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In depth analysis of trade and investment barriers in certain third

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    In-depth analysis of trade and investment barriers
       in certain third country markets in the area of
            labelling and marking requirements

                                      Final Report




           Franklin Dehousse / Katelyne Ghémar / Tsonka Iotsova




CEEI –Labelling – Final Report –16 August 2002                                          1
CENTRE D’ETUDES ECONMIQUES ET INSTITUTIONNELLES - C.E.E.I.




                            Brussels – 16 August 2002




CEEI –Labelling – Final Report –16 August 2002               2
    In-depth analysis of trade and investment barriers
               in certain third country markets
     in the area of labelling and marking requirements

                                   Final Report




           Franklin Dehousse / Katelyne Ghémar / Tsonka Iotsova




    This Report was prepared with financial assistance from the Commission of the
   European Communities. The views expressed herein are those of the Consultant,
              and do not represent any official view of the Commission




CEEI –Labelling – Final Report –16 August 2002                             3
CEEI –Labelling – Final Report –16 August 2002   4
                            TABLE OF CONTENTS

EXECUTIVE SUMMARY ______________________________________________ 6
PART 1: ORGANISATION OF THE RESEARCH _________________________ 10
PART 2: TURKEY ___________________________________________________ 18
PART 3: CANADA ___________________________________________________ 44
PART 4: MEXICO ___________________________________________________ 56
PART 5: RUSSIA ___________________________________________________ 82
PART 6: INDIA ____________________________________________________ 105
PART 7: CHINA____________________________________________________ 125
PART 8: THE US ___________________________________________________ 162
PART 9: BRAZIL ___________________________________________________ 225
PART 10: ARGENTINA _____________________________________________ 243
PART 11: URUGUAY _______________________________________________ 260
PART 12: POLAND _________________________________________________ 265
PART 13: KOREA __________________________________________________ 280
PART 14: JAPAN ___________________________________________________ 296
PART 15: AUSTRALIA ______________________________________________ 308
PART 16: CHILE ___________________________________________________ 325
PART 17: PARAGUAY ______________________________________________ 331
PART 18: COLOMBIA ______________________________________________ 337
PART 19: INDONESIA ______________________________________________ 342
PART 20: EGYPT___________________________________________________ 348
PART 21: LEGAL ANALYSIS ________________________________________ 356
PART 22 : COST-BENEFIT ANALYSIS ________________________________ 373




CEEI –Labelling – Final Report –16 August 2002                      5
                            EXECUTIVE SUMMARY


1. Twenty markets were investigated to map out trade and investment
   barriers in the area of labelling and marking requirements. These barriers
   hamper Community exports of various consumer goods. Priority
   countries and sectors have been identified in cooperation with the EU
   Commission and the EU Industry. The study aims to fulfil several
   objectives: (1) to identify existing and potential problems related to
   marking and labelling requirements in these countries (2) to evaluate the
   impact on EU trade and investment and assess the legality of these
   restrictions; (3) to compare the measures existing in third countries with
   those applied in EU, (4) to assess the legality of the identified restrictions
   under the terms of international and bilateral rules, (5) to perform a cost
   benefit analysis of further trade liberalisation.

2. Work methodology was elaborated according to these objectives. In the
   first stage of the research, the consultant collected information from EU
   industries (EU and national associations of foodstuffs and industrial
   products) and Commission services in order to identify the most damaging
   restrictions for further investigation. Since May 2001, the consultant
   started the missions in the markets under review. After each mission
   conducted, a legal analysis on the most damaging restrictions has been
   carried out. The consultant has conducted missions in the countries
   identified as priority by the European industry. The missions have enabled
   him to meet the importers of European products, to gather the relevant
   legal texts and to interview the third country authorities on their
   implementation. The information on the non-priority countries has been
   based on the complaints by the EU industry and desk research.

3. The main results of the research can be resumed as follows:


Labelling requirements create increasing difficulties

       EU companies and EU industry associations often complained about
       various labelling problems in the countries under review. Some
       countries have implemented stricter technical requirements since the
       elimination or the reduction of customs duties after the Uruguay Round
       or under the Agreements signed with the EU (e.g. India, China, Turkey,
       Mexico, Brazil, Argentina).

       Most of the labelling and marking requirements identified have been
       recently adopted and aim at the protection of the domestic industry
       (Turkey, India, Poland, Mexico, Argentina and Brazil). They have an
       impact on EU companies and the customers (importers and local
       branches of EU companies).



CEEI –Labelling – Final Report –16 August 2002                                 6
Problems faced in the EU

       The difficulties for the EU companies are mainly related to their
       compliance with some third countries' requirements (e.g. indication of
       the fiscal number of the importer, the indication of the maximum retail
       price). There is a tendency in several countries to impose the labelling
       in the country of origin. (India, Turkey, US, Indonesia, China). In these
       cases, the EU companies must (1) know the specific requirements in
       advance, (2) know some administrative details related to the import
       country in advance, (3) produce specific labels for these markets (4)
       afford additional costs.


Problems faced in the countries under review

       Importers or EU companies' representatives in third countries
       experience a wide range of problems, mainly related to controls
       conducted by third country authorities before, during or after the
       clearance process

       1.      Before the clearance process. When the labelling is required in
               the country of origin, the importer is often not given the possibility
               to re-label or correct mistakes in the customs. The products can
               be rejected or destroyed. The control of compliance with labelling
               requirements is strengthened while testing is conducted before
               the clearance on sanitary issues or standards. The product is
               tested regarding its composition and the coherence between the
               label and the composition is strictly assessed. This increases
               generally the controls of labels and their rejection by third country
               inspection bodies (e.g. India, Turkey, China, Argentina, Korea). A
               large number of countries have implemented registration
               procedures preliminary to the shipment for various products
               (foodstuffs, wines, cosmetics, footwear). These procedures
               oblige often the importer to provide samples of the draft labels.
               The labels are therefore approved before importation. In addition,
               the registration number should be attached on the label (Brazil,
               Uruguay, Paraguay, Colombia Indonesia, China). The
               accumulation of these requirements renders the importation even
               more burdensome.

       2.      During the clearance process. In various third country customs,
               EU products are experiencing burdensome controls on the labels
               (Mexico, Turkey, Argentina, US, Brazil). Even if the importer may,
               under certain conditions, re-label the product, he will face
               additional costs (penalties, time lost, storage costs, loss of
               perishable products etc …). This explains why importers often
               allege to be discriminated compared to domestic producers. In
               addition, they are often subject to other excessive product
               description requirements (in the invoice, in other specific


CEEI –Labelling – Final Report –16 August 2002                                     7
               documents), which further complicate the clearance process (in
               Mexico, Argentina, etc…).

       3.      After the clearance process. The EU products are also
               discriminated against local products when controls conducted in
               the retail are more focussed on imported products (Mexico,
               Russia, Turkey, China, Korea).

New labelling requirements

    The consultant has noticed the emergence of new labelling requirements
    related to eco-labelling or organic labelling (US, Japan). These
    requirements are in the most of the cases voluntary, but could influence
    the consumers’ behaviour. Therefore, the European companies are
    sometimes obliged to undergo a very strict certification procedure in order
    to obtain the eco-labelling.

Labelling and other import procedures

    The compliance with the labelling requirements is often controlled before
    the product is shipped through other specific procedures such as import
    licence, certification of conformity or hygienic certification or even labels
    certification (China, Argentina,). The label must then contain the specific
    import license number or the certification logo (specific label, additional
    costs and time lost). These measures create additional market access
    problems for the EU exporters (Turkey, Russia, India, Argentina, China).

    In some markets the certification procedure must be conducted after the
    clearance of goods but before they are put on the market (Poland, Brazil).
    The European standards are not always recognised and the products
    must undergo additional tests.


Main conclusions


   1. There exists clearly in this area an increase of the labelling problems
      met by EU exporters. This increase is both quantitative (there are more
      cases) and qualitative (these cases are more difficult).

   2. There are presently uncertainties on the interpretation of WTO rules
      regarding labelling requirements (especially considering the great
      variety of motives invoked to create new labelling requirements).

   3. Consequently, there is a need to complete the existing WTO regime,
      which is unsatisfactory in its present form. In that perspective, it is likely
      that some trade facilitation mechanisms will not reveal themselves
      satisfactory for most exporters.




CEEI –Labelling – Final Report –16 August 2002                                    8
   4. The negotiation position of the EU will be difficult to define. Various
      sources of concern have to be taken into consideration. Specific
      questions certainly arise about food products. Other important actors in
      the WTO negotiations do not necessarily follow the same line as the
      EU. The worries of the developing countries will also have to be taken
      into consideration. Labelling can be linked to various topic which are a
      concern for developing countries.

   5. It is important to try to solve as many problems as possible in the
      context of forthcoming and existing bilateral trade Agreements of the
      EU. This will most probably improve the negotiating position of the EU
      in the WTO negotiations.

   6. It is necessary to study the different methods that could increase the
      initiatives of specific international fora related to the definition of
      labelling requirements. Harmonization in specific fields could be
      extremely useful. Possibly some kind of joint approach of the WTO in
      that context would be productive.




CEEI –Labelling – Final Report –16 August 2002                              9
              PART 1: ORGANISATION OF THE RESEARCH


§1.    Organisation of research

       1.1.    The objectives of the study

       1.2.    The scope of the study

       1.3.    Methodology

               a)     The standard questionnaire
               b)     The identification of sectors most affected by labelling and
                      marking requirements in third countries
               c)     Meetings with the Commission services
               d)     Legal analysis

       1.4.    Missions conducted by the consultant

§2.    Consultations with the EU industries

       2.1.    Outcome of the questionnaire

       2.2.    Problems encountered by EU operators

       2.3.    Meetings with EU industries

       2.4.    The country coverage

               a) Additional market - China
               b) General comments




CEEI –Labelling – Final Report –16 August 2002                                 10
§1. Organisation of research


1.1.   The objectives of the study


CEEI research methodology has been adapted to the objectives of the study.
The first objective is to identify trade and investment barriers related to
labelling and marking requirements. The second objective is to evaluate the
impact of such barriers on the EU trade and investment and assess the
legality of these restrictions under the terms of bilateral and multilateral
Agreements. The final objective is to perform a cost benefit analysis of further
trade liberalisation. These will help the Commission and the Industry in
removing identified trade barriers.


1.2.   The scope of the study


The study is designed to identify market access problems resulting from the
application of marking and labelling requirements in some third countries. In
the scope of this study “labelling and marking shall mean any words,
particulars, trade marks, brand names, pictorial matter or symbol relating to
the good and placed on any packaging, document, manual, notice, label, ring
or collar accompanying or referring to the good”. The study takes into account
the compulsory requirements imposed by the third country authorities for the
marketing of the goods. However, it also examines, when necessary, the
voluntary labels and marking aiming at influencing the consumer Decision and
having possible trade restrictive effect for the imported European goods.

The analysis provides information about the third country standards to which
the imported good should comply in order to receive specific labels and
markings. A particular attention is drawn to the compatibility of these
standards with the international ones and the recognition of the European
standards and conformity assessment for the granting of third country labels
and markings.

Since the tariff reductions on industrial goods resulting from the Uruguay
Round, the technical requirements related to labels and marking were largely
used to protect the third country domestic industries. An increasing number of
countries have recently adopted - or are actually preparing- legislation on
labelling. These rules impose specific (sometimes burdensome) obligations to
importers1. They should be closely monitored in order to avoid trade adverse
effects for the EU exporters. The consultant analyses rules currently

1
  As an example, see Korea's Fair Labelling and Advertising Act, entered into force in 1999 or
the prepared Joint Australia – New Zealand Food Standards Code, which intend to implement
new labelling through nutrition and percentage labelling.


CEEI –Labelling – Final Report –16 August 2002                                             11
implemented in the countries under review. He is also collecting information on
the draft of new labelling and marking regulations in these markets.

A peculiar interest is given in some cases to the implementation and creation
of new legislation concerning eco-labels, labels and marking on genetically
modified organisms and labels on organic production of agricultural products.

The study investigates the practical implementation of the third country
labelling and marking legislation as well as the impact of the labelling
requirements for imported EU products. The emphasis is put on the
transparency and the clearness of the third country legislation. The possibility
for the EU exporter to obtain from the third country Authorities the relevant
applicable rules before export is also assessed. The study focuses on possible
problems, delays and excessively complicated formalities penalising the EU
exporters.

The scope of problems encountered by EU exporters with third countries
labelling and marking regulations in various sectors is extremely wide.
Generally speaking, most critics focus on the following aspects:

-         lack of transparency concerning the indications to be put on the label,

-         the procedures to be followed before, during and after clearance.


1.3.      Methodology


CEEI has divided its research into three stages. The first stage focused on
three aspects: drafting and distributing a standard questionnaire to the EU
operators, developing geographical files and organising meetings with EU
associations and operators in order to gather precise data on trade practices
and identified barriers.

a)        The standard questionnaire to the EU industry

Our first task was the identification of damaging labelling requirements in
countries under review and the evaluation of the impact of such requirements
on the individual business operators. For this purpose, a standard
questionnaire2 was drafted in close co-operation with the EU Commission.

 In April 2001, a draft questionnaire was sent for comments to number of EU
  representative associations.
 The consultant asked the associations to be provided with the data of the
  companies experiencing difficulties related to labelling and marking
  requirements. Some of the association expressed the interest in forwarding
  the questionnaire to their members.


2
    See Annex 1 of the Report.


CEEI –Labelling – Final Report –16 August 2002                                12
 At the end of April 2001, the questionnaire was sent to the EU associations
  and individual companies.

b) The identification of sectors most affected by labelling and marking
   requirements in third countries

The consultant has organised meetings with various European associations in
order to identify which are the products most affected by the labelling and
marking requirements in different third countries. Following these meetings the
consultant came to the conclusion that foodstuffs, alcoholic beverages, textiles
and cosmetics are more often affected by labelling and marking requirements.
However, according to the country under review, the products affected might
be different and all the problems concerning other products reported by the EU
industry will be taken into account.

c)     Meetings with Commission services

The consultant arranged several meetings with various Commission officials in
the different services concerned by the study:

       -       meetings with the DG Trade, Market Access Unit (Mr Ilkka
               Saarinen, Mr Christoph Huter, Mr Jean-Pierre De Laet);
       -       meetings with the officials of the DG Entreprise (in particular Mr
               Maik Schmall, Jean Pierre Bou).

d)     Legal analysis

In parallel to the field research, a study on legal bilateral and multilateral
Agreements in the field of marking and labelling requirements has been
conducted (TBT Agreement and other WTO Agreements, regional trade
Agreements and bilateral trade Agreements). A legal analysis according to
these Agreements is provided for the most damaging trade barriers related to
labelling and marking requirements. The consultant indicates the most
appropriate legal recourses, which could be used in order to redress the
situation. The consultant has also studied the impact of mutual recognition
Agreements on certification and conformity assessment (see Part 20 of the
present report for a general analysis and at the end of each third country
market analysis).


1.4.   Missions conducted by the consultant


During the second stage of the research, CEEI representatives conducted
missions in most of the countries under review (identified as priority markets
by the EU Industry). Missions have been conducted in Turkey, US, Canada,
Mexico, Russia, India, China, Korea, Argentina, Brazil, Uruguay, Chile,
Australia and Japan.




CEEI –Labelling – Final Report –16 August 2002                                13
The Commission had requested additional information on the marking and
labelling requirements in the United States. It has been decided to sign an
amendment of the contract and to conduct a second mission in the United
States.

Given the fact that new very strict labelling requirements have been
implemented in China and India, it was decided, in Agreement with the
competent services of the European Commission, to conduct second missions
in China and India instead of the foreseen missions to Colombia and
Indonesia.

During these missions, the consultant conducted interviews with the
competent national authorities (commerce, industry, customs) and the private
sector representatives (importers, distributors, customers of EU companies) in
order to get a more precise information about the barriers identified by the
industry and their implementation as well as to gather the legal and
administrative information necessary to the constitution of the legal files.

The third stage of the research focussed on the drafting of the Final report and
the legal evaluation of the findings of CEEI missions taking into account the
needs expressed by the Commission and the EU industry.


§2. Consultations with the EU industries


Consultations with the EU industries started with the distribution of the above-
mentioned questionnaire to national and sectorial industry associations.
Questionnaires were also forwarded to a large number of companies indicated
by the associations. Several EU and national associations gave the consultant
information about the labelling and marking requirements considered as
damaging for their exports. The consultant also attended , during the research
various trade fairs in order to interview directly EU exporters of various
products (Première Vision for textiles in March 2001, Cosmoprov for cosmetics
in Hongkong in November 2001, Foodex in Tokyo in March 2002 and in
Shanghai in May 2002, for foodstuffs products and wine and spirits).


2.1.   Outcome of the questionnaire


The questionnaires aim at giving a preliminary overview of problems (barriers)
related to marking and labelling requirements. The Industry associations were
invited to give their comments on the barriers they are encountering and the
impact of these barriers on their individual business.

In the first section of the questionnaire, the companies were invited to indicate
the priority countries for their business. The second part of the questionnaire
presented a selection of barriers with practical examples. Operators were also



CEEI –Labelling – Final Report –16 August 2002                                14
invited to define the scope of problems encountered (problems encountered
before clearance, during clearance or after clearance).

The operators were requested to indicate possible effects of identified barriers
on their own situation (additional costs, delays, losses of market shares, etc).
The questionnaire was meant to be a starting point followed by interviews with
operators and meetings in several Industry Associations.

The outcome of the questionnaire was quite low. However, the sectors most
affected by the labelling and marking requirements such as the foodstuff and
alcoholic beverage sector have answered the questionnaire or have provided
information about the barriers experienced in third countries.


2.2.   Problems encountered by EU operators


The EU operators encounter several barriers related to labelling and marking
requirements. They consider some of them as very damaging. In the
questionnaire, the EU companies were requested to indicate which third
countries requirements differ significantly from the EU or member countries
requirements as well as from the generally accepted requirements in the
concerned sector. Despite the low outcome of the questionnaire, the
consultant has received very useful information from the EU industry. The
majority of the companies have preferred to have personal interviews with the
consultant rather than to fill-in the questionnaire.


2.3.   Meetings with EU industries


It was decided that meetings would be organised with the most motivated and
representative associations. These associations know their export oriented
members (those who answered questionnaires).

Several meetings were organised with different EU associations in order to
cover a large number of sectors and products:

       -       Association of European fruit and vegetable processing
               industries
       -       Association of chocolate and confectionery industries
       -       Comité européen des entreprises vin
       -       EU confederation of spirits producers (with the participation of
               the Scotch Whisky Federation)
       -       European confederation of footwear industries
       -       Union of EU soft drink associations
       -       Association Internationale de la savonnerie, de la détergence et
               des produits d’entretien
       -       Bureau de liaison des industries céramiques européennes



CEEI –Labelling – Final Report –16 August 2002                               15
       -       Confederation of national associations of tanners and dressers
               of the EU

Additionally, other associations preferred to provide the contact names and the
information on their difficulties in third markets to the consultant rather than
participating in interviews (Liaison centre for meet processing industries in the
EU, Association of food industries for particular nutritional uses, Bureau
National Inter-professionnel du Cognac).

The meetings have allowed the consultant to identify the sectors most affected
by labelling and marking requirements and the third countries considered as
priority for the EU industry. The interviews also succeeded in identifying the
type of labelling and marking requirements, which can affect the products of
different industrial sectors. Some sectors are most concerned by labelling and
marking requirements than others. On the other hand, some industrial
associations are more interested in technical barriers implemented by third
countries and make surveys of the technical requirements applicable to their
products in third countries.

The foodstuffs, alcohol beverages, textiles, leather, cosmetics are between the
most affected sectors by the labelling and marking requirements. Other
sectors are occasionally affected by labelling and marking requirements, such
as machinery, electronic devices, and furniture. They suffer mostly from
certification and testing requirements, which should be mentioned on the label.


2.4.   The country coverage


The countries selected by the Commission for the analysis of labelling and
marking requirements were as follows:

USA                             Colombia                   Australia
Canada                          Mexico                     India
Argentina                       Turkey                     Thailand
Brazil                          Russia                     Malaysia
Uruguay                         Poland                     Indonesia
Paraguay                        Japan                      Korea
Chile                           Egypt


Some of these markets are considered as problematic for the EU industry (i.e.
Mexico, Turkey, US, Korea, India), whilst others are considered as less
problematic markets (i.e. Chile, Canada).

a)     Additional market – China

The industry reported the existence of various problems related to labelling
and marking requirements in China. China is considered by the EU industry as
a market with growing importance. According to the EU exporters, new


CEEI –Labelling – Final Report –16 August 2002                                16
labelling requirements for foodstuffs were adopted which require prior
certification of labels by the Chinese authorities. This measure is applicable
only to imported products. The EU companies still do not know sufficiently the
exact labelling and marking requirements in China. They have considered that
a clarification on the Chinese labelling and marking legislation, as well as on
certification requirements should be made. Therefore, the consultant has
proposed to include China among the countries under review. In order to
include China among the countries under review and considering the time and
the resources needed to perform mission to China (including Beijing, Shanghai
and Hong Kong) and to carry out analysis of the legal texts, the consultant has
proposed to exclude Thailand and Malaysia from the country coverage. An
amendment of the contract has been signed by the European Commission
and the consultant including China in the country coverage of the contract and
excluding Malaysia and Thailand.

b)      General comments

In the organisation of the field missions, the consultant has taken into account
some general features governing the development of marking and labelling
requirements:

         The labelling requirements are often linked to other measures as
          import licences, certification or hygienic controls requirements.
          Therefore, the procedures and difficulties related to these measures
          have also be taken into account.
         In some countries the legislation is over-prescriptive and the EU
          companies support important additional costs. The consultant has
          interviewed importers and EU exporters on these costs.

The investigation of problems encountered by the EU operators on these
markets has also been based upon the following elements:

    The information to be included on the label: whether the information to be
     included on the label is considered to be excessive by the EU companies.
     The comparison of these requirements with those applicable in the EU.
     The obligation to prepare the label in the country of origin or in the country
     of importation.

    Controls performed by the Customs authorities: controls performed by
     customs on the conformity of the labels, possibilities to re-label in customs
     in case of mistakes in the label.

    Controls performed during retail and distribution by the competent national
     authorities: controls in shops and warehouses, fines applicable for non-
     conformity of labels, possible discrimination between EU and national
     products.




CEEI –Labelling – Final Report –16 August 2002                                  17
                                PART 2: TURKEY




§1.    The mission to Turkey


§2.    Products affected by labelling requirements

       2.1.    General labelling requirements

               a)     The Turkish Standard TS 4331
               b)     The Law on the Protection of the Consumer
               c)     The Turkish Food Codex

       2.2.    Alcoholic beverages

       2.3.    Foodstuffs

       2.4.    Ceramics

       2.5.    Pharmaceutical and medical tests

               a)     Pharmaceutical products
               b)     Medical tests

       2.6.    Others


§3. Problematical labelling requirements

       3.1.    General overview

       3.2.    Import authorisation and labelling

               a)     Import authorisation by the Ministry of Agriculture
               b)     Difficulties related to import authorisation and labelling

       3.3.    Certification and labelling

       3.4.    Intellectual property issues and labelling




CEEI –Labelling – Final Report –16 August 2002                                     18
§4.    Implementation of labelling and marking requirements by Turkish
       Authorities

       4.1.    Approval of labels

       4.2.    Controls of labels

               a) Clearance
               b) Retail


§5.    Legal analysis

       5.1.    Turkey’s obligation in the field of labelling and marking
               requirements

       5.2.    The current situation




CEEI –Labelling – Final Report –16 August 2002                       19
§1.     The mission to Turkey


The Mission to Turkey was conducted between 23 and 30 May 2001. The
objective of the mission was to meet the subsidiaries of the EU companies,
their customers and the EU trade representatives in order to identify the most
damaging labelling and marking requirements for the EU industry and the
sectors concerned.


§2.     Products affected by marking and labelling requirements


The meetings conducted with the private sector have showed that the
alcoholic beverages, foodstuffs, ceramics and pharmaceutical sectors are the
most affected by labelling and marking requirements. In these sectors,
labelling requirements are not only a problem in themselves but they are also
related to other requirements such as import authorisation, certification and
protection of intellectual property. Some other sectors are also experiencing
restrictive labelling requirements but they do not affect considerably the trade
flows with Turkey and the industry considers these requirements as more
bearable.


 2.1.    General labelling requirements


Two different types of legal instruments regulate labelling and marking
requirements in Turkey. On the one hand, the Act on the Protection of the
Consumer is enumerating labelling, packaging and pricing requirements,
which should be indicated for the consumer. On the other hand, according to
the Turkish Standard TS 4331 of April 1995 general principles of labelling and
marking should be respected by the producers and importer of different
industrial products and foodstuffs. Additionally for foodstuffs, the requirements
of the Regulations of Turkish Foodstuffs Codex should be respected. For
industrial products, additional labelling requirements can be included in
specific standards (TS) elaborated by the Turkish Standard Institution (TSE).

The existence of various laws, decrees and other binding documents renders
difficult the establishment of a list containing the precise labelling and
packaging requirements, applicable for each type of industrial and agricultural
products.

a)      The Turkish Standard TS 4331

According to the Turkish Standard TS 4331 the following information should
appear on the internal package of all products:




CEEI –Labelling – Final Report –16 August 2002                                20
       -       the trading name and the address or short name and address, or
               the registered trade mark of the firm (producer, filler or retailer)
       -       the name of the material, the product and the class, type, variety
               or form as indicated in the relevant standards
       -       the quantity of the material in number, mass, length, volume or
               other units or where there are no requirements in the relevant
               standards, in net form
       -       the net quantity of the product, under normal circumstances,
               should be placed on the package where it can be seen easily
               (the size of the letters depending on the size of product is
               indicated in the standard; the colour should be in contrast with
               the background

Moreover, for foodstuffs, the following additional information should appear on
the internal package:

       -       the names of the materials used to make the product
       -       the names of the additives (anti-oxidant, bleaching, colouring,
               flavouring, ripening, preservative, stabilising, thickening
               materials, etc) and their quantities, if indicated in the relevant
               standards)
       -       if indicated in the relevant standard, last date of use or duration
               of use (may be given as day, month, year, or only year
               depending of the foodstuff)

In addition, other information, which may be required by the terms of law,
regulation and contract, must also appear on the internal package such as
direction for use, cleaning and maintenance, recipes, etc.

The nominal packaging quantity for some products is given in Annex 1 unless
otherwise indicated in relevant standards. For example, sugar and
confectionery can be packaged only in the following quantities: 125, 250, 500,
750, 1000, 1500, 2500, 3000, 4000 and 5000 grams. The products must
respect this nominal packaging quantity.

The capacity of packaging coverings for some products should be in
conformity with the values given in Annex 2 of the standard.

The standard TS 4331 also covers the marking and labelling of the external
packaging of the goods. The external packaging should contain the following
information:

       -       the trading name and address or short name and address, or the
               registered trade mark of the firm (producer, filler and retailer)
       -       the name of the material, the product and the class, type, variety
               or form as indicated in the relevant standards
       -       the quantity of internal packages (if more than one)




CEEI –Labelling – Final Report –16 August 2002                                  21
b)     The Law on the Protection of the Consumer

The Law on the Protection of the Consumer N° 4077 of 1995 states (Article
12) that labels shall be attached on the packaging or on the lids of the goods
which are subject to trade or where this is not possible, lists indicating origin,
the quality and the price of the product shall be made available.

The user guide should also accompany some products. Imported products
should be sold with an approved translation of the original guide in which
maintenance, use and reparation instructions shall be quoted. The Ministry of
Industry and Trade, together with the Turkish Standard Institution, disclose
which goods should be sold with a user's guide (Article 14).

The Law on the Protection of the Consumer is accompanied by several By-
Laws, that give more detailed information how the requirements of the law
should be applied to the label. The By-Laws also state that the relevant
standard provisions concerning "The Marking and Labelling of packages" TS
N°4331, the implementation of which is compulsory, shall be separately
applied to goods that have been packaged by the manufacturer, wholesaler,
importer or salespersons and presented for sale. This means that the
requirements of the Laws on the Protection of the Consumer are independent
of the requirements of TS N°4331 and must be applied in the shop in addition
to the other requirements of information for the consumer already indicated by
the producer or importer.

c)     The Turkish Food Codex

The Turkish Food Codex is applicable to all foodstuffs and alcoholic
beverages. The codex indicates that:

       -       it is an obligation that the packaging of foodstuffs put on sale
               must show labels
       -       information regarding the label food content must be full and
               correct
       -       information on the label must be in the Turkish language. In
               addition to Turkish, other languages can be used
       -       the colour of the lettering must be in contrast with the
               background
       -       the label describing food content must not give false information
               or be misleading
       -       including those of specially produced foodstuffs, food packaging
               must not say that the food prevents illness or has health
               properties
       -       specially processed nutrient energy-providing food must include
               obligatory information about its properties, but providing
               information about the nutritional value of food is, in general,
               optional
       -       energy and fat content reductions must be specified on the
               labels at not needed amounts


CEEI –Labelling – Final Report –16 August 2002                                 22
The following information must be shown on packaging:

       -       name of foodstuffs
       -       contents and additives
       -       net amount
       -       the name of the manufacturing firm
       -       production and processing date, expiry date and shelf life
       -       batch/party number and / or serial number
       -       food production/ processing license date and registration number
       -       country of origin
       -       instruction and direction for use and /or storage

If the food does not go directly to the consumer, the name of the foodstuff and
the net amount must be shown on the label. The rest of the information can be
provided separately.

However, some differences exist between the requirements of the TS 4331
and the Food Codex. For example, the TS 4331 requires only the expiry date
of the product, but the Food Codex requires that the production and expiry
dates are placed on the label. According to the Turkish administration both
production and expiry date should be indicated on the label. For them, this is
the only difference between the Turkish and the European legislation in this
field. It was alleged that this difference would be eliminated after the foreseen
amendment of the Turkish Food Codex.


2.2.   Alcoholic beverages


Alcoholic beverages are considered in Turkey as sensitive products mainly
due to the important local production of wine and raki (Turkish national drink)
and for religious reasons. In order to prevent smuggling and to protect national
production, Turkish authorities require the original back label for alcoholic
beverages. The back labels should be prepared by the producers and affixed
before shipment. The labelling requirements, which should be displayed on the
back labels, are as follows:

Product denomination statement
Details of importer statement
Country of origin
Alcoholic strength statement (the % vol as used in the EU is allowed)
Volume statement (in litres, centilitres or millilitres is acceptable). However
according to some importers the wine should be imported only in bottles of
75ml
Lot: product code statement
Number and the date of import authorisation is compulsory on the original
back label
Age is compulsory for whisky



CEEI –Labelling – Final Report –16 August 2002                                23
However, according to some importers the statement concerning the
producers or exporters should also be stated on the label. Another point,
which is not clear for the importers, is the requirement for an environmental
statement (recycling logo). For some of them, the environmental marking is
not considered as compulsory on the labels, for others this marking is
compulsory. It seems that the environmental marking is compulsory for all the
products imported by the monopoly TEKEL. Therefore, it is not required for the
products, which can be freely imported – whisky and sparking wine. Moreover,
for the products sold in a package (box), all the compulsory requirements
should be mentioned on the box except the recycling logo.

As indicated above, the labelling of alcoholic beverages is subject to the rules
prescribed by the TS N°4331, the Law for the protection of the Consumer and
the Turkish Food Codex. However, the provisions of the Turkish Food Codex
on some points (i.e. alcohol degree of alcohol) differ from those used in
Europe. The situation leads to refusal of import authorisation for some
European products. (see below 2.4. Import authorisation and labelling).
Moreover, the issue of import authorisation is very important for the
preparation of labels, because the importer is obliged to wait for this
authorisation in order to send its number and date to the producer so that he
may prepare the original back labels for importation into Turkey. According to
different importers, the process can last several months depending on the time
needed to obtain an import licence. Subsequently, the producer is obliged to
stop his production line and to prepare special labels for Turkey. The importers
estimate that they have to start procedure for the application for an import
licence three months before the termination of the previous one to avoid
shortage of stocks.

In cases where a mistake is found on the label of the alcoholic beverages,
there is no possibility to re-label in customs. The goods must be sent back to
the country of origin. According to some importers, the goods could be sent to
one of the Turkish Free Zones and relabelled, but this possibility is difficult to
use and its legality is not guaranteed.

On the other side, some of the importers have indicated that during the
procedure for import authorisation they are obliged to sign a statement that
they will use only the original label. In case they do not respect this statement
or in case the label is not original they will be obliged to pay 60% of the CIF
value of goods as a penalty. According to the Ministry of the Agriculture, this
obligation existed in the past but does not exist anymore. However, no legal
text abolishing this obligation was quoted by the authorities or given to the
consultant.


2.3.   Foodstuffs


Labelling of foodstuffs is also considered as problematical, although the
requirements provided by law are not much more restrictive than the European
requirements in this field. However some differences complicate the import of


CEEI –Labelling – Final Report –16 August 2002                                 24
EU products into Turkey. Like alcoholic beverages, the foodstuffs are subject
to the requirements of the TS n°4331, the Law on the protection of the
Consumer and the Turkish Food Codex (see 1.1. General labelling
requirements). The main indications on the labels and packaging should be as
follows:

       -       name of foodstuffs
       -       contents and additives
       -       net amount
       -       the name of the manufacturing firm
       -       production and processing date, expiry date and shelf life
       -       batch/party number and / or serial number
       -       food production/ processing license date and registration number
       -       country of origin
       -       instruction and direction for use and /or storage

However, these legal texts do not indicate that the name of the importer and
the number and date of import authorisation must be indicated on the label.
This indication is compulsory for all imported food products subject to import
authorisation. Nevertheless, in contradiction to the alcoholic beverages, the
majority of foodstuffs do not have to be labelled with original labels.

IMPORTANT: The consultant has been informed by the Turkish importers
that the Turkish authorities have prepared a new law requested that food
products are labelled by the exporter prior to the shipment. This
requirement will create numerous difficulties for EU exporters and
Turkish Importers. Therefore, the draft regulation should be closely
monitored.

Currently, only infant formula and food for special medical use should be
originally labelled in Turkish. According to the Ministry of Agriculture, stickers
can be used for the other food products.

Therefore, the possibility to import products without Turkish labels and to label
in warehouse or at customs is not clear. According to the Undersecretariat for
Foreign Trade, labels (stickers or original labels in Turkish) should be affixed
before shipment. The Undersecretariat has indicated that this obligation is set
up in the Law of Production, Consumption and Inspection of Foodstuffs. In fact
the Decree deriving its authority from the Law on Production, Consumption
and Inspection of Foodstuffs (Law N° 4113) from 28 June 1995 indicates that
"if labelling procedures are not completed within two months after the
importing, its sale within the country is not allowed". Therefore, it does not
seem that the law has been changed in order to prohibit labelling in
warehouse.




CEEI –Labelling – Final Report –16 August 2002                                 25
2.4.   Ceramics


Labelling of some ceramic products is believed to be a problematic issue
especially for products subject to compulsory certification according to the
Turkish standards. According to these standards, in addition to the normal
labelling requirements for hard porcelain, all goods should be marked by the
indication "hard porcelain". Without such marking access to the Turkish market
can be refused. Apparently this indication is included in the Turkish Standards
without precise definition of the meaning of hard porcelain. According to the
importers this measure is not yet implemented but the Turkish authority can
start with its implementation in the near future. The additional marking of all
porcelain would represent an estimated additional cost of 30% to 50% for EU
exporters to Turkey. Moreover, British products and some German products
automatically get the mark "Bone China" and the indication "hard porcelain"
could be confusing for the consumer.

In addition, a large number of ceramic products is subject to compulsory
certification by the Turkish Standard Institution (TSE). They have to be tested
according to the Turkish national standards although they already conform to
EU standards. The marking of TSE, which proves that the products are tested
in Turkey, should be indicated on the product or on its label, which could
create additional difficulties for EU companies. (see 2.3. Labelling and
Certification).


2.5.   Pharmaceutical and medical tests


Pharmaceutical products and other products, which are intended for medical
use such as medical tests, are submitted to special labelling requirements.

a) Pharmaceutical products

The importation of pharmaceutical products is subject to authorisation by the
Ministry of Health. Apparently, this import authorisation is delivered only if the
company proves that the pharmaceutical product cannot be produced in
Turkey. The company has to enclose the "patient information notice", its
notarised translation and the label with which the product will be sold in Turkey
together with the application form for import authorisation. The companies do
not experience particular difficulties with the information, which should be
indicated on the label. The original label is not compulsory for the
pharmaceuticals and stickers can be affixed. According to the importers, it is
possible to correct mistakes on labels or to re-pack products in warehouse in
case the labels do not conform. The main problem, when the pharmaceutical
products are put on the market, is the indication of the price. Price of
medicines are controlled by the Ministry of Health and according to the Turkish
legislation this price cannot be higher than the price applicable in the country



CEEI –Labelling – Final Report –16 August 2002                                 26
of origin. This situation causes competitive disadvantage to EU products,
mainly because prices in the EU are lower than in the US or Switzerland.


b) Medical tests

The medical tests are also subject since 1999 to the import authorisation
issued by the Ministry of Health. Moreover, the company should be registered
in order to have an activity in Turkey. The number of registration and the
number of import authorisation should be indicated on the label. The
procedure is considered by EU companies as very burdensome because it is
over-prescriptive and time consuming. (See 2.2. labelling and import
authorisation). In addition, the company must be re-registered every year as a
proof that it has always had activities in Turkey. This complicates the
preparation of labels.


2.6.   Others


Other products are also subject to labelling requirements, which go beyond the
EU requirements in this field.

Cosmetics, for example, are also submitted to import authorisation by the
Ministry of Health. The number and the date of this authorisation, as well as
the name of the importer should be indicated on the label. For the imported
products, the following information should also be included on the internal and
external packaging in accordance with Law N° 3977 of 23.2. 1994 and the
regulations adopted for its implementation:

       -       the name, the trade mark or the type of the product, the nature or
               the quality of the products used in the country of origin.
       -       the chemical names of all products entering into the composition
               of the product in order of importance, their names CIFA (The
               Cosmetics, Toiletry and Fragrance Association) and INCI
               (international Nomenclature Cosmetics Ingredients). The
               colouring materials used in all types of decorative cosmetics put
               into the market in different colours can be indicated as "may
               contain".
       -       The name and the address of the importer
       -       The net quantity of the product
       -       Date of production and lot or serial number (month, year)
       -       Expiry date for the products which cannot be used 30 months
               after the production date (month, year)
       -       Conditions for conservation of the products
       -       Instructions for use
       -       Number and date of import permission
       -       the degree of alcohol if necessary




CEEI –Labelling – Final Report –16 August 2002                                27
When the information cannot be included on the packaging due to the small
size of the goods, it should be included in the instructions for use in the
packaging.

The industrial products subject to compulsory certification according to
the Turkish standards must bear a label or be marked (depending of the
relevant applicable standards). This obligation could create problems when the
goods must be specifically marked by the TSE sign from origin.

The household products should bear energetic labelling. In addition, all
household products entering Turkey should be accompanied with the warranty
certificate. According to Turkish law, the after sale warranty must be at least
one year. During the registration of the customs declaration, the importer
should also present a maintenance certificate issued by the Ministry of
Industry, which certifies that the importer has a sufficient maintenance
network. According to the law it is compulsory to create 30-50 after sale
maintenance services in 7 different Turkish regions.


§3.    Problematic labelling requirements


3.1.   General overview


Labelling requirements in Turkey are still not in total conformity with the EU
legislation although the authorities have started the process of harmonisation.
However, the majority of Turkish laws still need to be harmonised in order to
achieve conformity with the EU requirements.

In addition, the main problems for EU companies in Turkey are related to other
requirements, which could have implications on marking and labelling. The
import authorisation is linked to the labelling requirements because its number
and date have to be indicated on the label. In the same way, the number of
standard should be indicated on the label or a specific marking should be
affixed on the product. The protection of the geographical denomination could
also constitute an important problem for EU companies.

After the interviews with the concerned EU companies and EU associations in
different sectors, the consultant decided to examine the regime and the
implementation of all the issues linked to labelling and marking requirements.


3.2.   Import authorisation and labelling


An important number of products are subject to import authorisation. Alcoholic
beverages and foodstuffs are submitted for authorisation by the Ministry of
Agriculture. The pharmaceutical, medical tests and cosmetics are subject to
the authorisation by the Ministry of Health, chemical products are subject to


CEEI –Labelling – Final Report –16 August 2002                              28
the authorisation by the Ministry of Environment. The procedures related to
these authorisations are complicated and can delay significantly import.

a)      Import authorisation by the Ministry of Agriculture

a1.     the case of alcoholic beverages

     import regime for alcoholic beverages in Turkey

One should notice that the regime for importation of alcoholic beverages in
Turkey is very complicated. Before 1 January 1996, the sole importer of
alcoholic beverages for the domestic market was TEKEL (the Turkish National
Monopoly for Importation of Alcoholic Beverages). Since 1996, whisky and
sparkling wine can be imported freely. The monopoly for other alcoholic
beverages remained until 2001. The Law abolishing the monopoly of TEKEL
was voted by the National Assembly on 11 January 2001 and entered into
force on 20 January 2001. However, for practical reasons the implementation
of this law is impossible without an application decree, which is still not
adopted by the Turkish authorities. Currently, the importation of all alcoholic
beverages, except whisky and sparkling wine, is still conducted by TEKEL.
According to the Ministry of agriculture, the application decree will be soon..
According to some EU importers, the implementation of the Law is not among
the priorities of the government and it is expected probably after the adoption
of the Law for the liberalisation of the tobacco sector. Therefore, the process
could last for 2-3 years. The difficulty consists in the provision of the law
establishing a threshold of 1 million litres. The importers must reach this
threshold to fix their prices themselves. Until the company reaches this level, it
will be obliged to pass through TEKEL. Nevertheless, the law does not define
the method of calculation of this threshold and the adoption of an
implementation decree is essential.

     application for import authorisation

All alcoholic beverages are subject to import authorisation issued by the
Ministry of Agriculture. Until recently, the documents were submitted to the
Ankara office of the Ministry of Agriculture. In May 2001, a new regional office
was opened in Istanbul, which is expected to facilitate the task of alcohol
importers. Before approaching the Ministry of Agriculture, the European
producer should prepare the following set of documents:

        -      pro-forma invoice
        -      certificate of origin
        -      certificate of analysis
        -      certificate of purity, health and hygiene
        -      certificate of fitness for human consumption
        -      certificate of free sale

In addition, for the Import of Scotch Whisky the following is required:

        -      certificate of compliance with UK legislation or certificate of age .


CEEI –Labelling – Final Report –16 August 2002                                    29
The documents should be translated to Turkish and legalised by the local
chamber of commerce and the Turkish Consulate in the country of origin. The
Chamber of Commerce in the country of origin should endorse the certificate
of origin. The set of documents must be prepared in three copies. According
to some importers the documents should be notarised in the Turkish
Consulate of the country of origin. Other importers consider that the
notarisation could be done in Turkey. As far as the certificate of age or
Certificate of compliance with the UK legislation is concerned, some importers
have indicated that such a certificate is no longer requested by the Istanbul
representation of the Ministry of Agriculture.

The above documentation is transmitted to the company's representative in
Turkey. For spirits, which cannot be imported freely (other than whisky and
sparkling wine), the licence will be granted to TEKEL, even though the Turkish
representative of an EU company is carrying out the procedure for import
licence.

