agencies in the US. This is a federal agency under
the Department of Health and Human Services. It's organized into seven different centers,
and the center that we'll focus on is the Center for Food Safety and Applied Nutrition,
also known as CFSAN.
FDA regulates quite a few categories of products. Food and beverages, obviously, and now it
includes things like health supplements or dietary supplements. They also, of course,
regulate drugs, over-the-counter drugs, active pharmaceutical ingredients, prescription drugs,
animal drug products, biologics, medical devices, veterinary drugs, cosmetics, radiation emitting
products, which would be things like laptops and cell phones, as well as tobacco.
FDA really plays two roles in how they function, firstly, they're the gatekeeper. So they help
formulate and determine what the regulations are with, input from the industry and from
the public. And then secondly, they are the enforcer of the regulations.
So once those regulations are set, it's their job to make actually make sure companies adhere
to the requirements. All of the regulations that FDA enforces are codified in what is
called the Code of Federal Regulations, and title 21, or section 21, is reserved for all
the rules of the U.S. Food and Drug Administration.
The key requirements are under what's called the Food, Drug, and Cosmetic Act. I mentioned
the agency, or the center, I should say, that oversees food: The Center for Food Safety
and Applied Nutrition. Their jurisdiction includes most food products except for meat
and poultry.
So they are covering agricultural products, processed foods, canned foods, seafood, alcoholic
beverages, bottled water. All of those are covered by F.D.A. under the Center for Food
Safety and Applied Nutrition. Now there are other agencies as well that play a role in
regulating food.
The U.S. Department of Agriculture oversees meat and poultry. They also oversee the importation
of fresh produce.
The Department of Justice has a bureau: the Alcohol Tobacco Tax Trade Bureau, otherwise
known as T.T.B. So if you're exporting alcoholic beverages to the U.S., T.T.B. has jurisdiction
over the alcoholic beverages, and every products coming into the U.S., initially falls under
the jurisdiction of Customs and Border Protection, or CBP.
Now, to touch on USDA, the agricultural marketing service, they oversee the national organic
program. So if you've ever seen this shield, USDA Organic, organic food products, they
are the agency that accredits certifier, who can then go forward and certify that companies
are producing products within accordance of the USDA organic program, the NOP program.
Department of Homeland Security, I mentioned CBP, they enforce all the import and export
regulations in the U.S. at our 317 official ports of entry. So that might be, for example,
the port of L.A., the port of New York, or Florida, Miami, West Virginia. Those are some
of our official ports of entry.
So the entry role of CBP is when you are shipping products over there. When they first arrive,
all shipments fall under the jurisdiction of Customs and Border Protection. Your buyer
in the U.S. will hire a customs broker. That is an individual or a company that has been
licensed by CBP to submit an entry or a filing to CBP on the behalf of the importer and that
entry provides customs with all of the information about the shipment arriving into the port.
You will be supplying things like your bill of lading, your commercial invoice, your packing
list. The customs broker then will enter all that information into software to Customs
and Border Protection. If it indicates that there is a food or beverage or drug or medical
advice then FDA will become involved, they will send a message to FDA saying: "This is
an FDA regulated product in this container."
And FDA then, will have a number of options. They can immediately release the product,
they could further review the entry, they could physically inspect the shipment, or
they could outright refuse entry of the shipment if, for example, it's on a red list or a reason
that they deem they have the right to go ahead and refuse it, based on regulations.
So what they do, really, in the large part depends on the history of the country, the
history of the manufacturer, the history of the importer, the product type. Is it a high-risk
product category? Is it a drug, for example, or a food? Or is it lower risk? Is it a cosmetic?
And they'll look at the specific product as well. So within food, is it a seafood product,
which tends to be higher risk. Or is it fresh juice, or is it a canned food product, again
a higher risk. Now, I explained briefly how it goes.
The FDA of course has a flow chart that they follow through. Their systems operate on "what
ifs". They kind of go through a flowchart of what needs to be done. Most of this is,
of course, at this point automated.
Now since you're the exporter, you're over here, you're the manufacturer, you're exporting.
Generally speaking you are not going to know the status of your shipment--what's happening,
actually, with your shipment, because you will not have any direct interaction with
F.D.A. as the manufacturer.F.D.A. will notify two parties when shipments are entered into
the U.S.
They'll notify the importer of record, which would typically be your customer and they'll
notify the customs broker. So I say here, my slide here, I recommend companies be cautious
against letters of credit, for example, that say 'Payment After FDA Passage'. You'll not
be notified when a container has passed FDA.
So there's really no way for you to verify when a shipment has cleared FDA. It's your
importer who's going to control all of that. Companies can act as a foreign importer of
record. You can be located here in Saigon, you can be registered as a foreign importer
and hire your own customs broker and put product into a warehouse, like Preferred Freezers
(give you a plug there) and then actually from here, tell them what to release, once
the product has been cleared cleared. So you can...It does exist an option to be what's
called a foreign importer of record, where you then can control the entire process.
There's some benefits, obviously. You have more control the whole way through. The customs
broker is hired by you and is going to be communicating directly with you about the
status of your shipment.
There's also some cons. There'll be more expenses. You'll be having to hire a customs broker.
You will have to pay the cost of storing product until you release it to your customers. So
again, it's something to consider.
To be a foreign importer of record is fairly straightforward. It's some paperwork that
you complete with a customs broker that gets submitted to Customs Border Protection. So,
it's not a terribly difficult process and it does give you some control.
FDA has started using some...a new program that they developed called Predict. Predict
basically is a risk-based screening system that is quantifying the risk of imported food
shipments.
So it, in essence, creates a score of how risky a particular shipment might be. Because
FDA doesn't have unlimited resources, they can't look at every shipment. They need to
focus their resources on what they consider to be the highest risk shipments.
So, using this new software, which was launched 2007 in Los Angeles, they are able to better
utilize their resources, their inspection resources, in ports of entry. This software
that they developed will allow them to look at, and to again, create a score of essence
for a particular shipment, based on the history of the product, the histories of the producer,
the manufacturer, the consignee, the country of origin, any past laboratory tests that
have been done, any inspections that have been done a foreign facility.
All of these elements go into this software for them to, again better target their inspections.
This chart shows some of the reasons that the percentages of detentions of, that FDA
has conducted or carried out.
This was done using actual detentions, inspections, I should say, in 2009 for a six month period.
Really, the one item on the left here, 33% of detentions are related to labeling.
So it's a big number. It really is a problem that is quite easy to avoid if you take some
time and devote some resources to getting your product labeling correct from the beginning
Another reason that ranks high in that list is a failure to have certain types of registrations
or process filings.
If, for example, you produce a canned food, you're required to register your factory and
to submit information about each product produced in that factory. Specific size, even of the
product's container. So that's another reason that companies encounter difficulties.
So, what percentage of shipments does FDA actually inspect? Well to give you a little
perspective, Europe, when it comes to animal based products - so seafood, meat, or poultry
- they are inspecting 100% of all shipments arriving into the European Union for animal
based products. If - so that gives you an idea for Europe.
Anyone want to speculaterelate for the U.S. FDA. Any idea what percentage FDA inspects
for food? Anyone want to take a guess?
Out of 100 shipments, they inspect less than two. So about two percent.
So, we often have clients exporting for many years to the U.S. and they'll say, "My container
got stopped. I've been shipping this product for years. Why? What happened? Why now?"?
Sometimes it is just random. It's a little bit like speeding down the highway. You don't
get stopped, you don't get stopped for months or years and then your day comes and your
container just gets stopped. So it's a small percentage, but it is obviously can be very
costly if it does happen to you