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GAC
focuses on FDA import safety
NCBFAA members lobbied Congress
with questions on H.R. 3610
Food and Drug Administration (FDA) imports received national media attention when Chinese pet food tainted with melamine caused thousands of deaths in dogs and cats this spring. United States consumers then received product recalls on Chinese toothpaste containing antifreeze and toys imported with lead.
Legislators have since proposed multiple bills to alleviate the increasing FDA import problem, but when the National Customs Brokers and Forwarders Association of America (NCBFAA) met for their annual Government Affairs Conference (GAC) in September, lobbying efforts focused on H.R. 3610, introduced by Rep. John D. Dingell (D-Mich.).
H.R. 3610 would restrict FDA-regulated products to only enter ports with FDA labs – 13 of the United States’ more than 300 ports contain FDA labs, of which only four are equipped to process food.
The bill requires certification of all foreign food facilities: every manufacturer, processor, packager and warehouse. China alone is expected to have up to 1.5 million food producers. NCBFAA members probed members of Congress with questions regarding the feasibility of foreign certification, especially when FDA funding is already low.
FDA’s food inspection program suffers from a lack of funding and Congress is turning to “user fees” to close the funding gap. The proposed fee collection in H.R. 3610 is based on the FDA line item. Produce entering the United States can be harvested from multiple growers and consolidated into one shipment for entry into the United States. The new system would require a separate FDA line item and the importer would be charged for each separate fee in one shipment. Depending on the number of FDA lines in an entry, the fee could exceed the importation’s value.
H.R. 3610 would also help to close the FDA funding gap by increasing current civil penalties from $1,000 to $500,000. The exact wording of H.R. 3610 would amend Section 303 of the Federal Food, Drug and Cosmetic Act by redesignating subsection (g) which relates to civil penalties as subsection (f), stating: “Any person who introduces into interstate commerce or delivers for introduction into interstate commerce an article of food that is adulterated within the meaning of section 402(a)(2)(B) shall be subject to a civil monetary penalty of –
(i) not more than $50,000 in the case of any individual and $250,000 in the case of any other person for such introduction or delivery, not to exceed $500,000 for all such violations adjudicated in a single proceeding; or
(ii) notwithstanding clause (i), if such person is the manufacturer or the importer of the food, not more than $100,000 in the case of any individual and $500,000 in the case of any other person for such introduction or delivery, not to exceed $1,000,000 for all such violations adjudicated in a single proceeding.”
Since the bill’s wording is so general, the higher fees would expose everyone in the supply chain to the FDA penalties including customs brokers, importers, manufacturers, etc. The fees would fund a larger number of FDA border inspections in addition to more laboratory analyses to assure food is safe enough to enter the United States. During meetings, members of the House were concerned the user fees would violate trade agreements and create a preference for domestic food sources. The line item fees may also trigger other countries to place similar fees on United States exports in retaliation.
While the FDA has not taken a position on the bill, the agency is ready to
provide technical assistance in negotiations. The FDA revealed its “action plan”
this month, reflecting the work of an administration task force on import safety.
Since the general wording in H.R. 3610 exposes the supply chain to increased civil penalties, Avalon's Expanded Regulatory Defense as part of its Combined Transit Liability (CTL) program
will protect your business. Expanded Regulatory Defense provides defense costs for fines and penalties assessed against your company by various government agencies including FDA. While the policy does not pay the fines itself, significant legal expenses would be incurred to defend against large penalties of this nature. Expanded Regulatory Defense appoints a legal expert to assist in mitigating the penalty and pays all legal fees in full.
To find out more, please view our
CTL Brochure or
Application.
Regulations regarding FDA imports are constantly shifting. Avalon remains committed to providing the highest level of local service, with nine fully-staffed offices across the country. Our bond underwriting department continues to pay close attention to FDA shipments.
To issue a bond for FDA restricted items outside your authority, such as vegetable protein products imported from China, please call your local Avalon office for approval. Avalon requires a signed
Customs Bond Application/Indemnity Agreement on bonds in excess of your underwriting authority and financial statements for single entry bonds greater than $300,000 and continuous bonds greater than $100,000.
Avalon is a market leader with a 35 percent share of the Customs bond market. Avalon’s Customs surety program is underwritten by our sister company, Lincoln General Insurance Company. Avalon and Lincoln are both wholly-owned subsidiaries of Kingsway Financial Services, publicly traded on the NYSE under ticker symbol KFS, so you can be assured of our financial stability and dedication to your industry.
For further information, contact Andriana Davis, Product Manager at Avalon’s corporate headquarters. Andriana Davis can be reached at (847) 700-8087 or at
adavis@avalonrisk.com. Please do not hesitate to contact one of our nine regional offices throughout the United States. To view a directory of Avalon's office locations, please visit our Web site at
www.avalonrisk.com.
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