Moreover, an application letter of guarantee (stating that the producer is
abiding by all the relevant regulations and is providing information on labelling)
should accompany the set of documents. Apparently, according to the
importers, the penalty for non-respect of the letter of guarantee is 60% of the
CIF value of the imported goods. According to the Turkish authority, this
penalty is not applied anymore but they were not able to quote the legal text
abolishing this provision.

   Issue of import authorisation

All the documents are transmitted to the Ministry of Agriculture. Subsequent
approval of an application takes between 10 and 20 days. However, the
procedure can take much longer, if minor errors are detected in the
documentation. In order to be authorised for sale on the Turkish market, they
have to fit the requirements of the Turkish Food Codex concerning the degree
of alcohol and the quality. The Turkish representatives of EU companies have
been faced with refusal by Turkish authorities for non-compliance with the
Turkish Food Codex. Cognac, for example, is often refused for high alcohol
degree, lemon vodka is also not accepted as well as some other alcohol
beverages with fruit content (cider, sparkling wine with peach). However, a
production licence is granted for similar products in Turkey. According to the
importers, the degree of alcohol of French cider is 4.5% and the Turkish one
produced by the Turkish company SEVILEN is 5%. Sometimes, the reasons
given by the Turkish authorities are difficult to understand by the EU importers.
They do not have appropriate legal recourse against Decision issued by the
Ministry of Agriculture. In some cases, the Ministry has granted an import
licence for Champagne in bottles of 0.75ml but has refused the licence for
smaller bottles with the same content because of a high alcohol degree.
According to some importers, apparently the Turkish authorities do not permit
certain types of packaging for alcoholic beverages. Beer for example can only
be imported in bottles of 0.33 ml and not in cans.



CEEI –Labelling – Final Report –16 August 2002                                 30
Problems also have been indicated concerning the importation of Porto wine.
The Turkish authorities have considered that given the high alcohol degree of
this wine, it can only be sweet wine. However, such an indication was not
included on the original label and the importer was obliged to prove that it is
sweet wine and to indicate thus on the label.

In cases where the permit is issued it is valid for one year. The importer must
request one permit per brand and indicate the total quantity, which the
importer estimates that will be brought into Turkey during the permit's validity.
The volume limit cannot be exceeded so traders are likely to overestimate the
demand. The "transfer price" which appears on the granted authorisation
cannot be changed during the 12-month period of validity. For alcohol
beverages other than whisky and sparkling wine, the permit is issued for the
State monopoly TEKEL and importers complain about the excessive price
asked by the State Monopoly for the importation of some brands.

Despite the fact that the validity of import authorisations is legally fixed to one
year, in practice this validity is 9-10 months, because of the complicated
procedure, which must be followed. According to the importers, they start the
procedure for import licence 2-3 months before the expected shipment date.

When the importer obtains the import permit, he must send the number and
date of the import permit to the producers which should print original labels in
Turkish with the following statement: imported by … (name of importer for
whisky and sparkling wine or TEKEL for other products) with import licence N°
….of …(date). This statement should be included on the original back label.

a2.    the case of foodstuff and agricultural products

The Turkish regime regarding technical regulations and standardisation for
foreign trade foresees that the importation of foodstuffs, agricultural and
animal products, veterinary products should receive a Control certificate
(called import authorisation or import permit by the importers) issued by the
Ministry of Agriculture (communiqué N°99/5). The procedure is comparable to
the one used for alcoholic beverages. The following documents should be
presented to the Ministry of Agriculture:

       -       pro-forma invoice
       -       certificate of origin
       -       certificate of analysis
       -       certificate of purity, health and hygiene
       -       certificate of fitness for human consumption
       -       certificate of free sale

Moreover, when a foodstuff is imported, the following additional information
should be presented to the Ministry:

       -       The name and address of the importing company
       -       The name and address of the exporting company
       -       The country of origin of the item


CEEI –Labelling – Final Report –16 August 2002                                  31
       -       The name of the item
       -       The degree of purity of the item (according to its characteristics)
       -       The composition of the item
       -       The date of production
       -       The sell by date
       -       Serial and batch number
       -       Special instructions (if any)
       -       Direction for use and quantity
       -       Calorific value and nutritional table
       -       The weight and the volume of each items

The quantity of the documents needed is impressive and the procedure can
last several months depending on the product to be imported. It is sometimes
difficult to indicate the production date and the expiry date of the product
(especially when the product has a short shelf life and it is not yet produced on
the day of demand of the import certificate).

Importers are faced with several difficulties concerning the import
authorisations for foodstuffs. According to them, Turkish authorities use this
authorisation as a hidden quantitative restriction in order to redress the
balance of payment of the country. Several difficulties were reported
concerning the importation of food products – refusal of import permit for
pasta, olive oil, vinegar, rice and cheese.

According to some importers, the Ministry of Agriculture allows only the import
of cheese, which cannot be produced in Turkey. The situation is also very
complicated as far as meat products are concerned. Some products were not
authorised for sanitary reasons, but the import of other products apparently not
submitted to import restrictions, such as pure pork were significantly delayed
or were not authorised. Importers have indicated that the ground for refusal is
more often non-conformity with the Turkish Food Codex. Moreover, the
Turkish authorities sometimes do not accept documents provided by the
European producers. For example, in some countries, the sanitary certificate
is not issued by the Ministry of Health but by an independent authority, which
is in charge of producing this type of analysis and certificates. The certificate
cannot be accepted by Turkish Ministry of Agriculture, if it is not stamped by
the Ministry of Health of the Country of origin. The situation complicates the
relations between the EU exporter and the Turkish importer, because even the
exporter does not exactly know how to get some authorisations. If all the
necessary documents are not duly provided, the import permit procedure will
be delayed significantly.

Moreover, the authorisations for foodstuffs products are granted by Ankara
office of the Ministry of Agriculture which renders communication between
importers in Istanbul and authorities in Ankara more difficult. Importers often
consider that Decision of the Ministry of Agriculture is not sufficiently motivated
and that they should have the possibility to object to it in front of the Court.

If the import authorisation is granted to the importer, the number and date of
the import authorisation, as well as the name of the importer, should be affixed


CEEI –Labelling – Final Report –16 August 2002                                  32
to the label. In comparison with alcoholic beverages, no original label is
required for foodstuffs expect for infant products and foodstuffs for specific
medical use. The majority of the importing companies are using stickers,
which are affixed in the warehouse.

a3.    the case of pharmaceuticals and medical tests

According to the Turkish legislation (Regime Regarding Technical Regulation
and Standardisation for Foreign Trade) for the importation of foodstuffs,
medicines, some consumable medical products, cosmetics, detergents, etc,
the importer shall receive a Control certificate issued by the Ministry of Health.
The procedure in the Ministry of Health is similar to the procedure applied by
the Ministry of Agriculture. The importer should request an authorisation for
one year for a pre-determined quantity of products.

One demand per product type and origin country should be introduced. The
demand should contain the following documents:

       -       technical file of the product, translated and duly notarised
       -       certificate for representation, given to the importer by the
               producer, translated and notarised
       -       quantitative formula of the product ( 100% in weight and volume)
               – 2 exemplars
       -       specifications of the product (properties – physiological, chemical
               and microbiological) – 2 exemplars
       -       Sanitary certificate for free sale in the country of origin, approved
               by the competent national authorities in the country of origin
       -       Photocopies of the original external and internal packaging, and
               if necessary the instruction for use
       -       Documents related to scientific works proving the alleged
               properties of the product
       -       Documents related to scientific work proving that the given
               product is not damaging for human health if correctly used
       -       Pro-forma invoice and control certificate (fiche belgesi)
       -       If the product is imported for the first time, certificate by the
               producer attesting that the producing company respects the code
               of good practices

The information requested could be slightly different for some products,
depending on their particularities. According to some importers, all the
documents should be translated and notarised by the Turkish Consulate in the
country of origin. Other importers are notarising their documents in Turkey. In
the event that not all the documents are presented, the demand could be
significantly delayed. Nevertheless, given that the pharmaceutical companies,
the companies producing medical products and cosmetic companies are
importing a large variety of products, the process is considered as very
burdensome. According to some importers, in addition to the above-mentioned
documents, the demand should contain the registration of the importer in
Turkey, because the companies in the pharmaceutical sector need special
registration, which should be renewed every year.


CEEI –Labelling – Final Report –16 August 2002                                   33
Therefore, several problems could arise with the import authorisation. Some
simple products do not have a technical file, as the technical file is elaborated
by one of the scientific experts of the producing company. It is difficult to
elaborate a technical file, especially for the Turkish market, when the volume
of products is not important. Another problem could be related to the free sale
certificate in the country of origin. For example, if one product is produced in
Great Britain but shipped from France, both French and British certificates for
free sale must be produced. The situation could be more complicated and the
delay due to the free sale certificate could reach one year and a half.

If the Ministry of Health issues the certificate, the number and the date of the
certificate as well as the name of the importer should be mentioned on the
label. Apparently, no original labels are needed for these types of products
and stickers may be affixed. However, the importers prefer to use original
labels for pharmaceuticals and cosmetics products.

b)     Difficulties related to import authorisation and labelling

The procedure for obtaining import permits in the Ministry of Agriculture and
the Ministry of Health (note that a similar procedure exists for chemical
products in the Ministry of Environment) is perceived as extremely
burdensome for the EU exporters and Turkish importers of the concerned
products. The obligation to indicate the number and date of import permit on
the original label or on the stickers delay the import procedure. Importers are
often subject to the subjectivity of the Ministry or are penalised by the
differences between EU legislation and the Turkish Food Codex. According to
the Turkish authorities, the Food Codex will be amended but the procedure for
obtaining the import permit as well as the obligation to indicate the number
and date of the permit on the label will remain even after harmonisation of the
Turkish legislation to the EU legislation.


3.3.   Certification and labelling


Industrial products in Turkey could be subject to inspection by the Turkish
Standard Institution (TSE). 1000 mandatory standards exist in Turkey, which
are applicable to domestic and imported products. Various products are
concerned (machinery, some textiles, ceramics, cosmetics, detergents and
even pasta)3. The inspections are carried out in respect of minimum health,
safety and protection of the environment, providing adequate information to
the consumer. The standardisation might be closely related to labelling for two
reasons: first, the sign of TSE and the standard number should according to
the relevant standards appear as mark on the good or on its label; second, the
TSE verify the composition of the products and the correctness of the
information which appears on the label.

3
  For the products submitted to mandatory standards – see the web-site of Turkish Standard
Institution – http://www.tse.org.tr


CEEI –Labelling – Final Report –16 August 2002                                         34
Therefore, the procedure is considered as over-prescriptive by EU importers
because they have to undergo all the testing and conformity accession
procedures even though their goods are already tested and approved in
Europe. In other cases, the goods are subject in the EU to a simple
declaration of conformity made by the producer and the existence of
mandatory standards in Turkey is surprising and burdensome for the
European companies.

The Turkish system for standardisation has existed since 1995 and standards
adopted differ from those applied in the EU. The country has started a
procedure of harmonisation of the Turkish standards with the existing
European standards (EN) but it is far from being completed.

When the EU goods are imported in Turkey, the importer should follow a
special procedure. First, he must check whether his products are subject to
mandatory standards. If mandatory standards exist, he should contact the
TSE, which will appoint an expert in charge of taking samples. The product will
be submitted to tests to verify its conformity with the Turkish Standards.

Three situations must be examined:

First: the product is produced in conformity with one of the EU standards: the
company can present the tests and the file attesting that the product is
elaborated in accordance with the EU standards. The procedure undertaken
by the TSE will be shorter and less complicated. Although the product is in
conformity with the EU regulation the product should be tested, as a mutual
recognition Agreement for testing and conformity assessment does not exist
between Turkey and the EU.

Second: the product is not elaborated in conformity with the EU standards, the
spot examination must be carried out in Turkey. The importer could request
examination also according to the relevant international standards (ISO, CEN,
IEC, CENELEC, ETSI).

Third: For the products bearing the mark "CE" and which are freely circulating
in the European Union, a conformity certificate shall be issued directly in case
the technical file is submitted to TSE before the import stage. This aims to
verify whether the certificates and the marks are issued in accordance with the
relevant EU Regulation.

The testing procedure in the TSE can last 3-5 days up to one week depending
on the product concerned. The conformity of the product to the Turkish
standard is verified and also the conformity of the composition of the product
with the information indicated on the label. All the Turkish standards contain
labelling requirements, which should be respected by the producer for the
information of the consumer. When the results are found unsatisfactory by the
TSE, the importer may object and start legal procedure. The result is
transmitted to the Ministry of Industry and the Customs department. When the
ISE issues an unsatisfactory Decision because of wrong indications on the



CEEI –Labelling – Final Report –16 August 2002                               35
labels, the importer could be authorised to change the labels in the
warehouse.

Nevertheless, a number of EU exporters have experienced important
problems with the Turkish standardisation requirements, mostly due to the
differences between the EU and Turkish standards. Additionally, samples
taken for testing can represent important cost for importers, especially in
cases of high value products (for example porcelain table sets).


3.4.   Intellectual Property issues and labelling


EU companies exporting to Turkey encounter problems related to the non-
respect of their intellectual property rights and especially problems related to
the protection of geographical indications. Turkey, as a member of the WTO,
is obliged to respect the TRIPS Agreement, in particular the provision
concerning the protection of the geographical indications. Geographical
indications are indications which identify a good as originating in the territory
of a country, or a region or locality in that territory where a given quality,
reputation or other characteristic of the good is essentially attributable to its
geographic origin.

The TRIPS Agreement provides that geographical indications should be
protected at least with a view to avoid unfair competition and consumers being
misled. Place names to identify wines and spirits are given higher protection,
even if the consumer is not misled. Turkey as a developing country has been
obliged to implement TRIPS Agreement since 2000. According to the Turkish
review of legislation, the relevant law for the protection of geographical
indications is Decree N°555 for Protection of Geographical Signs of June
19954.

Although such a decree exists, the protection insured by the law is not
sufficient for the European exporters. They complain about the violation of
their rights in respect to geographical indications. For example, there is a spirit
product sold by TEKEL called “Koniak” and some types of cheese are often
designed as “Rokfor”. EU exporters insist that Turkey should implement
legislation comparable to EU Regulation 1576/89 on spirits denominations or
EU regulation 2081/92 on geographical indications for products other than
alcohol and spirits.




4
  The text of the Decree and Turkish Intellectual property law may be obtained from
http://www.turkpatent.tr


CEEI –Labelling – Final Report –16 August 2002                                  36
§4.    Implementation of marking and labelling requirements by
       Turkish Authorities


For some products (especially those submitted to import permit or to
compulsory certification), labels are verified three times – during the
certification or authorisation procedure, during the customs clearance and in
the shops. However, these controls are not always performed on the same
basis.


4.1.   Approval of labels


First, labels should be approved during the procedure for import authorisation.
The importer must present a sample of the label to the control authority, which
will be attached to the product. For alcoholic beverages, importers are even
obliged to make a statement with respect to the requirements on the original
label. The non-respect of this statement could be penalised with 60% of the
CIF value of goods. When the product is submitted to mandatory certification,
the label is also checked by the TSE. The label must respect the requirements
of the relevant Turkish standard related to labelling. The first check will
concern eventually the conformity of the product with the indications on the
labels. The second check will verify whether all the necessary information for
the protection of the consumer is indicated on the label. If the labelling
requirements are not in conformity, the TSE will issue an unsatisfactory
statement and the importer will be obliged to change the labelling.

However, these inspections on labelling are not conducted on all products and
do not have the same intensity for all types of products.


4.2.    Controls of labels


Labels are additionally verified during customs clearance and when they are
put into the market for the sale to the consumer.

       a) Clearance

A large number of products, which are not submitted to the mandatory
certification requirements by the TSE are, however, submitted to testing during
the clearance process. This is the case, for example, of alcoholic beverages
and foodstuffs. These procedures provoke excessive customs delays. In
general, the importer should go to the Ministry of Agriculture to fix an
appointment with the expert who will come to take random samples. The
expert is not obliged to come immediately but within 2-3 days period. The
products are taken for analysis (5 days or more). The analysis may be made
by the Ministry of Agriculture (verification if the product is in conformity with the


CEEI –Labelling – Final Report –16 August 2002                                    37
import authorisation) and by the customs (verification on the classification of
the products). According to the importers, cheese products are submitted to
three analysis - chemical and microbiological analysis, atomic analysis and
analyses by the Customs. The costs of the analyses are estimated to be
around 270 Euro per product. If a problem is discovered during the analyses
the clearance procedure is longer. For example, according to importers,
Mascarpone cheese was considered as a cream by the Turkish authorities
and they wanted to oblige importers to change the description of the product
on the label and to replace the word “cheese” with “cream”. The importer was
obliged to prove that Mascarpone is considered as a cheese in Europe and is
defined as such.

The EU exporters and the Turkish importers of foodstuffs and alcoholic
beverages consider product tests as excessive and stress the additional costs
that result because of these procedures. Products with short shelf life could be
damaged or destroyed because of problems during testing procedures.
According to the importers, it is possible for some companies to avoid testing if
the same product is exported always by the same exporter and imported by
the same importer. The Ministry of Agriculture did not confirm this possibility.

According to the Ministry of Agriculture, all products containing meat, milk,
eggs, alcohol and special nutritional products need to be tested compulsorily
every time they are imported into Turkey. For other products, tests are not
compulsory but during importation, the Ministry can decide to take samples
and to perform an analysis on a random basis.

       b)      Retail

Labelling of products is also checked in retail. Labelling should conform with
the requirements of the Law on Protection of the Consumer. Any dispute
between consumer and the sellers arising from the implementation is within
the jurisdiction of the Consumer Courts. According to the law, any litigation
brought before the Court by consumers, consumer's organisation or the
Ministry of Industry is excluded from all charges and duties.

An important particularity of the law should be noticed: although the law is
designed mainly to protect the consumer against goods not in conformity with
Turkish standards and labelling requirements from being sold in the shops,
part five of the law (complementary provisions) gives larger powers to the
controlling authorities. According to Article 25 of the law, "the inspectors and
controllers of the Ministry and the Personal authorised by the municipal
authorities shall for the purpose of the implementation of this Act, have the
authority to carry out investigation, supervision and research in the premises
such as plant, store, shop, firm, depots or warehouses in which goods are
stored or sold”.

The requirement about controls in warehouses is surprising given the fact that
according to the Turkish Law on inspection of foodstuffs, the goods can be
labelled 2 months after their customs clearance if they are not put on the
market.


CEEI –Labelling – Final Report –16 August 2002                                38
§5.    Legal analysis


5.1.   Turkey's obligation in the field of labelling and marking
       requirements


Relations between the EU and Turkey are based on two important documents:
the Association Agreement between EC and Turkey and Decision N° 1/95 of
the EC Turkey Association Council of 22 December 1995 on implementing the
Final phase of the Customs Union. One has to notice that the Customs union
is still not applicable to the products enumerated in Annex I of EC Treaty.

According to Decision 1/95, Article 8 " within five years from the date of entry
into force of this Decision, Turkey shall incorporate into its internal legal order
the Community instruments relating to the removal of technical barriers to
trade". Decision 2/97 of the EC-Turkey Association Council enumerates the list
of the instruments to implement.

According to these provisions, Turkey shall implement all the relevant
Community provisions concerning labelling and marking requirements related
to industrial products. However, even after the termination of the allowed
period (31 December 2000), Turkish legislation related to the technical barriers
to trade is still not in conformity with the provision of Article 8. The Turkish
authorities have indicated the existence of some technical difficulties and the
necessity of important inter-ministerial work needed for the implementation of
the provisions of Article 8.

Labelling legislation in Turkey still creates some difficulties for EU exporters,
mainly because large part of the legislation is still not transposed and because
of subsisting differences between the EU and Turkish legislation even after the
transposition. For example, as far as the import authorisation is concerned, the
number and the date of authorisation will remain as a compulsory labelling
requirement.

Therefore, Article 9 of Decision 1/95 states that "when Turkey has put into
force the provisions of the Community instrument or instruments necessary for
the elimination of technical barriers to trade in a particular product, trade in
that product between the Parties shall take place in accordance with the
conditions laid down by those instruments, without prejudice to the application
of the provisions of this Decision". That means the trade between the parties in
the field in which Turkish legislation is harmonised with the EU legislation will
be subject to the provision of the relevant Community instrument. When some
differences exist between EU Legislation and Turkish legislation, however, it
would be very difficult for the EU company importing into Turkey to prove that
its products are in conformity with the EU legislation. As Turkey is not part of
the Community, the company cannot invoke possible direct effect of the
Community legislation in case of wrong transposition. The only way of dealing



CEEI –Labelling – Final Report –16 August 2002                                  39
with EU instruments receiving non-correct transposition in Turkey is via
bilateral negotiations between the two parties.

Moreover, Article 10 of Decision 1/95 imposes some obligations to Turkey
before the incorporation in its internal legislation of the instruments related to
the technical barriers to trade. Turkey shall not impede the placing on the
market of Community products with which conformity with the Community
directives has been attested. These provisions imply that Turkey cannot
introduce unjustified restrictions to trade for EU products conform to the
requirements of European legislation. Additional testing and certification
performed in Turkey for the EU products are in contradiction with these
requirements, especially since Turkey subjects a large number of EU products
to the Turkish standards and conformity assessment. On the other hand, the
Community has taken the obligation to accept the results of the procedures
applied in Turkey for assessing conformity with the requirements of
Community law. According to this provision, Turkish products exported to the
Community market could be tested in Turkey and are not obliged to undergo
any other certification procedure. Therefore, the arguments of Turkish
authorities that the certification procedure in Turkey is a consequence of
absence of a mutual recognition Agreement are not relevant. The Turkish
products and the EU products do not receive the same treatment in the
Customs Union. The Turkish products are certified and can circulate freely in
the territory of the Customs Union whereas Community products are subject to
two certification procedures (one in EU, and one in Turkey).

Decision 1/95 contains also provisions related to intellectual property. Article
31 of Decision states that " the Parties confirm the importance they attach to
ensuring adequate and effective protection and enforcement of intellectual,
industrial and commercial property rights". According to Article 4 of Annex VIII
of Decision 1/95, Turkey shall adopt before the entry into force of Decision,
national legislation equivalent to the legislation adopted by the Community in
the field of geographical indications.


5.2.   The current situation


For instance, Turkey has not adopted the legislation concerning technical
barriers to trade even after the termination of the 5-year period on 31
December 2000. According to the Turkish Under-Secretariat for Foreign
Trade, the progress of the harmonisation of Turkish legislation to the EU
Technical legislation related to labelling and marking is as follows


EU legislation to Harmonisat Turkish        Deadline for Explanatory     Institutions
be harmonised     ion        legislatio     harmonisatio notes           responsible for
                  progress   n        in    n     foreseen               the
                             harmony        by         the               harmonisation
                                            Institutions
Directive          In progress              2001                         Ministry         of
79/531/EEC                                                               industry and trade



CEEI –Labelling – Final Report –16 August 2002                                  40
applying             to
electrical     ovens,
directive 79/530 on
the indication by
labelling of the
energy
consumption of the
household
appliances
Council      directive    In progress          2001                           Ministry         of
92/75      on      the                                                        Industry and trade
indication          by
labelling         and
standard product
information of the
consumption          of
energy and other
resources           by
household
appliance
Council Directive         Partially   26   Nov. 2001   The      production Ministry             of
79/112     on      the    harmonised, 1997             date is voluntary Agriculture          and
approximation        of   in progress                  on the label. Many Rural Affairs
the laws of the                                        provisions about
Member         States                                  the ingredients are
related     to     the                                 not     as    clear
labelling,                                             enough as in EU
presentation and                                       directives.
advertising          of                                Revision studies
foodstuffs                                             in progress with
                                                       respect to 2000/13
                                                       EU directive
Directive 87/250 on       In progress          2001                        Ministry             of
the indication of                                                          Agriculture        and
alcoholic strength                                                         Rural affairs
by volume on the
labelling           of
alcoholic
beverages for sale
to the ultimate
consumer
Directive 89/398 on       Partially            2001    While there are        Ministry          of
the approximation         harmonised,                  some provisions        Agriculture     and
of laws of the            In progress                  related        with    Rural affairs
Member         States                                  labelling      and
related             to                                 description       of
foodstuffs intended                                    foodstuff,      the
for         particular                                 product list is not
nutritional uses                                       involved
Directive 90/496 on       Partially   16.11.   2001    In harmony but         Ministry          of
nutrition labelling       harmonised, 1997             revision study in      Agriculture     and
for foodstuffs            In progress                  progress       with    Rural affairs
                                                       respect to the
                                                       2000/13 directive
Directive 92/27 on Partially     24.04.        2003    The         related    Ministry of Health
labelling of medical harmonised, 1991                  regulation is in
products and on In progress                            force,     however
packaging leaflets                                     certain
                                                       shortcomings are
                                                       required to be



CEEI –Labelling – Final Report –16 August 2002                                       41
                                                           revised
Directive 67/548 on       In progress               2005             Ministry          of
the approximation                                                    Environment
of laws, regulations
and administrative
provisions relating
to                  the
classification,
packaging          and
labelling            of
dangerous
substances
Directive 78/631 on       In progress               2001             Ministry          of
the approximation                                                    Agriculture     and
of laws relating to                                                  Rural affairs
the classification,
packaging          and
labelling            of
dangerous
substances
(pesticides)
Directive      88/379     In progress               2005             Harmonisation
the approximation                                                    work       continue
of laws relating to                                                  according to the
the classification,                                                  directive 1999/45
packaging          and
labelling            of
dangerous
preparations
Directive 94/11 on        Fully         03.12.200                    Ministry          of
the approximation         harmonised    0                            Industry        and
of      the      laws,                                               Trade
regulation         and
administrative
provisions of the
Member          States
relating     to    the
labelling            of
materials used as
main components
of footwear for sale
to the consumer
Directive 89/622 on       In progress                                TEKEL
the approximation
of      the      laws,
regulation         and
administrative
provisions of the
Member          States
relating     to    the
labelling tobacco
products
Directive 93/34 on        In progress               2001             Ministry          of
statutory marking                                                    Industry        and
for two or three                                                     Trade
wheel vehicles
Directive 73/361 on       In progress               2001             Ministry          of
the approximation                                                    Industry        and
of      the      laws,                                               Trade
regulation         and



CEEI –Labelling – Final Report –16 August 2002                               42
administrative
provisions of the
Member         States
relating    to    the
labelling of wire-
ropes, chains and
hooks
Directive 93/465 on In progress             2001                       Undersecretariat
conformity                                                             for Foreign Trade
assessment       and
affixing and use of
CE        conformity
marking

As it shown in the table, which reproduces only small part of the EU legislation
regarding marking and labelling requirements, the progress of Turkey in this
field is still modest. According to EU industry, additional political pressure
should be made on Turkey to implement the provisions of Decision 1/95.




CEEI –Labelling – Final Report –16 August 2002                                43
                               PART 3: CANADA


§1.    The mission to Canada

§2.    General overview

       2.1.    Products potentially affected by labelling rules

       2.2.    The limited number of problems regarding labelling requirements

       2.3.    Possibilities to re-label in case of mislabelling


 §3. Foodstuffs

       3.1.    General requirements

       3.2.    Specific matters of concern

               3.2.1. Bar codes

               3.2.2. Specific import authorisation for meat and fresh products

               3.2.3. Nutritional information

               3.2.4. Presence of allergens

               3.2.5. Canned products

               3.2.6. Denomination of origin


 §4. Alcoholic beverages

       4.1.    The provincial monopolies

       4.2.    Labelling requirements


  §5. Textiles

       5.1.    CA number

       5.2.    Cleaning instructions

       5.3.    Others




CEEI –Labelling – Final Report –16 August 2002                                44
§6.    Others

       6.1.    Mention of standards on the label

       6.2.    Electrical equipment

       6.3.    Container size


§7.    Legal analysis

       7.1.           The mutual recognition Agreement with Canada

       7.2.           The WTO provisions




CEEI –Labelling – Final Report –16 August 2002                       45
§1.       The mission to Canada


The consultant conducted a mission in Canada from the 4th of June to the 9th
of June 2001 (Montreal, Toronto and Ottawa). The mission was organised with
the kind support of the EC delegation in Ottawa. The consultant met


(1) the relevant Canadian Authorities (Department for Foreign Affairs and
    International Trade, Industry Canada 5 , Food Inspection Agency, Health
    Canada, Standard Council of Canada, Customs), in order to complete the
    collection of relevant labelling requirements and other applicable rules
    related to the importation of the EU products;

(2) the EU Trade Member State Representatives in order to identify the
   companies having recently encountered difficulties regarding the control of
   labels, or additional costs related to labelling requirements;

(3) importers of the EU products potentially affected by Canadian marking
    and labelling requirements (mainly foodstuffs, textile).

(4) the Canadian Importers Association in order to get an overview of the
    import rules.


§2. General overview


2.1.      Products potentially affected by labelling rules


The consultant has interviewed the Trade representatives of the EU Member
States in Montreal, Toronto and Ottawa on the problems encountered by their
national companies in relation with marking and labelling rules.

Consumer products mentioned as of major interest by the Member States are:

-         Processed Foodstuffs (chocolate, biscuits, fish)
-         Wines and spirits (including beers)
-         Cosmetics
-         Chemical products
-         Pharmaceuticals
-         Textiles, shoes and other leather products




5
    Canadian Ministry of Industry


CEEI –Labelling – Final Report –16 August 2002                             46
2.2.   The limited number of problems regarding labelling requirements


Globally, the Member States and the EU companies do not consider that
Canadian labelling requirements as excessive or unbearable (some Member
States representatives stated that they did not have any knowledge about
difficulties: Germany). For many products, the requirements are similar to the
EU ones (textiles, wines). For others, there are some differences (i.e.
nutritional information for foodstuffs) but no major difficulty was mentioned
(except of marking of allergens for foodstuffs). However, the Member States
and some importers interviewed stressed the existence of difficulties to import
EU products, these are not directly linked to marking and labelling rules. The
difficulties evoked are as follows:

-      Import authorisation for some foodstuff products
-      Distribution issues for alcohol and spirits (State and provincial
       monopoly)


2.3.   Possibilities to re-label in case of mislabelling


The consultant interviewed the Customs Authorities on the controls carried out
by Customs during the clearance process on imported products. The
information collected was quite positive:

(1)    the country of origin marking is very liberal in Canada
(2)    Importers of the EU products are administered the same way the
       importers of NAFTA products are.
(3)    The importer has the ability to either mark or re-mark at the border or in
       the bonded warehouse (even if the re-label is not allowed under the
       current legislation, Customs Authorities will always authorise it).
(4)    There are few problems with importers regarding marking and labelling
       rules.
(5)    Under the “Set Assessment Programme”, the importers will be selected
       on the basis of their past performances. It will be possible to be
       accounting for the goods on a monthly basis.
(6)    When Customs find a problem with other requirements than country of
       origin requirements on the label, they will release the goods (the goods
       will therefore not be blocked) and will inform consequently Industry
       Canada. An exception is however made for some foodstuff products
       subject to the inspection of the Canadian Food Inspection Agency
       (CFIA). Customs are entitled to detain the goods on behalf of the
       Canadian Food Inspection Agency.6




6
  For Customs regulations: see D 19-1_1 for agricultural products and D 17_1_5 for the
release of goods. Internet site www.ccra-rdrc.gc.ca


CEEI –Labelling – Final Report –16 August 2002                                     47
§3.     Foodstuffs


3.1.    General requirements


Under Canadian rules7, the foodstuff products imported and commercialised in
Canada must be marked with:

-       Specific bar code
-       Nutritional information
-       Warnings on the presence of allergens
-       Specific measuring (in ml, mg, bouchée etc ..)

In addition, it is also required to affix the inspection logo, the country of origin
and the weight.

It must be stressed that the exporter/importer has access to a specific service
of the Canadian Food Inspection Agency (CFIA) in order to verify the
compliance of the label of the exported product with the Canadian
requirements.

There are some additional requirements existing at provincial level (i.e.
Quebec for fish products). The importer or its European supplier must
therefore contact CFIA local staff to know about these requirements.


3.2.    Specific matters of concern


Despite the overall opinion given by importers and Member States
Representatives that EU products do not face major difficulties with labelling
requirements, some punctual matters of concern were presented to the
consultant:

3.2.1. Bar codes

Some Member States’ representatives mentioned that differences in “Bar
codes” are sometimes found problematic by their national producers (e.g.
chocolate exporters). The EU bar codes possess 12 characters while under
the Canadian rules, the product has to be marked with 13 characters. In some
cases, the Canadian Authorities have stopped products marked with 12 codes
or the Canadian retailers have refused delivered products. However,
according to other sources (importers), it was also said that the EU exporters
have found a solution to this problem by adding a “0” at the end of the bar
code.

7
 Consumer packaging and labelling regulations + specific rules for fresh and fruit regulations,
processed products regulations.


CEEI –Labelling – Final Report –16 August 2002                                              48
3.2.2. Specific import authorisation for meat and fresh products

Some importers and Member States representatives complained about import
procedures for meat products. For example, an EU producer of vacuum
processed meat products has waited more than one year to get the import
authorisation from the Canadian Food Inspection Agency. However these
problems are not related to marking or labelling requirements. Taking into
account the foot and mouth disease as well as the BSE crisis, the
authorisations were rather postponed than refused.

3.2.3. Nutritional information

If some EU companies have encountered difficulties to fulfil the requirements
of nutritional information when they started their business to Canada, it seems
not to constitute a noticeable difficulty. Once the product is correctly marked it
does not face specific difficulty neither with Customs nor with inspection
agencies.

It is also possible for the importer to prepare the nutritional information and to
affix a sticker when the product is imported (in Customs or in the bonded
warehouse of the importer).

3.2.4. Presence of allergens

Under Canadian rules, while a domestic or imported product contains or may
contain presence of allergens (nuts, milk) it must be marked consequently.
Therefore, the CFIA controls the compliance of the product’s content with the
nutritional information affixed to the label. This has recently caused several
difficulties for some EU products.

On several occasions, the products controlled during the retailing phase were
found to be containing less than 1ppm of milk protein and taken out of retail.
The importers were accused of mislabelling. Consequently, they were charged
with a penalty and obliged to re-label the product with the mention “may
contain milk protein”. The importers of Belgium and French Chocolate
complained because (1) the quantity found was too modest and according to
them impossible to avoid 8 and (2) they are put on a black list on the internet
site of the Canadian Food Inspection Agency (CFIA)9. They faced additional
costs and time losses. They alleged that the controls are abusive. Some
companies (e.g. Catburry) have published Articles in the press explaining that
it is impossible to be sure that chocolate is totally exempted from nuts or milk
proteins. Market for the EU chocolate is promising and the EU chocolate
8
  Often milk chocolate is processed in the same machines than black chocolate. Even if the
machines are properly washed it is alleged that it cannot be avoided that a minima part of milk
protein can stay in the process of black chocolate. It is also alleged that some milk protein can
be brought while black chocolate is transported into a truck having formerly transported milk
products (…).
9           th
  On the 11 of May 2000, the authorities have published on the web site the list of products
concerned              by             a            General               warning.             See
www.inspection.gc/français/corpafr/recarapp/20010511/htm .


CEEI –Labelling – Final Report –16 August 2002                                               49
products are competitive on price and quality, compared to their US
competitors.

Canadian Authorities explained the reasons for these procedures. There was
a general alert on allergens 6 years ago. Currently, the Authorities are drafting
a new regulation on this issue. For the moment, they are following a list of
allergens, which is the same as this established in the Codex Alimentarius.

3.2.5. Canned products

This problem is more closely linked to the packaging than to labelling issues.
However, some Member State Trade representatives insisted that this
problem must be mentioned in the study.

Canada is reported to have enacted the most drastic regulations and
standards on container's integrity. This affects in particular exports of “ canned
products ” of various products (low acidity products). For non-fruit canned
products (vegetable, fish), the low acid food must be packaged in hermetically
sealed containers in order to prevent any bacterial contamination. This
requirement implemented under the Consumer Packaging and Labelling Act.

In particular, size, tightening, type of closure of the tins for fish products are
reported to be incompatible with the EU standards, which oblige EU exporters
to produce specific tins for the products exported to Canada. The CFIA carries
out inspections during the clearance process. If the tolerance level of all
standards (height, thickness, body hook, overlap, cover hook) overcomes a
certain percentage, the products are refused and the importer put on an
Internet black list.

According to Health Canada, while the product is found not complying with
these requirements, it is detained by the Customs authorities and (1) fixed if
fixable or (2) sent back to the port of shipment or (3) destroyed.

It must be stressed that this seems to be more a problem faced by Danish,
Portuguese and Italian exporters. Spanish exporters, who were facing huge
difficulties some years ago, have apparently overcome their difficulties (some
producers have adapted their canned packaging according to the Canadian
standards).

3.2.6. Denomination of origin

Various Member States representatives (France, Italy, and Spain) insisted on
the problems caused by domestic products using the denominations of the EU
products. They stressed that this problems shall be evoked in the study, given
the fact that:

(1)     The situation affects the EU imported products, and
(2)     The domestic products are wrongly labelled.




CEEI –Labelling – Final Report –16 August 2002                                 50
Various cases were quoted: domestic wines called Champaign; domestic
prosciutto identified as “ Prosciutto di Parma ” in the label, while the Prosciutto
di Parma cannot be imported as Prosciutto di Parma but as “ Prosciutto
originale ”.


§4.    Alcoholic beverages


4.1.   The Provincial Monopolies


There is a general difficulty to import and distribute alcohol because of the
existence of a State Monopoly controlled by the competent agencies in each
province (ex: SAQ in Quebec, LCBO in Ontario).

In Quebec, for example, EU products must be imported and distributed by
SAQ and distributed in SAQ shops. Sometimes, SAQ is not interested in
distributing some products (e.g. Belgian beers), which hampers their export to
Canada. Only wines bottled in Canada could be sold in the “épiceries”.


4.2.   Labelling requirements


Under the requirements to be affixed on the label, Member States and
importers mentioned the following issues:

-      compulsory measuring in ml. (affects beer exports).
-      Recycling (varies from one province to another)

Each province has competencies in terms of labelling requirements. They can
therefore enact additional compulsory requirements (e.g. way of recycling,
bottle water: maximum residual requirements). However, no specific difficulty
has been mentioned by the Member States.


§5.    Textiles


Under Canadian rules (Textiles labelling Act), the product must only be
marked with four types of data:

1.     CA number (registration number of the exporting company)
2.     Country of origin
3.     Fibre content
4.     Cleaning instructions.




CEEI –Labelling – Final Report –16 August 2002                                  51
5.1.   CA number

It is required that the label contains the business name of the importer,
manufacturer or distributor, as well as the postal address OR the CA number
(see section XII).

Some Member States (DK) mentioned that importers have experienced some
difficulties (delays only) to get the CA number (registration number of the
exporting company). The importer is required to ask for a CA number to the
Industry Canada administration. The CA number will enable the administration
to trace the history of the product and the identity of the exporter if a problem
occurs. However, interviews carried out with importers have shown that once
the importer got the CA number, there is no specific problem regarding the
marking requirements.

The CA requirement is not considered as excessive by the EU exporter, even
if it was alleged that companies producing outside Europe and shipping their
goods directly from the country of origin must label their products with the CA
number of their clients in these countries. (this information will however be
further detailed and verified in the Final Report. It seems indeed that some
importers are authorised by the Customs to affix the CA number in their
bonded warehouses. It means that it is not required to affix the CA number in
the country of origin).


5.2.   Cleaning instructions


Under the EU rules, the cleaning instructions are affixed using symbols, while
under Canadian rules, cleaning instructions are required to be put in writing
(both in French and in English).


5.3.   Others


According to an importer of Danish products, under the Federal Stuff Article
Act, the supplier should be registered in each province. These procedures are
alleged by interviewed importers to be very cumbersome, in particular when
the EU company produces the designs and has them processed in the third
countries. The EU company has therefore to ask each supplier to be
registered in Canada. Until recently, an EU supplier exporting his products to
Canada had to be registered in each State where the products are to be
commercialised (now apparently, it has to be registered only once).

An importer of Danish products faced difficulties last year, given the fact that
one of the Danish company suppliers (Indonesian sub-contractor) had not
been previously registered in Canada. Under the Stuff Article Act, the supplier
is also responsible for the information contained in the label.


CEEI –Labelling – Final Report –16 August 2002                                52
According to the Industry Canada representatives, it is NOT required for a
foreign dealer to be registered in Canada. The provinces do have additional
requirements on upholstery and stuff Articles. According to these
requirements, the products must be correctly labelled from origin.
Consequently, the European producer must contact the competent provincial
authorities in order to know the provincial requirements.

Inspectors from Industry Canada will carry out controls on imported goods
following specific complaints or notification by Customs. They will perform test
on fibre contents. They perform analysis in case of Customs allegations on
classification issues. They perform also random controls in shops.

There is a voluntary programme act regarding the care labelling. The
exporters are not required to use the same symbols but they have to meet the
Canadian standards.


§6.    Others


6.1.   Mention of standards on the label


Often, Member States insisted on the fact that compliance with standards
constitutes an important problem. This is indirectly linked to labelling and
marking issues, given the fact that some imported products (1) must,
previously to the importation, comply with Canadian standards and (2) the
standard must be marked on the product.

A first difficulty is to clearly identify which are the standards to comply with at
federal or at a state level. There is apparently no list of standards published by
product (HS code). Therefore, the importer must first consult the competent
Federal Agency – Standard Council of Canada (CSCA). There is a general
lack of transparency (affecting in particular some products as electrical
equipment, tools, machinery and isolation panels).


6.2.   Electrical equipment


The electrical equipment requires specific labelling requirements (voltage,
power and safety). However, it seems that the EU producers are more
affected by the registration procedures (previous certification, delays of
sometimes about 18 months) than by the mere labelling requirements.




CEEI –Labelling – Final Report –16 August 2002                                  53
6.3.    Container size

There are specific requirements. According to the Canadian Importers
Association and Member States Trade representatives, these requirements
constitute a non-tariff barrier (see supra).


§7.     Legal analysis


7.1.    The Mutual Recognition Agreement with Canada

The EU and Canada do not have a general trade Agreement. However, the
EU and the Canada have signed in 1998, a Mutual Recognition Agreement10.

The Agreement specifies that Canada shall accept the results of conformity
assessment procedures, including certifications of compliance, as required by
the Canadian legislation and regulations identified in the Sectoral Annexes,
produced by designated conformity assessment bodies or authorities in the
European Community. The EU shall also accept the results of conformity
assessment produced by the Canadian designed bodies under the EU rules.

The Agreement aims to facilitate market access throughout the territories of
the two parties with regard to conformity assessment.

The Agreement only applies to sectors, which are specifically listed in the
annexes of this Agreement. Those are: telecommunication terminals
electromagnetic   compatibility, electrical   safety,  recreational   craft,
pharmaceutical good manufacturing practices and medical devices.

The market access of these goods should be facilitated by the application of
the Agreement and they would not be obliged to undergo new conformity
assessment procedure when entering the Canadian market. However, the
application of this Agreement has encountered several difficulties and the
Agreement is still not completely implemented. In addition, according to the EU
Member States representatives and the EU importers the certification and
conformity assessment in Canada is made difficult by the existence of non-
transparent provincial requirements, which do not enter in the scope of the
Mutual Recognition Agreement.


