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Challenges before Indian food exporters

Though the FDA was supposed to have conducted an "outreach programme'' to enable all entities concerned to familiarise themselves with the many-faceted implications of the Bioterrorism Act, not much awareness is evident in India in this respect, especially among small and medium exporters, says R. Gopalakrishnan.

THE Public Health Security and Bioterrorism Preparedness and Response Act, 2002, of the U.S. has major implications for exporters of processed foods and edible agro products to that country by way of requirements of new compliance norms and procedures, entailing additional costs and, as some fear, delays in clearance of shipments.

By all evidence, the Bioterrorism Act (as the law is commonly known) is not a non-tariff barrier (NTB), considering especially that it places enormous responsibilities on various agencies and stakeholders in the food chain within the U.S. itself. It is clearly intended to prevent the possibility of terrorists using the food chain to launch an attack and to respond rapidly in case of an actual emergency or terrorist attack.

Unlike the HACCP (hazard analysis critical control points) of the European Union, the Bioterrorism Act is not an enforcer of standards of production and handling processes (which are, in the case of many products including imports, already being regulated by the U.S. Food and Drug Administration-FDA) but one that is information-oriented and could be used to pin down suspects and culprits and take urgent remedial action in case of an emergency.

The FDA has asserted that the Act, which became law in June 2002, is in tune with the international obligations of the U.S. under the World Trade Organisation (WTO) and regional agreements like NAFTA (North American Free Trade Agreement). Various sections of the Act amend many provisions of the Food and Drug Administration (FDA) Act to enable enforcement of the precautionary measures intended by Congress.

Having considered comments received from around the world on the law and the draft regulations published by the FDA in October 2002, the agency published in October this year what are known as "interim final regulations,'' many of whose provisions will come into force from December 12, by which time the FDA is mandated to come out with final regulations. The regulations notified in October will be in force from December 12 even if finalisation of the rules is delayed.

There are mainly four sections (see inset) of the law which affect exporters of foods and edible agro-products and unprocessed products to the U.S. These relate to registration of "foreign facilities'' with the FDA, prior notification of arrival of shipments (by sea, air or road) in the U.S., record keeping and administrative detention of consignments. A perusal of the massive law and regulations would show that investment in time and money needs to be made by Indian exporters of foods to the U.S. by way of information technology equipment and systems (especially in the case of small exporters who might not have such systems now), keeping of records relating to both their own facilities and one stage each before and ahead of their own operation, keeping track of movement of shipments and keeping in touch with U.S. authorities online. It is in this context that the Act provides an opportunity to the Indian software industry to develop systems to facilitate compliance with the U.S. law by Indian exporters.

Nomination of U.S. agent

Also, according to trade sources, the requirement that those who have to register with the FDA have to nominate an agent in the U.S. (for purposes of the law) will create problems because not many in that country will be willing to lend their name in the absence of a clear idea about their responsibility if things go wrong.

To its credit, the U.S. has placed on the Internet an enormous amount of information and documentation to enable both domestic and foreign sellers and suppliers of foods and beverages to understand the Bioterrorism Act, its procedures, and even the responses that the FDA has made to various comments received from within the country and outside, including by way of amendment to the draft regulations.

Exporters will now be able to send their further comments till December and another opportunity for sending comments will be available for one month from March 2004. Indian exporters to the U.S. will be advised to study in detail the various provisions of the U.S. Act (and also take legal advice, if deemed necessary) to ensure that their consignments do not face risks.

There are a lot of legal nuances detailed in the "interim final regulations'' and the responses of the FDA to comments received from global trade partners of the U.S. Though the FDA was supposed to have conducted an "outreach programme'' to enable all entities concerned to familiarise themselves with the many-faceted implications of the Bioterrorism Act, not much seems to have been done in India in this respect, especially with reference to small and medium exporters. Will these exporters lose market share by default? That is a multi-million-dollar question, considering the country's stake, even if modest (around Rs. 4,500 crores), in the U.S. food market.

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