Food companies get guidance under Bioterrorism Act, registration

By Ahmed ElAmin

- Last updated on GMT

Related tags: Final rule, Corporation, International trade

Now that the US authorities have issued final guidance under the
Bioterrorism Act, companies can now have assurance about the food
safety systems they have implemented or are about to put in place,
and the costs involved in complying with the act.

Above all, the final rules issued by the Food and Drug Administration (FDA) also clarify some of the standards for the industry and re-emphasises that foreign companies will need to designate a USagent responsible for their activities in the country.

The US agent requirement was seen as possibly adversely affecting small domestic companies who felt they might lose some of their trading partners in the supply chain.

In industry comments leading up to the issuing ofthe final rule some companies were worried foreign facilities would stop exporting to the US as a result of the agent requirement.

However the FDA, in making an economic analysis of the effects of the rule, found that there was no reason to change the interim rule, especially since it had received no comments on the subjectfrom industry.

The FDA estimates that about 420,000 food facilities are required to register under the act, of which half are domestic companies. As of January 18 this year, about 238,129 had registered, of which107,043 were domestic companies.

The Bioterrorism Act was passed in 2002 to ensure the safety of the US food supply from a terrorist attack. Among other procedures required under the law, the act requires all domestic and foreignfacilities that manufacture, process, pack or hold food for human or animal consumption to register the with FDA.

Section 306 of the act, issued as an interim rule, also mandates strict record keeping requirements for those who manufacture, process, pack, transport, distribute, receive, hold or import food tothe US.

The US agent acts as a communications link between FDA and the foreign facility based in the US. The FDA considers providing information to the US agent the same as providing information directlyto the foreign facility.

In the run-up to issuing a final rule on Section 306 the FDA also asked for comments on the assumptions underlying its estimates of the costs of hiring and retaining a US agent. The agency also wanted comments on whether domestic small businesses had been adversely affected by trading partners that have ceased exporting to the US due to the increasedcosts.

The FDA found that domestic companies had not been adversely affected and so will keep the rule in place, unamended.

In the economic analyses of the proposed and interim final rules, the FDA estimated that about 90 per cent of foreign facilities did not currently have a US agent.

Foreign facilities currently without a US agent would require between five to 15 hours to find an agent and would pay an annual fee of $1,000, the FDA estimates.

During the period from the publication of the proposed rule to publication of the interim final rule, a number of companies began advertising their services as a US agent for foreign foodfacilities on the Internet.

The companies specified a range of costs, some with discounts for multiple facilities under the same ownership, fees that are a function of the number of shipments each year, or additional fees for registration updates.

The FDA found rates quoted on the Internet ranged between $399 and $1,400 for representation for one year adding up to a total estimated cost of $306 million in the first year due to initialregistration fees. Total annual costs for foreign facilities were estimated at $229 million after the first year of the rule.

"Although some comments confirmed the assumption of the interim final rule economic analysis that some facilities would stop exporting to the United States due to costs associated withhiring a US agent, the comments did not provide any information to estimate how many facilities would stop exporting,"​ the FDA concluded. "Therefore, the FDA has not altered thisportion of its analysis."

The final rule is one of several regulations issued by the FDA to implement the Bioterrorism Act.

In October 2003, the FDA and the Department of Health and Human Services also jointly issued an interim final rule for prior notice of imported food shipments, which requires that FDA receiveadvance notice of human and animal food that is imported or offered for import into the US.

The final rule on prior notice is still being developed due to the numerous comments received relating to its implementation.

In June 2004, the FDA published a final rule that specifies procedures that the agency would use to administratively detain food when the agency has credible evidence or information that the foodpresents a threat of serious adverse health consequences or death to humans or animals.

In December 2004, the FDA published a final rule requiring food firms to establish and maintain records that would allow inspectors to conduct an effective and traceback investigation to protectthe food and animal feed supply.

Of the foreign companies that have so far registered their food facilities in the US, the largest number came from Japan (16,379) Canada (10,184), China (10,737), France (9,193), Mexico (8,453) andItaly (8,313).

Among European countries, UK registrations added up to 2,273, just behind Germany with 2,640 and Spain with 3,305.

Related topics: Regulation

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