7.2.    The WTO provisions

Despite the limited number of problems with the Canadian labelling
requirements, it could be useful to analyse some of them according to the
provisions of the WTO Agreements.

10
     OJ 1998, L 280


CEEI –Labelling – Final Report –16 August 2002                              54
Some excessive requirements applicable to foodstuffs (e.g. to make very
specific and detailed indications of ingredients) could eventually be challenged
under the Agreement on Sanitary and Phytosanitary Measures (SPS) or under
the provisions of Article III of GATT Agreement (national treatment obligation)
if they are applicable only to imported products. Some product requirements
not in consistence with the international practice could be challenged under
the Agreement on Technical barriers to Trade (TBT Agreement).

In case the rules are not published or sufficiently transparent, the application
of Article X of GATT could be foreseen. A detailed analysis of these and other
WTO provisions could be found in Part 21 – Legal analysis.




CEEI –Labelling – Final Report –16 August 2002                               55
                                PART 4: MEXICO




§1.    The mission to Mexico


§2.    Marking and labelling requirements affecting imported products

       2.1.    General presentation of basic requirements

       2.2.    General labelling requirements (NOM 050)

       2.3.    Labelling requirements for textiles (NOM 004)

               2.3.1. The requirements
               2.3.2. Complaints made by the EU industry

       2.4.    Labelling requirements for leather and footwear

               2.4.1. The requirements
               2.4.2. Complaints made by the EU industry

       2.5.    Labelling requirements for foodstuffs

               2.5.1. The requirements
               2.5.2. Complaints made by the EU industry

       2.6.    Labelling requirements for alcoholic beverages

               2.6.1. The specific import regime for wines
               2.6.2. Complaints made by the EU industry


§3.    Problems faced by importers of EU products

       3.1.    Controls conducted on the compliance with NOM ‘s requirements

               3.1.1. Random checks
               3.1.2. Problems related to mislabelling
               3.1.3. Other problems

       3.2.    Penalties     and     additional   costs   faced   by   importers

       3.3.    Practices of the Verifications Units

       3.4.    Discrimination in favour of other imported products



CEEI –Labelling – Final Report –16 August 2002                               56
       3.5.    Discrimination in favour of other domestic products

       3.6.    Overall burden of products composition description requirements


§4.    Legal analysis

       4.1.    Main problems experienced by the EU companies in Mexico

       4.2.    Legal analysis of problems experienced on the Mexican market




CEEI –Labelling – Final Report –16 August 2002                              57
§1.       The mission to Mexico


The mission in Mexico was conducted from the 23 rd of June to 2nd of July
2001. The consultant met:

      (1) the relevant Mexican Authorities (Ministry of Economy, Customs,
          PROFEPA11), in order to complete the collection of relevant labelling
          requirements and other applicable rules related to the importation of the
          EU products;

      (2) the EU Trade Member State Representatives in order to identify the
         companies having encountered recently difficulties regarding the control
         of labels, or additional costs related to labelling requirements;

      (3) importers of the EU products most affected by Mexican marking and
          labelling requirements (mainly foodstuffs, textile, wines and spirits);

      (4) the Customs Agent association (CAAAREM) in order to discuss
          certain practical issues of the clearance process.


The main outcome of the mission is as follows:

1.        The Mexican market remains a closed market regarding labelling and
          marking requirements. The requirements are numerous, complex and
          strict. They are very often interpreted in a subjective way by Customs
          Authorities, which use strict requirements in order to stop the goods
          during clearance.

2.        The situation was considered as very difficult in the beginning of the
          implementation of these requirements (goods stuck in Customs,
          problems with verification units, etc…), but it has improved for three
          reasons: (1) the importers got used to the complex labelling
          requirements and do comply with them (2) the Authorities have shown a
          greater flexibility regarding some compulsory requirements (e.g. name
          of the importer can be affixed in a separate sticker), (3) the re-labelling
          conditions and penalties paid during the Customs clearance were
          reduced.

3.        It must be however underlined that importers still suffer from some
          excessive controls or, in some cases, from discrimination of treatment
          compared to the treatment reserved to other imported products, mainly
          US products. The report quotes some cases.




11
     Consumer protection Administration in Mexico


CEEI –Labelling – Final Report –16 August 2002                                    58
§2. Marking and labelling requirements affecting imported
products


Mexican rules on labelling and marking are non-comprehensive and
complex. The importer will have to comply with general rules and, if the
imported products are subject to specific requirements, with these specific
requirements. The present report does not present an exhaustive analysis of
the requirements but insists on those requirements mentioned as problematic
by the EU industry, the Member States Representatives and the importers
interviewed.


2.1.      General presentation of basic requirements


The basic requirements are set in the following texts:

1. Federal Law on Measurement and Normalisation (“ Ley Federal sobre
   Metrología y Normalización ”). This text establishes basic principles
   governing the compliance with the Compulsory Mexican Norms (including
   on labelling): aim of the NOMS12 (art. 40), compulsory compliance (art. 53),
   accreditation of Verification Units (art. 68), control of compliance (art. 89)
   and penalties (art. 112 – 113).

2. Regulation on the Federal Law of Measurement and Normalisation:
   implements the provisions of the Law (obligation to comply with the NOMs
   of commercial information, competencies of the administration to issue
   interpretation criteria on the NOMs etc…).

3. Law on External Trade (“ Ley de Comercio Exterior ”). The Law
   establishes the NOMs whose compliance will be checked by the Customs
   Authorities at the point of entry (art. 26).

4. Agreement establishing the verification procedures for imported
   products complying with NOM’s 050 and 051 (“Acuerdo por el que se
   establecen los procedimientos de verificación a que se sujetarán los
   importadores de mercancías que opten por cumplir con las normas oficiales
   mexicanas NOM-050-SCFI-1994 y NOM-051-SCFI-1994 en el territorio
   nacional” 13 ). The Agreement has set several voluntary options for the
   compliance of the commercial information with the NOM’s.

5. “Agreement on the tariff items for which compliance with NOMs if
   verified at the border (“ACUERDO que identifica las fracciones
   arancelarias de las tarifas de la Ley del Impuesto General de Importación y

12
     Norma Oficial Mexicana
13
     Diario Oficial de la Federación (DOF) el 24 de febrero de 1997.


CEEI –Labelling – Final Report –16 August 2002                                59
     de la Ley del Impuesto General de Exportación, en las cuales se clasifican
     las mercancías sujetas al cumplimiento de las normas oficiales mexicanas
     en el punto de su entrada en el país, y en el de su salida”) 14. This text lays
     down voluntary options for compliance with the requirements (art. 6). For
     example, it allows the importers (as an alternative to compliance before
     importation) to comply with the labelling requirements in Mexico.

      However, they are obliged to submit each shipment to the control of private
     certification companies, charging some 200-250 USD per label controlled
     (i.e. if a shipment contains many different items or models the price of each
     verification climbs quickly). Consequently, it is preferred to label before
     importation.

6. Customs Law (“ Ley Aduanera ”). Various provisions apply to compliance
   with labelling requirements and their control by Customs Authorities (e.g.
   clearance process: art.43, sanctions for non-compliance with the NOM’s:
   art. 178, embargo definitivo: art. 183).

In addition, the following NOMs establish applicable requirements for imported
goods:


NOM                     Title                                                Product covered
NOM-004-SCFI-1994       Etiquetado de productos textiles, prendas de Textiles
                        vestir y sus accesorios
NOM-020-SCFI-1997       Información comercial; Etiquetado de cueros y        Leather finished products,
                        pieles curtidas, naturales y materiales sintéticos   raw hides and skins,
                        o artificiales con esa apariencia, calzado,          artificial and synthetic
                        marroquinería, así como los productos                products
                        elaborados con dichos materiales.
NOM-024-SCFI-1994       Información      comercial     para   empaques, Electronic and electrical
                        instructivos y garantías de los productos products,           household
                        electrónicos, eléctricos y electrodomésticos    appliances
NOM-051-SCFI-1994       Especificaciones generales de etiquetado para Foodstuffs , and other non
                        alimentos y bebidas no alcoholicas pre- alcoholic            pre-packed
                        envasados                                     beverages.
NOM-120-SCFI-1996       Etiquetado de productos de cuero                     Leather
NOM-142-SSA1-1995       Especificaciones sanitarias, etiquetado sanitario Alcoholic beverages
                        y comercial para bebidas alcohólicos

NOM-050-SCFI-1994       Información comercial – disposiciones generales General provisions for all
                        para productos                                  the products




14
  DOFl 2 de junio de 1997 y reformado el 10 de octubre de 1997 y el 16 de diciembre de
1998. ”


CEEI –Labelling – Final Report –16 August 2002                                              60
2.2.   General labelling requirements (NOM 050)

The basic text is the SECOFI NOM 050/94 15 . It establishes the essential
labelling requirements for all products. It has to be understood in relation with
the provisions set forth by the Acuerdo of June the 2nd of 199716.

The NOM 050/94 applies both to domestic and to imported products. It
establishes the set of minimum compulsory commercial information required
for products commercialised in the domestic market. Under the NOM 050, the
label of the imported product must contain:

a)     the name and description of products
b)     the quantity (in conformity with requirements NOM 030 SCFI)
c)     the name of the national producer (can be required).
d)     the country of origin
e)     the risks announcements
f)     the mention of the location of the "user guide"
g)     expiry date
h)     name, denomination or social trademark of the importer and it’s fiscal
       registration number.

It also foresees that “this information could be added to the product after the
clearance process and before the retailing of the product". Under this
provision, the EU producer is therefore not required to affix this information to
the labels of the goods to be exported to Mexico.

According to the Authorities, such legislation aims to provide the Mexican
consumer with adequate information and protection. For example, the fiscal
registration number is justified by the necessity of identifying the manufacturer
or the importer if a problem occurs. According to the authorities, such
requirements are not difficult to satisfy. The domestic products are also subject
to the same requirements and subject to the same controls. Therefore, the
labelling legislation does not represent specific discrimination against imported
products.

Importers can use the services of the Verification Units (V.U). These units
verify the conformity of imported products to the NOM 050/94. The basic
requirements for these verification procedures are set by the regulation of
February 199717.


15
   “Norma Oficial Mexicana NOM 050 SCFI 1994, información comercial – disposiciones
generales para productos”. DOF 3 de Enero de 1996.
16
   “ Acuerdo que identifica las fracciones arancelarias de las tarifas de la ley de Impuesto
General de importación y de la Ley de impuesto General de exportación, en las cuales se
clasifican las mercancías sujetas al cumplimiento de la norma oficiales mexicanas en el punto
de su entrada de la mercancía en el país, conforme a lo dispuesto por el articulo 26 de la Ley
de comercio exterior ” DO 2 June 1997.
17
   “Acuerdo por el que se establecen los procedimientos de verificación a que se sujetarán los
importadores de mercancía que opten por cumplir con las normas oficiales mexicanas 0050


CEEI –Labelling – Final Report –16 August 2002                                             61
 Under the Acuerdo of 1997, the importer can choose among 4 different
  options in order to prove the compliance with the NOM 0050:

     Under the first option (art. 6, §1), the goods will be subject to the usual
      customs procedure. The customs officials will perform a detailed check
      even if, according to the regulations, the products are subject to a
      random control. According to Mexican authorities, there are only random
      controls. For infringement, the Customs authorities charge a penalty of 2-
      10% of the goods’ value.

     Other options (art. 6, § 2, 3, 4) imply the use of services of the
      Verification Units. The activity of the verification units is authorised by the
      Government. According to the second option, the goods arrive in
      clearance with a document already issued by the Verification unit
      ("constancia de conformidad") attesting the compliance with the NOM’s
      requirements. The third option provides the possibility to verify goods in
      customs warehouse by the Verification units. The last option provides the
      importer, under certain conditions, with an opportunity to accomplish the
      verification at its private warehouse, outside the customs. In all cases,
      when the Customs authority finds an infringement to NOM while a
      verification unit did not find any irregularity, no sanction is imposed to the
      importer, unless it concerns an importer’s fault.

2.3.    Labelling requirements for textiles (NOM 004)


2.3.1. The requirements


The basic text is the SECOFI NOM 004/94 18 , which establishes the
compulsory requirements to be affixed on one or various labels:


Apparel products and accessories:

-       Commercial Brand
-       Product composition (% in decreasing order)
-       Size (for apparel products)
-       Cleaning instructions (symbols are accepted)
-       Country of origin
-       Name, denomination or social reason, and fiscal registration number of
        the importer (or domestic producer).



SFI 1994 y NOM 51 SCFI 1994 en el territorio nacional. DOF 24 de Febrero de 1994.
18
   “Norma Oficial Mexicana NOM 004 SCFI 1994, información comercial – etiquetado de
productos textiles, prendas de vestir y sus accesorios”. DOF 24 de enero de 1996.


CEEI –Labelling – Final Report –16 August 2002                                    62
These data can be presented in any of the permanent or temporary labels as
mentioned in the points 3.6.1 and 3.6.2. of the regulation.


Other textiles (fabrics ):


-      Product composition (% in decreasing order)
-      Country of origin
-      Name, denomination or social reason, and fiscal registration number of
       the importer (or domestic producer)


2.3.2. Complaints made by the EU textiles industry


The complaints made by the EU textile industry focus on the obligation to affix
(to the label) the data of the importer, and particularly, the fiscal registration
number. This obliges the EU producer to design a specific label for the
Mexican market. According to previous researches conducted by the
consultant in this field, the additional cost for a label for fashionable apparel
products is estimated to be 2 – 2,4 DM/Article. In addition, the obligation can
hamper the purchase of stocks by Mexican customers.


2.4.   Labelling requirements for leather and footwear (NOM 020)


2.4.1. The requirements


The basic text is the SECOFI NOM 020. This text lays down the requirements
to be affixed for three different categories of products

a) finished products,
b) hides and skins, and
c) artificial materials or synthetic products

These products must comply with different labelling/marking requirements
(packaging, labelling of the scroll, labelling of the product).

Requirement             Finished product         Finished   hides   and Artificial products
                                                 skins
a) Name, denomination Yes                        Yes                     Yes
or complete or short
social reason of the
domestic producer OR
the importer OR of its
branded trade mark
b) legend “ hecho en Yes                         Yes                     Yes



CEEI –Labelling – Final Report –16 August 2002                                         63
Mexico ” or the country
of origin ;
c) Generic or specific Yes                           Yes                     Yes
description of materials
and      optionally  the
finishing (can be placed
in one separate label)
In Spanish                Yes                        Yes                     Yes
It must be readable       Yes                        Yes                     Yes
Permanent form            Yes                        Can be marked in a Los               materiales
                                                     readable    place     of terminados         con
                                                     packaging, e.g. on a apariencia       de   piel,
                                                     adhesive label           cuando se encuentren
                                                                              enrollados se pueden
                                                                              marcar colocando una
                                                                              etiqueta dentro de la
                                                                              bobina y cuando estén
                                                                              en forma de plancha u
                                                                              hojas se deben marcar
                                                                              por medio de etiquetas
                                                                              adheridas o colgadas
                                                                              firmemente.
Specific/additional:      Footwear: cutting, el      Si se usan los términos
                          forro y la suela: When     de acabado como ante
                          there is a combination     y     gamuza,     deben
                          of minimum 2 materials,    indicarse en el mismo
                          indicate which of them     tipo de tamaño de letra,
                          predominates.              primeramente          el
                                                     nombre específico del
                          Apparel (jackets, pants,   animal del que proviene
                          skirts,  handkerchiefs,    y a continuación la
                          travel       outlets…) :   palabra        acabado.
                          external part and the      Ejemplos:
                          forro                          Ternera     acabado
                                                     ante.
                          Pers, wallets (…). :           Ternera     acabado
                          external part + forro if   gamuza.
                          leather                        Carnaza    acabado
                                                     gamuza.
                          En los artículos de            Carnaza    acabado
                          cuero       para    uso    ante.
                          industrial, como son los
                          rollos de banda de
                          cuero, artículos tales
                          como refacciones de
                          cuero, empaques de
                          cuero, etc., únicamente
                          debe marcarse en un
                          lugar visible de su
                          embalaje




CEEI –Labelling – Final Report –16 August 2002                                            64
2.4.2. The complaints made by the EU industry


In interviews made with the European Industry Associations (COTANCE), it
was made clear that these requirements are quite burdensome for the EU
tanners, even if until now no particular problem has been underlined by their
members who comply with the requirements. COTANCE has particularly
underlined two issues:


(1)    As far as the basis of the requirements are concerned, the Mexican
       Authorities can carry out tests on the product composition, which are
       costly for the importer of the EU products and might hamper the export
       of the EU finished leather.

(2)    It is not clear if the finished leather imported to Mexico and aimed to be
       processed will be exempted from the marking rules laid down by the
       NOM 020. Even if, accordingly to the point 3.3. of the NOM 020, an
       imported product (which will be introduced into different processes of
       production) will not be considered as a consumer good and could be
       exempted from the requirements19, all imported products must comply
       with the NOM at the entry point. Therefore, the EU industry estimates
       that it would be sufficient to comply with the requirements at the level of
       the retail sale rather than during the clearance process. These strict
       requirements for intermediate products could therefore constitute an
       unnecessary trade barrier in contradiction with Article 2 of the TBT
       Agreement.

(3)    It is estimated that the definitions applied by NOM 020 do not
       correspond to the internationally recognised terms (International Council
       of Tanners), and therefore, to the international practice.

Moreover, with respect to the labelling requirements applying to finished
products, the obligations set out by the point 4.1 c (“ definición genérica o
específica de los materiales y opcionalmente su acabado ”) and the point
4.1.2 (pincipales elementos de los artículos elaborados con piel o de
productos con esa apariencia o de sus substitutos de otros materiales) are
seen to be excessive.




19
  Under Article 10 of the Acuerdo of 2 June 1997, it is also foreseen that the importer of
products aimed to be processed can benefit from an exemption provided that he makes a
specific declaration to the Customs.


CEEI –Labelling – Final Report –16 August 2002                                         65
2.5.   Labelling requirements for foodstuffs

2.5.1. The requirements

The NOM 051 has set up the basic labelling requirements in relation to
packaged foodstuffs and non-alcoholic drinks. It applies to all imported
and domestic products destined to the consumers in the territory of Mexico
(point 1.1.) The NOM is applied jointly with three other NOMs related to:
-      the definition of “ net content ” and verification methods (NOM 002
       SCFI)
-      the general system of measures units (NOM 008 SCFI)
-      the declaration of quantity in the label (NOM 030 – SCFI).

The NOM defines general and specific labelling requirements.

a)     general labelling requirements

The information contained in the label must be true and must not induce the
consumer in error. Furthermore, the wording and the image used must
concern exclusively the product itself. Any graphic illustration must be
accompanied by a written description in Spanish.

b)     compulsory labelling requirements

The NOM 051 establishes a very detailed description of the compulsory
requirements regarding:

-      Name and denomination of the product (4.2.1)

-      The ingredients list (4.2.2.) – it is compulsory for products containing
       more than one ingredient. Among the different requirements, it is useful
       to note that the ingredients must be presented in decreasing order, all
       ingredients of more than 25% of content must be described regarding
       its constitutive elements. Some products can be described with a
       generic name.

-      The Net content (4.2.3)

-      The name or type of the company and the address for fiscal
       purposes (domicilio fiscal) of the producer. This information must be
       delivered to the Ministry of Economy by the importer, if required.

-      Name, denomination or type of the company and address for fiscal
       purposes of the importer (domicilio fiscal). This information can be
       affixed in Mexico after the end of the clearance process but before the
       retail.

-      Country of origin - unlike other NOMs (0020 or 004): denominations
       other than "hecho en" are acceptable, for instance: "Fabricado en";


CEEI –Labelling – Final Report –16 August 2002                              66
       "producto de …" which are foreseen in the international treaties signed
       by Mexico.

-      Lot identification

-      “Best before” together with conservation warning

-      Nutritional information - it is optional, except for the declaration in
       quantity or quality of any nutritional property. There are also some
       compulsory requirements (energy content, proteins content and soda
       content). The presentation of the nutritional information must comply
       with specific rules regarding the energetic content (Kcal/100g or by
       portion), the protein content (/100g), vitamins and minerals (/100g or by
       portion or package). A table of balanced recommendations
       “ recomendaciones ponderadas ” must be used. The NOM also gives
       an example of the presentation of the nutritional information.

-      Declaration of nutritional properties (4.2.9.) – the declaration of
       nutritional properties such as "dietetic", "rich in vitamins" should comply
       with the domestic rules applicable for this kind of products.

-      Presentation of the compulsory requirements: a label must be
       affixed on every single unit, multiple package or collective package. As
       far as a collective package is concerned, the best before mention and
       the batch number must be affixed individually on every unit. The written
       information must be visible and indelible. Among the various
       requirements, the mark and the denomination of the product must
       appear in the product’s superior superficies (4.2.10.)

       When the information is provided in a foreign language, it must also be
       written in Spanish, using the same letter size, typographic proportions
       and must be obvious (4.2.11.)


In addition, the NOM 051 also defines criteria for:

-      Optional labelling conditions (consumer date, additional nutritional
       information, but with specific conditions, instruction for use and others)
       …(4.3)

-      Calculations (nutritive, energy, proteins …) (5)

-      Declarations prohibited on the label (6)

-      Warnings (7)

The competent authorities and the authorised Verification Units control
the compliance with these requirements.




CEEI –Labelling – Final Report –16 August 2002                                 67
The NOM is to be understood with the provisions of the Measurement Law20,
the Federal law for the consumer’s protection21, the CODEX Alimentarius and
norms of implementation, the Federal Health Law and the Regulation of the
Federal Health Law. According to the Mexican authorities, the NOM is in
conformity with the CODEX norms.

2.5.2. Complaints made by EU industry

The EU associations interviewed (foodstuffs and non alcoholic beverages)
have complained regarding:

-      Over-detailed requirements
-      Obligation to write all data in Spanish
-      Importer data information
-      Burdensome requirements on the compulsory size of characters and
       letters.

However, it seems that their members who have faced several difficulties
when the NOM was implemented (1992), have got used to the requirements,
which could explain the low level of complaints. Regarding to the importer data
requirement, it has to be underlined that for foodstuffs, it is not compulsory to
affix these data to the label in the country of origin, as far as the NOM clearly
foresees that they can be affixed after the clearance process.

However, this must be confronted with importer's experience (see §3). They
have mentioned a multiplicity of concerns regarding the controls of compliance
conducted by Customs on their products.


2.6.   Labelling requirements for alcoholic beverages

2.6.1. The specific import regime for wines

Like in most of the other markets under review, importation of wines and spirits
in Mexico is a sensitive issue. These products are subject to various complex
and costly import measures, including labelling requirements.

a)     Import duties and taxes

The Customs duties are about 20% of the CIF value.

In addition, the Custom Authorities levy the 0.8% of clearance process fee.

On this basis (CIF + Customs duties + clearance fees and other taxes) the
Customs charge the IEPS22 (Special tax on goods and services). For some
products (whiskey, calvados, cognac, etc.) it is a banded system on volume,

20
   DOF 1/07/92.
21
   DOF24/12/92.
22
   See Tax Reform Law, DOF 31.12.00, implemented since 1/1/2000.


CEEI –Labelling – Final Report –16 August 2002                                68
involving different unitary tax rates, ranging from 3.87 to 793 pesos per litre for
various categories of spirits drinks. For other alcoholic drinks, it is still an ad
valorem tax.

15% VAT is then levied on this total.

In addition, the importer has to face additional costs linked to the fiscal stamps
attribution (“ marbetes ” / “ precintos ”) and labels in the customs warehouses
(see below).

Therefore, the labelling requirements and their costs have to be assessed in
this general context.


b)     The labelling requirements

The NOM 030 SCFI 1993, the NOM 050 – SCFI – 1994, and the NOM 142
SSAI – 1995 define (among others) the compulsory sanitary and commercial
requirements to be affixed on the imported (and domestic) wines and spirits.

The requirements will be described and analysed in detail in the Final report.

In resume, the compulsory requirements are as follows:

The importer must add to each imported bottle a back label. This label is to be
considered by the consumer as the main label. It must then have the same
size than the original (EU) label. The text of the back label must be in Spanish
(except for the name and origin appellation) and must comply with precise
requirements regarding the place and the form of letters. These requirements
are very strict and strictly applied. Therefore, most of the importers use the
services of the verification units.

The label must contain the following elements:

-      Name or trade mark.
-      Appellation or generic designation (for Brandy, “ brandy ” must be
       added with the text 100% uva, which must be exact).
-      Net content expressed in litres and or millilitres, headed by the mention
       “ CONTENIDO NETO ”, or “ CONT.NET ”.
-      Name, denomination or type of company and address of the exporter.
-      Name, denomination or type of company and address of the importer.
-      Mention of origin: “ Producto de ”, or “ Hecho en ”, or “ Manufacturado
       en ”, followed by the name of the country of origin.
-      Percentage of alcohol in volume, followed by the mention: % Alc.Vol.
-      Registration number given by the Ministry of Health (S.S.A.N°).
-      Warning : “ el abuso en el consumo de este producto es nocivo para la
       salud .”
-      For prepared products and cocktails, the list of ingredients must be
       preceded by the mention “ Ingredients ” and be presented in decreasing
       order.;


CEEI –Labelling – Final Report –16 August 2002                                  69
-         If containing aspartame: “ Fenilcetoúricos: contiene fenilanina ”.
-         For the alcoholic beverages whose daily consumption provokes the
          ingestion of 50 g or more of sorbitol must contain the mention:
          “ Contiene sorbitol: El abuso de este edulcorante puede causar efectos
          laxante ”.

c)        The fiscal stamps (“marbetes” and “recintos”)

Mexican importers are required, as proof of payment of the IEPS (Special Tax
on goods and services) and the VAT, to affix fiscal stamps (Marbetes) for most
of bottled alcoholic beverages in containers between 0.45 and 5.00 litres
(excluding beers, wines, champagnes and coolers). The fiscal seals
(Precintos) must be applied to containers holding over 5 litres. The costs of
these stamps and seals are reviewed according to the inflation rate. They are
affixed by the importer in the Customs general bonded warehouse, authorised
by the Ministry of Finance (Hacienda). They must be placed in the main front
label of the bottle, covering a part of the label and the bottle itself. In some
cases, it is allowed to affix it to the back label, provided that the brand name
and the name(s) of the importer, bottler, or producer are printed thereon23.


2.6.2. Complaints by the EU Industry

The consultant attended various meetings with the European Association of
Spirits producers (CEPS) and the members who provided detailed information
about the problems encountered.

Main CEPS’ critics focus on:

-         Fiscal stamps: it is considered particularly burdensome that taxpayers
          must note on all invoices the folio numbers of the stamps/seals affixed
          on containers. They must also submit to the Ministry of Finance (on a
          quarter basis) a record of the folio numbers of the stamps and seals
          obtained, used and destroyed during the preceding quarter. Therefore,
          the CEPS expressed the opinion that the system should be simplified
          and, in particular, the record of a serial number of invoices should be
          removed. It has to be underlined that importers interviewed in Mexico
          have confirmed the burden of these requirements, which have stopped
          some imports.

-         Minimum Alcoholic strength: the minimum strength levels (whiskeys
          38° GL and liqueurs 24° GL conflicts with the EU ones: 40% and 15%
          respectively).

-         Maximum Alcoholic strength: the level is 50° GL, which is alleged to
          be problematic for certain high strength malt whiskeys.




23
     See (First) Tax Reform Law of 31.12.98.


CEEI –Labelling – Final Report –16 August 2002                                70
-      Analytic parameters: some parameters are found to be problematic for
       our exporters. For example, maximal for copper are problematic for
       some scotch whiskeys. These levels should be increased to
       accommodate with all EU scotch Whiskeys brands.

-      Health warning statement: CEPS and some national association of
       alcoholic beverages complained about the excessive formal
       requirements regarding the health warning statement. Since February
       2000, the health warning statement must be :

       -       in colour contrasting with the background,
       -       in condensed capital letters of Helvetica type, in clear and easily
               legible characters,
       -       in print with the letter height conforming with specific
               requirements (different letter height according to the container
               volume)
       -       be surrounded by a free space of at least 3 mm.

-      Discrimination in controls: The CEPS also denounced the fact that
       Mexican authorities check very strictly imported products. Customs are
       alleged to charge penalties for any discrepancy in the label (up to 70%
       of the value of the goods), while domestic products are less checked
       and are not subject to the same penalties level.

-      Others: Additionally, the associations complained about the fact that
       the presentation cartons must also comply with labelling requirements,
       which is considered to be excessive. The health warning statement
       must be shown on the top part and on the lateral faces of packing
       boxes (and cartons) in characters that are not smaller than 4
       millimetres. They have also complained about the duplication of
       documentary health checks established by the analytical and sampling
       requirements of the NOM 142, which are alleged to be excessive. The
       registration requirements applying to the importers of alcoholic
       beverages (normal registration, fiscal register of sectoral importers,
       register of alcoholic drinks taxpayers) is also excessive and time
       consuming.


§3. Implementation: problems faced by importers of EU
products


During the mission to Mexico, the consultant interviewed the Member States
representatives, importers of EU products, the Authorities and the Customs
agents association on several issues regarding to the implementation of
labelling requirements. The answers given by importers of various products on
their difficulties focussed on the same conflictive issues:

-      excessive controls conducted by Customs on the compliance with the
       requirements (3.1.)


CEEI –Labelling – Final Report –16 August 2002                                 71
-      penalties charged by Customs in case of mislabelling (3.2)
-      practices of the verification units (3.3)
-      discrimination with other imported products (3.4)
-      discrimination with domestic products (3.5)
-      overall burden of the product description requirements (3.6).


3.1.   Controls conducted on the compliance with NOM’s requirements

The interviews conducted with foodstuffs importers, textile and apparel
importers, wine and spirits importers confirmed that the strict requirements laid
down by the above explained requirements often constitute an open door for
Customs to harass importers of EU products regarding non compliance with
the requirements.

Various problems are reported :

-      Excessive random checks
-      Problems caused for small inconsistencies with the requirements.


3.1.1. Random checks

After the payment of import duties, the importer presents the goods to the
Customs Authorities. On the basis of the import demand (“ pedimento de
importación ”), the Customs Authorities will subject, or not, the goods to a first
physical check. According to Customs, only 10% of products are checked at
random basis of the “ mecanismo de selección automatizado”. Before using
this mechanism, the importer, which must comply with labelling requirements
under the NOMs, must present, along with the import demand, the labels that
can be potentially checked. If the products fall under the first check, they will
be subject to a detailed physical check, including the verification of the label to
NOM’s requirements, and of the product composition to the information
contained in the label. After this first check, another check can be carried out
on another 10% the controlled goods. It will be carried out anyway if some
discrepancies have been detected.

According to importers, certain products (textiles, certain foodstuffs like
chocolate, wines and spirits) are not checked at random, but systematically.
Therefore, the labels will be systematically controlled. The importers fear in
these cases the subjectivity of customs authorities.


3.1.2. Problems related to mislabelling

Customs often reject the labels for small discrepancies with the labelling
requirements laid down by the NOMS. This is particularly the case for
foodstuffs or wines and spirits:




CEEI –Labelling – Final Report –16 August 2002                                  72
There are various causes of rejection: words used for the description of the
products, size of characters, place of the back labels and the importer's data.

a)     description of the product

Some examples can be given to illustrate the difficulties experienced by the
EU and Mexican importers:

-      In a chocolate box, the label affixed in Europe mention “ 30% min. of
       azucar ”. Customs reject the word “min. “ (for minimum) arguing that the
       consumer could understand “min.” as “ minuto ” (‘minute instead of
       “ mínimo”:minimum). However, one can wonder how can the consumer
       understand 30% minute of sugar (…)? In this case, the importer was
       penalised and obliged to affix a new label in the customs warehouse.
       He faced also significant additional costs for storage.

-      Labels affixed on wine bottles are rejected because they had mentioned
       the quantity in cl and not in “cl.” (with a point at the end).

-      Apparel products are found “mislabelled” when the products are
       described by English words commonly accepted as “body”, “sweater ”
       (instead of “swater”) etc …Sometimes even Spanish words are rejected
       (sintético”, instead of “lorica”). Same occurs for foodstuffs: “soja (esp)
       instead of soya (mex).


b)     place of the label

According to Mexican labelling rules, the label placed in the front has to
comply with the NOM’s requirements. However, Customs often do accept that
the label affixed can be placed in the back of the package, either in the country
of origin or in the customs warehouse. This is important for the image of the
product (e.g. prestigious wines). Nevertheless, this practice is not commonly
accepted by all Customs officers. Some importers of wines and chocolate
complained that Customs forced them to affix the Mexican label on the top of
the EU label, which damaged their product image.

In some cases, Customs have also refused products packaged by few units (
for instance grisini packed by 4 units in plastics and gathered into a single
packaging) complying with labelling requirements. Customs required a specific
label by unit (a specific label each small package of 4 grisini). The importer
was finally obliged to affix another label on each unit specifying that this unit
“is not labelled for its individual sale (“no está etiquetado para su venta
individual”). This example illustrates that the excessive requirements often
leave the door open to abuses.

c)     position and dimension of the words in labels

The label must comply with very strict requirement regarding its dimension (it
must be at least as big as the original label) and the size of letters - as well as


CEEI –Labelling – Final Report –16 August 2002                                  73
their position in the label. Importers complained that these requirements are
too strict in particular for small sized products. Importers stop importing some
products such as small chocolates (no place for additional label).

d)     importer’s data

Importers often face problems because of the importer’s data requirements
(name, address, fiscal registration). It seems clear that for foodstuffs and
wines, the importer data can be affixed separately to the label on a sticker
(non permanent label) in the customs warehouse or in the importers fiscal
warehouse. According to an importer of various foodstuff products, there was
an improvement of the situation since the customs have authorised to affix the
labels in his bonded warehouse. He must affix the labels in a period between
15 to 60 days. Nevertheless, the controls remain very strict.

However, the question of the possibility to affix importer’s data in customs
should still be clarified regarding textile products.

According to a representative Ministry of Economy, it should be allowed to
affix the importer’s data on a non permanent separate label, while according to
the Customs, the importer’s data should be affixed on the label together with
other requirements.

Importers complained that while they have to re-label in the warehouse, they
face significant additional costs of storage (they have to wait until the Customs
verify the compliance of new labels and sometimes the goods are stuck for
several weeks).

Controls and rejection by Customs seem even stricter for EU footwear, given
the strong lobby of the domestic industry.


3.1.3. Other problems

a)     fiscal stamps

The importers of alcoholic beverages complained about the burdensome
requirements regarding the fixation of fiscal stamps/seals, which are
considered as a non tariff barrier hampering the imports of these products in
Mexico.

First, the obligation to be registered (and the delays caused by the registration
process in 2001) is defined as an obstacle. Indeed, the registration is a
condition for receiving the stamps from Ministry of Finance (Hacienda).
Importers get only the number of stamps equal to number of bottles to be
imported, showing to the local excise office a copy or a pro-forma of the
demand addressed to the customs authorities (pedimento aduanero).

Second, the obligation to notify the Ministry of Finance, every 3 months of the
identity of the customer for each bottle sold is too burdensome. If a stamp is


CEEI –Labelling – Final Report –16 August 2002                                74
lost, the importer will not receive new stamps. It is also alleged that the
Ministry of Finance refuses to deliver new stamps while the importer is in
conflict with the Customs (for example, an importer had launched an
administrative recourse regarding a shipment that has been stolen while it was
under Customs control. He had refused to pay the customs duty on the stolen
goods and therefore, the Ministry of Finance had refused to deliver new
stamps. He had to stop the alcohol import business.

b)     marking of packages

Problems are also mentioned regarding the marking of the packaging of
Articles, which individually do not need to be specifically labelled. For
example, an importer of bicycle in kit form (aimed to be assembled in Mexico)
can only clear the goods in Veracruz customs office. When the containers
arrive at the Mexico city Customs, they must be transported under Customs
supervision to the customs point of Veracruz. The Customs are alleged to be
excessively strict with the description of the content of the boxes.


3.2.   Penalties and additional costs faced by importers


According to the Customs Agent Association, the penalties applied for
products that do not comply with labelling requirements established by the
NOMs range from 2% up to 10% of the CIF value. Indeed, the recent
modifications of Articles 184 and 185 of the Customs Code have significantly
reduced the level of such penalties (previously up to 100% of the CIF value).

However, the importers still argue that the penalties will always be higher than
those applied to domestic producers, when controlled and when their products
are found inconsistent with NOMs labelling requirements. In addition, the
imported product can be twice subject to penalties: when it is controlled by
Customs and when it is checked again during the retail.
Under the Ley Federal of Meterologia, there are also different types of
penalties foreseen for non compliance with NOMs requirements. It is therefore
unclear if penalties charged by Customs will be the only sanctions applied in
case of mislabelling or if additional fees could be levied against the importer.
Once the products are considered as mislabelled, the importers must re-label
the goods correctly within 10 days. If they are not found complying with the
requirements, they can be seized by Customs.


3.3.   Practices of the verification units


Under the provisions of the Acuerdo of 2 June 1997, the importers are invited
to use the services of the verification units to avoid any problems in customs
checks. The verification units receive the models of labels of products to be




CEEI –Labelling – Final Report –16 August 2002                               75
imported and issue either a definitive approval of their conformity (“constancia
de conformidad) or a provisional approval (“dictamen”).

The principle is that when the document of conformity has been issued by the
accredited Verification Unit, the importer should not encounter any problem,
either during the customs clearance, nor when the product is put on the
market. Therefore, given the problems encountered during the customs
checks, many importers prefer not to risk unnecessary blockage of goods in
Customs and pay the services of the verification units (in particular for
foodstuff products).

However, the practices described during these interviews raise the following
questions;

-      the costs of the Verification units, not harmonised
-      the coherence of the verification done by the Verification units

a)     cost of the verification units

Fees of the accredited verification units are not harmonised. The verification
units are private companies and offer their services freely on the market. In
practice, the importer negotiates the prices on the basis of the number of
labels to be verified. The Mexican administration confirmed that the Authorities
have no control on the price levels imposed by the Verification units.

However, even if sometimes found excessive, most of the importers prefer to
use their services in order to avoid problems during customs clearance.

Some importer criticise the fact that to get a permanent authorisation
(Constancia de conformidad) from the verification unit, the importer must
import products for a value above 1 million USD. The permanent authorisation
will cost about 770 pesos BUT the product has to arrive already labelled from
the country of origin. Below this value, the declaration of conformity
(dicatamen) issued for each shipment will cost 500 – 1250 pesos by imported
product.

b)    the questionable coherence of the work done by the verification
units

Various importers underlined two issues:

1. The Verification units can also provide the services of producing and
   affixing the correct labels for which they will issue certificates
   (constancias de conformidad or dictamenes). In some cases, the labels
   made by the Verification units were found not complying with the strict
   requirements applicable to foodstuffs and wines (for example, the back
   label of an imported bottle of wine affixed by the Verification units is too
   small and contains letters whose size and place is not in conformity with
   the provisions of NOM 142). An importer who suffered various rejections
   of its label for minor differences in size and height of letters denounced


CEEI –Labelling – Final Report –16 August 2002                                76
    this practice and showed to the consultant the difference between the
    labels he produced himself (complying with the requirements) and the
    label affixed by the Verification units (not complying). As a conclusion we
    can state that the importers often consider the recourse to the Verification
    units as useless when they already have some knowledge about the
    Mexican requirements.

2. According to an importer, some Verification units have included a clause
   of non-responsibility in their contracts providing that they will not be
   responsible for any lack of compliance found in the retail phase on the
   labels they have checked. However, according to the Mexican
   authorities, while a Verification Unit has checked the compliance of the
   label, it will be responsible if the same label is found not in conformity
   with the NOM’s.


3.4.   Discrimination in favour of other imported products


It is alleged that the US imported products are not subject to controls strict as
the EU products are during the clearance process and in the retail phase.

The consultant has visited various malls with importers and found various
examples of branded shoes - from US companies processed in Asia - which
were not complying with the strict requirements of the NOM 120. For instance,
while the EU product (sport shoes) was marked with all requirements
regarding the exporter and importer data, the composition of the sole and the
upper part of the shoes, some similar shoes labels from the US brand
processed and imported from Hong-Kong contained only the brand name and
the following text “imported in Mexico by “XXX”, Mexico, without any further
mention (no address, no fiscal number). According to customers of EU
companies, these goods are not systematically checked in Customs in the
same way as the EU products are. US products processed in the US or in Asia
are alleged to benefit from a “favour treatment” from Mexican Authorities. The
importers of EU foodstuff products also complained that their products are
systematically verified in Customs while similar US products are not. They
insisted on the fact that it is possible to find on the retail various US products
without importers data and without description in Spanish.


3.5.   Discrimination in favour of domestic products

Importers alleged that they are discriminated against domestic producers for
the following reasons:

-      The imported goods are systematically (textiles, footwear) or more often
       checked in Customs (wines, foodstuffs, others). The domestic
       producers are not checked on an equal footing.




CEEI –Labelling – Final Report –16 August 2002                                 77
-      The imported products are allegedly more often checked in the retail
       than the domestic products.

-      Domestic products presented in the retail often do not comply with the
       NOM requirements. For example, apparel, footwear and foodstuff
       products were found in shops without the complete producer
       identification data, the fiscal registration number etc …


3.6.   Overall burden of product composition description requirements

According to most importers, the main difficulty concerns the excessive
product description requirements (including the labelling requirements). For
example, an importer of chocolate must present the following documents with
description specifications:

-      for each shipment and for each type of product (e.g. for each “praline”),
       he must provide a specific certificate with the composition and the
       ingredients.
-      The invoice also must describe the products.
-      In annex to the invoice, a document describing the content of the
       shipment, the SH codes, the internal reference of the product,
       quantities, net weight, % of sugar, brut weight, value.
-      The sanitary document.
-      Another document attesting that all documents annexed are accurate,
       giving other product description, batch number, complete data of
       importer and exporter, including telephone numbers (all these data are
       already mentioned in the certificate, the invoice the annex XVIII and the
       labels!). Only the manager of the company is allowed to sign this
       document, otherwise the goods will not be cleared.

This explains why the importers see in these requirements non tariff measures
aimed (1) to delay the clearance process (2) to charge additional fees on
importers and possibly (3) to discourage imports.




CEEI –Labelling – Final Report –16 August 2002                               78
§4. Legal analysis


4.1.       Main problems experienced by the EU companies in Mexico

The main problems experienced by the European companies in Mexico are
related to the fact that the Mexican labelling requirements are in most of the
cases more prescriptive than the EU-ones. In addition, the EU goods should
comply with the Mexican compulsory standards. The EU companies
experienced also regular difficulties with controls performed by the Mexican
customs during the clearance procedures.


4.2.       Legal analysis of problems experienced on the Mexican market

The legal framework of the trade relation between Mexico and the EU is
defined by the Economic Partnership, Political Coordination and Cooperation
Agreement between the European Community and Mexico24. This Agreement
provides in its Article 18 that the Parties undertake to cooperate on technical
regulations and conformity assessment.On the other side Article 19 provides
for customs co-operation and for facilitation of the clearance procedures.

The framework Agreement is completed on these issues by Decision 2/2000
of the EC-Mexico Joint Council of 23 march 2000.

Decision 2/2000 introduces more detailed requirements on standards,
technical regulations and conformity assessment procedures (Article 19).
According to these requirements, the standards, technical regulations and
conformity assessment procedures are defined in the same way as in the
WTO Agreement on Technical Barriers to Trade (hereinafter "the TBT
Agreement").

The Parties confirm their rights and obligations relating to standards, technical
regulations and conformity assessment procedures under the TBT Agreement.
In order to avoid unnecessary barriers to trade, the parties should work
towards exchange of information on their respective standards, technical
regulations and conformity assessment procedures, bilateral consultations on
specific technical barriers to trade, promotion of international standards and
facilitation of the adoption of their respective standards, technical regulation
and conformity assessment procedures.

Each party is required to provide to the other party technical advice and
assistance on the terms and conditions to enhance this party standards.
Article also requires for the establishment of Committee of standards and
technical regulations which should report yearly to the Joint Committee and

24
     Official Journal 2000, L 276 , 28/10/2000 P. 0045 - 0079




CEEI –Labelling – Final Report –16 August 2002                                79
should work also on the approximation and simplification of labelling
requirements, including voluntary schemes, the use of pictograms and
symbols, and the convergence of terms applied to leather products.

This Article is designed to facilitate trade between the two parties by providing
sufficient information on the each party labelling and marking requirements
and by moving progressively towards a harmonisation of these requirements.
However, the implementation of this Article remains quite low, which causes
difficulties to the EU companies exporting to Mexico, because they cannot
invoke directly the application of this Article.

Some measures, such as the requirement to affix the label from origin and the
impossibility to correct minor errors found during customs clearance, could
normally be discussed under the provision of this Article in order to find a
satisfactory solution for the EU traders.

As the definition of Article 19 refers to the definition of standards and technical
regulations in the TBT Agreement, it does not include the sanitary and
photosanitary requirements. Therefore, Decision 2/2000 introduces specific
Article on sanitary and phytosanitary requirements (Article 20). According to
this Article the Parties shall cooperate in the area of sanitary and phytosanitary
measures with the objective of facilitating trade. The Parties recall their rights
and obligations set out in the WTO Agreement on the Application of Sanitary
and Phytosanitary Measures and establish special Committee on sanitary and
phytosanitary measures. The special committee should monitor the
implementation of Article. It should address the problems related to specific
sanitary and phytosanitary measures in view of reaching mutual acceptable
solutions. The committee should also consider specific arrangements on
harmonisation and information exchange.

Given the fact that a large number of problems are related to foodstuffs and to
agricultural products, the implementation of this Article is very important for the
EU exporters. However, the practical implementation of the provision is quite
low, which hinders trade between the two parties.

It must be underlined that the majority of problems experienced by the EU
companies in Mexico are related to the controls performed by customs
authorities on the labelling of imported products. The products should undergo
specific procedure and be certified by the verification units in order to be sure
to pass the customs clearance. In other cases, the products are stopped,
rejected or destroyed for minor errors. In these cases, the provisions for
customs cooperation could be applied.

Decision 2/2000 introduces additional provisions on customs cooperation –
Article 17. This Article foresees for transparency in customs procedures and
provides for the creation of special committee for creation of special committee
for customs cooperation.




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In addition of these rules, the rules of the WTO could be invoked by the EU
companies. The provisions of TBT Agreement, the Agreement of Sanitary and
Phytosanitary requirements and GATT Articles III, VIII and IX concerning
respectively the obligation for national treatment, facilitation of import
procedures and transparency could be used in certain cases, when Mexican
authorities imposes burdensome or discriminatory requirements. (see below
part 21 – Legal analysis)




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                                PART 5: RUSSIA



§1.    Mission to Russia


§2.    Products affected by marking and labelling requirements

       2.1.    General labelling requirements

               a) Labelling requirements for industrial products
               b) Labelling requirements for foodstuffs

       2.2.    Alcoholic beverages

       2.3.    Foodstuffs

       2.4.    Textile products


§3.    Labelling and certification

       3.1.    The certificate of conformity

       3.2.    The declaration of conformity

       3.3.    The Hygienic certification

       3.4.    The implementation of the certification procedures


§4.    Controls of labels

       4.1.    Controls of labels by the Customs Authorities

       4.2.    Control of labels in retail

               a)     Controls of labels by Trade inspections
               b)     Controls of certification logo by Gostandard inspections


§5.    Legal analysis




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§1.    Mission to Russia


The Mission to Russia was conducted from the 23 rd to the 30th of May 2001.
The objective of the mission was to meet the subsidiaries of the EU
companies, their customers and the EU trade representatives in order to
identify the most damaging labelling and marking requirements for the EU
industry and the sectors concerned. The consultant also met Russian
authorities with the purpose to collect regulations concerning labelling and
marking requirements.


§2.    Products affected by labelling requirements


Labelling and marking requirements in Russia do not create significant trade
restrictions for the EU companies doing business in this country by
themselves. Russian labelling requirements are more prescriptive comparing
to the EU requirements, but as the producers of the majority of the industrial
and processed agricultural products are not obliged to prepare original labels
for the Russian market, these requirements are not considered as unbearable.
Moreover, the labelling requirements in Russia are linked to certification
requirements, which are considered to be one of the main trade barriers for
the EU exporters. Other kinds of requirements, such as the fiscal stamps that
should be attached to goods entering on the Russian market, can also be
problematic for the EU companies.

Generally speaking, two types of labelling requirements should be
distinguished in Russia – the labelling requirements for industrial products and
these applied to foodstuffs.


2.1.   General labelling requirements


a)      Labelling requirements for industrial products

The Russian legislation implementing labelling rules officially aims at offering a
high level of consumer’s protection. The labelling requirements are set up in
the Law for the protection of the consumer and they are explained in the
Regulation of the Gosstandart n°51121-97.

The information must be provided as a passport of the product, as a user’s
notice or as a label.

The information must be written in Russian. The translation of the information
in other languages is also admitted. However, on the importer’s request, the




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information may also be translated in the other languages of the Russian
Federation.

         The information must include the following data:

     1. Name of the product
     2. Country of origin
     3. Name of the producer in Russian, the correct pronunciation of the name
      is an obligation (the name of the company may be additionally written with
      Latin letters)
     4. Essential or functional use of the product or its scope of application
     5. Rules and conditions for storing, transport, use, repairing and demolition
      of the product (if necessary)
     6. Essential consumer characteristics
     7. Information concerning mandatory certification
     8. Address of the producer and/or the seller
     9. Net weight, essential dimensions and quantity
     10. Composition
     11. Trade mark of the producer (if there is one)
     12. Production date
     13. Expiration date
     14. GOST documents used during the production of the product (only for
      products produced in Russia)
     15. Information concerning voluntary certification ( if there is one)
     16. Information about the mark of conformity to the GOST standards
      (voluntary)
     17. Bar code of the product (if there is one)
     18. Specific information for the consumer (if necessary)

    The points from one to eight are compulsory for the producer and/or the
    seller. According to the complexity of the product, the producer or the seller
    can provide the totality or a part of the information (points 9-18) in order to
    provide the necessary information to the consumer.

The name of the product must be in conformity with the requirements of the
standards of the Russian Federation. Products that are non-traditional for
Russia, and therefore imported, have to be named accordingly to the
international and regional standards. The use of characteristics as
"ecologically clean", "without radioactive danger", "produced without
dangerous substances" and others that have advertising effect are allowed in
certain conditions. and after authorisation of the competent body.

If the producer is not the exporter, the name and the address of the exporter
must be added to the label.

All the rules and requirements covering the essential and the functional use of
the product and its scope of application must be provided in conformity with
the regulations.



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In order to inform the consumer or the authorities that the product has been
subject to the mandatory certification, the producer should mark the product
with a specific sign, which is in conformity with the GOST R 50460.

The quantity and the essential dimensions of the product must be provided
according to the international system.

The composition of the product must be presented in a paragraph named
“composition”.

The trademark of the product must be put on the product or on the label.

The expiry date must be given using one of the following expressions:
         “best during” ( days, months, years)
         “best before” ( day, month, year)
         “use before” (day, month, year)
         “period of use” (days, hours, cycles and others)

The information must be put on all products, on one or several places where it
is easy readable. The information has to be always on the same place of the
product, package or the label.

If the product is too small, the information shall be presented on an information
notice attached to the product.

The information concerning the storing, transport, utilisation and demolition of
the product must be indicated but using different colours or letters.

This information is to be affixed on the label of the product. However, for
imported products, it can be provided on stickers, on the original label, or on
the package of the product.

However, given the complexity of some products, additional GOST regulations
may apply to these categories of products. (i.e. the GOST R.MEK 335-1-94 for
household appliances, the GOST 700-80 for textile materials, the GOST
25779-90 for toys, the GOST 28389-89 for ceramics).

Taking into account the number of regulations and the fact that in the general
regulation it is not clear enough which additional mentions should be indicated
on the labels, the EU exporters and the Russian importers use a variety of
labelling information. This situation can be a source of insecurity during the
verifications performed by the controlling authorities.

b)     Labelling requirements for foodstuffs

Labelling requirements for foodstuffs are established by the Government
Decree N°1575 and are detailed in the standard GOST 51074-97. They are all
compulsory, while labelling requirements for industrial products are not.




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The standard GOST 51074-97 is divided into 2 sections. The first deals with
general requirements and the second provides additional requirements
concerning some categories of products.

All foodstuffs products must be labelled as follows:

1)       name of the product, its type (i.e. – concentrated, sterilised, etc.)
2)       name and address of the producer, packaging company, exporter and
         importer of the product, country and place of production
3)       trade mark of the producer (if there is one)
4)       weight or volume of the product
5)       composition of the product (ingredients)
6)       nutritive value (for all the products except alcoholic beverages, coffee,
         tea and spices) – nutritive value should be indicated in nutritive
         component for 100gr or 100 ml, the energetic value should be indicated
         in Kcal for 100gr or 100ml.
7)       Conditions for storage
8)       Expiry date or period of conservation
9)       Information about the certification of the product

Indications such as "ecologically clean", "home-made", "containing vitamins"
can not be mentioned without a reference to a normative document and/or
after receiving an authorisation of the competent authorities.

The list of ingredients should be indicated for all products, except for products
consisting of a single component. If there was an addition of a bioactive
component, a warning about possible negative effect should be present on the
label.

The expiry date must be provided using one of the following expressions:

           best during
           best before
           use before
           period of use

If the product has a very short validity term, the hour, day and month should
be indicated; for products having a validity term which is less than 3 months,
the day and the month should be indicated; for other products – the day,
month and year of the validity term must be present on the label.

In order to inform the consumer about the certification, the mark of conformity
should be attached to the label.

The second part of the Standard GOST 51074-97, defines the relevant
information concerning the most important categories of foodstuffs. It contains
the general information and some additional information according to the
specificity of each product group.




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2.2.   Alcoholic beverages


Alcoholic beverages are subject to strict labelling requirements. The Decree
N° 1575 has introduced the requirement for back labels in Russian. The label
should contain the following information:

       -       Name of the product and type of alcoholic beverage;
       -       All ingredients, including all colour and flavour substance along
               with the name and code of international classification (i.e. E150
               and with indication of kind (natural or artificial);
       -       Volume and percentage of alcohol contained (i.e. 750 ml is not
               allowed the mention should be 0.75l);
       -       Sugar content (except for dry wines, cognac, brandy and
               calvados) ;
       -       Expiry date;
       -       Date of bottling;
       -       Goststandart’s mark of conformity;
       -       Address of company producer;
       -       Address of company exporter;
       -       Address of company importer;
       -       For Cognac and whisky – the age;
       -       Warning text.

Some of these requirements are considered as problematic for the EU
exporters and the Russian importers. For example, if labels contain a mistake,
importers are obliged to print new original labels in Russia and to fix them
manually. The requirement concerning the ingredients of the product is
surprising. In fact, Russia is among a very small number of countries in the
world, which are requiring such kind of information on the labels. The alcohol
composed only of one ingredient is exempted from this obligation (for
example, cognac but not whisky). It is also very important to precise that the
volume should be written on the label in litres and not in ml, otherwise the
importer will be obliged to change labels. Moreover, the sugar content should
be indicated in gram/cubic meter and not in gram in 100 ml, except for
liqueurs. Another problem is related to the deposits in wine. According to the
Russian law, the wine must not have deposits and when it has, it will be
disapproved during certification procedure.

The expiry date is not totally clear for the EU exporters. The alcoholic
beverages are exempted from the obligation to have an expiry date in the
GOST R 51074-97 but apparently, this mention is compulsory according to the
Federal Law "State Regulation of Production and Turnover of Ethyl Spirits and
Alcohol products". This requirement is useless for the majority of the alcoholic
beverages and could create significant problems for wine exporters. According
to the Russian law, wine cannot have a period of conservation longer than 3
years. Russian authorities (the Ministry of Agriculture) have indicated that they
are aware of the situation and that the law will be changed in the near future.



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Moreover, the Russian Government requires a warning text. The text is very
long and enumerates that the alcohol is dangerous for human health and that
it is not recommended for pregnant women, children and teenagers under the
age of 18, drivers and in case of some diseases duly indicated on the label
according to the recommendation of the Russian law. The new warning is
much longer than the previous one, which can create problems of space on
the labels.

Another indication not required in Europe is the date of bottling. Some of the
EU exporters do not put the date of bottling. In other cases, the lot number is
permitted (Agreement between France and Russia).

Additionally, alcoholic beverages are submitted to the fiscal "excise stamps".
Producers should originally affix these stamps and the products should cross
the Russian border already with these fiscal stamps. Since 2001, an
amendment to the Russian Customs Law has modified the regime of fiscal
stamps. All the fiscal stamps are now divided into two groups:

I.     per volume of bottles on which these fiscal seals should be put:
       1. from 0.1 to 0.5 litre
       2. from 0.5 to 1 litre
       3. more than 1 litre

II.    per type of alcoholic beverages
       1. strong alcoholic beverages
       2. wine

On the basis of the amendment, the law foresees the following sanctions. If
the marking of bottles does not correspond to their volume or to the type of
alcoholic beverages, the penalty will reach between 100% and 300% of the
goods’ customs value. The cost of goods is indicated in the contract between
the importer and the exporter, which have to be registered when applying for
fiscal stamps.

During customs clearance procedure, the Russian authorities verify the
presence of fiscal stamps and sometimes, the existence of Russian labels.
However, the information concerning the controls of labels during customs
clearance is quite contradictory; it seems that this control exists only for
alcoholic beverages. The customs authorities also verify the certificate of
conformity. (see §3. Labelling and certification).

Moreover, alcoholic beverages are subject to a second conformity inspection
carried out by the Moscow Government. The importers are obliged to give 3
samples for the inspection. Even if the product has already received a
standardisation body’s approval, the Moscow Government can reject the
product as non-conform. During this inspection the labels are very carefully
checked in order to verify the data required for consumer protection. When the
products are considered to be in conformity, the importer should add to the
label the Moscow region’s bar codes.



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2.3.   Foodstuffs


Labelling requirements for foodstuff products are strict and often go beyond
the European requirements. The compulsory requirements should be placed
on the label (see 4.1. b labelling requirements for foodstuffs). Moreover, for
some products, there are additional labelling requirements. For instance, non-
packaged meat and poultry products must be stamped with the special stamp
of the veterinary control. On the foodstuffs labels designed for children
nutrition, the vitamin and minerals content should be indicated on the label as
well as the indications for use, preparation and conservation. The use of a
picture of children on the packaging is prohibited.

As far as the veterinary marking is concerned, it is important to know that
veterinary inspection of the goods is needed. The Russian veterinarian (or
other veterinarians authorised by the Russian authorities) in the country of
origin should perform the controls. Following the BSE and the Foot and Mouth
Disease, the European veterinary certificates are not recognised. Products are
inspected in the country of origin, marked with the special stamp and then
exported to Russia. The stamp with the same number should be present on
the product, on the packaging and on the label. The veterinary certificate is
also applicable for frozen products. This requirement has created important
problems to importers of frozen chickens, although the Russian market is
experiencing shortage of chicken and meat products in general.

Importers of food products have the possibility to attach stickers in Russian on
the products and they are already used to the requirements of the Russian
legislation. The Russian representatives of the EU companies prepare the
labels, often in consultation with the certification body, although an important
number of companies employ a person dealing specifically with the labelling
and certification requirements on a full time basis. The reason is that some
requirements go beyond the EU requirements in this field - such as the
enumeration of all the additives as well as the quantity of some ingredients in
grams and energetic value in Kcal for all products -. Moreover, some additives
used in the EU are not accepted in Russia without reasonable ground for this
interdiction.

Foodstuff products are also subject to a standardisation procedure and the
logo of the certification institute should be affixed on the label. In addition,
these products are submitted to a hygienic certification ( or “hygienic
conclusion”), performed by independent organisms under the authority of the
Ministry of Health.

These obligations create difficulties for the EU exporters and Russian
importers. First, the obligations are very burdensome. Second, the
nomenclature of the products subject to the hygienic certification is not
sufficiently detailed and it is not clear enough which products are concerned
by this requirement. Third, the EU exporters complained about the difficulties
to send samples for certification to Russia. According to the Russian Customs,


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a special import scheme exists for the import of samples. In this case, the
importer must produce a special request to the customs authorities.


2.4.   Textile products


Textile products are subject to the general requirements applied to industrial
products. As these requirements are very complex and depend on the product,
it is generally admitted by the importers and traders that textile products
should be labelled as follows:

       -       the name of the product ( for ex. skirt, dress, etc),
       -       the model of the product (артикул n°)
       -       name and address of the producer or of the distributor
       -       country of origin
       -       composition (the ingredients are presented by order of
               importance and with the percentage)
       -       the size according to the Russian size system
       -       indications for washing, ironing and use of the product
       -       bar code
       -       mark of conformity (the logo of conformity approved by the
               certification body with the number of this certification body)
       -       code recommended age (for children clothing)

However, importers and retailers in shop do not use all these mentions nor
attach additional information ???. For example, according to some importers, it
is compulsory to put on the label the date of entry of the product into the shop
with the signature of the sales manager. However, the consultant did not find
such a requirement in the relevant legal texts.

Some of the Russian importers or traders have expressed the opinion that it is
not compulsory to put the logo of Goststandard on the labels of all textile
products. However, according to Goststandard representatives the logo shall
be affixed on the labels of all the products and the seller should additionally
present the certificate of conformity to the control authorities, which allow to
affix the Gostandard logo. According to some importers, the authorities verify
strictly the relationship between the product and its certificate. They can fine
the importer or the seller when they identify small inconsistencies between the
indications on the product and on the conformity certificate.


§3. Labelling and certification


EU companies exporting to Russia shall take into consideration that 90% of
the products are subject to compulsory certification according to the rules of
Gostandard (Gost R certification). The conformity assessment should be
performed by a specially authorised body, which will allow the issuing of the
certificate of conformity for the product. In 1999, a system of declaration of


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conformity was introduced for a limited number of products. However, due to
the complexity of the system, the old procedure for certification of conformity is
still used by the importers.


3.1.   The certificate of conformity


The compulsory certification GOST- R was introduced by the Law of June 10,
1993 "On the certification of goods and services"25. The Resolutiont "On the
approval of the list of goods and services subject to compulsory certification"
identifies the products subject to mandatory certification. The Government
determines the groups of goods subject to certification. Afterwards,
Gosstandart establishes a mandatory list of the products subject to the
compulsory certification (on a tariff line basis). This list is called
"Nomenclature"26.

On the basis of the Nomenclature, Customs Authorities establish a second list
of products for which a certificate of conformity is required for import. After the
latest revision of the Customs Order 49627, the two lists must be identical. The
compulsory certification is necessary for compliance with the State standards,
sanitary regulations ensuring safety of life and health of the consumer.

The EU producers must choose between a production certificate and a
shipment certificate

The certification is compulsory for domestically produced goods and for
imported goods, indicated in the mandatory list. Certification normally has to
be done before the goods are shipped to Russia. However, in some cases,
importers are authorised to request the certificate at the arrival of goods in
Russia. The certificate should be issued by one of the certification bodies
accredited by Gosstandard. There are 102 accredited certification bodies in
Russia. In Europe, there are only two authorised organisations – SGS (a
Swiss certification body) and Din Gos Tuv (German certification body), which
issue the Gost R certificates28.

In practice, the certification schemes can be divided into two groups,
depending on the identity of the applicant (the manufacturer or the importer).
The EU producer can request a production certificate for a serial production
(hereinafter "production certificate") or a shipment certificate (requested for
each shipment). The importer can request a certificate by shipment ("shipment
certificate"). The applicant proposes the scheme and the certification body
takes the definitive Decision.


25
   In the Editions of federal laws of December 27, 1995; March 2, 1998; July 31, 1998.
26
   Latest edition was introduced by the Gosstandard Resolutiont of February 23, 1998 and
become effective on October 1, 1998.
27
   Order of 12 May 1999.
28
   Certificates required for sale in Russia, proving that the goods are conform to the Russian
certification rules.


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     The production certification is considered by some EU companies as the
      easiest way of certification, in particular, when they have regular business
      with Russia. This certification requires that experts from accredited
      Gosstandart Bodies evaluate "in situ" the production system of the EU
      company. The evaluation must determine the capacity of the company to
      maintain the quality of serially produced goods, its capacity to control the
      production of its branches and to maintain the same quality if the supplier
      changes. This procedure is not the same as the one followed to get the
      ISO 9001 certificate. However, if the EU company already has ISO
      certificate, the GOST-R procedure may be simplified.

     Under the Russian rules, the Certification Body issues one certificate by
      "homogeneous group of products"29. The production certificate is normally
      issued for three years if delivered by Russian accredited experts. In any
      case, experts should check the system of production every year in order to
      ensure that the Russian standards are respected. This could explain why
      the European accredited bodies issue the production certificate for only
      one year and renew the certificates while conducting the yearly checking. It
      is important that the importer submit samples to the certification institute in
      Russia every 6 months in order to prove that the quality is maintained.

      The original certificate is delivered to the EU producer. This latter gives a
      copy with the stamp of the company to his customers in Russia.

      The shipment certificate must indicate the quantity, the type and
      references of the product, the number of the contract and of the invoice.
      The exporter or the importer should request one certificate by tariff line.
      This type of certificate is the less expensive way of certification (in
      particular when a few different products are exported). However, it is less
      convenient for exporters maintaining regular business with Russia. This
      certificate allows selling the products during one year. If after one year,
      there are any unsold stocks, new certificates have to be requested from the
      Certification Body. The first certificate is more expensive, but afterwards,
      when the certification is required for the same type of products the
      certificate is cheaper, because some basic tests are not performed.

      When the producer requests the certificate, it is more advantageous to ask
      for a production certificate, established for the group of homogenous
      products. In case a shipment certificate is requested, a different certificate
      has to be made for each tariff line and it has to be done before each
      shipment.

      The procedure and the costs are dependent on the contract
      negotiated with the certification institute

      The European producer or exporter has to contact one of the Russian or
      European certification bodies accredited by Gosstandard. These will
      indicate the required documents and the procedure to follow during the

29
     Decision 1271/97, Art. 2.7


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      certification procedure. The applicant (importer or EU producer) must
      submit the application form to the Certification Body. The form must be
      accompanied by copies of the documents confirming the origin, assortment
      quality and quantity (for some schemes), copies of the documents used for
      product manufacturing and hygienic conclusion (if the product is subject to
      such conclusion).

      The applicant must also present all documents confirming the established
      quality indicators of the products - materials, tests protocols issued by the
      executive bodies within their competence and previous certificates. The
      compliance with National, International and European standards (CE, IEC,
      VC, GS and ISO) is not sufficient to sell products in Russia (even if the
      producer or the importer can transmit these certificates to the certification
      body to speed up the procedure).

      The certification is based on a contract concluded between the Certification
      Body and the applicant. The price for the certification services in Russia is
      determined by the Recommendation of Gosstandard "Payment for works of
      certification of goods and services"30. The Foreign Accredited Bodies are
      not bound with this requirement. However, even in Russia, there are
      different prices applied by the various certification bodies. This is,
      according to the Russian Authorities, because the competent body can
      determine the certification scheme to be used and the number of tests and
      analyses to be performed.

      The products are tested according to Russian standards elaborated by
      Gosstandard. These standards are still not unified with the European and
      International ones, although Gosstandard has started a process of
      modernisation.

      In case a shipment certificate is required, the producer or the importer
      should normally request one certificate by tariff line contained in the
      Gosstandard mandatory list. However, the certification body can authorise
      the applicant to perform certification by group of homogenous products.

      The marking requirements            and their compliance        control    are
      burdensome

      While the certificate of conformity is issued, the product has to be marked
      with the GOST R certification logo on the package or on the label of the
      product. The marking requirements are as follows:

          -      the number of the certification body;
          -      the minimum size of the mark is 8 mm;
          -      the label and the size of the conformity logo should be verified;
                 before commercialisation by the certification body.




30
     Recommendation R 50.3 001-96, amended the 19 October 1999


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The importer or the exporter should also provide a translated version of the
original label to the certification body. The certification body must verify the
identity of the product and the information indicated on the label. Moreover,
the applicant should also submit the label for the Russian consumer. The
certification institute should verify the conformity of the label with the Russian
requirements and the conformity of the certification logo. However, according
to the importers this verification is not performed very strictly.

The certificate is compulsory for the commercialisation of products in Russia.
An inspection body from Gosstandard carries out the inspection of goods
subject to mandatory certification. It verifies whether all the products subject to
certification are sold with a conformity certificate.

In case of disputes or conflicts among the participants in the certification
process, a party concerned may apply to a dispute settlement commission
(COS). If the party disagrees with Decision of the commission, it can appeal
directly to Gosstandard. Decision of Gosstandard may be appealed in the
Court.


3.2.   The declaration of conformity


The Russian version of the declaration of conformity

In July 1999, under the pressure of the future accession to WTO and the
Understanding on certification annexed to the EC-Russia bilateral textile
Agreement, the Government of the Russian Federation has adopted a Decree
on the declaration of conformity 31. According to the Russian authorities, this is
the first step towards the future Law on certification, which will modernise the
Gost system.

Foreigners cannot make the Declaration

However, the Russian version of the declaration of conformity presents some
noticable particularities. It has to be differentiated from the producer
declaration in the European Union. The Gost declaration of conformity can be
done not only by the manufacturer, but also by the seller or performer.
Foreigners can not make the declaration. According to the Decree, a Russian
producer or organisation registered as a juridical person in Russia and
representing the interests of relevant foreign manufacturers should adopt the
declaration (art. 1). Therefore, the certification can not be realised by the
European producer or exporter, if not registered under Russian Law. (art. 2)
The strict interpretation of this regulation will mean that even a representative
office of a foreign company can not issue the conformity declaration because
under the Russian Law, it is not a juridical person, registered In Russia. The

31
  "Decision of the Government of the Russian Federation n° 766 of July 7, 1999 on the
approval of the list of products whose conformity may be confirmed by the conformity
declaration and the procedure for the adoption of the conformity declaration and its
registration.


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EU operator has to set up a company in Russia or to grant a Russian
company the rights to represent his interests.

Declaration concerns only a limited number of products

The conformity declaration applies only to products included in the list of
Decision n°766. The declaration applies to a very small amount of products.
The overall amount of products subject to the declaration of conformity is
about 10% of the 90% subject to compulsory certification. During the interview
conducted by the consultant with the representatives of Gostandard, it was
reported that the Russian system for certification would be modernised before
the country’s accession to the WTO. Nevertheless, this reform is still in stage
of its very beginning.

Different documents can be used for the Declaration

The following documents can be used as the basis for the declaration: the
protocols of acceptance, the acceptance delivery or other check tests of the
products carried out by the manufacturer or outside laboratories, the
conformity certificates or protocols of the test for raw and other materials or
accessories, the certificates for the system of production quality, the
documents stipulated for the given products by relevant federal Law and
issued by bodies and organisations authorised thereto, other documents
confirming directly or indirectly the conformity of the products with the
established requirements (art. 4).

There is no time limit for the validity of the Declaration

The declaration of conformity is established with respect to concrete products
or groups of products for a period established by the manufacturer. The text
does not establish any specific time limit (art. 6). The declaration has to be
established according to the form given in the annex32.

An accredited Gosstandard Body must register the Declaration

A particular feature of the Declaration is that it should be registered by a
certification Body accredited by Gosstandard. This Body should be authorised
by Gosstandard to conduct certification for the relevant products. The
certification body must check the correctness of the declaration and the
related documents within seven days. It decides to register (or not) the
Declaration. The certification body has to check whether the product is on the


32
  The details that have to be given in the conformity declaration are the following: " name of
the organisation or surname first name and patronymic of the individual businessman that
adopted the declaration; data about the registration of the organisation or individual
businessman(name of registration body, date of registration, number); address, telephone,
fax; post , surname, name and patronymic of the head of the organisation on whose behalf the
declaration is being adopted; name type brand of the product covered by the declaration,
Russian classification code, data about the serial output or lot ( lot , numbers of Articles,
requisite, elements of the Agreement, contract, invoice, name of manufacturer and of a
country and so on).


CEEI –Labelling – Final Report –16 August 2002                                             95
list of the products authorised for the declaration of conformity and the
correctness of all the documents.

The registered conformity declaration has the same legal effect as a
conformity certificate. On this basis the manufacturer is entitled to mark the
product with the conformity mark.

The price of the declaration set up in the amendment of the Law "Payment for
the work on certification of products and services" amounts to two minimal
monthly salaries in Russia.

The implementation of the conformity declaration was very slow

The implementation of the rules concerning the conformity declaration took
more than one year. Russian authorities have been very slow in introducing
changes in the regulations regarding the schemes for certification and other
related regulations. The declaration is not used by the EU exporters, due to
the complexity of the system and small amount of products benefiting from this
scheme. In many cases, the EU companies export products subject to either
conformity assessment or to the declaration of conformity. Nevertheless, they
prefer to use the same procedure for their exports.

Marking requirements for products subject to the declaration of
conformity

Products subject to the declaration of conformity are also submitted to marking
requirements. They should be marked with the same logo as the products
submitted to the declaration of conformity. However, no number of certification
institute should be attached to the logo. In this case, the person who made the
declaration is responsible for the veracity of the information and for the
information attached to the label.


3.3.   The hygienic certification (or “hygienic conclusion”)


The hygienic certification is issued in accordance with the Law “On Sanitary -
Epidemiological Well-being of the population”

The Hygienic conclusion must be performed before the certification
procedures

The hygienic certification is mandatory for some products (foodstuffs, products
entering into contact with the skin, alcoholic beverages, cosmetics, etc). It
should be done before GOST-R certification procedure is engaged. The list of
the products, requiring hygienic conclusion, is not clear, as the nomenclature
is not established on a tariff base but on a group of products base. The
hygienic conclusion is also needed when a new product is commercialised in
Russia for the first time.



CEEI –Labelling – Final Report –16 August 2002                              96
The Department issues the hygienic conclusion for Sanitary and
Epidemiological State Control of the Ministry of Health (DSESC). This
conclusion has to be well distinguished from the certificate of conformity,
issued by Gosstandard. The aim of the certificate is to prove that the
European product is in conformity with the standards for security and health
established by the Russian federation.

The certificate is done by type of products and has a one-year validity term.
The time limit for delivery of the certificate is 4 weeks from the moment, when
all the documents and samples have been presented to the competent body.
The competent body is not always the certification body but the majority of the
certification bodies are also authorised to carry out tests for the hygienic
conclusion or have contracts with accredited laboratories. The results of the
tests are transmitted to the DSESC, which is the only body competent to
deliver the hygienic conclusion. The DSESC issues a registration number for
the conclusion, which is necessary to obtain a GOST R certification and which
will be reproduced on the certificate of conformity. The companies should
present 3 samples of the products for the hygienic conclusion. Those samples
can not be used for the conformity certification, some one or two additional
samples are required. The tests conducted on the products are bacteriological,
physicochemical and toxicological. The contract with the laboratory determines
the number and the cost of the tests.




CEEI –Labelling – Final Report –16 August 2002                              97
CERTIFICATION OF CONFORMITY

The producer has the choice between:

Production certificate                           Shipment certificate
Validity: 1-3 years, with          compulsory    This certificate is done for every shipment
checking every year.                             if the producer does not have a production
                                                 certificate.
                                                 Validity: The products can be sold during
                                                 one year, afterwards a new certificate has
                                                 to be done.
Procedure: Experts from a Gosstandard             Procedure: 2 Samples of each product
authorised body are coming to evaluate the       have to be sent to the authorised
system of the company in situ. They deliver      certification body. Normal time limit: 2
one certificate by type of products. The         weeks. One certificate by tariff line is
producer also presents samples of the            requested. It is possible to regroup the
products. Different tests are performed.         products in the group of homogenous
                                                 products.
Costs: The company has to pay all travel         Costs: The price depends of the number
and related costs as well as costs related to    and complexity of the tests performed and
the work and accommodation of the experts        the contract with the certification body.
Competent          certification     bodies:     Competent          certification      bodies:
Certificate can be issued by Russian (102        Certificate can be issued by Russian (102
certification bodies in Russia) or foreign       certification bodies in Russia) or foreign
(only 2 certification bodies in Europe)          (only 2 certification bodies in Europe)
authorised certification body.                   authorised certification body.
Additional comments: ISO certification           Additional comments: The products
and other International certificates are not     imported into Russia must have Gost R
sufficient to sell products in Russia.           certification. The conformity is evaluated
However they can be taken into                   according to the Russian standards.
consideration during the audit.          The     International and European certificates of
conformity is evaluated according to the         conformity are not sufficient, but can be
Russian standards. The goods have to be          taken into consideration. The goods have
marked with the conformity mark.                 to be marked with the conformity mark.

The importer can only request a shipment certificate.




CEEI –Labelling – Final Report –16 August 2002                                           98
Hygienic conclusion / certification:


A hygienic certificate is requested for some products


Competent authority:                             Department        for     Sanitary     and
                                                 Epidemiological State Control
Has to be requested from:                        The certification body if it authorised to
                                                 make analysis for this type of conclusion
                                                 or the competent accredited laboratory.
                                                 The certification body can advise the EU
                                                 operator how to get the conclusion. In any
                                                 case, the certificate is issued by the
                                                 Department        for     sanitary     and
                                                 Epidemiological State Control
Procedure:                                       3 samples, time limit: 2 weeks.




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DECLARATION OF CONFORMITY


In some cases, the producer or importer has the choice between:

Certificate of conformity                     Declaration of conformity
The producer can do:                          The declaration can be done by the
Production certification: experts from        producer or by the importer.
the authorised certification body come to     Product coverage: Only a limited
evaluate in situ the production system of     number of products, enumerated in the
the company. One certificate by group of      decree 766.
homogenous products. Validity: 3 years        Procedure: Only a Russian producer or
with regular checks every year. The           an organisation registered as a judicial
producer can give a copy of the certificate   person in Russia can make the
to the importer.                              declaration.
Shipment certificate: One certificate by      Declaration has to be accomplished by all
tariff line. The certificate has to be done   the documents, certifying the conformity
for every shipment. Products can be sold      of the products.
with this certificate during one year.        Registration of the declaration: has to
                                              be      registered   by      an   accredited
The importer can             only     request certification body. Time limit for
shipment certificate.                         registration: 7 days.
                                              Validity: no time limit for the validity
                                              Cost: 2 monthly
                                                salaries in Russia
                                              Additional comments: Same legal
                                              effects and procedure for dispute
                                              settlement as the old system. The product
                                              has to be marked with the conformity
                                              mark.




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3.4.    The implementation of the certification procedures


The interviews with importers of the EU products have shown that each operator has
its own way of conducting the certification. Some EU exporters obtain a production
certificate. Other EU companies use the shipment certification. Others prefer to sell
products to Russian importers in Europe and they are not dealing with certification
procedures.

The certification is quoted by the European companies, their agents, or their clients
as the most important obstacle to the EU exports. Few exporters have chosen the
production certificate. In fact, the production certificate is a very expensive option. EU
companies have no interest to do it if their exports are not significant in terms of
volume and product coverage. The companies have to invite the accredited experts
and to assume travel and living costs during audits.

The importers more often request shipment certificates. The cost of these certificates
depends on the relationship between the importer and the standardisation body.


       §4. Controls of labels


4.1.    Controls of labels by the Customs authorities


The consultant has not found any law regulating the controls of labels by the customs
authorities. However, according to some certification bodies, customs should check
the label during clearance. According to the State Customs Committee, Customs
officials do not check the labels during the clearance process. Given the confusion on
this point, various European companies prepare their label before exporting to
Russia. Even if the label is not controlled by the customs, a model of the label must
normally be presented to the certification body before commercialisation.

It appears that, in some cases, customs authorities control the label. For alcoholic
beverages for example, they verify the existence of an original Russian label, for
foodstuffs they control the date of expiry. Therefore, in general, labels are not
controlled by customs and the majority of the importers affix stickers in Russia.


4.2.    Control of labels in retail


a)      controls of labels by Trade inspections

Controls of labels are very strict in shops. The Trade Inspection is in charge of
controlling labels and of verifying whether all the indications prescribed by the law are
placed on the labels. The non-conformity of the labels is penalised, under the Law for
the Protection of the Consumer. The seller is responsible for the conformity of the



CEEI –Labelling – Final Report –16 August 2002                                        101
labels, he shall take all the necessary measures to assure that labels are in
conformity with Russian requirements.

However, the EU companies having shops in Russia or the clients of EU companies
have reported excessive controls by the Trade Inspection. Given that the Russian
requirements are very complex, the Trade Inspection could easily identify breaches
of the law and fine the sellers. Important fines are imposed for minor infringements
(i.e. absence of label of one Article in case all other identical Articles have labels).

b)     Controls of certification logo by Gostandard inspections

Gostandard inspection has the right to control whether all the products subject to
mandatory certification have undergone the procedure and whether they are marked
with the certification logo. Two cases must be distinguished:

1) products are not marked with the certification logo

In the event that the inspection finds products not marked with the certification logo,
the seller must present the certificate of conformity for these products. If the seller
has the certificate of conformity the penalty will be less important. When the seller
does not have the certificate of conformity, the goods will be confiscated and both the
seller and the importer will be fined for breach of the law.

2) products are marked with the certification logo, but the inspection has doubt about
   the authenticity of the certificate

The inspection can (according to the number of the certification body indicated on the
logo) ask the competent certification institute whether it has delivered (or not) the
certificate. If the certificate is found false, the consequences are identical to the
absence of certificate (confiscation of goods and penalty).

When the certificate is authentic, but the inspection has doubt about the conformity of
the product to the Russian standards, analysis will be performed. If the product is not
in conformity, the responsibility of the certification body is involved. However, this
situation seems exceptional.


     §5.       Legal analysis


The main difficulties experienced by the EU exporters to Russia are related to the
obligation to certify their products according to the Goststandard requirements. In
application of these requirements, all products must have the Gosstandard logo,
together with the number of the certification unit. In addition, the labelling and
marking requirements for some products are more detailed than the European
requirements. Russia is still not a member of the WTO and is not obliged to respect
the provisions of the WTO Agreements. However, the country is applying for
accession and, in this respect, Russia would be obliged to adapt its legislation to the
WTO requirements. According to Russian sources, the legislation on certification and



CEEI –Labelling – Final Report –16 August 2002                                      102
conformity assessment will be modified in a near future and these modifications
would represent one of the main changes before WTO accession.

The legal provisions, which apply are included in the Partnership and Co-operation
Agreement33, which have entered into force on 1st of December 1997.

One of the most important provision is Article 55 of the PCA. According to this Article
"the two parties recognise the importance of the approximation of law" and Russia
took the commitment to adopt legislation compatible with EU legislation. The
approximation of law includes the field of standards and the technical regulations.
Article 60 PCA recognises the importance of approximation of law in the field of
standards and conformity assessment, the use of international standards and the
conclusion of mutual recognition Agreements.

In the textile sector, in application of these provisions an Understanding on
certification was annexed by Exchange of Letters to the 1999 EC-Russia textile
Agreement. Under the Understanding, Russia should provide information about the
current scheme of certification and adopt a new law in conformity with the
international standards. Under the pressure of the EU, Russia has adopted the new
scheme of certification, which is the declaration of conformity. However, as above-
mentioned, the implementation of this scheme still hinders EU exports to Russia.

In view of the future accession of Russia to the WTO, it should be mentioned that
Russian standards are not in conformity with the requirements of the TBT
Agreement. The Agreement (Article 2) requires that the members should use
international standards already existing, except if those standards are ineffective. The
standards should not create unnecessary obstacle to trade and be more trade
restrictive than necessary to fulfil legitimate objectives.

Russia has not provided sufficiently clear information about the current system of
conformity assessment with Articles 55 and 60 PCA and the Understanding on
Certification. The requirements of the Russian side remain unclear for the EU
operators.

The Russian authorities do not accept any certification to internationally adopted
standards. The procedure of certification is not in conformity with the international
guides and recommendations. Only a few European laboratories and certification
bodies are accredited to provide Gosstandart certification.

 As far as labelling requirements are concerned and when those are not related to
specific certification procedure, the provisions of Article 55 are applicable in the same
way. Art. 55 PCA requires the approximation of the Russian legislation concerning
technical barriers and the protection of the consumers to the European law in this
field. It seems that Russia has not accomplished significant efforts to implement this
provision. However, this Article is not accompanied with effective enforcement
procedures requesting the parties to make examination on progress of law
approximation. The Cooperation Council set up under the Agreement is responsible
for its interpretation and implementation. This means that the EU companies, which

33
     Official Journal L 327 , 28/11/1997 p. 0003 - 0069


CEEI –Labelling – Final Report –16 August 2002                                       103
have encountered difficulties with the Russian certification, have no direct recourse
under the Agreement. They could refer difficulties or cases of discrimination to the
European Commission, which could raise the issue in the Cooperation Council.




CEEI –Labelling – Final Report –16 August 2002                                   104
                                      PART 6: INDIA




§1.    The missions to India


§2.    Marking and labelling requirements affecting imported products

       2.1.    Requirements on all imported packaged products (Notif 44/2000)

       2.2.    Additional requirements for some foodstuffs products

               a)     Shelf life data requirements
               b)     Vegetarian logo
               c)     Certification requirements for some products

       2.3.    Meat and poultry products (Notif 3/2001)

               a)     Labelling requirements
               b)     Sanitary import permit

       2.4.    Additional requirements for wines and spirits (Notif. 5/2001)

       2.5.    Clearance for food articles

       2.6.    Import conditions fro textiles


§3.    Problems of EU companies (before shipment)

       3.1.    Labelling in the EU Member State of origin

       3.2.    Difficulties with the MRP requirement

       3.3.    Additional costs for EU companies


§4.    Problems faced by importers of EU products

       4.1.    Foodstuffs products

               a) Payment of customs duties and import taxes
               b) Compulsory inspections by authorized laboratories

       4.2.    Textile and clothing products




CEEI –Labelling – Final Report –16 August 2002                                  105
       4.3.    Wines and spirits

               a)      Burden of import duties and taxes
               b)     Labelling requirements

       4.4.    Additional problems

§5.    Legal analysis




CEEI –Labelling – Final Report –16 August 2002             106
§1.       The missions to India


A first mission was conducted in Delhi from 12th to 24th September 2001. The
consultant met

      (1) the relevant Indian Authorities (Directorate General for Foreign Trade
          (DGFT), Customs, Bureau of Indian Standards (BIS), in order to complete the
          collection of relevant labelling requirements and other applicable rules related
          to the importation of EU products, as well as the position of the Authorities on
          their implementation;

      (2) the EU Trade Member States Trade Representatives in order to identify the
         companies, which have recently encountered difficulties regarding the control
         of labels, or additional costs related to labelling requirements;

      (3) importers of EU products most affected by the marking and labelling
          requirements (mainly foodstuffs, textiles, wines and spirits);

      (4) The Industry Association CIFTI in order to discuss certain aspects of the
          labelling requirements for foodstuffs products.

A second mission was conducted at the end of the reporting period in order to
assess the evolution of the situation (from 24 to 28 May 2002). During this mission,
the consultant met EU trade representatives and importers of products affected by
marking and labelling requirements.

The main outcome of the missions is as follows:

In April 2001, Indian Authorities implemented a significant liberalisation of the import
restrictions (removal of Quantitative Restrictions (QRs) and a reduction of import
duties. All goods not classified as prohibited or restricted in ITC (HS) Classification of
Export & Import of items can be freely imported. However, since November 2000, the
DGFT has started the imposition of various non tariff barriers: the extension of
packaging and labelling requirements to imported consumer goods, the extension of
mandatory registration of BIS standards to imported products, the agriculture permit
and the sanitary permit for import of meat and meat products of all kinds including
fresh, chilled and frozen meat, tissue or organs of poultry, pig, sheep, goat; egg and
egg powder; milk and milk products; bovine, ovine and caprine embryos, ova or
semen; and pet food products of animal origin34.

Therefore, importers and EU companies complain about the raising of new non tariff
barriers affecting the importation of EU (and other) products in particular the
implementation of labelling and certification requirements contained in various texts.
The implementation of these requirements causes various problems to EU exporters
and Indian importers:


34
     Vinod Mehta and Arun Goyal: Export and Import Policy 2002-2007, a.b. 2002, p. 55.


CEEI –Labelling – Final Report –16 August 2002                                           107
1.     For EU exporters, the provisions of the “Standards on Weight and Measures
       Act” and the provisions of the “Prevention of Food Adulteration Act” (PFA) are
       now applied to imported products. Therefore, the exporters must affix a
       specific label before shipment. The new rules foresee that the compliance with
       these requirements shall be ensured before the clearance process.

2.     EU exporters face difficulties to comply with some of these requirements.
       In particular, the obligation to affix the Maximum Retail Price (MRP) on the
       label is problematic. The MRP varies from one Indian State to another, given
       the fact that its calculation is based on domestic taxes. For EU exporters of
       wine, for example, this requirement constitutes, if strictly applied, an
       unbearable barrier.

3.     The obligation to comply with the requirements before the clearance process
       causes practical difficulties to importers. According to Customs, importers are
       neither allowed to affix the labels in Customs nor allowed to correct a label
       found unsatisfactory by Indian Authorities (Customs or Bureau of Indian
       Standards).

4.     Indian importers also face difficulties with the controls carried out by accredited
       laboratories in charge of compulsory inspections for foodstuffs. The
       laboratories check the labels and the product composition (mainly compliance
       with PFA standards and correspondence between nutritional information and
       the labels). The results of the tests cannot be challenged. There is no
       maximum time-duration for the tests. Sometimes, the product is wrongly
       classified and analysed under different standards, according to the accredited
       laboratory. This generates uncertainty. In the majority of the cases, the
       importer is charged with significant storage costs and the products are not
       always stored in adequate conditions. The testing process is the main non-
       tariff barrier.

5.     Members States and importers also complain about the Indian quality
       standards requirements contained in the Notification No. 44. EU exporters of
       133 products must follow burdensome procedures of certification carried out
       by the Bureau of Indian Standards independently of the other provisions
       regarding the application of the PFA and Weights and Measures Acts.

6.     The difficulties dramatically worsened for meat and meat products since Indian
       Authorities require a sanitary import permit. In addition, for primary agricultural
       products a Bio Security and Sanitary- Phyto Sanitary permit is required.

7.     Import of alcoholic beverages is subject to compliance to various mandatory
       requirements as stipulated by various state regulations, which complicates the
       preparation of labels and tremendously increases the importers’ costs (label
       registration fees).

8.     Compliance to labelling requirements is now more carefully checked during the
       import procedure for apparel products since the implementation of new
       provisions regarding hazardous dyes.



CEEI –Labelling – Final Report –16 August 2002                                        108
§2. Marking and labelling requirements affecting imported products


Before 2000, only the domestic packaged products were subject to labelling
requirements contained in the Standard of Weights and Measures Rules of 1977. In
addition, domestic foodstuff products must comply with the provisions of the
Prevention of Food Adulteration Act 1954. Under the pressure of domestic producers,
which had complained that the imported products were not subject to these rules, the
Directorate General for Foreign Trade (DGFT) has extended the application of these
requirements to all imported products (Notifications Nos. 44/2000 and 3/2001).

These rules have immediately caused difficulties to the EU exporters and their
clients, since their compliance should be ensured before the clearance process.

In addition, Indian Authorities have also implemented additional requirements for
some foodstuffs products (meat and meat products, eggs products, milk products,
and primary agricultural products) requiring the importer to file to the Department of
Animal Husbandry and Dairying for a specific import sanitary authorization. This
further complicates the import process and adds new product description
requirements to those already fixed for the same products (labelling requirements).

Importers also complained about the additional labelling requirements for wines and
alcoholic beverages, since the State Governments are entitled to issue mandatory
labelling requirements for these products (Notification 5 DGFT/2001).


2.1. Requirements on all imported packaged products (Notification No. 44/2000)


In November 2000, the Directorate General for Foreign Trade (DGFT) has issued
new labelling and marking rules for imported products35. These rules implemented
since 1st January 2001 are of great concern for EU exporters and their customers.
The notification stipulates that:

“all such packaged products, which are subject to the provisions of the Standard of
Weights      and     Measures       (Package     commodities) Rules   1977    when
produced/packed/sold in the domestic market, shall be subject to compliance of all
the provisions of the said rules, when imported into India. The compliance of these
shall be ensured before the import consignment of such commodities is cleared by
Customs for home consumption. All pre-packaged commodities, imported into India,
shall in particular carry the following declarations:

(a) Name and address of the importer
(b) Generic or common name of the commodity packed,
(c)the net quantity in terms of standards units (…)
(d)the month and year of packing in which the commodity is manufactured or packed
or imported;

35
     Notification N° 44(RE) 24.11.2K of 24 November 2000.


CEEI –Labelling – Final Report –16 August 2002                                    109
(e) the maximum retail sale price at which the commodity packaged form may be sold
to the ultimate consumer. This price shall include all taxes local or otherwise, freight,
transport charges, commission payable to dealers, and all charges towards
advertising, delivery, packing, forwarding and the like, as the case may be.”

Under Policy Circular No. 38 (RE-2000) of 22/01/01, the labelling requirements
mentioned in Notification No. 44 (RE-2000) dated 24/1/2000 are “applicable only to
imports of those pre-packaged commodities, which are intended for retail sale“
(therefore not for raw materials, components, bulk imports etc, which would go under
processing or assembly before selling to consumers).


2.2. Additional requirements on some foodstuffs products

a) Shelf life data requirements

Another important provision is alleged to further restrict imports of foodstuffs products
in India. Since 2001, “all edible /food products, domestic sale and manufacture of
which are governed by Prevention of Food and Adulteration Act 1954 shall also be
subject to the conditions that, at the time of importation, the products are having a
valid shelf life of not less than 60% of its original shelf life. Shelf life of the product is
to be calculated, based on the declaration given on the label of the product, regarding
its date of manufacture and the due date for expiry “36.

b) Vegetarian logo

Under Notification dated 20 December 2001, for all vegetarian food, a declaration to
this effect shall be made by a symbol and colour code so stipulated for this purpose
to indicate the product is Vegetarian. The code is a green colour filled circle, with a
diameter not less than the minimum size specified in the notification. Depending on
the size of the principal display panel, the minimal size of its diameter is 3 to 8 mm.

c) Certification requirements for some products

In addition to the provisions regarding the application of the Standards of Weights
and Measures rules to all pre-packaged commodities aimed to be imported, the
Notification No. 44 contains provisions regarding the application of Indian Quality
Standards for 131 products37. The extension of BIS standards to imports implies the
intervention of BIS authorities. For example the assessment of BIS standards on
mineral water can only be given by the BIS. The creation of new non-tariff barriers is
due to the fact that the imported products should satisfy the requirements of different
laws administered by different ministries38.




36
   Export and Import Policy.
37
   Policy Circular 34 (RE-2000)/97-2002 defines that it is an independent provision.²
38
   See Vinod Mehta and Arun Goyal: Export and Import Policy 2002 – 2007, Commentary, case law,
text, ab, 2002, p. 55.


CEEI –Labelling – Final Report –16 August 2002                                           110
2.3. Meat and poultry products (Notification No. 3 DGFT/ 2001)

a) The labelling requirements

Under the Notification No. 3 of 31 March 200139, the Directorate General for Foreign
Trade has decided that

“Import of meat and poultry products will be subject to the compliance of conditions
regarding manufacture, slaughter, packing labelling and quality conditions as laid
down in Meat Food Product Order, 1973” and

“Import of such edible/food products, domestic sales and manufacture of which are
governed by PFA 1954 shall be subject to the conditions laid down in the aforesaid
Act. “

For these two types of commodities, the Resolution foresees that compliance with
these requirements is to be ensured before allowing customs clearance of the
consignment (resolution’s points 2.7 and 2.8).

Therefore, the food products imported into India shall carry the following data:

(a) Name of the company, together with complete address, telephone and fax
numbers,
(b) Address of the distributor
(c) Manufacturing licence number
(d) Brand name of the product
(e) Standard certification number
(f) Quality logo
(g) Batch number
(h) Net weight on the package item
    (i) Content: ingredients used with indication of the units per ingredient
(j) Date of manufacture
(k) Date of packaging
(l) Expiry date (from the manufactured date, the total validity should not exceed 4
months)
(m) Maximum Retail price

b) The sanitary import permit

Since July 2001, imports of meat and meat products of all kinds, eggs and eggs
powder, milk and milk products are subject to a sanitary import permit to be issued by
the Department of Animal Husbandry and Dairying of the Ministry of Agriculture as
per section 3A of Livestock Importation Act, 1898, as incorporated by Livestock
Importation (Amendment) Ordinance, 2001 dated 05.07.2001 and as notified on
07.07.2001.

The applications for import permit must be sent to the Joint Secretary Trade Division
of the Department of Animal Husbandry and Dairying, Ministry of Agriculture (point 2

39
     Notification N° 3(RE-2001)/1997-2002.


CEEI –Labelling – Final Report –16 August 2002                                     111
Notification). The sanitary permit is delivered only after a detailed risk analysis is
carried out and being conclusive. The notification also foresees detailed examination
of the products at the point of entry by the officer in charge of the Animal quarantine
and certification services or any other duly authorised officer. The examination is
conducted according to the guidelines issued by the Department of Animal
Husbandry from time to time (point 5 Notification).


2.4. Additional requirements for wines and spirits (Notification No. 5/2001)

Under the Notification No. 5 of DGFT of 31 March 2001, “ Imports of alcoholic
beverages as classified under chapter 22 of ITC (HS) Classifications of Export and
Import Items, 1997-1992, shall be subject to compliance of various mandatory
requirements as stipulated by various State Governments”.

Labelling requirements for wines and spirits in India fall also under the competence of
the Indian states. The States decide the rules, the regulations and the import policies.
Each State can, therefore, issue its own set of rules. Among the 26 States, most of
them have now announced their policy concerning the registration rules
(Maharashtra, Delhi). For some states, these registration rules do not contain precise
labelling requirements. Others States have issued labelling requirements.

In general the state labelling requirements differ at least on three issues:

-      the statutory warning: For example, in Haryana it is “Excessive use of alcohol
       is deleterious for health”, while in other states it is “consumption of liquor is
       injurious to health”. In addition, in the State of Delhi, the label must be written
       in English, Hindi and Urdu.

-      The mention “for sale only in …” (the specific state).

-      The MRP (Minimum retail price) requirement.

The labels have to be registered in the State of final destination.

Therefore, the EU producer, who wants to export wines to Mumbai and Delhi, must
theoretically produce a different label for each state of final destination. Beforehand,
the importer will have to follow specific registration procedures and submit the labels
for approval to the State administration (see point 3). A major problem is that the
wholesaler must register the brand. However, the wholesaler is not the brand owner.
The EU companies fear to let the wholesaler register the brand without giving to him
the exclusive rights of the brand. Therefore, the EU companies would prefer to
register the brand and the labels themselves.




CEEI –Labelling – Final Report –16 August 2002                                        112
2.5.      Clearance of food articles

Indian Authorities have issued the Customs Circular N° 36 of 15 June 2001
40
  concerning the clearance of food articles. It foresees that the Customs should carry
general checks in addition to testing of samples prior to the Customs clearance on:

(a)The condition of the hold in which the products were transported
(b) the physical/visual appearance in terms of possible damages
(d) the labelling requirements under the PFA and the Packaged commodities rules.

If the product does not satisfy these requirements, the clearance should not be
allowed.

In addition, under the Circular 36/2001-CUS, “all the consignments of edible food
products imported through ports, airports, ICDs CFSs, land customs stations shall be
referred to PHOs for testing and clearance shall be allowed only after receipt of the
test report. Pending receipt of the test report, such consignments shall be allowed to
be stored in warehouses under section 49 of the Customs Act 1962. If the products
fail the tests, the customs authorities will ensure that the goods are re-exported out of
the country by following the usual adjudication procedure or destroyed as required
under the relevant rules”.

The Circular also provides that in case of failing test report, the products will be re-
exported or destroyed (point 2.3) (see infra, point 3 regarding the problems faced by
importers with the testing procedures).


2.6.      Import conditions for textiles

Import of textile products is permitted under the condition the products shall not
contain any of the hazardous dyes whose handling, production, carriage or use is
prohibited by the Government of India under the provisions of clause (d) of
subsection (2) of section 6 of the Environment (Protection) Act, 1986 together with
other relevant rules. The import consignment shall accompany a pre-shipment
certificate from the notified agencies. In cases where certificates are not available,
the consignment will be cleared after testing of the same from the notified agencies.




40
     Customs Circular N° 36/2001-CUS.


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§3. Problems of EU companies (before shipment)


During interviews conducted with EU Trade representatives and representative
offices of EU companies, various problems have been underlined:

1. According to the new rules, EU companies should label their products in the
   country of origin at least for all products covered by PFA and Standards of Weight
   and Measures Act (in this case, it covers all pre-packaged commodity, therefore,
   this represents a wide gamut of products).

2. Some requirements are difficult to comply with (for example the minimum retail
   price can not be estimated exactly in the country of origin, it is difficult to label in
   Hindi or Urdu, there are also difficulties regarding the shelf life requirements)

3. EU companies face additional costs to comply with these requirements.


3.1.   Labelling in the EU Member State of origin


Since the beginning of 2001, all imported products over 50 grams should be labelled
according to the Standard of Weight and Measures Packaging Act rules and, in the
case of foodstuffs, according to the rules of PFA Act.

Compliance with these requirements should be ensured before the clearance
process, the labelling burden is now theoretically on the EU exporter's side. This
means that the EU exporter has to prepare a specific label for the Indian market and
suffers additional costs. More important, it seems that in case of discrepancies found
by the Customs, the importer is not anymore authorised to correct the label, either in
the Customs warehouse or in its warehouse.

During the first mission, the consultant has raised this question with the Authorities in
charge of the policy (DGFT) and the implementation (Customs) in order to see if the
wording “before the clearance process” could not been understood in a broad
manner. For example, it is important to know if the stickers could not been affixed in
the Customs bonded warehouse. Indeed, the customs bonded warehouse can be
understood as a place outside the territory of India (argumentation defended by the
Austrian Deputy Trade Commissioner).

The DGFT official and the Customs Chief Commissioner have given similar answers,
but with slight differences:

1) According to Customs the EU products (foodstuffs or others) must be labelled in
   the country of origin (before shipment) in compliance with the Indian rules. The
   shipment must arrive at the port of entry already adequately labelled. There is no
   exception admissible, even if the Customs have accepted during a transition
   period (covering January – June 2001) that the products could have been labelled
   in the Customs bonded warehouses. According to Customs, if the label is found


CEEI –Labelling – Final Report –16 August 2002                                        114
   not complying with the requirements, the products cannot be cleared and the
   importer is given no chance to correct the label.

2) The DGFT Deputy Director has confirmed that the products must comply with
   labelling while arriving at the port. However, exceptionally, it should be possible to
   negotiate some exceptions on a case-by-case basis.

According to the information collected during the second mission, it seems that, in
practice, most of the foodstuffs products are labelled in the country of origin.
However, some importers affix the stickers just before presenting the goods for
testing, or for clearance.


3.2.    Difficulties with the Maximum Retail Price (MRP) requirement


The EU Member States Trade Representatives, the EU companies and importers
have strongly criticised the obligation to affix the Maximum Retail Price in the country
of origin. There are various problems: (1) to know in advance the amount of the MRP
and (2) to afford the costs of this obligation.

The MRP is calculated on the basis of different criteria (freight, insurance, internal
taxes). In India, each State has a different rate of sales tax and other taxes. Sales tax
varies from 8% to 20% in the state of final destination. It is often not possible to know
in advance the identity of products and of consumers, as well as the quantities, which
will be sold. Even if the importer can give to the EU company an accurate indication
of internal taxes to the importer, he will not be able to guarantee that the information
on the exchange rate is correct.

If an EU producer supplies products aimed to be sold in various states, he will have
to produce as much different labels as there are States of final destination for each
item sold. This results in significant additional costs.

3.3.    Additional costs for EU companies

The obligations introduced by the Indian law result in higher production costs for the
EU producer, who must produce a different label by Indian State of final destination.
Often, the EU exporter even does not know the customers of its client (importer). He
does not know also in which State the product will be finally purchased by the final
consumer. This explains why importers recommend to the EU exporter to affix a
standard maximum retail price (for ex. 100 Rs for all states, while the product will be
sold at 70 or 80 Rs in various states). This “practical” solution is tolerated by
Customs. However, it raised a number of difficulties for the importers, while Customs
take the MRP as an assessable value for taxation.

According to Member States trade representatives, the companies most affected by
the obligation to label in the country of origin and by the MRP requirements are the
foodstuffs exporters.




CEEI –Labelling – Final Report –16 August 2002                                       115
For the products subject to registration with the Bureau of Indian Standards (BIS) (ex
for food additives and mineral waters), additional costs should be added to the
considerable costs already supported by the EU companies: (fees, inspection trip for
2 BIS inspectors to production facilities, yearly renewable fees).


§4. Problems faced by importers of EU products


Since the implementation of labelling and certification requirements, the importers are
facing increasing difficulties. These difficulties seem to be particularly important for
foodstuff importers, because controls are stricter on their products. According to the
EU Member States, these new rules now constitute an important barrier for SME and
prevent their exports.

In addition, importers of apparel products have alleged facing increasing difficulties
with the controls performed by Indian Authorities (controls on labels and certification
issues).


4.1. Foodstuff products

Under Notification No. 3 of DGFT, combined with Notification No. 44 of DGFT, the
problems faced by foodstuff importers can be described as follows.

When the consignment arrives at the port, the importers have to pass the following
steps:

                             1. Payment of import duties
                             2. Tests by accredited laboratories
                             3. Storage conditions and additional costs


a) Payment of customs duties and the import taxes.

At that moment, importers do not even know if the clearance process will be
authorised or not, but they are obliged to pay all duties and taxes. It was mentioned
that in some cases, while the analysis report (which checks the identity of the product
to the label) was negative, and the goods were rejected, the importer had faced
problems to recover the money unduly paid to Customs41.

b) Compulsory inspections by authorised laboratories.

Since 2000, the Customs have issued several circulars regarding the application of
the PFA Act and other Acts for the clearance and consignments of food articles 42.
41
   It must be quoted, that this practice to pay the customs duties before receiving the results of the
tests reports is apparently not uniformly applied, since some importers have declared they could
negotiate with Customs to pay the import duties after a positive test report delivered by the laboratory.
42
   See Board’s circular N° 103/2000-CUS providing guidelines for examination, testing of food items
prior to customs clearance and Circular N° 36/2001-CUS on the application of PFA and other acts.


CEEI –Labelling – Final Report –16 August 2002                                                      116
Under the Circular 36/2001-CUS, “all the consignments of edible food products
imported through ports, airports, ICDs CFSs, land customs stations shall be referred
to PHOs for testing and clearance shall be allowed only after receipt of the test
report. Pending receipt of the test report, such consignments shall be allowed to be
stored in warehouses under section 49 of the Customs Act 1962. If the products fails
the tests, the customs authorities will ensure that the goods are re-exported out of the
country by following the usual adjudication procedure or destroyed as required under
the relevant rules”.

The importers must, therefore, bring samples to the central Food Laboratory or an
authorised laboratory for such testing by the Directorate General of Health Services.
A 100% check is done on foodstuff products. These laboratories are meant to
conduct the control of compliance with the PFA rules, Standards and Measures
Rules and other requirements (such as control of the mark of certification for the
products subject to compulsory certification43 or the requirements on non vegetarian
symbol and any requirement under other acts such as Meat Food Product Order,
1973, Plants, Fruits and Seeds Order, 1989; the Livestock Act etc44). This means that
the product composition, the size of packaging as well as the labels will be carefully
inspected. As PFA rules are very detailed and complex, inspectors are alleged to use
these regulations to discourage imports. The corruption is also denounced “out of the
record”. In case of foodstuffs, importers need quick procedures, given the short shelf
life of their products.

Importers have stressed the following difficulties:

1. The scarcity of laboratories authorised by the Indian Authorities together with the
   lack of management aimed at conducting fast testing on imported products can
   be considered as a first obstacle. For the time being there are only four
   authorised laboratories in Delhi and one in Mumbai (200 km from Mumbai).
   These laboratories are at 30 miles away from the customs check-points.

2. Authorities are alleged to report the quick testing of the products by all possible
   means. First, the Customs must collect the sample in a sealed envelope. There
   is no guarantee that the sample will be kept in a fridge before leaving for the
   laboratory. Cheese importers reported that their samples were let at 40° for more
   than half day. Second, the Customs must call the Port Health Officer (PHO) or
   the Airport officer (AHO), which issue certificate, allowing the disposal of the
   sample in a laboratory. Please note that there is only one person in charge of this
   procedure in Delhi airport. The importer must, therefore, obtain an appointment
   in advance with this person.

     If there is no Port Health Officer available, under the Circular 36/2001, the
     Customs should draw the samples to the laboratory. However, in practice, it is up

43
   Some foodstuff products as chocolate, additive, mineral water among 133 products are subject to
very strict certification requirements by BIS. The EU companies must have a representation office in
India, follow registration and certification procedures in the country of origin. The laboratories will
therefore verify the presence of the certification logo on the package of the imported product as well as
the other labelling requirements under the PFA and the Standards of Weights and Measures Act.
44
   Circular 36/2001-CUS, point 3.


CEEI –Labelling – Final Report –16 August 2002                                                      117
     to the importer to arrange the transportation facilities for sending the samples
     with the Customs or Health Officer representative. In some case, there is no
     transport facility to send the sample to the laboratory. The importer requests the
     qualified agent to accompany the sample and drive him to the laboratory. No
     importer is allowed to enter in the laboratory (according to some of them: it is
     “like a prison”). They do not receive complete information on the tests carried out
     on their products. Many interlocutors pretended they are not even adequately
     equipped to carry out the tests. EU companies have complained about the
     unhygienic conditions in some laboratories and the dangers of heat damage and
     vermin infestation.

3. Theoretically, in case of perishable foodstuffs, the conformity with the PFA is
   assessed faster and the goods are given preliminary clearance against financial
   guarantee. However, various goods are surprisingly not classified as perishable
   (chocolate).

4. All importers interviewed complained about unacceptable delays. It is alleged
   that the tests last at least two weeks. During the testing period, the importer must
   pay the container demurrage charges, the ground rent port charges and other
   facilitation charges45. These charges are estimated to be at least 7% of CIF value
   of shipment. For example, for 45 days delays, an importer paid about INR
   100.000 of extra charges (container demurrage, charges for detention of a
   refrigerated container, ground rent and others) for a total CIF value of 1400000
   IRS. In another port (Delhi), an importer had to pay extra storage costs during 21
   days, such as some 70,000 IRS or roughly 7.6% of the CIF value of the imported
   product. Note that in this case, the product had a short shelf life (processed
   cheese product). The worst aspect is the storage conditions. According to an
   importer of EU cheese, the temperature in the AAI’s warehouse is not as per the
   specifications in which cheese is supposed to be stored. In various cases
   products were seriously damaged.

5. In addition, the fees requested by the laboratories are quite high. For example, an
    importer of different types of EU cheese must pay Rs. 2,000 by type of cheese
    tested, while another quoted Rs. 5000 by product. The importers of foodstuffs
    estimate that costs of testing (sample, testing fees, delays) represent an
    important barrier to imports. A same product sent in different consignments will
    be tested for each consignment.

6. One has to note that importers of foodstuff face various problems with the
   packaging dimension requirements contained in the PFA. For example, the
   laboratories refused imported EU cheese boxes of 140 grams because according
   to them it is not in compliance with the PFA rules foreseeing only packages of
   100 gr., 150 gr. or 200gr. This obliges the EU company to produce specific
   packages for the Indian market, in addition to the specific labels. In this case, the
   importer stated that PFA requirements were not clear and that cheese is not
   specifically mentioned in these requirements.

45
   According to an importer of Italian Cheese, m »Meanwhile the sample is tested by the accredited
laboratory, the material stays in the cargo under the AAI’s warehouse at the airport. The AAI give
relaxation of penalty for goods lying in their warehouse only for 5 days and if the report (which is not
time bound) comes after 5 days, this importer is charged heavy cumulative demurrage costs.


CEEI –Labelling – Final Report –16 August 2002                                                     118
7. Other problems concern the denomination of the imported products, as defined in
   the label. For example, a product defined as “sugar confectionery with coco” was
   rejected by the Central Food Technology Research Institute, Mysore which
   initially tested it under the standards of “chocolate” and found it not in conformity
   to the specifications and standards for chocolate contained in the PFA (the
   product was alleged to contain below the fat minimum content for chocolate).
   The Laboratory refused to test the product under the standards of
   “Confectionery”. Finally, the product was tested at the accredited Mumbai
   laboratory, which accepted to classify and test the product under the standards
   for confectionery (total delay: more than 40 days).

       In these examples, importers complained that in practice, there is no clear
       possibility for importers to appeal against the laboratory decision. In the case of
       the “confectionery sugar with coco”, the importer tried to have the product tested
       by the other laboratory, which refused to test it. He sent the products to Mumbai
       laboratory. This laboratory declared that the product complies with the standards
       of PFA. Time lost was 2 months during which the importer faced significant
       additional costs for storage.

8. For all products inspected, importers have to wait for the green light from the
   laboratories to start the clearance process. In case of mistake found in the label
   (e.g. spelling mistake of importer’s name), the importer is theoretically not allowed
   to correct the label and the product will either be sent back or destroyed. Any
   small error found in the label is called “misbranding” and is considered as a
   serious offence. According to the Customs Chief Commissioner of Delhi Customs
   Office, there is no possibility anymore to affix stickers, even in the bonded
   warehouses (which was allowed during a transition period). However, some
   importers have stated that the Customs still enable them to affix the stickers after
   arrival in the port 46 (some importers of foodstuffs, importers of apparel, importers
   of wines and spirits). This confused situation can be explained by various reasons
   (1) for foodstuffs, there are some clearance points which are more flexible than
   Delhi, (2) for textiles and wines, there is for the moment still a quite liberal attitude
   regarding labels. This could also explain why according to the meeting conducted
   with DGFT, the Customs could exceptionally decide on a case by case basis if the
   mistake can or cannot be corrected.
   .
Clearance process: it is alleged that for foodstuff products the whole process (tests
and clearance) can take up to 8 weeks (!). Products were sometimes out of use at
the end of the clearance process.


4.2. Textiles and clothing products

Control of labels on imported textiles and clothing products is a complex issue.

From one side, theoretically the importation of textile and clothing fabrics is subject
since 1988 to very strict marking and labelling requirements. These requirements are

46
     According to an importer, a 3% CIF penalty is charged.


CEEI –Labelling – Final Report –16 August 2002                                         119
set up by a Notification from the Textile Commissioner. This text has extended for
textile imported products requirements applied for domestic products. The EU
industry has explained that it is not possible for their companies to comply with (e.g.
marking of importer’s and exporter’s data in the selvage of the fabric). This implies
that the EU fabric producer installs a specific production line for products aimed to be
sold to India. During a recent survey made by the consultant with textile importers in
1999-200047, it was found that for the time being, Customs Authorities had not yet
implemented these requirements (no controls were conducted during the clearance
process to verify the compliance of imported fabrics and apparel with these
requirements). However, importers underlined that this risk is accurate, since the
textile domestic lobby was pressuring the Authorities to request Customs to conduct
stricter controls on required marking and labels. This is therefore perceived by the EU
industry (EURATEX and individual companies interviewed) as a threat for their
exports.

However, the situation has changed since June 2001. Since the implementation of
the DGFT Notification No. 3 of 31 March 2001, importers must also submit samples
of their products to specialised laboratory for azo dyes testing (BIS laboratory or
SGS). This situation is strange because under Notification No. 3, the import
consignment should be cleared without testing if the “import consignment is
accompanied by a pre-shipment certificate from the notified agencies. In cases such
certificates are not available, the consignment will be cleared after testing of the
same from the notified agencies”. Some of the importers interviewed stated that their
certificates from the EU were not accepted by Indian Authorities and they had
therefore to submit their products to authorised laboratories before the clearance
process.

The laboratory is meant to conduct azo dyes testing, even if these tests have already
been conducted in the EU. The importer suffers significant additional costs: he must
give a sample of each model/design to be imported. This sample will be tested. In
addition, the importer will have to pay 2,500 Rs for each sample tested. The testing
fees and procedure particularly hamper the importers of high quality apparel
products, importing small quantities and different models (e.g. suits and ties). For an
importer interviewed, the costs of the tests (samples, fees and storage costs during
the testing period) represent about 10% of the CIF value of the product. These tests
together with the high imported duties for these items (specific duties and import
duties resulting on average to 70% of CIF) prevent the development of trade and risk
to definitively stop imports of EU textile and clothing products.

An EU apparel company has bitterly complained about excessive testing conducted
on samples imported in India. These samples were not aimed to be sold.

In addition, the laboratory also checks the labels regarding the product composition
and the compliance of labelling requirements with the Standard of Weight and
Measures Rules (e.g. MRP requirement). This constitutes a big change, given the
fact that until now, despite strict specific requirements for textile and apparel, the
labels were not checked before or during the clearance process.


47
     CEEI Market Access Study (textile sector). Final Report, March 1999.


CEEI –Labelling – Final Report –16 August 2002                                      120
Importers also pointed out another problem indirectly linked to the issue of labelling
requirements. Since May 2001, under Notification n° 20 of the Ministry of Finance,
Customs authorities charge the tariff value for products of apparel not knitted or
crocheted articles falling in the subheadings N° 6201.00 at the rate of 60% of the
Maximum Retail Price (MRP) “that is declared or is required to be declared on the
retail packages under the provisions of the Standards on Weights and Measures Act,
1976 or the rules made thereunder or under any other law for the time being in force”
48
   . In addition to the fact that importers can be faced with increased total import
duties, it shows that the MRP requirement is now carefully checked by Customs. In a
Notification from the Ministry of Finance to all Chiefs Commissioners and
Commissioners of Central Excise, it is recalled that “the provisions of the standards
of Weights and Measures Act 1976, and the rules made under that Act are applicable
to ready made garments. As such it is obligatory to indicate the maximum retail price.
The person who is required to pay duty on ready made garments may be advised to
indicate the MRP of the garments included in the consignments under assessment
on the invoices so that the duty liability is correctly ascertainable”. Note that in this
document, it is referred that the calculation of the tariff value under notification
20/2001 on the 60% of the MRP is for “garments” (not only products of HS 6201.00).

According to importers, all these measures and controls illustrate a stricter attitude of
the Indian Authorities towards the importation of apparel after the elimination of
quantitative restrictions and the slight facial reduction of customs duties (specific
duties were reduced following negotiations with the EU in 2000).


4.3. Wines and spirits


Importers of wines and spirits have complained about the accumulation of measures
applied to the importation of their products. If their main concern remains the
implementation of excessive import duties, they are also worried about the
multiplication of labelling requirements at federal and local levels, which hamper the
importation of wines and spirits.

     a) Burden of import duties and taxes (at federal and state levels)

Since the implementation of Notification of Ministry of Finance of 31 March 2001, in
2002, imports of liquors are subject to a countervailing duty of 75% up to 150% of
CIF value (depending on value of the product)49. Under these rules and following the
implementation of all applied duties, total import duties for wines (HS 22.04) below 25
USD are 316%; for wines over 25 USD, the duties are 264%. For beers (HS 22.03)
of a value up to 25 USD, the import duties are 420%, while over 25 USD, the import
duty is 264%. For whiskeys, Cognac, brandies (HS code 22.08) the import duty
remains at a prohibitive level of 413.24%.

Since the countervailing duty is levied at Federal level, the States should not levy
additional sales taxes on the imported products. However, they do it in the form of

48
  Ministry of Finance Notification n° 20/2001-central Excise (N.T), 30 April 2001.
49
  Notifications n° 36 and 37 of Ministry of Finance specifying a countervailing duty on liquors. See
also Notification DGFT N° 5 (RE 2001)/1997-2002 of 31 March 2001.


CEEI –Labelling – Final Report –16 August 2002                                                 121
fees as they consider that taxation and technical requirements on imported wines fall
under their competencies. Indeed, on 31 March 2001, the Directorate General of
Foreign Trade has issued a Notification stating that ”Import of alcoholic beverages as
classified under Chapter 22 of ITC (HS) Classifications of Export and Import items
(1997-2002) shall be subject to compliance with mandatory requirements stipulated
by various State Governments” 50

The additional duty (or CVD) is supposed to compensate the state excise duty.
However, in various states, a local tax is charged on the product value (included
import duties). In the Maharashtra state, the importer has to pay in addition of the
import duties already paid (basic + additional + special additional) a fee of 100
Rs/bottle (while domestic wines are charged only with a fee of 25 Rs). In Rajasthan,
a tax of 34.5% is charged on imported wines, while the tax is 0% for domestic
products. In the state of Karnataka a 72% local tax is levied only on imported
products.

The States have not respected the Federal State Notifications urging them to stop
levying these additional duties on imported products.

      b) Labelling requirements

Regarding the control conducted on labels, distinction should be made between the
Federal level and the State level.

At federal level, it seems that Customs show a more flexible attitude for imported
wines than other products (e.g. foodstuffs) given the fact that the importers are
allowed to affix the proper labels in the bounded warehouse. However, not all
importers have a bounded warehouse. They need to affix the back label prior to the
clearance process and examination.

Importers face more difficulties at local level.

When the States have defined their policies regarding labels, importers must respect
registration and label approval procedures (documents and delays to get the
approvals could be burdensome). The importer must register the labels for each
vintage (! Ex: for listel cabernay and for listel Chardonnay).

In addition, the registration of label is costly. In “Chandigarh State”, it represents for
each label 25,000 Rs. Note that the local wines have also to comply with the same
requirements.

The importers must prepare a detailed file for each State in order to get the
registration. For example, a separate file will be prepared for a bordeau 1999 and
again for the same bordeau 2000. (even if the label has not changed).

The fees for brand registration are also significant, for example, half a million Rs by
brand. In some states, the fees can even reach one million Rs.


50
     Notification DGFT N° 5 (RE 2001)/1997-2002 of 31 March 2001.


CEEI –Labelling – Final Report –16 August 2002                                        122
 Therefore, the importers criticise the labelling requirements as an additional non-
tariff barrier. (i.e. import license permits issued by States).

The situation is, however, worse in the States which have not yet defined their
registration policy. In these States, it is not possible to distribute imported wines.


4.4. Additional problems

Labelling requirements are apparently only applicable to commodities in pre-
packaged conditions, which are earmarked for retail sale in India. Therefore certain
imported goods used as inputs of Indian manufacturers, such as raw materials,
components, bulk imports etc … and therefore are not meant for retail sale in India
should not be subject to these labelling requirements (Policy Circular N° 38, dated
21.01.2001).

However, importers of furniture components aimed to be assembled in India (e.g.
components for a table) have complained that Customs Authorities have requested
the MRP to be affixed on the labels of every component. This means clearly that
there are some abuses from Customs Authorities on the basis of the new labelling
rules. However, this information will be checked into detail with other importers during
the reporting period.

The importers fear that Customs may use these marking and labelling requirements
to harass them even more than usual. The Member State Trade representatives have
expressed the opinion that these moves signal the Government intention to raise new
barriers to imports in the post quantitative restriction regime.

Importers also complained about the delay for getting the sanitary import permit for
meat and meat products (can reach 3 months duration).

Importers of sugar confectionery complained that the CVD is being charged on the
MRP (minus abatement rate). According to them, this results in increasing the price
of their product, compared to the previous method (was charged on CIF basis). This
has stopped some exports of Italian and German confectionery products.


§5.    Legal analysis


The Indian market is considered by the European companies as one of the most
difficult markets among the markets under review. The main problem for the EU
exporters is the obligation to label their products before export and the impossibility to
correct the labels if they are found incorrect by the Indian authorities. In addition,
Indian labelling requirements are not always clear and the exporters are often in
impossibility to prepare correctly their labels. Products are also submitted to
compulsory inspections by the Indian authorities. These inspections aim to verify the
correspondence between the product composition and the information displayed on
the label. The Indian authorities are implementing also new certification procedures



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for an important number of products, which could create additional difficulties for the
European companies.

These difficulties could be challenged under the provisions of WTO Agreements.
Several Articles could be applicable for the problems identified depending on the
concrete case and the products involved. The TBT Agreement could be applied in
cases, in which the product and certification requirements are involved (e.g. the
products must comply with a standard which exists only in India and must undergo
special certification procedure). The SPS Agreement could apply in cases some
specific measures are taken to protect human health from contaminants, additives
and diseases (e.g. regular inspections conducted on food products). If these
measures are found more trade restrictive as necessary to protect human health they
should be eliminated.

The measures taken by the Indian Government could also fall under the scope of the
General Agreement. In case, these measures are applicable only to imported
products, they should be eliminated in application of Article III, which imposes
national treatment obligation. Excessive controls and penalties applied in customs
(e.g. obligation to re-send the products, when minor error in label is detected) could
be challenged under Article VIII GATT. Indian requirements are also considered by
the importer as non-transparent because non-published or due to the frequent
changes in the Indian legislation. This situation could be analysed under Article X of
the GATT Agreement.

A detailed analysis of these WTO provisions could be found in part 21 – Legal
Analysis.




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                                     PART 7: CHINA



§1.    The missions to China


§2.    The cosmetic products

       2.1.    Labelling requirements for cosmetic products (Order 21)

               2.1.1. Classification of the cosmetic products
               2.1.2. Labelling requirements for imported products

       2.2.    State of implementation

       2.3.    Problems for EU companies and importers

               2.3.1.   The main difficulties
               2.3.2.   Additional costs for EU companies and importers of EU products
               2.3.3.   The requirements on the formula
               2.3.4.   Data of the original label
               2.3.5    Discrimination between imported and domestic products

       2.4.    Additional problems

       2.5.    Conclusion


§3.    The foodstuffs products (including wines and spirits)

       3.1.    Labelling requirements for foodstuffs, wines and spirits (Order 19)

               3.1.1. Foodstuffs
               3.1.2. Additional labelling requirements for wines and spirits

       3.2.    The label approval for foodstuffs and wines

               3.2.1. The context
               3.2.2. The label approval procedure (order 19)

       3.3.    State of implementation

               3.3.1. Wines and spirits
               3.3.2. Foodstuffs products
               3.3.3. The Notification n° 21 of AQSIQ




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       3.4.    Problems for EU companies and importers

               3.4.1. Labelling in the country of origin
               3.4.2. Wines and spirits


§4.    Other products

       4.1.    Pharmaceuticals

               4.1.1. The labelling requirements
               4.1.2. The problems for EU operators

       4.2.    Electronic appliances

       4.3.    Textiles and clothing products

               4.3.1. The requirements
               4.3.2. Implementation

       4.4.    Additional problems

§5.    Conclusions

§6.    Legal analysis




CEEI –Labelling – Final Report –16 August 2002             126
§1.      The missions to China


The consultant conducted two missions in China and Hong-Kong. The first mission
took place from 30 October to 13 November 2001 (Beijing, Shanghai, Hong Kong).
The mission enabled the consultant to realise a first assessment on the new labelling
requirements for various products and in particular, the new requirements on label
certification for foodstuffs and cosmetics. The consultant met

        the relevant Chinese Authorities (AQSIQ – State administration for industry
         and commerce) in order to complete the collection of the relevant labelling
         requirements and other applicable rules related to the importation of the EU
         products, as well as the position of the Authorities on their implementation;

         the EU Trade Member State Representatives in order to identify the
         companies having recently encountered difficulties regarding the control of
         labels, or additional costs related to labelling requirements as well as to collect
         MS opinion on the impact of the new rules for the EU companies;

        importers of EU products most affected by the marking and labelling
         requirements (mainly foodstuffs, wines and spirits, cosmetics, textile,
         furniture). Individual interviews have been conducted in Beijing, Shanghai and
         Hong Kong. In Hong Kong, the consultant also visited and interviewed various
         companies in the International Fair COSMOPRO (12 November 2001);

During this first mission, a large number of problems were identified. However, there
was a significant uncertainty as regards the implementation of the new requirements.
It has been therefore decided to conduct another short mission at the end of the
research.

This second mission has been conducted in Shanghai from 21 to 23 May 2002. It has
enabled the consultant to interview other importers and to collect additional
information on the labelling requirements. The consultant took advantage of the
International Fair SIAL 2002 in Shanghai gathering various EU exporters of
foodstuffs, wines and spirits.


The main outcome of these missions is as follows:

Since April 2001, Chinese Authorities have issued significant modifications of the
labelling requirements applied for imported products (cosmetics, foodstuffs, wines
and spirits). The implementation of these requirements raises various concerns of the
EU exporters and importers of EU products in China:

1.       For EU exporters, the provisions of the Order 19 and the Order 21 are
         currently partially applied to imported products and will be totally implemented
         by November 2002. The main change results in fact that the EU exporters
         should affix a specific label before shipment. The new rules foresee that the


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         compliance with these requirements shall be ensured before the clearance
         process.

2.       EU exporters face difficulties to comply with some of these requirements. In
         particular the obligation to affix the production date (instead of the batch
         number) on the label is problematic for some products (e.g. cognac).

3.       The implementation of the new requirements has been postponed in order to
         give time to EU exporters and their customers to comply with new rules.
         However, importers fear that they will not be in a position to cope with such
         requirements before the clearance process. According to Chinese Authorities
         interviewed, importers of certain type of products (e.g. foodstuffs) will not be
         allowed neither to affix the stickers in Customs nor, which is more problematic,
         to correct a label found non satisfactory by Chinese Authorities (Customs or
         AQSIQ).

4.       Importers face also difficulties with the procedure of certification of labels
         carried out by the accredited Authorities. The procedures are burdensome,
         costly and very long. In certain cases, they prevent the EU companies from
         introducing in due time, their new products and expose them to the
         competition of illegal importation of their products, or situation of infringement
         of their intellectual property rights (copies made locally).

5.       According to the meetings with Member States representatives in Beijing and
         Shanghai, imported products potentially or effectively affected by labelling
         requirements are:

        Cosmetics
        Wines and spirits
        Foodstuffs
        Textile apparel
        Pharmaceuticals
        Others

The present document gives an overview of the situation product by product. In
particular, the document explains:

         a)    The labelling requirements
         b)    The implementation level and problems
         c)    The problems encountered by EU exporters and their customers.




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§2. The cosmetic products


2.1.     Labelling requirements for cosmetics products (Order 21)


2.1.1. Classification of the cosmetic products

Under Chinese standards, all cosmetics are divided into 2 categories: cosmetics for
ordinary use and cosmetics for special use.

Ordinary cosmetics refer to hair shampoo, hair conditioner; face wash, facial mask,
colour cosmetics, perfume, nail decoration products etc.

Special cosmetics refer to sunscreen, hair grower, hair dyeing, deodorant, sliming
products, freckle remover, breast beautifying, hair perm products, depilatory product.


2.1.2. Labelling requirements for imported products

National Standards of the People‘s Republic of China establish general labelling
requirements for cosmetic products (imported and domestic). These standards are
contained in various texts. Most important is the standards GB 5296 3-1995 (General
labelling of cosmetics). Some operators also quoted the standard GB7916 – 87 and
GB 7916-199 of May 1999.

In addition, before April 2000, imported cosmetics needed to be pre-market and
registered at the Ministry of Health (MOH), while ordinary domestic products were
only subject to a notification needed 2 months after the product’s launch in the
market.

In April 2000, the Chinese Authorities have issued new rules additional to those
existing regarding the delivery of a certificate by the Ministry of Health. These rules
have implemented the requirement for the importer to obtain a certification of the
label for the product to be imported. Therefore, all imported cosmetics are
currently subject to a double pre-market registration at MOH and AQSIQ
(Administration for quality supervision and Inspection and Quarantine). The lead time
for both registrations is 6-12 months (according to the company) and 90 days
respectively. Ordinary domestic products are not required to do this pre-market
registration: a simple notification within 2 months after the product is launched.

a) General labelling of cosmetics

The standards provide for the fundamental principles for general labelling of
cosmetics, as well the contents of the labelling and the requirements for the labelling.
The standards are applicable to the products sold in the Chinese market (point 1).
This means that it was conceived to control the compliance with these standards in
the market phase and not before importation.



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Labelling is referred as descriptive indications pasted or printed or enclosed in
packages delivered to consumers (point 3). Different forms of labelling are to be
used, according to the products features:

-   labelling directly printed or pasted on the product container
-   labelling on the individual package
-   descriptive materials enclosed in the individual package

According to the fundamental principles, the content of labelling of cosmetics should
be simple, clear and contain scientific and exact information (point 5.1). The labelling
of cosmetics should provide a practical introduction of the product, without
exaggeration and false advertisement content. All medical terms that may be easily
confused with pharmaceuticals should not be used (5.2). In the practice, this leads
EU companies to remove from their labels and packaging some indications such as
anti-wrinkles and sliming product.

The texts indicate the compulsory data to be affixed on the labels, with their
interpretation (in Chinese):

-   Name of the product (6.1).
-   Name and address of the manufacturer (including the packing firm and the sub
    packing firm of the product) (6.2).
-   For imported products: the name of the original production country or region, the
    name and address of the manufacturer or the distributor importer or the legally
    registered agent in China of the product (6.2.2.).
-   Net weight or net volume (6.3).
-   Date of production (year, months, day) and quality assurance period (months or
    years) OR batch number of production and expiry date (please use before
    …month /year) (6.4).
-   Production license, hygiene licence, product standards numbers (6.5). For
    imported products: the number of the approval document for the hygiene license
    (6.6).
-   For special application cosmetics: the number of the approval document for the
    hygiene license of these cosmetics (6.7).
-   Safety precaution and indications (if necessary) (6.8).
-   Storage conditions to ensure quality assurance period and safety requirements if
    necessary (6.9).

Naked products with small volume and without any individual package (lipsticks,
cosmetic pens) on which the descriptive elements are difficult to be indicated, the
name of the product and the name of the manufacturer should be indicated (only)
(7.1). For some special raw materials, contents should be marked in accordance with
the standard GB-7916.

The indication should remain readable and should not fall during transportation (8.1).
The wording should be in Chinese characters. Chinese and foreign language may be
used together (8.2). The measuring of the content should be in the Chinese
measuring unit system (8.4).

This standard was issued in 1988 revised in 1995 and in 1999.


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b) Registration procedure by Ministry of Health


B1 – Imported cosmetics

This procedure applies to any imported product aimed to be marketed in China.
These products need prior approval by the Ministry of Health (MoH). The MOH
issues a Hygiene permit whose registration number should be affixed on all products
sold in the market.

The procedure includes 2 steps: testing and evaluation.

Testing

Product composition testing is performed by designated central official laboratories (3
laboratories located in Beijing, Shanghai and Guangzhou) according to Chinese
standards methods. The tests aim, in particular, at finding out of whether the product
contains heavy metals, the pH values forbidden and restricted substances.

According to an operator, 20 samples by product tested are required. Files have to
be presented in 13 copies.

Testing fees according to product category amount from UDS 600 up to USD 4000.

Lead time takes generally 3 months for special use cosmetics and 2 months for
ordinary cosmetics. For other companies (newcomers and SME) it is estimated to be
4 months.

Products failing to pass any of the tests (chemical, microbiological, safety) are
rejected in the next step. Results are generally not opposable. If a product fails, the
tests are to be repeated (and fees charged) until passed, or the composition
changed.

Evaluation

Decision of the panel of experts

A file including a compulsory extensive listing of documents has to be prepared for
the submission to a panel of experts designated by the MOH. Such evaluation
commissions meets 4 time per year in Beijing only. They can ask for any additional
information. The panel of experts examine the cases during two weeks and submit
their reports to the Ministry of Health.

Additional samples and fees are requested (USD 240/product).

Among the documents, the applicant (EU company) has to provide proprietary
information such as quantitative and qualitative formula and the manufacturing
process. These documents are to be provided in 13 copies (by product).



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Since complementary information being often requested by the panel, the final
Decision is often delayed. Rejections are not opposable.

Final Decision by MoH

While the panel has finalised its Decision, the results are submitted to the MOH at a
department level and at ministerial level (6 signatures required). Two more months
are necessary to get the final approval.

As an average, importers of EU products consider that a 12 – 18 months lead-time is
necessary to get the final approval since the submission of the demand.

In case of any change, even minor of the Foreign/Chinese product name, sourcing,
formula has to be registered according to the full above explained process and
additional costs are involved.

B2 – Domestic products

Procedure to be followed for similar cosmetics is easier and cheaper for domestic
ordinary products.

For Ordinary cosmetics, no preliminary approval by MOH is required. Before
release on the market they should only pass a simple testing performed by the local
Hygiene station where the manufacturer is located. Fees charged are about USD 120
by product.

For Special use cosmetics 51, the same process than for all imported cosmetics
applies. The only difference is that testing performed is shared between two
designated laboratories (one provincial, one central). Testing fees range from USD
700 to USD 3250. Evaluation is duplicated between provincial (provisional
evaluation) and Beijing (final evaluation) commissions. Evaluation fees amounts to
USD 240.

However, it is estimated that the lead- time considered for domestic hygiene permit
can be longer than for imported, due to the complexity of dealing with two different
organisations and meeting the schedule of commissions.

c) Certification of labelling performed by AQSIQ (CIQ)

Since April 2000, AQSIQ has implemented new regulations related to the
Certification of Labelling:

-    the “Order 21” 52
-    the regulation of implementation53.


51
   8 products (hair colours, sunscreens, spot correctors etc ..).
52
   N° 21. Measures for supervision and Inspection of the Imported and Exported Cosmetics », of Feb
17 2000, effective since 1 st April 2000. :
53
   « Notice of Implementation of Measures for supervision and Inspection of the Imported and
Exported Cosmetics ».


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The procedure aims at the delivery of a certificate, which should be available when
requested by Customs, or local inspection and quarantine offices in the Customs and
throughout the country. The applicant has to follow a procedure similar to the
procedure of MOH (submitting a file including similar or same documents, provide
samples for similar testing). However, no testing report is given to the applicant.

Fees charged are estimated to amount to USD 160 by product and some USD 140
additional per additional format or shade. As an example, a range of lipstick under
the same product will be charged about USD 850. Lead-time to get the approval
takes generally 3 – months. Furthermore all products should be affixed a CIQ label.

These measures cover the supervision and inspection of import & export cosmetics.
CIQSA is the authority in charge of the supervision and inspection of cosmetics all in
China (art. 4), and in particular, the approval of examination of import and export
cosmetics labels (notice, point 1). It delivers the certificate for Examination of Import
& Export Cosmetics Labels before declaration for inspection (art. 5).

These provisions cover all products enumerated in the list of Import/Export
commodities, which are subject to Inspection enforced by the Commodity Inspection
Authorities. The provisions cover also all cosmetics specified by other laws and
regulations for inspection by quarantine authorities and all products subject to
inspection according to international conventions (art. 3).

Chapter II of Order 21 concerns in particular the label examination. Other chapters
cover the issues of management of different grades (chapter III), management of
inspections (chapter IV), management of supervision (chapter V) and supplementary
provisions (chapter V).

Under the Order 21, there are three steps in the procedure of label examination:

-       Preliminary examination of the labels and products to be imported;
    -   Control of labels
    -   Delivery of the final certificate of approval

The preliminary examination of the labels:

The importer submits a request to the accredited office of AQSIQ

The importer or its agent must present a request for approval of the labels of the
goods to be imported to the State Bureau Quarantine of Control and at least 90
working days before application for inspection of the cosmetics (art. 9). It is
conducted by accredited organisms of AQSIQ.

Under the Circular of implementation, 6 local offices are competent for the first
examination of labels: Beijing, Shanghai, Guangdong, Xiamen, Hubei, and China
Commodity Inspection (Hong Kong). The local office will conduct a first examination
of the labels and submit their initial examination reports together with other materials
to the Research Institute for Commodity Inspection Technology responsible for the
Final examination. The Research Institute for Commodity Inspection Technology and
the CIQ laboratories in Shanghai, Guandong, Xiamen and Hubei are competent to


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carry out inspections for examination of import and export cosmetic labels (Notice,
point 1.2).

The request must contain the following elements:

      -   “the application form for label examination; (form to be delivered by the
          registration office of CIQSA and to be filled in 3 spare copies).
      -   the explanation for functions and relevant reference materials; test methods of
          the cosmetics in concern.
      -   Ingredients of cosmetics.
      -   Quality standards of the manufacturer.
      -   Certificate for production and sale issued by the country of origin.
      -   6 samples of the proposed labels or at least photos of such labels.
      -   Other necessary materials concerned.

      The applicant must offer representative samples of the cosmetic in concern. The
      quantity must meet the need for label examination (not clear, art. 11).

      One single demand can be presented in limited cases: similar ingredients and
      productive technology but different specifications, or similar ingredients and
      productive technology but different packages, or similar ingredients, productive
      technology and packages but different appearances. In any case, 6 copies of
      each label are required (art. 12).


The accredited office conducts a preliminary examination of labels

The offices that accept the application for import and export cosmetics labels
examination must carry out inspection of general items within 10 working days and
send their inspection reports, application forms and samples of cosmetics to the
appointed laboratories designated by CIQS for analysis.

The label examination aims at verifying whether the sanitary conditions and
functional ingredients of the cosmetic are true and accurate as specified in the label,
the design, lay out, word explanation, pictures and symbols of the label are in
conformity with the relevant stipulations, and if correct Chinese labels are used for
imported cosmetics.

The accredited office controls the conformity of the labels with the Chinese laws,
regulations and standards (it is not quoted which rules and standards are concerned).
However, according to various interlocutors, it seems that the basic text regulating
the labelling of imported products is the 1987 text, revised in 1995 and 1999 by the
State Bureau of Technical supervision (GB see supra)54.

The appointed laboratories shall conduct the inspection of special items and perform
the initial examination within 40 working days, and send their initial inspection reports
to the Research Institute of Commodity Inspection Technology for the final
examination.

54
     General Rules for the labelling of cosmetics.


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Final Examination

The Research Institute of Commodity Inspection Technology shall finish the Final
examination and numbering within 10 working days. If the labels are found in
conformity with these rules, the certificate of examination of Import and Export
Cosmetics labels is delivered only after approval of State Administration of Inspection
and Quarantine (Notice point 4).

The Research Institute shall then set up files for examination of Import/Export
cosmetic labels. The application form and certificate of import and export cosmetic
label examination shall be issued solely by the Research Institute (point 6).


2.2.     State of implementation


It is indeed important to understand if the rules of registration and of certification of
labels are implemented or not and to what extend in order to assess the difficulties of
our companies and their clients.

The MoH registration procedure has been fully implemented since several years.
All EU companies willing to sell a new product into China are subject to these
procedures. In various meetings, they have pointed out the difficulties encountered in
the implementation: the procedure is long, burdensome and costly. The certificate
obtained will only have a validity of 3 years (see point 2.3.). It is very important to
select well the point of entry according to the length of the procedure (Shanghai
being more flexible for example).

The Order 21 procedure of certification of labels is in a transition period. Chinese
Authorities have started by collecting the fees but have given some “grace period” to
the EU exporters and their suppliers to adapt to the new rules: they allow the
importation of Foreign products with the receipt of the registered file. This means, in
practice, that the company must anyway have received the tests results for the file
and must have constituted and deposed the official demand to the Committee of
experts (with all documents translated and completed). Once the company has
received the receipt of acceptance of its file for label registration and has paid the
corresponding fees, it will be allowed to import the goods even if it has not yet
received the certificate, provided that it can deliver the certificate to Customs in a
three months period after importation.

 Most of the importers use this facility; However, this contains the risk of not being
able to present the certificate (if not given by the administration). This explains that
other companies already installed in China strictly follow the procedure since last
year, even if those companies have faced several difficulties. However, they have
already made the paper work for each type of product and are certainly better
prepared from a practical point of view than other SME or Chinese importers not
complying still with these requirements.




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On 4 of April 2002, Chinese Authorities have issued the Bulletin n.° 21 on the
implementation of the measures established in the Order 21. This text clarifies to
some extend, the situation on the implementation of the measures “order 21”. First, it
foresees that from the 1st of July 2002, in order to proceed sanitary control measures
at the point of entry, importers should provide the certificate of label approval or the
attestation of the reception of the deposit of label approval (receipt of file
acceptance). In any case, on the 1st of November 2002, the certificate of label
approval will be required for the formalities of sanitary control.

This seems to illustrate the willingness from AQSIQ to strictly implement for all
imported products the measures of Order 21 by November 2002.


2.3.     Problems for EU companies and importers


2.3.1. The main difficulties

The consultant has conducted interviews with several companies willing to export or,
already exporting to China and having experienced burdensome procedures set forth
by Order 21. These interviews were conducted in China (November 2001 and May
2002) and also during the International Cosmetics Trade Fair of Hongkong in
November 2001.

The situation for cosmetics is rather different from other products:


                          1. The additional costs suffered by the EU companies are
                             quite important (testing and other fees). In addition, The
                             procedure is so long that sometimes it is not worth for
                             products of a limited time duration

                          2. A key issue is that the EU company is required to provide
                             the formula of the product composition, which
                             constitutes a real risk of copying.

                          3. Some data mentioned on the original labels are not
                             accepted by Chinese Authorities.

                          4. EU companies feel discriminated compared to domestic
                             ones at various levels (registration to MOH only for
                             imported ordinary products, controls on products etc).




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2.3.2. Additional costs for EU companies and importers of EU products

The registration procedure is too long and the time lost is a key issue

The EU companies face additional costs given the fact they have to follow two
registration procedures with similar features (same tests, examination of labels)
These procedures are long and burdensome.

Registration at MoH

The importer, which wants to launch a new product has to start with the registration
procedure with MoH (13 copies of the file by product are required).

The registration procedure takes between 9 and 18 months (SME and newcomers
suffer the longest delays). This is particularly long and costly for a product of a short
duration life (cosmetics having often two years duration life until their formula is
adapted.) For companies installed in the market since the early 1990’s and having
started to follow these proceedings then, the time duration remains the same.

As above explained, the applicant must pass though several phases:

                     (1) submit the samples to the laboratories accredited by MoH for
                         analysis: the analysis takes about two months. This time limit
                         had been exceeded in several cases when the Customs have
                         denied the importation of the samples (importation of samples
                         above 10 kgs requires a specific authorization difficult to
                         obtain).

                     (2) During that period the applicant prepares the required
                         documents and their translation into Chinese. For various
                         documents, the translation has to be certified by a notary,
                         which results in delays (sometimes two months for the
                         certification of the free sale certificate: this translation can only
                         be done by a translator accredited by the notary!). The
                         applicant completes the file by informal contacts with the
                         administration in order to ensure that all documents required
                         and information will be duly presented to the panel of experts.

                     (3) The applicant submits the completed files with the tests results
                         to the panel of experts evaluation. The review panel meets only
                         every three months. If for example the evaluation meeting is
                         between the 15th and the 30th of March, the applicant must
                         submit the files (containing all documents and additional
                         information required) before the end of February. Between the
                         1st and 15th of April, the Secretariat worked at the notification of
                         the results. A certificate will not be issued before mid May…
                         Sometimes it happens that at this latest stage of the procedure,
                         the MoH asks again for complementary information, which will
                         delay again the whole process for the company.


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Theoretically it is only when the Final Decision of MoH is made public that the
applicant can file for the AQSIQ certification of labels procedure.

For other companies (newcomers and SME) The average time duration for the
procedure is about 18 months.

AQSIQ label certification

Large foreign companies having a representation office in China and dealing directly
with the Order 21 procedure estimate its duration about 3-4 months - if all
documentation provided is correct.

For small and medium companies and newcomers in the Chinese market, the
procedure is taking over by specialised consultant or associations (ex Union de la
Parfumerie Française for French companies). In these cases, the overall time limit
can be extended up to 8 months.

Costs

Estimates vary:

An EU company estimated its costs for a 9 months registration from USD 840 to USD
4240 (excluding staff salaries, mail, cost for overseas statements etc ). Other
company quoted costs between 5000 and 6000 USD by new line of products (250 –
300 RMB/product). Other companies estimate the price at 3000 USD by
commercialised product. According to ICE, the cost of the certificate MoH is about
2000 RMB for each product.


Both procedures are burdensome

The procedures are burdensome in terms of number of files to prepare (even for
similar products), samples to provide, and a number of tests to be conducted.

Theoretically, the applicant for MoH procedure must prepare a file for each different
product. For example, for a set of various lipsticks of different colours, a file is
required for each colour! (20 lipsticks = 20 files into 13 copies and 20 samples). Each
product must be subject to a test (and fees will be charged accordingly). It has to be
stressed that domestic cosmetics should not follow this procedure.

The documents required by AQSIQ are mostly the same than those provided for
MoH. However, the importer has to provide separate and new files (3 copies) with:

   -    formula complete and its translation in Chinese.
   -    results of laboratory tests (also in some cases the results of tests conducted in
        Europe).
   -    free sale certificate in Chinese.
   -    model of label (4 models or photos of labels).
   -    copy of the certificate of hygiene given by the Ministry of Health.


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This means that the importer has to wait for the first certificate, before applying for
the second to AQSIQ. This significantly delays the importation of the product.
However, in practice, most companies start the AQSIQ procedure (tests) after
launching of the MoH procedure in order to save time.

It is reported that on various occasions, when the laboratory has conducted the tests
for MoH and accepted the report tests delivered by the EU company as correct (ex
absence of methanol, level of PH), the panel of experts rejects the file saying that the
technical specification is not complete. In one case, a company lost a couple of
months in order to know exactly which were the documents required, three additional
months to provide the additional documents required, redo the tests and had to wait
for the next meeting of the panel of experts. Another company explained the
problems faced with the tests results for sun-cream: the company had to justify the
use of certain components and provide additional documents (time lost: several
months).

The overall registration procedure fees are too high

The applicant must pay the tests conducted by MOH. EU companies mentioned
costs reaching from 250 EURO – 500 EURO /test by product. For a big EU company,
these fees represent 3.5 Mio de RMB/year. It has to be stressed that the company
must pay a fee and prepare a file for each type of different product. For example, two
different files for sun-creams with a different level of sun protection (15 and 40,
having different concentration levels).

The fees charged by AQSIQ for testing are also expensive. AQSIQ does not give
detailed results of the tests, which does not allow the applicant to challenge the tests.

The tests are allegedly too old and inaccurate. The domestic products are not subject
to these tests. The domestic companies are theoretically controlled by MoH officials.
It is however difficult to estimate the level of controls conducted in the mills.

The tests conducted by MOH and AQSIQ are similar

EU exporters complained regarding the obligation to submit their products to the
same tests in both procedures: they pointed out that these requirements are
meaningless, costly (samples and fees) and burdensome (preparation of the files).

Surprisingly, in various cases, tests passed under the MOH procedure are found non
satisfactory under the AQSIQ procedure. A big cosmetic company estimates the level
of rejection either by MOH or AQSIQ at 10% (quite important).

In addition, according to various interlocutors, the accredited laboratories are even
not equipped to carry out some of the tests (SPF, protection tests). Therefore, they
will sometimes require and accept the tests already performed by the EU company,
sometimes not. Others estimated that sometimes the “good” results of the tests are
not even taken into account in the final Decision when the products are rejected.




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2.3.3. The requirements on the formula

The requirements are excessive

The file of the applicant must contain the complete formula of the product
composition and some analytical specifications. The requirements are estimated to
be excessive and this constitutes an additional paperwork for the applicant.

These requirements are an open door for copies

EU companies are highly reluctant to provide these information since it constitutes a
risk of copying (in particular the volume in grams of each ingredient). It is often said
that the major problem for cosmetics companies is the copying of products under the
same name of the company or the name of a domestic competitor.

2.3.4. Data of the original label

It happens that some data of the original label are not accepted.

Some words like “melanin” or “derm” are not accepted and this can block the
registration and the approval of labels procedure. However, according to operators
interviewed, this is maybe more the result of a philosophy than protectionism.

Another problem is that there is a tendency to require the translation of the whole
original packaging in Chinese (even for mentions not required under the standards).
It has to be noted that the label given to MoH for the registration procedure is often
NOT the same label than the one required by AQSIQ (!). AQSIQ wants that all the
information given to the consumer reflect what is printed out. Today all the
information contained in the packaging must be written on the label. Therefore,
theoretically, the EU company should translate all data on the original
label/packaging, included the list of all ingredients


2.3.5. Discrimination between imported and domestic products

Complaints on the discrimination are made at different levels:

   a) most domestic products are not subject to registration procedures

As explained supra, various domestic products are NOT subject to registration at
MoH (ordinary products). Ordinary products are only subject to registration at the
provincial level. This requires only the constitution of a technical file and the delivery
of some samples. No animal tests and safety tests are conducted. Therefore the
procedure is significantly quicker than for imported ordinary products (2 weeks
instead of 2 months). These products can therefore be put more quickly on the
market. It is also explained that on various occasions, the formula of a new EU
product still under examination has been developed by a domestic competitor on the
domestic market and sold through unofficial channel (door to door sales), which
enabled the EU companies to put a hand on it by chance …



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The fact the domestic products are subject to a different and more flexible regime is
therefore damageable for EU companies in terms of costs, time lost, lack of market
share penetration. It is also discriminatory in terms of controls on the product
composition. The lack of control added to the lack of strict confidentiality on the
formulas given by EU applicants is said to indirectly favour the copying. There is no
control on these product composition which could enable the counterfeiting
companies to be sued in due time.

   b) domestic products often do not respect the labelling requirements

As beforehand explained, the standards on labelling of cosmetics are complete,
complex and quite demanding. For imported products, it is now difficult to propose a
flexible interpretation of these standards, as the Order 21 has foreseen a strict control
of the labels before the importation phase.

However, domestic products are not subject to this control procedure. Currently, it is
reported that most domestic cosmetics do not respect or propose a smooth labelling
of their products. Often the domestic products will only be labelled with the name of
the product, the function of the product, the number of the hygiene permit (when
required) and the best before date.

   c) Imported products are subject to additional tests during clearance

According to an importer, during clearance, the CIQ officials ask for each batch a
test. Samples are sent to quarantine laboratories. Tests last about 15 working days
(3 weeks).

After clearance process, the importer affix on each product the CIQ label (to be
purchased at CIQ) attesting the conformity of the product with CIQ requirements.

In conclusion, the EU companies would require a sole regulation on basis of which
only one set of tests is performed and one set of documents is required. If the current
regulations were implemented “strictly” (e.g. the company waits to get the second
certificate to import the products) it would totally prevent the import of new cosmetics
because of the short life of these products (2 years). The products are out of fashion
trend, they are outdated compared to the innovation of the sector. It is extremely
costly. The domestic industry is not subject to the same constraints. Another problem
is the parallel importation into China of products from Europe, without n° and without
label.

Finally, rules of Order 21 are not crystal clear. There is a real risk that the Authorities
ask for packaging specifically made in Chinese for the Chinese market. This would
then lead (as for foodstuffs) to additional problems for our exporters (it is more
difficult to produce a specific label than affix a sticker in Chinese).




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2.4.   Additional problems (indirectly linked to labelling requirements):


The quarantine certificate is the most important problem faced by importers

If labelling requirements and registration procedures constitute a source of concern
for importers, their main worry is the obligation, since March 2002, to provide a
quarantine certificate attesting that the imported cosmetics are not made out of
bovine, ovine extracts forbidden ingredients (materials from the brains, nerve tissues,
internal organs, placentas and blood from bovine, ovine, caprin origin from of the
covered countries).

A Joint Notice from MoH and AQSIQ published on 7 March 2002 has required for
the importation and the sale of cosmetic products after the 20 th of April 2002 an
official quarantine certificate granted by the Authorities of the country concerned in
order to prevent China from BSE disease. The certificate should be issued by an
administrative organisation from the country / place of manufacturing, stating that the
related cosmetics do not contain any ingredients from brains or nerve tissues,
internal organs, placenta or blood (or their extracts) from bovine, ovine or caprin
origin.

EU countries covered are United Kingdom, Ireland, Germany, France, Belgium,
Austria, Netherlands, Portugal, Denmark, Italy, Spain and Finland. It has been
evoked that some Japanese companies use animal placentas in some products in
their skin-whitening range, which are sold in China. However, Japan is not covered
by the measures. The measures are therefore clearly seen by cosmetic companies
as a reaction against the measures decided by the EU against the importation of
some meat and seafood products containing harmful antibiotics.

Since March, all cosmetics products not provided with the sanitary certificate (which
has to be accepted by MoH) could not been imported. On the basis of an additional
communiqué of MoH (Communique n° 2), it is not even possible since 14 March
2002 to apply for MoH registration procedure without the quarantine certificate.
According to some interlocutors, the different the local authorities interpret this
communiqué in their own way and do not permit in some case the sale of cosmetics
without quarantine certificate. Since the 20th of April, all products previously imported
from these countries should have been retired from sale. Since mid May, all
cosmetics products from a big German group have been retired from the retail sale in
Shanghai. Currently all exports from these countries are completely blocked.

French companies have complained about the denial of Chinese authorities to accept
the certificate provided by the “Union de la Parfumerie Française” (UPF) which is the
sole official organism accredited by French Authorities to deliver all official certificate
documents for the cosmetic exportation use abroad. Chinese Authorities have
required that this certificate should be delivered by the Ministry of Agriculture, while
the French administration has refused to grant these certificates.

Surprisingly, a German operator said that the Chinese authorities have refused the
official sanitary certificate delivered by the Ministry of agriculture and required a


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certificate delivered by a Chinese organism (situation clarified in the Final version of
this report).

Importers still face difficulties to import samples

Importers and EU companies have also mentioned difficulties to import the samples
necessary to present the files to MoH or to AQSIQ. AQSIQ asks for a previous
authorization at the point of entry while the samples are aimed to be presented for
the procedure of label certification. In addition, when the samples are above 10 kgs,
they are subject to import duties. To avoid these problems, the importer must request
a special authorization from the laboratory signed by the Director of laboratory. Then
Customs examine the file to allow the authorization of import duty free.

Many problems arise from the unclear repartition of competences between the office
of standards and the CIQ.

It is also said that in some provinces, once the final permit delivered, the provincial
administration also asks for an additional registration (700 RMB additional).


2.5.   Conclusion

Few cosmetics are exported directly

According to various interlocutors, the excessive burden of procedures explains the
scarcity of the EU direct exports of cosmetics. Most Foreign cosmetics (FR, IT, JAP,
South Korean) are often either smuggled or exported through Hong Kong. Some
Italian companies have tried to export directly but have left. The costs of an agent
that takes care of the procedures is also a significant obstacle.

Therefore, these interlocutors estimate that companies are waiting for the reduction
of import duties and the simplification of regulations


§3. The foodstuffs products (including wine and spirits)


Since 1999, the Chinese Authorities have progressively modified the labelling
requirements for foodstuffs, wines and spirits. In addition, they have issued a text
called “Order 19”. This text has established the procedures for the approval of labels
before the importation process. When issued, there was a general protest from
importers, EU companies and the Member States Authorities. Therefore, the
administration decided to delay the implementation for some months. Even if the
administration has recently decided to implement it by the latest in November 2002,
the situation remains unclear. In some regions, the rules are applied partly, in some
other not yet, which means that the imported products are still imported with the
same labels. All importers interviewed in November and in May 2002 raised concern
about these requirements. According to them, it is unlikely that Chinese Authorities
will step back and remove the order 19. There is therefore a great concern regarding
its implementation.


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3.1.     Labelling requirements for foodstuffs and wine (Order 19)


3.1.1. Foodstuffs

According to the food standards 55 , the imported food products shall carry the
following data:

 (a) Name of the food (should indicate the true nature of the food).
 (b) Name of the manufacturer, together with complete address, telephone and fax
     numbers.
(b) Name and address of the distributor.
(d) Brand name of the product.
(e) Standard certification number.
(f) Quality grades in accordance with the product standard or enterprise standard.
(g) Production date.
(h) Net content and drained weight.
(i)List of ingredients: ingredients in descending order of weight or volume at the time
of the manufacture of the food (as well as ingredients composing a compound
ingredient while represent above 25% of the food). Food additive names should
respect Chinese standard GB 2760.
(j) Date of manufacture.
(k) Date of packaging.
(l) Expiry date or minimum durability date (year/month/date).
(m)country of origin.
(n) storage conditions.
(o) special labelling when treated with ionising radiation.

3.1.2. Additional labelling requirements for wines and spirits

Labelling requirements for wines and spirits in China fall now under the labelling
compulsory standards and the Order 19. The standards (GB 7718-94 56/ GB 10344-
89 57/ GB 7204/9858) establish the compulsory labelling requirements to be affixed on
the imported and domestic products. In addition, GB 17924-99 establishes the model
of marking for the products under Geographical indications. Order 19 sets up the
rules governing the approval of labels.

According to importers of EU wines and spirits interviewed during the mission, the
labelling requirements are as follows:

    The bottles should carry a counter-label in Chinese. This should be the
     translation of the original label and comply with the Chinese domestic labelling
     requirements.



55
   GB 7718-94., par 4 : Mandatory labelling.
56
   General standards for the labelling of foods.
57
   General standards for the labelling of alcoholic drinks.
58
   « Classification of alcoholic beverages ». This text sets maximum alcoholic strenghs .


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     The compulsory requirements to be affixed on the counter-label concern in
      particular:

      -    the name of the product (ex Cognac, Bordeaux, liquor …)
      -   the name of the producer,
      -    the production date (which cannot be replaced by the batch number),
      -    the alcohol content,
      -   the net volume (ml)
      -   the country of origin, the place of production (ex produced and embottled in
          the limited region of cognac)
      -   the contact point (representation office of the Foreign Company, distributor,
          importer)
      -   vintage
      -   100% made of grapes (for wines)
      -   level of sugar, type of product (draw ..)
      -   best before date
      -   importer, exporter or distributor data
      -   conservation methods

Before the Order 19, the controls conducted by Chinese Authorities only focussed on
the compulsory data established by Chinese standards on foodstuffs 59. The producer
or the importer could make a registration with STBS on a voluntary basis. No testing
was carried out on the product composition of imported bottles before the retail
phase. Since the Order 19 was issued, Chinese Authorities have started the analysis
on the bottles.


3.2.        The label approval for foodstuffs and wine (Order 19)


3.2.1. The context

Adoption of new rules in a conflictive context

These rules were issued by the former administration of CIQSA (Quarantine). In April
2001, CIQSA has merged 2001 with the Chinese Bureau of standards (CISTBS) into
another administrative body called AQSIQ. It is estimated that there are some
problems regarding the implementation of these rules between the CISTBS branch
and the CIQSA branch of the new AQSIQ. Among other things, CISTBS was the only
body accredited to issue new requirements on labelling and did not recognise the
authority of CIQSA in this field. CIQSA was and is still the authority in charge of
controls at the entry point On the other side, CIQSA branch wants to implement the
requirements and collect the fees related to the label verification procedure.

This has lead to a transitory regime pending the full implementation

The announcement of the implementation of a priori control of the labels (order 19)
has raised many concerns among the importers and the Member States embassies.

59
     Ex : 1997/doc 690.


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The Foreign Spirits Producers association based in Hong Kong and Beijing has
proposed a transitory regime to the Authorities. Finally, the authorities have
accepted, for the time being, to keep the labels with the same data, even if they
follow the procedure of label approval. This explains that the implementation is not
yet completed.

However, all importers and Member States interviewed stated that there is a real
danger that a strict implementation stops EU exports.


3.2.2. The label approval procedure (Order 19)

On 15 February 2000, the State Bureau of control and quarantine for import export
(CIQSA) issued Measures regarding the monitoring of labels for foodstuffs (and
wines and spirits) for Import and Export (commonly called “Order 19”). These
measures should have been theoretically implemented on 1 st April 2000. Two
circulars of 12 February 2000 and of 25 February 2000 have implemented some
aspects of the provisions of the Order 19. More recently, Communication 21 of 4 April
2002 has decided that the rules should be applied by the latest for November 2002.

These measures cover the examination and control of labels of pre-packed products
for import or export. CIQSA is the authority in charge of the monitoring, the
examination of the labels and the delivery of the certificate.

Under the Order 19, there are three steps in the procedure:

-        Preliminary examination of the labels and products to be imported;
     -   Control of labels
     -   Delivery of the final certificate of approval

a)       The preliminary examination of the labels

The importer submit a request to the accredited office of AQSIQ

The importer must present a request for approval of the labels of the goods to be
imported to the State Bureau of Control and Quarantine (art.6 and 10). It is
conducted by accredited organisms of CIQSA. Under the Circular of implementation,
there are four offices competent for the first examination of labels: Beijing, Shanghai,
Guandhong, China Quarantine Ltd (Hong Kong). The local office will conduct a first
examination of the labels and send the product to laboratories for a first set of
chemical analysis.

The request must contain the following elements:

     -   “the official request for label approval” (form to be delivered by the registration
         office of CIQSA and to be filled in 3 spare copies see www.ciq.gov.en )
     -   the description of the design of the label and the appropriate attestations,
     -    the description of the contents mentioned in the label,
     -   6 samples of the proposed labels or at least a picture of equivalent effect (8
         samples according to CIQSA representatives).


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     -   Documents on the sanitary allegations and the verification methods
     -   Attestations that the product has been legally manufactured and
         commercialised in the country of origin.
     - Any other appropriated document
     One single demand can be presented for similar products, but only if the unique
     difference among them is the packaging or the specifications.

The local CIQSA office conducts a preliminary examination of labels

The importer must present the demand with representative samples (art.9). The
samples are sent to laboratories designated by AQSIQ for analysis. The local office
controls the conformity of the labels with the Chinese laws, regulations and standards
(it is not indicated which rules and standards are concerned). However, according to
various interlocutors, it seems that the only text regulating the labelling of imported
products is a text of 1994 issued by the State Bureau of Technical supervision (GB
7718-94)60.

The text foresees following compulsory requirements:

     -   name of the product
     -   list of ingredients
     -   weight and net volume of the product
     -   name and address of the producer and retailer
     -   date of production
     -   instructions for the product conservation
     -   level of the quality of the product
     -   code of the norm of the product
     -   if applicable, special mention for special treatments applied to the product.

Some products were exempted from these compulsory requirements. In 1995, the
State Bureau of Technical Supervision had accepted some proposal of labels made
by Cognac producers (but it was not clear if these conditions could also apply to
other wines and spirits and foodstuffs).

The text GB 7718-94 also contains voluntary standards (non compulsory).

The office conducts the preliminary examination (called “ordinary examination”). It is
focused on the ordinary ingredients, the additives indicated on the labels and the
psycho-chemical analyses indicated in the national rules. The results along with other
documents are transmitted to AQSIQ for its approval.

If the labels are found in conformity with these rules, the State Office of Control and
Quarantine delivers a certificate of examination of foodstuffs for import/export”. The
products for which such a certificate is delivered are listed in a document published
by CIQS (art. 13).




60
  General Rules for the labelling of the foodstuffs products GB 7718-94 in application since 1sr
February 1995.


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b) control of labels

The importer must request tests on the imported products. He must present the
certificate of examination with the request of testing. The controlling organisms will
check: (1) if the label on the sample is the label already examined in the first phase;
(2) if the content description on the label corresponds to the content of the tested
product, and (3) if the label examined can be used in the country of distribution.

While approved, CIQSA sends the samples and the documents to the laboratory
accredited for the second analysis: “the special analysis”. These laboratories will
decide which are the elements of the first analysis to check and will conduct the
special analysis. It focuses on the sanitary aspects, the nutritional elements indicated
on the labels, the level of radioactivity and others sanitary questions required by the
State. The laboratory must transmit the results of the tests within 30 days (It is not
clear when exactly this period starts. However, it seems to the consultant that it starts
from the moment of transmission of the documents and samples by CIQSA to its
laboratories).

c) certificate of final approval of labels

After the transmission of the results of the special tests, the registration office for
labelling of the imported/exported products designated by CIQSA will conduct the
final investigation within 5 days. It is not clear on which elements this final
investigation focuses. The office delivers the “certificate of examination of foodstuffs
products for import and export”. It is published and transmitted to the CIQSA
services.

CISQ is competent for the interpretation of the rules of Order 19 (art. 20). The order
19 replaces and removes the provisions of the existing rules on the management of
labels for the foodstuff products N° 158-1994 and N° 112-94. (art. 21)

It was foreseen that the sanitary Authorities would require the certificate at the point
of entry from:

   1st October 2000 for biscuits, some fruits, meat products, canned products, eggs
   1st January 2001 for milk products, drinks, alcohols, dietetic products, frozen
    foodstuffs;
   1st May 2001, all foodstuffs products.

However until now, the implementation has now not been as strict as it was decided.
The text is not officially implemented at the border.

In November 2001, AQSIQ representatives stated that until the total implementation
of Order 19, the Authorities deliver at the level of the final incidence a certificate of
acceptance valid for 3 months. This allow the importation into China within the 3
months and the setting into compliance by the importer to all labelling requirements
set forth by Order 19 (the importer can import with an inappropriate label but must
modify it and apply the correct label within these 3 months). The importer has to
present the certificate of compliance to the Customs.


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They also stated that the obligation to carry the appropriate label at the arrival is
treated on a “case by case” basis. In most of cases, the Customs and the quarantine
officials will only require to see all the labels already prepared to be affixed (the
importer or the exporter should then make the labels printed just before the goods
arrive to the port).


3.3.     State of implementation


The consultant interviewed the importers of foodstuffs products and of wine and
spirits in order to know to which extend the label certification procedure was applied
to their products.

Some differences of the implementation for wines and spirits and for foodstuffs
products are noted below.


3.3.1. Wines and spirits

The strong lobby made by wines and spirits producers to Chinese Authorities
resulted in the acceptance of a grace period for these products pending the full
implementation (now foreseen for November 2002).

According to this “Agreement” made with AQSIQ, the importers make the application
for the label certification, pay the corresponding fees, give the samples required for
testing BUT have not yet changed their label according to AQSIQ requirements or
what they interpret as being AQSIQ requirements61. Until now, the authorities have
accepted that these companies present their products to clearance with the receipt of
the administration attesting that their file has been filed and the fees have been paid.
Other importers said that this was accepted only if the importer was putting its label in
conformity with the labelling requirements and the Order 19, three months after
importation. The situation remains therefore unclear and managed on a “case by
case” basis.


3.3.2. Foodstuffs products

Until now, it seems that Order 19 has not been fully implemented to imported
foodstuffs. In supermarkets, there are still various imported products with English
labels only, or with Chinese labels carrying a minimum data. Big operators importing
a large range of products from the EU have already started to file for the label
certification for their products (and even some of them were already granted with the
label certificates). However, the overall situation shows that the rules are not fully
implemented for all imported products. There are various reasons explaining this
situation. First, it is materially extremely difficult for importers or purchase centrals
importing some 600 –700 types of different products to file 600 files to AQSIQ, as it is
61
   Therefore their counter label in Chinese contains the batch number, as before and not the
production date).


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materially difficult for AQSIQ to treat all files with a limited number of staff. Both sides
need time to adapt to the new requirements.

Various operators interviewed in the EU or in the SIAL Fair explained that they were
still exporting their products to Hong Kong (e.g. confectionery producers). Therefore
they either export with the label with English data or with minimum data in Chinese.
Other exporters leave the burden of the labelling in Chinese to the importer which
affix the counter-labels or stickers either in the bounded warehouse or in its own
warehouse before the retail. These exporters are not familiar with the provisions of
Order 19.

Another reason is that the authorities have accepted the import of the products with
only the receipt of the attestation of registered file delivered by AQSIQ, while the
applicant has deposited the file for label approval, given the required samples to be
tested and paid the corresponding fees. According to the operators the number of
samples asked by the administration can vary from one place (Beijing: various
samples) to another (Shanghai: minimum one litter or one kg of samples for
laboratories added to 7 other pieces for quarantine). Costs reported by operators
interviewed vary from 300 RMB to 600 RMB.

All operators insisted on the costs of label certification and the uncertainties on the
future implementation of these rules by Chinese authorities. The access to the
Chinese market risks to become too expensive for small and medium companies
because of the costs resulting from the label certification for foodstuffs (time lost,
fees). It is unclear how the administration will require new certification in case of
slight changes in the label or the product composition, which occur normally on a
regular basis in the trade life of a given product.


3.3.3. The Notification n° 21. of ASQIQ

In April 2002, Chinese Authorities have issued the Notification n,°21 on the
implementation of the measures established in the Order 19. It is foreseen that the
importers will have the opportunity, until 1st of November 2002, at the latest, to apply
for the approval of the labels of the goods aimed to be imported. However, for the
proceedings of the sanitary control, the importer will have to be granted with a
certificate of label approval before the 1st of November. It is unclear what will happen
with products arriving at the points of entry after this date and for which the label
approval certificates will not have been delivered.

Various companies have already filed their request for label certification since the last
year and still wait for the requested certificates. For example, an importer of wines
having introduced its files for label certification in summer 2001, is still not notified
with Decision of the panel of experts. It has to be reminded that the order 19 contains
various provisions enabling the administration either to refuse the tests of the
products, either to request additional “necessary information “ to the applicant, which
causes an endless procedure without a treatment of the file by the panel of experts
which meets only 3 times a year… However, he has recently received proposals from
“authorised” consultants to help them to seep up the ongoing procedures (these
consultants are suspected to be closely tied with the AQSIQ panels of experts …). As


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an example, fees for these services are estimated about 250 RMB by label. For
importers waiting for certificates covering hundreds of labels, this represents a
significant additional and non justified additional cost! The current unclear situation
has therefore opened the door to such practices. This will result in any cases in
additional costs for our companies, which will accept to buy the services of these
consultants.

In any case, the notification n° 21 seems to illustrate the willingness from AQSIQ
to strictly implement the measures of Order 21 by November 2002 for al
imported products.


3.4.     Problems for EU companies and importers


During interviews conducted with the EU Trade representatives and representative
offices of the EU companies, various problems have been pointed out.

3.4.1. Labelling in the country of origin

      According to the new rules, EU companies should label their products in the
       country of origin.
      Some requirements are difficult to comply with (the production date, the
       contact point can not be estimated exactly in the country of origin).
      EU companies and their customers face additional costs. The Order 19
       establishes compulsory tests of the products, paid by the importer.
      The relative non-transparency of the text leaves an open door for subjectivity
       for the AQSIQ. There is a risk of arbitrary in Decision of conformity of the
       labels with the Chinese rules.

As far as the compliance with these requirements should be ensured before the
clearance process, the labelling burden is now theoretically on the EU exporter's
side. This means that the EU exporter has to prepare a specific label in Chinese for
the Chinese market and will suffer additional costs. More important, it seems that in
case of discrepancies found by the AQSIQ at the point of entry, the importer will not
be authorised to correct the label.

In November 2001, the consultant has raised this question with the Authorities in
charge of the policy and its implementation (AQSIQ) in order to see if the wording
“before the clearance process” could not been understood in a broad manner. For
example, it is important to know if the stickers could not been affixed in the Customs
bonded warehouse.

According to AQSIQ the EU product (foodstuff or wines and spirits) must be labelled
in the country of origin (before shipment) in compliance with the Chinese rules. The
shipment must arrive at the port of entry already adequately labelled. There is no
exception admissible, even if the Customs have accepted during a transition period
(covering January - November.2001) that the products could have been imported
without the label approved affixed on the products and therefore labelled after



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clearance or in the Customs bonded warehouses.

According to EU companies, there is de facto an obligation to produce a specific label
in Chinese and affix it, given the fact that everything on the original EU packaging
should be translated in Chinese. Given the fact that all Chinese compulsory
requirements should also be translated in the original label, this obliges de facto the
exporter to modify the original label accordingly. Therefore, while these rules will be
strictly applied, the best solution will be to send the products to China only labelled
with the Chinese label.


3.4.2. Wines and spirits

Most complaints made by importers on the requirements focussed on the following
issues:

      -   The requirements under the new rules;
      -   The additional costs under the order 19 procedure (delays and testing fees)
      -   The additional problems in the clearance procedure (additional controls and
          testing)

a) Complaints on the requirements

     Translation of the original label: Under the food standards, everything on the
      original packaging should be translated into Chinese. Before, the control was
      focused only on the mandatory standards62 (had to be translated – but could be
      translated after clearance). Under the rules enforced by Order 19, the control will
      be before the importation and, according to some importers, given that there are
      some discrepancies between the Chinese and the EU labelling requirements (e.g.
      production date instead of batch number), the counter-label can never be the
      accurate translation of the original label. Theoretically, this would then oblige the
      EU exporter either to modify the original label in order to comply with the Chinese
      requirements, or to directly affix a unique label in Chinese.

     Obligation to affix a different label by category of product: some EU
      producers complained that according to the new rules, it is compulsory to produce
      and affix a different label by category of product. This rule is so strict that it makes
      the export of slightly different products of common features very complicated. For
      example, an exporter of yoghurts has to produce different labels in Chinese for
      low fat, low sugar, natural and fruit yoghurts (for each different variety of fruits),
      which significantly increases the production costs, and the costs of the importer,
      provided that an approval has to be filed for each label!

     Production date: EU exporters of spirits produced out of a blend of wines (e.g.
      cognac) are not able to specify the exact production date. French producers have
      requested to be allowed to replace the production date by the batch number. This
      apparently was accepted by some administrative bodies (ex CISTBS) but refused
      by CIQSA in some cases. During the meeting hold with CIQSA representatives, it

62
     For example, for cognac mandatory standards are applicable.


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    was explained that it could be accepted that the batch number replaces the
    production date only if each consignment contains an explanation on how the
    batch number corresponds to the production date.

   Product life duration: some importers have been told that the counter-label of
    the imported wines should contain a time limit for life duration, which is not a
    common practice in Europe (even difficult to assess for EU producers).

   Contact point: Chinese Authorities (AQSIQ) do apparently not agree that the
    Foreign Representation office of a EU company be listed as the “contact point” on
    the counter-label. For some EU companies, it is very important and in particular if
    the label has to be print out and affixed before the importation. Chinese
    Authorities prefer either the importer or the retailer to be mentioned.

   Level of bacteria: the minimum number of bacteria accepted is under the level of
    bacteria contained in EU wines (to be confirmed).

   Conservation methods: it is difficult to be 100% sure that the formula used for
    the conservation method will be accepted by the AQSIQ authorities on the basis
    of the current rules. For example, an importer has been told to insert in the
    counter-label in Chinese: “to conserve below 16) in the shadow”.

b) Complaints on the procedure for label approval

The procedure for label approval causes various difficulties: (1) the procedure is long
and burdensome; (2) the tests are costly for the importers and (3) there are still big
discrepancies in the implementation.

The procedure is long and burdensome

According to the rules, the procedure can last 60 days. However, some spirits
importers reported that the usual duration is about 45 days if the label complies with
all standards and that the documents required are complete.

It will be impossible to follow the procedure for vintage wines (Beaujolais nouveau),
which require to be sold on the market quickly and within a determined period of time.

The testing costs are high

AQSIQ asks 300 RMB by label approved and 300 additional RMB for each test. In
case of further change in the label already approved, 300 RMB will also be collected.
A separate file has to be prepared (and corresponding fees paid) for each different
type of wine (for example the same wine in cabernet, merlot) even the same wine for
each different “millesime”.

There are discrepancies in the implementation

Implementation of these rules varies according to the region or city. In Beijing, the
procedure is longer and apparently stricter than in Shanghai, which explains that
various importers chose to introduce the files in Shanghai.


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The label approval has to be achieved before the import license is requested

During the mission, it has been explained that for products requiring a license, the
importer has to be granted with the label approval while he applies for the import
license. However, as the authorities have granted the importers with some flexibility
in the implementation and accept the products to be imported with the receipt of the
attestation of the registered file, this provision is not fully implemented. Nevertheless,
after the 1st of November, it is likely that without the label approval certificate, the
license cannot be applied for, which will result in additional difficulties for the
importer.

c) Complaints on the controls and tests during the clearance process

Wines and spirits producers complained about the fact that although the label is
approved previous to the importation and the product composition checked, Chinese
Quarantine Authorities (depending also from AQSIQ) will also check the product
while the consignments arrive in the port.

1. The importers are then required to provide additional samples for checking the
   product composition and the labels. These tests are conducted under the
   quarantine rules of 1994, which are still in application, despite the implementation
   of Article 19. According to an importer, CIQ asks for 1 to 3 bottles by category of
   product, which is expensive for shipments of different types of products. The
   importer will be charged with 2000 up to 3000 RMB by check by category of
   product.

2. For all products inspected, importers have to wait for the green light from the CIQ
   laboratories to start the clearance process. If the laboratory report is negative, the
   goods could be either destroyed or re-sent to the country of origin. One has to
   note that importers of wines face various problems with the date of production
   requirements contained in the new rules. For example, the quarantine authorities
   refused imported EU wines because their label contained the batch number
   instead of the production date. In this case, the importers has however previously
   obtained the Agreement from the Office of standards (BEST) that the batch
   number could be accepted instead of the production date but CIQ denied to
   accept it.

   Clearance process : it is alleged that for wines and foodstuff products the whole
   process (tests and clearance) can take up to several weeks (!). Products were
   sometimes out of use at the end of the clearance process.

If a mistake is found on the label (e.g. spelling mistake of importer name), the
importer, according to the Authorities, would not be allowed to correct the label
and the product would be either re-sent or destroyed. In the meeting conducted with
the AQSIQ representatives, representatives of the Quarantine office insisted that, at
least for foodstuffs, there will be no possibility to affix stickers anymore, even in the
bonded warehouses (which was allowed during a transition period). However, some
importers have stated that the Customs still enable them to affix the stickers after the



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arrival in the port (some importers of foodstuffs, importers of apparel, importers of
wines and spirits).

This confused situation can be explained by various reasons:

1. for foodstuffs, there are some clearance points which are more flexible than
    Beijing (Shanghai),
2. for wines and spirits, there is for the moment still a quite liberal attitude regarding
    labels. The bottles imported with labels not complying strictly with the
    requirements are accepted to be cleared and the importer is given a 3 months
    time period to correct the labels (since January 2001, the Authorities have
    requested the importer to present the required files for the label approval and
    charged the importer with the test procedures). However, they have accepted
    that the importer imports the bottles labelled according to the requirements
    previously in force, provided that the importer affixes the correct label in a three-
    month period. After the expiration of this three months period, the transitional
    period was prolonged. Most of importers stated that the new requirements are
    impossible to apply and that there is still a big uncertainty regarding the attitude
    of AQSIQ on their situation.

Finally attention should be drawn to the fact that there are also requirements on the
“price labels”. These labels must be approved by the Price Bureau. Requirements
are:

   -   Brand name, as officially registered on the trade mark;
   -   Model
   -   Size (ex medium)
   -   Place (province level)
   -   Sale price
   -   Bare code
   -   Approval of the (local) price bureau (ex Beijing) (special logo -hologram).
   -   Quality level: quality number product.

EU investors in the retail sale confirmed that controls conducted on the price label
are very strict.


§4. Other products


4.1. Pharmaceuticals


Pharmaceuticals products are subject to a registration procedure. In addition, since
June 2002, the imported cosmetics have to comply with new labelling requirements
issued by the State and Drug Administration.




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4.1.1. The labelling requirements

Regarding labelling requirements, the State Drug Administration has issued in 2000,
a “Regulation for the Administration of Drug Packing, labels and Insert sheets “(SDA,
Order N° 23). It was reviewed and approved at the Administration Affairs meeting of
SDA on March 17th, 2000. It was planned to be effective from January 1, 2001. A
subsequent notice of SDA has however provided a transitional period until 30 of June
2002, to continue the use of packaging, labels and insert sheets which have already
been printed.

The main provisions of this regulation are as follows:

The regulation establishes general standards for packaging, labelling and insert
sheets (art. 1). These standards are compulsory and all drugs packaging, labels and
insert sheets should be printed according to these requirements. In order to be sold
or used in China they shall use Chinese language as the main language and adopt
the Chinese simplified characters published by the State Working Committee of
language and Written characters. Additional text or graphics must be approved by
SDA (art. 2 and 3).

The generic name of the product shall not be less than 50% of the size of the brand
name. Space shall be left between the generic name and the brand name, the two
names shall not be printed as one word (art. 5). To be marked, the brand name
should previously be approved by SDA (art. 6).

As for other products, it is foreseen that the information should be presented in clear
and readable characters. No stickers are allowed. (art. 7).

The regulation provides specific indications for inner and outside packaging (art. 8),
inner packaging labels and outside packaging labels (art. 9), and insert sheets (art.
12). The SDA approves the content of the insert sheet. The content of both inner and
outside packaging of a drug shall not exceed the prescribed content of the insert
sheet approved by SDA.

The regulation annexes formats for insert sheets. It includes requirements for
packaging and labelling of active ingredients. It requires stability tests if the inner
packaging is changed.

4.1.2. The problems for EU operators

SDA has recently published insert sheets for many drugs and for specific products.
EU operators have addressed the following issues:

   1. Some of these insert sheets have fewer adverse effects, that are included in
      the international insert sheet of the pioneer company. However, pioneer
      company’s products are more effective and have few adverse effects;
   2. Indications may vary with pioneer company’s
   3. some dosage and administration are seen as unreasonable



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   4. the Member States company’s insert sheet are more scientific and complete
      than SDA version. It is alleged that there are some scientific errors in some of
      the insert sheets in SDA versions which confuse patients and doctors
   5. The quality reflected by the numbers for some of the insert sheets in SDA
      version is apparently lower than pioneer’s products, there are some errors of
      wordings etc …

Some EU companies could be seriously affected by these insert sheets
requirements.


4.2. Electronic appliances


Electronic devises are subject to certification requirements. They must also comply
with specific labelling requirements and should carry a specific sticker of CCIP
(attesting of a former commodity inspection carried out by CIQSA). The mark is the
sign of the commodity certificate. Production plants are visited by Chinese officials or
private companies inspecting on behalf of Chinese Authorities. The number of the
manufacturer is printed on the label


4.3. Textiles and clothing products


4.3.1. The requirements

There are specific labelling standards for textile products (GB 5296.4 XXXX). This
norm establishes the basic principles, the content of labels and rules applying to the
labelling of textile and apparel products sold in China.

The labels should contain the following mandatory data:

1. Name and address of the manufacturer.
2. Name of the product (in accordance with Chinese standards).
3. Size (in accordance with standard GB 1335.
4. Product composition: name and composition of the various raw materials utilised.
5. Cleaning instructions (compulsory use of symbols defined by GB 8685).
6. Storage conditions and other recommendations: compulsory for delicate products.
7. “Best before”: only for products perishable: date of manufacturing and expiry date
    (year, month, day).
8. N° of standard.
9. Quality classification (if required by a Chinese standard).

The labels will have to respect the following presentation, according to the product:

1.Printing or direct weaving in the fabric.
2. Label sawed, or affixed or hanged to the product.
3. Printing or pasted to the packaging.
4. In the documents accompanying the product (point 6.1).


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Some data must be affixed in a permanent label: model, type and specification of the
product, product composition and cleaning instructions (point 6.2). Some products,
such as wool socks, can be exempted from permanent labels. These labels should
be affixed in a visible place. For clothing product, labels for model, style and
specifications should be affixed in middle of the collar. Cleaning instructions and
product composition should be affixed in specific places. Labels for scarves, ties and
house linen should be affixed at specific places. (point 7.3).

For fabrics, the labels can be hanged, printed or woven (7.4.1.).

The content of the instruction must be clear and precise and visible (point 8.1). The
compulsory data should be written in Chinese characters. These should not be
smaller than the foreign language characters (8.2). The label should remain during
the time of the product utilisation (8.3).


4.3.2. Implementation


According to the EU Member States trade representatives, there are no major
complaints regarding the implementation of these requirements. In some cases,
nevertheless, it appears that Customs insist on having a complete description of
every single component. It is the case for carpets but also for furniture containing
textiles.

In the practice, most exported textiles and clothing products are exported without the
label in Chinese language. This label is affixed by the Chinese importer after the
clearance process and before the retail phase.


§5. Conclusions


Before Order 19, the labelling requirements were not a source of major concern

Over the recent years, the EU products have been imported into China with a certain
grade of flexibility regarding the product identification requirements and labels. There
were some labelling requirements but in general, there were not considered as
unbearable as such and they were applied with a certain flexibility.

a) The requirements

For most of the consumer goods, the Chinese Authorities had already implemented a
certain number of standards and rules regarding the labelling of the products, some
of them voluntary, some other compulsory. According to SAIC, the authority in charge
of the compliance control in the market phase (“in market supervision”), the legal
basis for these requirements was contained in various texts:

Law on trade marks,


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Law on products quality,
Law on protection of the consumer rights,
Unfair competition law.
The relevant rules of implementation

For most products, the general requirements are: the labels of the domestic and
imported goods should contain: (1) the name of the Chinese producer, (2) the name
and address of the EU manufacturer and (3) the relevant ingredients. Production date
or period of safe use are required for most of the products. In addition, products
which can be harmful for the consumers should contain a specific warning (for
example for toys: this toy is suitable for child of a certain age).

For example, for Articles listed in the Law of products quality, the packaging of the
products should be real and with a certificate of inspection.

Under the Law of product quality, some consumer goods should bear a certificate of
conformity. The products are to be inspected by the competent authorities which can
deliver or refuse the certificate of conformity. The product should then bear the
certificate number. The certification authority will check if the content of the label
matches with the product composition.

In addition, for specific products, (foodstuffs, cosmetics, pharmaceuticals, cigarettes)
there are additional regulations and specific authorities in charge of their
implementation. The importer should then contact these agencies regarding the
requirements to be complied with (ex Foodstuffs: Ministry of Health, AQSIQ).
Therefore the producer had to consult corresponding laws:

Law on food safety
Law on drugs administration (…)

b) The implementation

Despite the existence of various labelling requirements and standards for different
products, the implementation of these and the control of compliance conducted by
the Authorities seem to have been quite flexible in order not to constitute a barrier to
EU exports.

The products carried either the original labels with /or not a small sticker in Chinese
or sometimes carried an original packaging with Chinese text. The product was not
controlled regarding the label before the retailing phase (in market supervision). One
could therefore not argue that imported products were discriminated compared to
domestic products, given the fact that the controls were made at the same moment,
on an equal basis. The imported products were not controlled and hold during the
clearance process. The stickers could be easily affixed by the importers in their
warehouses.

Theoretically, if a consumer finds a product not complying with the requirements, he
can appeal to the administration competent for the product. The retailer will be sued
because he should check if the product complies with the labelling requirements. The
retailer will then sue the manufacturer.


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Procedures for label approval could constitute a change for EU products

The procedures set forth by Orders 19 for foodstuffs and wines and by Order 21 for
cosmetics are considered by the importers and some EU exporters as a source of a
major concern for various reasons (despite the absence of a strict implementation):

These regulations provide for a procedure of label approval previous to the export.
The procedure can be long and burdensome and result in additional costs for the
exporter (production of labels in Chinese) and the importer (costs of the procedure
and time lost). More important: the procedure can result in the rejection of the
proposed label and therefore the import of the product. Mention has to be made that
provisions of Order 19 and Order 21 still contain a lot of “grey zones”, which open the
door to subjective interpretation by Chinese authorities. For example, the authorities
can require from the importer “any document necessary”, which has already been
used to delay the proceedings in various cases.

In this respect, the change is that all existing standards, not strictly applied and not
strictly controlled before the retail phase, have to be complied with before export. It is
highly difficult for the EU exporter (and even in some cases for the importer) to be
100% sure that he is complying with all Chinese standards and rules. These
provisions are not all translated into English nor easily available.

Anyway, the power of interpretation of AQSIQ will prevail. For example, various
operators stated that according to AQSIQ interpretation, the Chinese counter-label
for wines should be the exact translation in the original label AND vice versa, which
means that if the counter-label must contain different data than the original label, this
latter should logically be adapted (therefore re-done)! Another interlocutor was even
told by AQSIQ, that if an original label of wine contains a picture of a “chateau”, this
picture should be at least described in Chinese. This interpretation power of AQSIQ
could turn into the key difficulty.

Finally, according to various interlocutors, it seems that Chinese Authorities have
used the threat to strictly implement these new rules in order to react against
measures recently decided by the EU aiming to arrest Chinese exports of meat and
seafood products. This is a real concern for all EU exporters potentially affected by
the label certification.


§6.    Legal analysis


China is considered as one of the most problematic markets among the markets
under review. The European exporters consider as essential difficulty the obligation
to affix the label in the country of origin and the new procedures of certification of the
labels, which are very difficult and costly. In addition, Chinese authorities have
implemented compulsory labelling rules, which go far beyond the international
accepted practices and this creates difficulties for the EU companies.




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These difficulties could be challenged under the provisions of WTO Agreements.
Several Articles could be applicable for the problems identified depending on the
concrete case and the products involved. The TBT Agreement could be applied in
cases, in which the product and certification requirements are involved (e.g. the new
procedure for certification of labels for cosmetics and food products – Order 19 and
Order 21 could be analysed). The definition of technical rules, which could be
considered under the scope of the TBT Agreement has create some difficulties, but
the recent case-law opts for a broader definition of technical regulation. (see part 21
– Legal analysis §1). The rules of the TBT Agreement are stricter than these of the
General Agreement and require stricter analysis of the trade restrictive effect of the
technical measure. This requirement could also be analysed under the SPS
Agreement if the aim of the measures is to protect human health from contaminants,
additives and diseases. However, it should be underlined that the measures should
be qualified under the SPS Agreement or under the TBT Agreement, the
simultaneous application of the Agreements is not possible. A detailed analysis of the
provisions of the Agreements, their scope and implementation could be found in part
21, §1 and 2.

When it is not possible to apply the provisions of the specific Agreement, the General
Agreement could be applicable. In case, these measures are applicable only to
imported products or if they create discrimination for imported products, they should
be eliminated in application of Article III of GATT, which imposes national treatment
obligation. In some cases, it could be considered that the label certification and other
compulsory labelling requirements disadvantage foreign products in comparison to
local products (e.g. the imported products are rejected and must be resent in the
country of origin without the possibility to attach stickers or new labels, whereas this
possibility exist for local products).

Excessive controls and penalties applied in customs or burdensome import
requirements (e.g. obligation to re-send the products, when minor error in label is
detected) could be challenged under Article VIII GATT. This Article requires the
elimination of the excessive customs formalities. In some case the labelling
requirements could be analysed under Article X of the GATT Agreement, if they are
considered as non-transparent. In some cases, Chinese provisions are not published
or the importers are not given enough time to adapt to new requirements, which
could impede significantly their business.

A detailed analysis of these WTO provisions could be found in part 21 – Legal
Analysis.




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                                    PART 8: THE US




§1.    Federal labelling requirements for food, drugs and cosmetics


       1.1.    Products under the responsibility of the FDA

       1.2.    Labelling of food products

               1.2.1.   The name of the food
               1.2.2.   The net quantity of content
               1.2.3.   The information regarding manufacturer, packer or distributor
               1.2.4.   The statement of ingredients
               1.2.5.   The nutrition information

       1.3.    Implementation of the food labelling legislation by FDA

               1.3.1. There is no possibility for FDA pre-marketing labelling review
               1.3.2. FDA is responsible for controls of labels during clearance
                      procedure
               1.3.3. The importer can affix stickers if minor errors are found in the
                      product labels
               1.3.4. The product should be labelled from origin
               1.3.5. Post-marketing control of the products
               1.3.6. Main difficulties encountered by the EU importers in the United
                      States

       1.4.    Labelling of food additives

       1.5.    Labelling of cosmetics

       1.6.    Labelling of drugs

               1.6.1. Main information required
               1.6.2. Prescription drugs
               1.6.3. Over the counter drugs

       1.7.    Labelling of devices

       1.8.    Labelling of biologics




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       1.9.    Products under the responsibility of the USDA

               1.9.1.   General rules
               1.9.2.   Shipping containers labels
               1.9.3.   Organic labelling
               1.9.4.   Protection of geographical indications

       1.10. Labelling of products under the responsibility of the Bureau of Alcohol,
             Tobacco and Firearms

               1.10.1.        Mandatory information for wine
               1.10.2.        Mandatory information for distilled spirit
               1.10.3.        Mandatory information for malt beverages
               1.10.4.        States requirements

       1.11. General requirement for the indication of the country of origin


§2.    US State requirements for food, drugs and cosmetic products


       2.1.    Basic principles

               2.1.1. Priority of Federal rules
               2.1.2. The National Uniformity for Food Act of 2001


       2.2.    Louisiana labelling requirements

       2.3.    Texas labelling requirements

       2.4.    Connecticut labelling requirements


§3.    Labelling and marking requirements for textile products


       3.1.    The Textile Fiber Products Labelling Act

       3.2.    The Wool Labelling Act

       3.3.    The Fur Labelling Act

       3.4.    Legislation on care labelling

       3.5.    State requirements for textile products

       3.6.    Difficulties experienced by the EU companies with the US labelling
               requirements


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§4.    Energy efficient products

       4.1.    The appliance labelling rules

       4.2.    The home insulation rules


§5.    Labelling requirements under the Fair Packaging and Labelling Act


       5.1.    Rules

       5.2.    Difficulties experienced by the EU companies with the FPLA


§6.    Other labelling requirements in the United States


§7.    Main differences in labelling requirements in the US and the EU


       7.1.    Labelling of foodstuffs

               7.1.1.   Nutritional labelling
               7.1.2.   Ingredients
               7.1.3.   Lot numbers
               7.1.4.   Specific quality claims
               7.1.5.   Additives
               7.1.6.   Dietetic food
               7.1.7.   Other products
               7.1.8.   Wines, spirits and beers.

       8.2.    Agricultural products

       8.3.    Labelling of cosmetics

       8.4.    Labelling of drugs

       8.5.    Labelling of textiles

       8.6.    Other labelling requirements

§9.    Legal analysis


Annexes




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                                      PART 8 : THE US



The legal regime of product labelling in the USA is quite complex. One needs to
distinguish between different products, different levels and different objectives. First,
the study covers food, drugs and cosmetics, which are fundamental products from
the perspective of labelling. One needs to distinguish between the federal and the
States norms. The study also covers specific products, like textile (§ 3), or energy
efficient products (§ 4). A special attention must be given to the provisions of the Fair
Packaging and Labelling (§ 5).


§ 1. Federal labelling requirements for food, drugs and cosmetics


1.1.   Products under the responsibility of the FDA


FDA is the specific regulatory agency responsible for all foods (except meat, poultry,
frozen and dried eggs and the labelling of alcoholic beverages and tobacco),
cosmetics, drugs, biologics, medical devices, and radiological products. The main
responsibility of FDA is to ensure the consumer protection in the US. The laws that
provide the FDA regulatory authority are as follows:

   -    The Pure Food and Drug Act of 1906
   -    The Federal Food, Drug and Cosmetics Act of 1938, as amended
   -    The Public Health Services Act (1944)
   -    The Fair Packaging and Labelling Act (1966)
   -    The Infant Formula Act (1980), as amended
   -    The Nutritional Labelling and Education Act of 1990
   -    The Food quality Protection Act of 1996


1.2.    Labelling of food products

The US Code of Federal Regulations (title 21) establishes the rules that govern the
operation for food safety. The main parts of the title 21 are as follows:

Parts 1-99, General requirements for enforcement of Federal Food, Drugs and
Cosmetics Act and Fair Packaging and Labelling Act; Colour additives
Parts 100-169, General Regulations for Labelling, Food Standards, Current Good
Manufacturer Practices for food, bottle water, low acid canned food, acidified food,
Hazard Analysis Critical Control Points for seafood.
Part 170-199, Regulations for Food additives.

According to the requirements of the Federal Food Drugs and Cosmetics Act
(FFDCA), a food label must contain specified information clearly displayed and in



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terms that the ordinary consumer is likely to read and understand under ordinary
conditions of purchase and use.

If the label of food bears representations in foreign language, the label must bear all
of the required statement in foreign language, as well as in English. The Tariff Act of
1930 requires all imported articles to be marked with the English name of the country
of origin.

When the food is packaged the following mandatory information should appear on
the label in English:

     -   name of food
     -   net quantity and contents
     -    the name, street address, city, state and zip code of either manufacturer,
          packer or distributor
     -    statement of the ingredients
     -    food additives and colours
     -    nutrition information

The 21 CFR details how the labels should be drafted and where the information
should be affixed on the product:


1.2.1.    The name of the food

The name of food – the common or usual name of food should appear on the
principal display panel, in bold type and in lines generally parallel to the base of the
package as it is displayed. The form of the product must also be included – sliced, a
whole or chopped (or other style, unless shown of the picture or unless the product is
visible through the container). The size must be proportional to the size of the food
and should be one of the most important features of the principal display panel. If
there is a standard for this food, the name as indicated in the standard should be
shown on the package.

A new food, which resembles a traditional food and is a substitute for a traditional
food must be labelled as an imitation if the new food contains less proteins or a
lesser amount of any essential vitamin or mineral. The size of the word “imitation”
should be the same as the size of the name of the product. Beverages that purport to
contain juice (fruit or vegetable) must declare the percentage of juice. The
percentage of juice must be put on the information panel63 near to the top. Only the
brand name, product name, logo or universal product code could be placed above it.
The print should be easily legible and contrast distinctly with the other printed or
graphic material. The type % juice must be not less than the largest type on the
information panel, except that used for the brand name, logo, universal product code
or the title phrase “Nutritional Facts”.



63
   The information panel is the label immediate to the right of the principal display panel, as displayed
to the consumer. If this panel is not usable due to the package design and construction, then the
information panel is the next panel immediately to the right.


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The principal display panel of the food is this portion of the package label, which is
most likely to be seen by the consumer at the time of purchase. Many containers are
designed with two or more different surfaces that are suitable for principal display
panel.


1.2.2. The net quantity of contents

The net quantity of contents is an accurate statement of the net amount of food in
the package. The required units of measure are the pound and the US gallon but
metric system measurement may also be used, in addition to required representation
in English units. The quantity of contents must appear on the principal display panel
of the labels in lines generally parallel to the base of the package when displayed for
sale. If the area of the principal display panel is larger than 5 inches², the quantity
must appear within the 30% of the label. The declaration must be in a type size
based upon the area of the principal display panel of the package (as listed in 21
CFR 101.105) and must be separated from the other information.


1.2.3. The information regarding manufacturer, packer or distributor

The name, street address, city, state and zip code of the manufacturer, packer,
or the distributor: This information must be placed on either the principal display
panel or the information panel. The street address may be omitted by a firm listed in
a current city or telephone directory. Imported products labels may omit zip code.
However, if the food is not manufactured by the person or company, whose name
appears on the label, the name must be qualified: manufactured for, distributed for or
a similar expression.


1.2.4. The statement of ingredients

The statement of ingredients: The food’s ingredients must be listed by their
common names in order of their predominance by weight unless the food is prepared
in conformity with existing standards. In this case the label must include only the
ingredients, which the standard make optional. However, in food standards most
ingredients are optional and therefore should be mentioned on the label. The word
"ingredients" do not refer to the chemical composition but means the individual food
components in mixed food. If a certain ingredient is characterising another in a food
(e.g. shrimp in shrimp cocktail), the percent of this ingredient must be required as a
part of the food’s name.

Food additives and colours are required to be listed as additives, but the law exempts
butter, cheese, and ice-cream from the obligation to show colours on the labels.
Spices, flavours and colour may be listed as such, without naming the specific
materials, but any artificial colours or flavours must be identified as such, and certain
coal-tar colours must be named specifically.

In order to avoid allergies, the ingredient list should include, when appropriate:



CEEI –Labelling – Final Report –16 August 2002                                       167
   -    FDA certified food additives, by name
   -    Source of protein hydrolysates, which are used in many foods as flavours and
         flavour enhancers
   -    Declaration of caseinate as a milk derivative in the ingredient list of food,
            which claims to be non-diary, such as coffee whiteners.


1.2.5. The nutrition information

The nutrition information: The Nutrition Labelling and Education Act (NLEA),
signed into law on November 8th, 1990, represents the first comprehensive revision of
the food requirements existing in the Food, Drug and Cosmetic Act. Under the
Nutrition labelling and Education Act, nutrition labelling must appear in the food label
or in the accompanying label. FDA has specified an a uniform format, which must
include the serving size, the number of servings per container and the nutrition
content of the food per serving, including the amount of each of the 11 nutrients
specified in the statute such as calories, sugar and sodium.

Nutrition labelling – Applicable foods

Under the US rules, the nutrition labelling is required for most foods. In addition,
voluntary labelling is available for many raw foods: the 20 most frequently eaten raw
fruits, vegetables and fish, under the FDA's voluntary point-of-purchase nutrition
information program, and the 45 best-selling cuts of meat under the USDA’s
program. Although voluntary, FDA’s program for raw produce and fish carries a
strong incentive for retailers to participate. The nutritional information is also required
for some restaurant foods. FDA requires nutrition information for foods about which
health or nutrient-content claims are made on restaurant menus, signs or placards.

Nutrition labelling – Exemptions

Under NLEA, some foods are exempt from nutrition labelling. These include:

   -        food served for immediate consumption
   -        ready-to-eat food that is not for immediate consumption but is prepared
            primarily on site
   -        food shipped in bulk, as long as it is not for sale in this form to consumers
   -        medical food, such as those used to address the nutritional needs of
            patients with certain diseases
   -        plain coffee or tea, some spices, and other foods that contain no
            significant amounts of any nutrients.

Food produced by small business also may be exempt, under 1993 amendments of
NEA. Companies claiming this exemption must notify FDA that they meet the criteria
before they begin marketing their products. US companies, other than importers may
be exempted without notification if they employ less than 10 full times workers.




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Nutrition information panel

The nutrition information panel must begin with the word nutrition facts and contains
information on some nutrients. The nutrients are either compulsory (underlined),
either voluntary :
    -       total calories
    -       calories from fat
    -       calories from saturated fat
    -       total fat
    -       saturated fat
    -       polyunsaturated fat
    -       monounsaturated fat
    -       cholesterol
    -       sodium
    -       potassium
    -       total carbohydrate
    -       dietary fiber
    -       soluble fiber
    -       insoluble fiber
    -       sugars
    -       sugar alcohol
    -       proteins
    -       vitamin A
    -       percent of vitamin A present as beta-carotene
    -       vitamin C
    -       calcium
    -       iron
    -       other essential vitamins and minerals

If a claim is made about any optional component, or if a food is fortified and enriched
with any of them, nutritional information for those became mandatory.

These mandatory and voluntary components are the only ones allowed on the
nutrition fact panel. Other information cannot appear on it.

Nutritional Panel format

All nutrients must be declared as percentage of Daily Values, which are label
reference values. This amount in grams or milligrams of macronutrients (such as fat,
cholesterol, sodium, and proteins) are still listed to the immediate right of these
nutrients. A column headed “% daily value” appears on the far right side.

The nutrition panel should be presented as the example shown below. Very detailed
information on the nutrition label can be found on the FDA’s web site:
http://www.cfsan.fda.gov/.




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Nutrition Panel Footnote:

Some larger packages have additional footnotes. This is a list of daily values for 2000
or 2500-calorie diet.

Format modifications:

In some cases, variations in the format of nutritional panel are allowed. For example,
the labels of food for children under 2 may not carry information about fat and
calories from fat, the labels of children under 4 may not include the % Daily Values
for total fat, cholesterol, sodium, potassium, total carbohydrate and dietary fiber.

Some foods qualify for simplified label format. It is allowed when the food contains
insignificant amounts of seven or more of the mandatory nutrients and total calories.
“Insignificant” means 0 or a total for carbohydrate, dietary fiber and protein less than
1g.

Some format exceptions exist for small and medium-size packages. Packages with
less than 12 square inches of available labelling space do not have to carry the
nutrition information unless a nutrient component or health claim is made for the
product. However, they must provide an address or telephone number for the
consumer to obtain nutrition information. If manufacturer wants to present nutrition
information on these packages, he can choose between presenting in a smaller
nutrition panel version or in tabular or linear format. The tabular or linear format may


CEEI –Labelling – Final Report –16 August 2002                                      170
also be used on packages that have less than 40 square inches available for labelling
and insufficient space for the full vertical format. Other options for these packages
are abbreviating names of dietary components, omitting all footnotes, except for the
statement “percent daily value is based on a 2000 calories diet”, placing the nutrition
information on other panels readily seen by consumers.

A select group of packages with more than 40 square inches of labelling space are
also allowed the format exception. These are packages with insufficient vertical
space (about 3 inches) to accommodate the required information.

Serving sizes

NLEA defines the serving size as the amount of food customarily eaten in the same
time. The serving sizes that appear on food labels are based on FDA-established
lists of "Reference Amounts Customarily Consumed Per Eaten Occasion".

Daily Values

The new label reference value, Daily value, comprises two sets of dietary standards
Daily Reference Value (DRV) and Reference Daily Intakes (RDI). Only the daily value
term appears on the label in order to render it less confusing.

Nutrient Content Claims

The regulation also spell out what terms may be used to describe the level of nutrient
in a food and how they can be used. Some examples should be taken:

   -        Free – this term means that the a product contains no amount of, or only
            trivial amounts of, one or more of these components: fat, saturated fat,
            cholesterol, sodium, sugars and calories. For example calorie-free means
            less than 5 calories per serving.
   -        Low – this term can be used on foods that can be eaten frequently without
            exceeding dietary guidelines for one or more of these components – fat,
            saturated fat, cholesterol, sodium and calories. The descriptions are
            defined as follows:
                     Low-fat: 3g. or less per serving
                     Low-saturated fat: 1g. or less per serving
                     Low-sodium: 140 mg or less per serving
                     Very low sodium: 35 mg or less per serving
                     Low-cholesterol: 20mg or less per serving
                     Low-calories: 40 calories or less per serving
               Synonyms for low include "little", "few", low-source of", "and contains a
               small amount of.."
   -        Lean and extra-lean. These terms can be used to describe the fat content
            of meat, poultry, sea-food and game meats.
                      Lean: less than 10g. fat, 4.5g.or less saturated fat, and less than
                      95 mg cholesterol per serving and per 100 g.
                      Extra-lean: less than 5g. fat, less than 2g. saturated fat and less
                      than 95mg. Cholesterol per serving and per 100 g.




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   -        High: Term can be used if the food contains 20% or more of the daily
            value for a particular nutrient in a serving
   -        Good source: the term means that one serving of a food contains 25
            percent or more of daily value for a particular nutrient.
   -        Reduced: This means that a nutritionally altered product contains at least
            25% less of nutrient or of calories than the reference food. However, a
            reduced claim cannot be made if the reference food already meets the
            requirements for a low claim.
   -        Less: This term means that a food whether altered or not, contains
            20%less of a nutrient or of calories than the reference food.
   -        Light: this descriptor can mean two things:
                      First, the nutritionally altered product contains one-third fewer
                      calories or half the fat of the reference food.
                      Second, that the sodium content of low calorie, low fat food has
                      been reduced by 50%.
                      The term "light" still can be used to describe such properties as
                      texture and colours, as long as the label explains the intend – for
                      example "light brown sugar".
   -        More: This term means that a serving of food, whether altered or not,
            contains a nutrient that is at least 10% of the daily value more than the
            reference food. The 10% of the daily value also applies to “fortified”,
            “enriched” and “added”, “extra and plus” claims but in these cases the
            food should be altered.

When the food is labelled as healthy, it must be low in fat and must contain limited
amounts of cholesterol and sodium. In addition, if it is a single item food, it must
provide at least 10% of one or more of vitamins A or C, iron, calcium, protein or fiber.
Exempt of this 10% from this 10% rule are certain raw, canned and frozen fruits, and
vegetables and certain cereal-grain products. These foods can be labelled “healthy”,
if they do not contain ingredients that change the nutritional profile, and in case of
enriched grain products, conform to the standards of identity, which call for certain
required ingredients.

Other definitions

The regulations also address other definitions. The most important among them are:

Percent fat free: A product bearing this claim must be a low fat or fat free product. In
addition, the claim must accurately reflect the amount of fat present in 100 g of food.
For example, if a food contains 2.5 g fat per 50 g, the claim must be “95% fat free”.

Implied: These types of claims are prohibited when they wrongfully imply that a food
contains or does not contain a meaningful level of nutrient.

Meals and main dishes: claims that a meal or main dish is “free” of nutrients such as
sodium or cholesterol; must meet the same requirements as those for individual
foods.




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Standardised food: Any nutrient claim such as “reduced fat”, “low calorie”, and “light”
may be used in a conjunction with a standardised term if the new product has been
specifically formulated to meet FDA’s criteria for that claim.

Fresh

Although not mandated by NLEA, the FDA has issued regulation for the term “fresh”.
The agency took this step, because of concern over the term’s possible misuse on
some food labels. The regulation defines the term “fresh” when it is used only in a
food that is raw or unprocessed. In this context “fresh” can only be used with food
which never been frozen or heated, and contains no preservatives (irradition at low
level is allowed).

Baby food

FDA is not allowing broad use of nutrient claims on infant and toddler foods. The
terms “unsweetened” and “unsalted” are allowed on these foods, because they are
related to taste and to the nutrient content.

Health Claims

Claims for 10 relationships between a nutrient or a food and the risk of disease are
now allowed in the US. They can be made in several ways through third party
recognition or by using symbols and signs (heart for example), vignettes and
descriptions. The claims must meet the requirements for authorised health claims.
For example, they cannot state the degree of risk reduction and can only use “may”
or “might” in discussing the nutrient or food disease relationship. And they must state
that other factors play a role in that disease. An example of appropriate claim is
“while many factors affects heart disease, diet low in saturated fat and cholesterol
may reduce the risk of this disease”.

The allowed nutrient-disease relationships are:

   -        calcium and osteoporosis
   -        fat and cancer
   -        saturated fat and cholesterol and coronary heart disease
   -        fiber-containing grain products, fruits and vegetables and cancer
   -        fruits, vegetables and grain products that contain fiber and the risk of
            coronary heart disease
   -        sodium and hypertension
   -        fruits and vegetables and cancer
   -        folic acid and neutral tube defects
   -        dietary sugar alcohols and dental caries
   -        soluble fiber from certain foods, such as whole oats and psyllium seed
            husk, and heart disease

For additional information and the rules to use the health claims, the exporter or the
importers should consult the FDA requirements on the FDA’s web site.

Low acid canned and acidified foods


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The law acid canned and acidified foods should follow special procedure to enter the
US. The EU exporters of canned foods are often not aware of the procedure and this
explains the high level of detention records for this type of food. According to the US
legislation (Title 21 CFR 108.25-108.35), the low acid foods are products, packaged
in hermetically sealed containers, have pH greater than 4.6 and water acidity greater
than 0.85. Acidified foods are low acid foods to which acid is added to reduce the pH
to 4.6 or below. For each low acid canned or acidified foods processing
establishment, which ships product to the US must register with the FDA. The
processing establishment should be advised to fill in the registration them selves after
requiring the forms to the FDA64.

In addition to the establishment registration, processors should file a separated
scheduled process for each product and product style, and for each container size of
low-acid canned foods and acidified foods intended for export to the US 65. The FDA
recommends that the processing establishment complete all necessary filling forms.
The scheduled process describes the process time and temperature as well as any
other factors witch could affect the sterilisation process.


1.3.   Implementation of the food labelling legislation by FDA


1.3.1. There is no possibility for FDA pre-marketing labelling review

FDA is the US regulatory agency implementing the US labelling requirements on food
products. The EU companies willing to export the Unites States could require general
labelling regulations to the FDA. However, the companies cannot require an approval
of the label, before the marketing of the products. When some technical problems
related to the fulfilment of labelling requirements occur, the exporter or the importer
could prepare a file and ask for comments. The comments may be available in 6
months or a year after the submission of the file.

The FDA submits the infant formulas to prior review. Nevertheless, this review is not
a prior approval of the label. The objective is to verify if the language used on the
packaging is correct.


1.3.2. FDA is responsible for controls of labels during clearance procedure

The FDA is also responsible for the verification of the labels of imported products.
The control of labels is performed in customs during the clearance procedure. The
products are not systematically submitted to verification. The FDA is notified by the
customs of an entry of a regulated food through duplicate copy of the Customs Entry
Documentation, the copy of the commercial invoice and surety to cover potential
duties, taxes and penalties. FDA reviews the Importer’s entry documentation to

64
  The exporters could contact the LACF registration coordinator on lacf@cfsan.fda.gov
65
  The forms are – form FDA-2541a (low acid aseptic packaging except low acid aseptic packaging
systems) and form FDA-2541c (low acid aseptic packaging systems), which are available on
www.cfan.fda.gov .


CEEI –Labelling – Final Report –16 August 2002                                           174
determine if a physical examination, wharf examination or sample examination
should be made. If the FDA makes a decision not to collect a sample, the FDA sends
to the US Customs Administration and to the importer a “May Proceed Notice” and
the shipment is released as far as FDA is concerned. The agency has the right to
sample the product to see if the product corresponds to the labels.

During the verification procedure, it is allowed that the products are stored in the
importers warehouse. However, they cannot be distributed until they are realised for
distribution. If the importer or the distributor decides to offer the products for
distribution, the FDA will fine him. If the product sampled is found in conformity with
the FDA regulation, it is released.

When the FDA finds that the products seems to be in violation with the Food, Drug
and Cosmetics Act and other related acts, the FDA sends to the importer and the
Customs administration a “Note of Detention and Hearing”, which specifies the nature
of the violation and gives the importer 10 workings days to provide testimony as to
the admissibility of the shipment. It is extremely important that the importer reacts
during these ten days, because if it does not respond, a notice of refusal is issued
and the products are destroyed by the US Customs. The importer has the choice
either to present testimony, either to submit an application for authorisation to
recondition or to perform another action (FDA form FD N°766). The reconditioning
form permits the importer to bring a food that is adulterated and misbranded into
compliance by re-labelling or other action or by converting to a non-food use. A
detailed method to bring the food into compliance must be given. The FDA fixes a
deadline for the importer to change the labels of its products, a bond is required for
payment of liquidated damages. The importers should contact the FDA district office
and invite it to perform a checking of the relabelled products. If the stickers are
correct, the products will be released with FDA authorisation. Depending on the
reputation of the importer, a physical check of the products will not be necessary, the
importer will only e-mail the new label of the product to the FDA district office. The
FDA could disapprove reconditioning procedure. A second and final request will not
be considered unless it contains meaningful changes in the reconditioning operation
to ensure reasonable changes of success. When the reconditioning is not found
sufficient or is not allowed, the products are destroyed.


1.3.3. The importer can affix stickers if minor errors are found in the product
       labels

In case, errors are found on the product label, the importer can put stickers with the
correct labelling requirements. However, the use of stickers is not allowed if the
products contain prohibited or not authorised colours or additives. One should
remember that only the colours and additives approved by FDA could be used as
food ingredients. The FDA has not specific requirements on allergens. According to
the FDA representatives, the agency is working on warning concerning the presence
of allergens in food. The agency is not satisfied with currently used “might contain
allergens”, it wants to find a proper language, which explains to the consumer exactly
what kind of allergens might be present in the product.




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1.3.4. The products should be labelled from origin

According to FDA, the products should be labelled in the country of origin. The labels
should be prepared according to the US requirements. The only exception of this rule
is the existence of labelling agreement. The labelling agreement is permitted under
regulation 101.100. This is a contract between the seller and the buyer specifying
that the buyer is responsible for the proper product labelling. However, the labelling
agreements are extremely controlled by the authorities. The agreement should
involve only two companies and specify the place of shipment and the place of
arrival. The customs verify the existence of labelling agreement and release the
goods. However, even the products covered by labelling agreement should bear the
country of origin. The marking of country of origin on the product is a requirement of
the US customs and should be applied to all imported products. The labelling
agreements are mostly used between the US and Canadian companies.

It is important to notice that due to the bio-terrorism, the controls during customs
clearance have become stricter and the controls of the US labelling requirements
have been increased.

It should also be mentioned that the products covered by the small business
exception are exempted from nutrition labelling. The small business exception is
applicable if the company employs full time less than 100 people and if less than 100
000 units of this product are sold on the market in the 12 months period preceding
the exemption claim. If the products were not sold in the United States during this
period, the producer should state that less that 100 000 units of this product are
reasonably anticipated to be sold during the period for which the exemption is
claimed. The exemption is not automatic, the producer or the importer should file a
notice with the Office of Food labelling of FDA. The exemption is granted for 12
months period. If at the end of this period the company no longer qualify for the
exemption, it has 18-month period to comply with the nutrition labelling requirements.
The US producers, but not the importers, are automatically qualified for the
exception, if they employ less than 10 full time workers and if the units sold on the US
market do not exceed 10 000.


1.3.5. Post-marketing control of the products

All the products are not subject to detailed controls during customs clearance. When
no discrepancies are found, the products are released in the commerce. The FDA
has the possibility to control the goods during the distribution process. The Agency
disposes with special agents in the different district offices in charge to react to
consumer complaints or to make controls in supermarkets. The district offices have
the right to investigate the conformity of the labels, to make analysis of the products
in order to determine if the products are conform to the statements shown on the
label. When some mistakes or omissions are found, the products could be either
withdrawn from sale until new labels are prepared by the importer or the distributor,
either seized or destroyed if the products contain illicit substances.




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1.3.6. Main difficulties encountered by the EU importers in the United States

The main difficulties experienced by the EU importers in the US are related to the
absence of nutritional labelling, absence of some ingredients on the labels,
unapproved additives or colours, statement of weight and measures not in conformity
with the US requirements. The EU exporters and the importers of food products
should verify very carefully that all the requirements foreseen by the US law are dully
attached to the food products before shipment to the Unites States. For the low acid
canned and acidified foods the establishment registration and the scheduled process
forms should accompany the shipment otherwise the US authorities could detain the
shipment.


1.4.       Labelling of food additives

Pre-market approval is required for food additives in the US. Before marketing the
food or colour additives, the manufacturer must ask FDA for its approval. The office
of pre-market approval provides a centralised focal point for pre-marketing review.
Once the food and colour additives approved, the FDA can adopt regulations on how
this additives should be used, in which aliments and the maximum amount to be
used. The FDA can also state how these additives shall be indicated on the labels.


1.5.       Labelling of cosmetics

Labelling of cosmetics is believed to be less complicated than the labelling of food
products, however, the importers should pay attention to several particularities of the
US legislation compared to the EU legislation. The US legislation is more prescriptive
concerning the denomination of the products, the ingredient list and the warning
statement. Therefore, the EU exporter should carefully respect the US legislation
when preparing the products for export. The importers or the producers of cosmetics,
which are mislabelled or misbranded, could undergo criminal prosecution. Cosmetics
marketed in the United States, whether manufactured here or imported from abroad,
must be in compliance with the provisions of the Federal Food, Drug, and Cosmetic
(FD&C) Act, the Fair Packaging and Labelling (FP&L) Act, and the regulations
published under the authority of these laws.

The main information, which should be included on the label of cosmetic product, is
as follows:

On the principal display panel66 the product must show:

     -            name of the product
     -            identity
     -            warning
     -            net quantity of contents

66
 The principal display panel is this portion of the package label, which is most likely to be seen by the consumer at the time of purchase.
Many containers are designed with two or more different surfaces that are suitable for principal display panel.




CEEI –Labelling – Final Report –16 August 2002                                                                                          177
On the information panel67 the product must show:

   -        directions for safe use
   -        additional warnings
   -        name and place of business
   -        ingredient declaration
   -        any other required information specific for some kind of cosmetics
The labelling requirements are codified at 21 CFR 701 and 740.

Net quantity- According to these requirements the net quantity should be in the
bottom area of the label, by using the US measures for quantity. In addition, the
metric unities could be used, but it is not allowed to use only the metric system.

Name and place of business – should be understood in the same way as for food
products.

Warning – cosmetics, which may be hazardous to consumers when misused must
bear appropriate label warnings and adequate directions for safe use. The
statements must be prominent and conspicuous. Some cosmetics must bear label
warnings or cautions prescribed by regulation (21 CFR 740). Cosmetics in self-
pressurized containers (aerosol products), feminine deodorant sprays, and children's
bubble bath products are examples of products for which such statements are
compulsory.
Although the FD&C Act does not require that cosmetic manufacturers or marketers
test their products for safety, the FDA strongly urges cosmetic manufacturers to
conduct whatever toxicological or other tests are appropriate to substantiate the
safety of their cosmetics. If the safety of a cosmetic is not adequately substantiated,
the product may be considered misbranded and may be subject to regulatory action
unless the label bears the following statement: Warning--The safety of this product
has not been determined. Sec. 21 CFR 740.10.
Ingredients statement – The US legislation is very strict regarding the ingredient
statement. The ingredients should be enumerated in specific order and the size of the
letters is strictly regulated. The ingredient declaration must be conspicuous so that it
is likely to be read at the time of purchase. It may appear on any information panel of
the package, i.e., the folding carton, box wrapping if the immediate container is so
packaged, and may also appear on a firmly affixed tag, tape or card. The letters must
not be less than 1/16 of an inch in height (21 CFR 701.3 (b)). If the total package
surface available to bear labelling is less than 12 square inches, the letters must not
be less than 1/32 of an inch in height (21 CFR 701.3(p)). Off-package ingredient
labelling is permitted if the cosmetic is held in tightly compartmented trays or racks, it
is not enclosed in a folding carton, and the package surface area is less than 12
square inches (21 CFR 701.3(i)).
The ingredients must be declared in descending order of predominance. Colour
additives and ingredients present at one percent or less may be declared without
regard for predominance. The ingredients must be identified by the names


67
     The information panel is the panel, which is on the right side of the principal display panel.



CEEI –Labelling – Final Report –16 August 2002                                                        178
established or adopted by regulation those accepted by the FDA as exempt from
public disclosure may be stated as "and other ingredients" (21 CFR 701.3(a)).
Cosmetics, which are also drugs, must first identify the drug ingredient(s) as "active
ingredient(s)" before listing the cosmetic ingredients.

All label statements required by regulation must be in English language and must be
placed on the label or labelling with such prominence and conspicuousness that they
are readily noticed and understood by consumers under customary conditions of
purchase. Attention: If the product is considered as not clearly labelled fort the
consumer the products could be declared as altered or misbranded by the US
authorities.


1.6.   Labelling of drugs


1.6.1. Main information required

The drugs in the United States should be labelled according to the Food, Drugs and
Cosmetics Act. The main information which should be present on the label is as
follows:
   - product name

   - manufacturer and importer name and address

   - active ingredients : therapeutic substances in medicine

   - purpose :       product category (such as antihistamine, antacid, or cough
   suppressant)

   - uses : symptoms or diseases the product will treat or prevent

   - warning : when not to use the product, when to stop taking it, when to see a
   doctor, and possible side effects

   - directions: how much to take, how to take it, and how long to take it

   - other information: such as storage information

   - inactive ingredients

   - quantity

This information should be shown on the principal display panel. The USTR title
21/part 200-300 details general and specific labelling requirements for drug products.
The labelling procedures significantly differ for prescription drugs and over-counter
drugs.



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1.6.2. Prescription drugs
All the prescription drugs imported for the first time in the United States should
undergo through the “New Drug Approval Process”. The approval process includes a
verification of the product labelling. For the innovated products, the procedure lasts
several years, because all the laboratory tests must be performed. For the generic
drugs, an abbreviated new drugs approval procedure is applied. The producer should
strictly respect the US labelling requirements. For example, the information shown on
the principal display panel should be in the following order:
   -        description
   -        clinical pharmacology
   -        instruction and usage
   -        contraindications
   -        warnings
   -        precautions
   -        adverse reactions
   -        drug abuse and dependence
   -        over dosage
   -        dosage and administration
   -        how supplied
Prescription drugs non-authorised in the United States cannot be imported in the
country. If the producer or the importer wants to change the label of authorised drugs,
these changes should be notified to the FDA.

1.6.3. Over the counter drugs

The over the counter drugs do not need preliminary approval by the FDA. They can
be imported in the United States if they respect the US labelling requirements. The
EU exporter and the US importer should pay great attention to the existing difference
between European and US legislation on the distinction between drugs and
cosmetics. In the US all the cosmetics containing claims are considered as drugs. An
example can be given a cream containing a UV protection is considered as
cosmetics in the EU but as a drug in the US. The cosmetics with claims should follow
the over the counter drug legislation and not the cosmetics legislation. They should
be registered before import. The registration is not an approval but aims to constitute
a list of all the drugs in the US. The producer could ask the FDA whether the product
is drug or cosmetic. The difference is established according to the claims, the
ingredients and the intended use of the product. The exporters or the importers must
register the cosmetic products before import if they risk to be considered as drugs by
the US authorities.




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Since May 6th, 2002, FDA has been implementing new form of labelling for the over
the counter drugs. The new labelling is introduced by an amendment of the Food,
Drug and Cosmetic Act from 17 March 1999. The new legislation requires that the
labelling is presented into a table similar to the nutritional labelling table applicable to
food products. The table for OTC drugs is named “drug facts” and should be
presented as follows:




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Drug facts

Active ingredients (in each dosage unit)                   Purpose
xxxxxxxxxxxxxxx mg                                       xxxxxxxx
Uses
xxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx
Warnings
Do not use xxxxxxxxx
Ask doctor or pharmacist before use it if you are……………………
When using this product
………………………………
………………………………
Stop use and ask a doctor if
…………………………………
…………………………………
If pregnant or breast –feeding, ask a health professional before use.
Keep out of reach of children. In case of overdose, get medical help or contact a
poison control center right always.
Directions
xxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxx
Other information
Xxxxxxxxxxxxxxxxxxxxxxx
Xxxxxxxxxxxxxxxxxxxxxxxx
Inactive ingredients…………………………………………………………………
Questions? Tel number

The information should be presented in a special table shown in the regulation and in
the size and format required. The OTC drugs not labelled correctly according to this
rule cannot be imported to the United States. This change affects European suppliers
of OTC drugs and some cosmetics, because some of them were not aware of these
changes and did not have time to adapt to the regulations.

1.7.   Labelling of devices
FDA is also responsible for labelling of Over the Counter devices such as contact
lens and prescription devices such as devices used for medical tests. The US has
particular legislation for labelling of devices. The importers of some of the prescription
devices need to be licensed before importing its products to the United States. The
licence number should be indicated on the label. The OTC devices should bear the
information contained in 21 CFR Section 801. These requirements are as follows:

-      identity of the product
-      name and place of business
-      Intended use
-      adequate directions
-      net quantity and contents.




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Specific requirements exist for some devices such as hearing aids, impact resistance
lenses in sunglasses and eyeglasses, menstrual tampons, latex condoms and
devices containing natural rubber.
For in-vitro devices a special labelling requirements are included in 21 CFR 809.

1.8.    Labelling of biologics
Labelling of biologics – blood products, therapeutics and vaccines are also submitted
to specific requirements. The majority of these products should obtained licences
before being imported to the US. The licensing process is comparable to the
registration process in the EU. During the licensing process, the labels of the
products are also verified. However, the verification of label does not mean that the
label is approved. The FDA only states that the label corresponds to the current
status of the product, the agency does not guarantee further modifications in the
labels. In addition, for blood products for example the blood manufacturer or collector
should be registered in a special register in FDA. The European exporters willing to
import biologics to the US, are strongly advised to contact the Center for Biologics
Evaluation and Research (CBER) of FDA68. The labelling requirements for biologics
are very extensive and they are related not only to the external labels of goods but
also to the information notice, which describes the product, the tests performed and
its efficiency. The EU companies willing to develop business in these products need
to study very carefully the regulations.


1.9.    Products under the responsibility of the USDA

1.9.1. General rules

All the food products containing more than 3% of raw meat or 2% of more cooked or
poultry meat, are under the responsibility of the USDA (US Department of
Agriculture). The Food Safety and Inspection Service (FSIS) should insure that the
imported products meet the US requirements. The importation of meat, poultry and
egg products is submitted to the prior approval of labels to the FSIS (9CFR317.3).
The producer or the importer should provide to FSIS a sample of the label (generally
called sketch) for approval69. A request for approval should be submitted along with
the sample of the label. If the label is approved, the company would get an approval
number, which should also be applied on the label.

The sample should contain all the required information:

     o product name (standardised name, common or usual name or descriptive
       name)
     o establishment name and the country of origin
     o inspection legend (US inspected and passed by the Department of Agriculture)
     o name and address of the manufacture and the distributor
     o net quantity of content (pounds and ounces) or liquid measures

68
  www.fda.gov/cber
69
  The address for the submission of the label is as follows: USDA, Food Safety and Inspection
               th
Service, 300 12 Street, SW, Room 602 Annex, Washington DC 20250, Tel. +1 202 205 0279, Fax +
1 202 205 3625, e-mail: FSIS.Labeling@usda.gov


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   o list of ingredients (required if the product is fabricated of two or more
     ingredients and they should be listed in descending order of predominance)
   o nutrition facts (mandatory for most products other than the single ingredients
     items. The requirements are the same than for the food products under the
     supervision of FDA)
   o handling statements (special statement required for perishable products such
     as keep refrigerated or keep frozen)
   o safe handling instructions (must be on any product, which is not ready to eat)

Some of the labelling requirements should be affixed on a special place of the label
or have a specific size (9SFR 317.2 and 381 subpart N). One has to notice that the
expiry date is not required by the Federal Law. Nowadays, except for some infant
formula and baby food, product dating is not required by Federal regulations.
However, dating of some foods is required in more than 20 States.


1.9.2. Shipping containers labels

Shipping containers labels do not need advance approval, but they are checked by
the FSIS during re-inspection at the port of entry. The following information must
appear on the end of the panel of the shipping container: product name, foreign
establishment number, country of origin, shipping marks, the name and address of
the foreign establishment or the importer (unless it appears on the labels of the
immediate containers inside the shipping containers), and if applicable, special
handling statement (as “keep refrigerated” or “keep frozen”). In addition, there must
be enough space to apply the US import inspection stamp. The label can be modified
by FSIS prior to the approval, if the label is approved, it would be stamped “approved
as modified”. Sometimes, the approval of FSIS is not needed, this procedure is
known as “generic approval”. In this case the labelling must show all mandatory
features and cannot be false or misleading. The generic approval is used for
standardised products that bear no claims, guarantees and foreign language and for
amenable single ingredients products.


1.9.3. Organic labelling

A main concern for the European companies is the organic labelling, which will be
implemented starting from 20 August 2002. The Organic Foods Production Act of
1990 requires USDA to develop national standards for organically produced
agricultural products to assure consumer that the organic products marketed as
organic meet uniform standards. The USDA had developed the national Organic
program. To be considered as organic the products should satisfy some
requirements. Some processes are considered as excluded (ex. Genetic engineering,
ionising radiation) and some substances are prohibited. The products should undergo
special certification in order to be considered as organic. The Organic Foods
Production Act requires that the imported products meet the standards of the national
Organic Program. Certifying agents operating in third countries may apply for USDA
accreditation. In case, an USDA accreditation agent does not exist in the country of
origin the product should be certified in the USA. The third countries could also
negotiate agreements with the US for the equivalency of the organic requirements.


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The labelling requirements for organic foods are based on the percentage of organic
ingredients in a product. Food labelled as “100 percent organic” must contain
(excluding water and salt) only organically produced ingredients. Products labelled as
“organic” must consist of at least 95% organically produced ingredients (excluding
salt and paper). Any remaining products ingredients must consist of non-agricultural
substances approved by the US National List or non-organically produced agricultural
products that are not commercially available in organic form. Products meeting the
requirements “100% organic” and “organic” may display these terms and the
percentage of organic content on their principal display panel. The certified agent
mark or logo may also be used on the principal display panel. Processed products
that contain at least 70% of organic ingredients can use the phrase “made with
organic ingredients” and list up to three of the organic ingredients or food groups on
the principal display panel.

Any product identifies as organic must identify each organically produced ingredient
in the ingredient statement on the information panel. The name and address of the
certified agent of the final product must be displayed on the information panel. A civil
penalty of up to 10 000$ can be levied on any person who sells or labels as organic
product that is not produced and handled in accordance with the National Organic
Program’s regulation.

The European exporters are worrying that they will not be able to market their
products as organic starting from 20 August 2002, because they need to undergo
additional certification in the United States even if they are certified as organic in
Europe. On the other side, the producers of products, which are not under the
responsibility of the FDA but under the responsibility of another governmental agency
as FDA or Bureau of Alcohol, Tobacco and Firearms (BATF). The wines and spirits
for example need a labelling approval in order to be commercialised in the United
States. They should (in addition to labelling approval, requested by BATF) perform a
special certification for organic products. When the importers apply for labelling
approval for products with organic ingredients they should present the certification
obtained from accredited body.


1.9.4. Protection of geographical indications

One of the main complaints of the importer of European food products in the US
concerns the protection of geographical indications. This difficulty is experienced by
products both under the jurisdiction of FDA and under the jurisdiction of USDA. In
order to protect their geographical indication in the US, the producers have registered
the name and principal mark of their products with the Patent and Trademark Office
(PTO). However, according to European producers and the American importers, the
intellectual property rights related to the geographical indications are often violated in
the United States by the American companies, but also by the administration, which
does not take the proper regulatory actions to assure this protection. The label of
some American products, produced and sold in the United States contain references
to geographical indications registered by importers of European goods or contain
pictures of these regions.



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For example the PTO have registered the mark “the real Italian tomato company” for
a California-based company that produces tomato sauces and canned tomato
products. Registration of this mark will prevent Italian producers of similar products
from labelling their cans “real Italian tomatoes”. An other example is USDA approval
of a label for an American company producing ham, which states “taste of Italy” and
contains a depiction of Milan’s Duomo and the map of Italy with the Emilia-Romagna
region prominently identified. The label also states that the product is a “Traditional
Italian prosciutto”. According to the European producers, these violations are in
contradiction with the provisions of article 22 of the TRIPs agreement, which prohibits
“ the use of any means and designation or presentation of the good that indicates or
suggests that the good of questions originates in a geographical area other than the
true place of origin in a manner, which misleads the public as to the geographical
origin of the good”. Article 22 requires the TRIPs members to refuse to register or to
cancel the registration of marks and labels that mislead the consumer about the
origin of the product. The NAFTA legislation approved by the congress contains
similar provisions and requires that “the mis-descriptive geographic marks would be
prohibited from December 8, 1993, unless they became distinctive.

It is important to notice that the European Union is foreseeing an important
amendment of its geographical indications legislation. The proposed regulation
foresees that the right to object registration of quality products and traditional
production methods should be extended to WTO member countries, which have
legitimate interest within the EU territory. However, that provision will be applied on
the basis of reciprocity. According to the European producers, it is necessary that the
EU negotiates the right for the EU members states to object registration of quality
products in the US not respecting the TRIPS provisions.


1.10. Labelling of products under the responsibility of the Bureau of
      Alcohol, Tobacco and Firearms

Labelling of alcoholic beverages - white spirits, wines and malt products - is under the
responsibility of the Bureau of Alcohol, Tobacco and Firearms. Imported wines in
bottles and other containers are required to be packaged, marked, branded and
labelled in accordance with the regulations in 27 CFR Part 4. Imported malt
beverages, including alcohol-free and non-alcoholic malt beverages, are also
required to be labelled in conformance with the regulations in 27 CFR Part 7. The
labelling regulations governing imported distilled spirits can be found in 27 CFR Part
5.

Each bottle, cask or other immediate container of imported distilled spirits, wines, or
malt beverages must be marked for Customs purposes to indicate the country of
origin of the alcoholic beverage contained therein.




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1.10.1. Mandatory information for wine
The mandatory information for wine is contained in 27 CFR and the requirements are
as follows:
   -        brand name – the name under which the product is sold
   -        class and type of designation – the specific identity of wine
   -        alcohol content – can be stated as a specific percentage or as a range
            between two percentages
   -        percentage of foreign wine
   -        name and address – for imported wine the name of trader and the name
            of importer should be showed on the label
   -        net contents
   -        FD&C Yellow #5 – where that colouring agent is used on the product
            bottled on or after
   -        Saccharin disclosure – a specific statement should be used if the product
            contains saccharin
   -        Declaration of sulphites - this declaration is required for wine containing
            10 or more parts per million of sulphur dioxide
   -        Health Warning Statement – is required for all alcohol beverages
            containing not less than 5% of alcohol. The government warning must
            appear in capital letters and in bold type. It must state: (1) According to
            the Surgeon, women should not drink alcoholic beverages during
            pregnancy because of the risk of birth defects. (2) consumption of
            alcoholic beverages impairs your ability to drive a car or operate
            machinery, and may cause health problems.
   -        Country of origin – this is a US customs requirement which is required for
            all the imported wines and may appear on the front, back and side of the
            container.
The size requirements for all mandatory information, excluding health warning
statement are 2mm for containers larger than 187 ml and 1mm for the containers of
187 ml or less. These requirements should be readily legible and appear on a
contrasting background. The type size and the legibility requirements for the health
warning statement are as follows:
For the bottles over 3 liters (101 fl.oz.) – 3 mm
For the bottles over 237 ml (8fl.oz.) to 3 liters – 2mm
237 ml or less – 1mm
The legibility requirements are also set down, the letters cannot exceed a maximum
number of characters per inch:


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Minimum size                                            Maximum characters per inch
1mm                                                     40
2mm                                                     25
3mm                                                     12


1.10.2. Mandatory information for distilled spirits

The mandatory labelling information for distilled spirits is also stated in the 27 SFR.
The requirements are as follows:
   -        brand name – the name under which the product is sold. A name that
            describes the age, origin and the identity or other characteristics of the
            distilled spirits are prohibited unless the name, whether standing alone or
            in combination with printed or graphic materials accurately describes the
            distilled spirits, conveys no erroneous impression or is qualified with the
            word “brand”
   -        class and type of designation – the specific identity of alcohol
   -        alcohol content – must be stated in percentage of alcohol by volume and
            in addition optionally, the alcohol contents can be in degrees proof.
   -        name and address – for imported spirits, bottled prior to importation the
            name and address of the importer must appear on the label preceded by
            an appropriate explanatory phrase such as “imported by” or “sole agent”.
            For spirits bottled after importation, the name of the bottler or/and importer
            must appear.
   -        net contents
   -        presence of colouring materials – the colouring materials must be
            specified on the labels in expression such as “coloured with Caramel”,
            “certified colour added” or “artificially coloured”, etc.
   -        treatment with wood – coloured and flavoured with wood product, should
            indicate it on the label. This rules applies only for whisky and for brandy.
   -        FD&C Yellow #5 – where that colouring agent is used on the product
            bottled on or after
   -        Saccharin disclosure – a specific statement should be used if the product
            contains saccharin
   -        Declaration of sulphites - this declaration is required for spirit containing
            10 or more parts per million of sulphur dioxide
   -        Commodity Statement
   -        Statement of age – is required for all the whiskeys aged less than 4 years,
            grape brandy aged less than 2 years, distilled spirits labelled with



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            miscellaneous age references or representations, distilled spirits labelled
            with a distillation date
   -        State of distillation – applies only to whiskey distilled in the US
   -        Health Warning Statement – is required for all alcohol beverages
            containing not less than 5% of alcohol. The government warning must
            appear in capital letters and in bold type. It must state: (1) According to
            the Surgeon, women should not drink alcoholic beverages during
            pregnancy because of the risk of birth defects. (2) consumption of
            alcoholic beverages impairs your ability to drive a car or operate
            machinery, and may cause health problems.
   -        Country of origin – this is a US customs requirement which is required for
            all the imported spirits whether bottled, packed or filled prior or after
            importation.
Specific size requirements are applied for distilled spirits, as it is the case for wine.
For all the mandatory information excluding brand name and health warning
statement the letters should be at least 2mm for containers larger than 200 ml and
minimum 1mm for containers of 200 and less. The requirements should be readily
legible and appear on a contrasting background. The brand name must generally
appear parallel to the base of the container.

The requirements for the type size and the legibility of the health statement are the
same than these applied for wine.


1.10.3. Mandatory information for malt beverages

The mandatory labelling information for malt beverages is as follows:
   -        brand name
   -        class and type designation
   -        alcohol content
   -        name and address
   -        net contents
   -        FD&C Yellow #5 – where that colouring agent is used on the product
            bottled on or after
   -        Saccharin disclosure – a specific statement should be used if the product
            contains saccharin
   -        Declaration of sulphites - this declaration is required for product
            containing 10 or more parts per million of sulphur dioxide
   -        Aspartame declaration – the following statement in capital letters,
            separate and apart from all other information, when the product contains
            aspartame in accordance with the FDA regulations: “PHENYLKETO-
            NURICS: CONTAINS PHENYLANINE”


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     -      Health Warning Statement – is required for all alcohol beverages
            containing not less than 5% of alcohol. The government warning must
            appear in capital letters and in bold type. It must state: (1) According to
            the Surgeon, women should not drink alcoholic beverages during
            pregnancy because of the risk of birth defects. (2) Consumption of
            alcoholic beverages impairs your ability to drive a car or operate
            machinery, and may cause health problems.
     -      Country of origin – this is a US customs requirement for all the imported
            malt products and may appear on the front, back and side of the
            container.
All the beverage products entering in the United States should undergo an approval
of the labelling by the BATF. If the approval is granted, BATF delivers a certificate
required for the customs clearance of the goods. The name of the importer is
indicated on the labels of the products and the person introducing the documents for
the customs clearance is normally the person, whose name is on the label.
Therefore, if the EU exporter has several importers in the United States, every
importer should obtain the approval of the labels on their name. This situation may
create difficulties to the EU exporter because he should prepare different labels for
each importer in the United State. The importer must submit the label project and a
sample together with the application. However, samples are not required for all the
alcoholic beverages some are exempted of this requirement 70 . The name of the
importer is not required under the European legislation, the name of producer, bottler
or the importer is sufficient.

Another point on which, the European exporters should be attentive is the obligation
to declare colouring materials on the label. Some alcohols (like whisky) are exempted
of this requirement, others (like liqueurs) should bear “artificially coloured” or certified
colours added”. Saccharin and sulphates, when present for more than 10ppm (10mg)
per litter, should also be declared on the label.

It should be also mentioned that the BATF does not permit the use of the word
“pure”, “purest” and “old” on the label unless this word is a part of the trade mark.
The net content should be stated in millilitres for the bottles of less than 1litter, for the
others the content should be expressed in litters. The abbreviation ml is permitted,
but the word litter should not be abbreviated. It is important to note that the net
content is regulated in the United States.

An important difficulty for the European exporters is the fact that labels should be
attached before shipment. The customs authority requires the certificate of label
approval before clear the products. If the product does not have a label approval, it
will be hold in customs or the importer will be obliged to constitute a bond as a
guarantee.


1.10.4. States Requirements


70
   The importer should contact the BATF in order to know if he needs to supply a sample of the
product. Additional information on labelling could be obtained on the internet site of BATF –
atf@treas.gov


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The EU companies exporting to the United States must not only respect the Federal
requirements but also the States’ legislations. Large number of States has additional
requirements – they are mostly related to the warning statement or fiscal stamps. A
very small number of States operate a deposit/refund scheme, with an accompanying
labelling requirements for all alcoholic beverages in containers over 50 ml. For
example in Iowa, the beverages over 50ml should be marked with “Iowa refund 5
cents”. Similar requirements exist in Maine and Vermont.

1.11. General requirement for the indication of the country of origin
The US customs have a general requirement for the indication of the country of origin
of every article of foreign origin entering the United States. These articles must be
legibly marked with the English name of the country of origin unless the exception is
provided for this by the law.
This requirement creates problems for the European exporters. The indication “EC”
or “EU” or “European community” is not recognised because it does not indicate an
individual country of origin. According to the US requirements the expression
“country” means the political entity known as a nation. European exporters consider
this requirement as excessive for two reasons. First, the EU exporter should furnish
additional documentation for customs clearance in order to satisfy the US
requirements. Second, the EU producers should prepare special marking for the
United States, on goods, which bear EU as country of origin. This is source of
additional costs.
The marking of origin must be legible. It should be located in conspicuous place. The
article should be marked as indelibly and permanently as the nature of the product
will permit. However, any reasonable method of marking is permitted, including the
adhesive marking. The only condition is that the adhesive marking should remain on
the product and can be destroyed only by a deliberate act.
Some articles require special marking such as clocks, knives, forks, surgical
instruments, scientific and laboratory instruments, dental instruments and vacuum
containers. These articles requires either additional, either more permanent labelling.
Some products are exempted from marking of the country of origin. Those are mainly
products that would be difficult to mark, for example raw agricultural materials, works
of art, etc. However, the containers of all the products even those not submitted to
individual country of origin marking should be marked with the English name of the
country of origin.
The articles, subject to country of origin marking, which enter the US without proper
marling of origin, shall be submitted to additional duties unless properly marked,
exported or destroyed under customs supervision prior to liquidation or entry. The
European exporters are advised to mark correctly their products with the country of
origin in order to avoid additional fees and penalties in customs.


§ 2. US State requirements for food drugs and cosmetic products


2.1.   Basic principles


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2.1.1. Priority of federal rules

The majority of the labelling requirements are adopted on the Federal level. However,
the States have the power to adopt labelling requirements related to the health and
security.

The determination of Federal vs. State competence in the United States is very
complex. This explains the existence of numerous Federal and States labelling
requirements. If there is not a Federal requirement, which have been given pre-
emptive status by the Congress, there is not compelling claim of jurisdiction and the
States can adopt their labelling requirements. Nevertheless, these requirements
cannot affect any pre-emption, expressed or implied, which arise under the
Constitution or other federal laws. For example, the Federal Food, Drugs and
Cosmetics Act provides for national uniformity for non-prescription drugs and pre-
emption for labelling or packaging of cosmetics. Therefore, the States are not allowed
to adopt additional requirements in these fields. Exemptions are granted under
certain conditions.

An additional difficulty arises from the fact that there is not a system centralising the
State labelling requirements. On the other side, it is very difficult to determine if these
individual States labelling requirements are in conformity with the federal
requirements or differ from these requirements.


2.1.2. The project for the National Uniformity for Food Act

It is important to notice that an amendment to the Federal Food, Drug and Cosmetic
Act was introduced - The National Uniformity for Food Act of 2001. The amendment,
which is still not adopted provides for national uniform food safety labelling and
warning requirements. The bill provides that the where the FDA has set a federal
safety standard for food ingredient, the states would apply and enforce the same
standard. If the FDA has not set such a standard, the states remain free to enforce
their own standard. In the first six months after the legislation is enacted, states can
petition the FDA with their current safety standard. During that time, the FDA can opt
to make that state standard the national standard or to exempt the state from the
national standard or to reject the state standard and enforce compliance with the
FDA standard. The bill also provide for national uniformity in product warning. No
State can require manufactures to place non-FDA warning labels on their products.
The bill does not affect state authority in traditional areas such as : freshness dating,
open date labelling, grade labelling, religious dietary labelling, returnable bottle
labelling and unit pricing. If the bill is adopted, it will invalid the majority of the state
legislations, related to labelling of food ingredients (such as labelling of percentage of
alcohol in food, state labelling of food additives, etc.).

The States have implemented some federal rules in their internal legislation. They
have implemented some additional requirements in order to protect consumers’
health and safety. These requirements concern issues for which there is no national
framework such as open date labelling, unit price labelling, container deposit


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labelling, religious dietary labelling and previously frozen labelling71. The consultant
will list as example some of the State requirements. During the consultation with the
European companies, they have not mentioned difficulties with the US federal
requirements.

State labelling requirements are various and difficult to list. However, there are some
group of products for which several states have adopted labelling requirements. For
example, several states have taken measures to regulate dietary supplements. For
example, in Florida some products containing ephedrine are banned. Like federal
laws, state laws often provide no appreciable safety benefit to the public while
imposing greatly on manufacturers and consumers. Several states have as well
adopted regulation on drinking water and milk products.
The consultant will examine the Louisiana, Texas and Connecticut state regulations
and will provide in annex 1 the list of identified state requirements.


2.2.       Louisiana labelling requirements

The goods sold in Louisiana should respect the Federal labelling requirements, but
also some existing State labelling requirements. Particular attention should be paid to
the State of Louisiana’s requirements for food, drugs and cosmetics products. It
should be noticed that the definition of Food, Drug and Cosmetic products should not
understood like the one delimitating the competence of the Federal Food and Drug
Administration. In the Louisianan requirements, meat and milk products are also
included. The labelling requirements for these products can be found in the Section
40 of the Louisiana Revised Statutes 72 . According to this legislation, labelling
requirements exist for food (especially in case of misbranded food RS 40-608, honey,
kosher food, honey). As far as the organic food is concerned, according to the
Louisianan legislation a food cannot be labelled as organic unless it is free of
synthetic fertilisers and antibiotics (RS 40:608.3). The fresh fruits and vegetables are
exempted from labelling (RS 40:609).

The Louisianan legislation contains a restriction for metal beverage containers, so
designed and constructed that metal part is detachable in the opening of the
containers.

Specific labelling requirements also exist for feed, for milk and meat and poultry. In
case of importation of these products to Louisiana, the exporter should contact the
US importer and to require specific information about the labelling.

The legislation also foresees for the specific labelling of water, it should be labelled
as “mineral water”, “spring water”, “artesian water”, “purified water”, “distilled water”
or “drinking water”, depending of the type of the bottle water. The bottler,
manufacturer, distributor, or vendor of bottled water should register each separate
and distinct type of bottled water with the Louisianan authorities in accordance with
R.S. 40:627 and RS 40:628.



71
     « Food labelling : toward national uniformity »
72
     The Louisianan legislation could be find on the web-site http://www.legis.state.la.us


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The Louisiana Government has also the right to introduce the procedure for
registration for drugs, cosmetics and processed food in accordance with RS 40:627.
The registration in accordance with this article, requires the submission of catalogue
and the specimen of the labels, elaborated in compliance with the FDA requirements.
If the label is not in accordance with the FDA requirements, the label needs to be
approved before the product is put on the market.

In addition to those requirements, the mislabelling is also prohibited for drugs
(40:621) and cosmetics (40:617).

The EU exporters concerned by specific labelling requirements in Louisiana have
reported no specific complaints. The reason seems to be the fact that products are
rarely exported to one determinate State of the US and the local distributor takes
care of the specific labelling requirements for each State.


2.3.      Texas labelling requirements


The main legislation on Food, Drug and Cosmetic Labelling is the Texas Food, Drug
and Cosmetic Act. This act is enforced by the State Department of Health, the State
Attorney General and the Consumer Protection Division. The Act provides for specific
labelling of food additives, drinking water and specific requirements for misbranded
food (Texas FDCA 431). The law specifies that a food is considered as misbranded if
it is not produced in conformity with the state standards. The raw agricultural
products, for example, must show on the label if they have been grown in soil with
chemical pesticides.

The Texas legislation provides also for labelling of alcohol (liqueur) in candy, for
definition of crabmeat, special labelling requirements for honey and kosher food.

No particular complaints have been received from the EU companies concerning the
Texas requirements.


2.4.      The Connecticut labelling requirements


Several laws provide for labelling requirements in Connecticut - the Pure Food and
Drug law, Sulfiting Agents law, Apple Juice Law, Cider Law, Bottled Water law, Non-
alcoholic beverages labelling law and Packaging of Consumer Commodities law73.

The Pure Food and drug law provides special labelling provisions for kosher food,
oleomargarine, butter, honey, difference between jam and jelly, special labelling for
maple syrup (labelling indicated if the syrup has been prepared in the government
inspected farm), special provisions on vinegar and liqueurs, definition of frozen
desserts and some other foods. The state legislation mainly set up the definition,
permitting that the product is labelled with specific names.

73
     Detailed information on the Connecticut laws could be found on the web-site : www.cga.state.ct.us


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No complaints concerning this legislation have been received.


§ 3. Labelling and marking requirements for textile products


The labelling requirements for textiles in the United States are quite complex. The
labelling is verified by the US customs during the customs clearance procedure. The
governmental body responsible for the labelling of textile products is the Foreign
Trade Commission (FTC)74. The FTC has elaborated several sets of labelling rules
for the textile products. The main regulations, which should be respected, are the
Textile Fiber Products Identification Act, Wool Products Labelling Act and Fur
Products Labelling Act.


3.1.     The Textile Fiber Products Labelling Act
All textile fiber products imported into the United States shall be stamped, tagged,
labelled, or otherwise marked with the following information as required by the Textile
Fiber Products Identification Act, unless exempted from marking under Section 12 of
the Act::
        The generic names and percentages by weight of the constituent fibres
         present in the textile fiber product, exclusive of permissive ornamentation, in
         amounts of more than five percent, in order of predominance by weight, with
         any percentage of fiber or fibres required to be designated as "other fiber" or
         "other fibres" appearing last. Fibres present in amounts of five percent or less
         must be designated as "other fibres."
        The name of the manufacturer or the name or registered identification number
         issued by the Federal Trade Commission of one or more persons marketing or
         handling the textile fiber product. A word trademark, used as a house mark,
         registered in the United States Patent Office, may be on labels in lieu of the
         name otherwise required, if the owner of such trademark furnishes a copy of
         the registration to the Federal Trade Commission prior to use.
        The name of the country where processed or manufactured.


The textile product labelling act also indicates how the labelling should be displayed.
The Federal Trade Commission has also issued several guidelines for the industry
explaining and ruling on what statements are admissible on the labels.


3.2.     The wool labelling act



74
  Detailed information on textile product labelling could be found on the web-site of the Federal Trade
Commission – http://www.ftc.gov


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Any product containing woollen fiber imported into the United States, with the
exception of carpet, rugs, mats, upholsteries, and articles made more than 20 years
prior to importation, shall be tagged, labelled, or otherwise clearly marked with the
following information as required by the Wool Products Labelling Act of 1939:
      The percentage of the total fiber weight of the wool product, exclusive of
       ornamentation not exceeding five percent of the total fiber weight, of: (1) wool,
       (2) recycled wool, (3) each fiber other than wool if the percent by weight of
       such fiber is five percent or more, and (4) the aggregate of all other fibres.
      The maximum percent of the total weight of the wool product, of any non-
       fibrous loading, filling, or adulterating matter.
      The name of the manufacturer or person introducing the product in commerce
       in the United States; i.e., the importer. If the importer has a registered
       identification number issued by the Federal Trade Commission, that number
       may be used instead of the individual's name.


3.3.   The Fur labelling act
Any article of wearing apparel imported into the United States and made in whole or
in part of fur or used fur, with the exception of articles made of new fur of which the
cost or manufacturer's selling price does not exceed $7, shall be tagged, labelled, or
otherwise clearly marked to show the following information as required by the Fur
Products Labelling Act:
      The name of the manufacturer or person introducing the product in commerce
       in the United States; i.e., importer. If the importer has a registered
       identification number, that number may be used instead of the individual's
       name.
      The name or names of the animal or animals that produced the fur as set forth
       in the Fur Products Name Guide and as determined under the rules and
       regulations.
      That the fur product contains used or damaged fur where such is the fact.
      That the fur product is bleached, dyed, or otherwise artificially coloured when
       such is the fact.
      That the fur product is composed in whole or in substantial part of paws, tails,
       bellies, or waste fur when such is the fact.
      The name of the country of origin of any imported furs contained in a fur
       product.


The labelling requirements are verified by the US customs agents. It is advised for
the EU exporter to label their goods in the country of origin, before export in
conformity with the US requirements.




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It is important to notice that the US importer must sign a statement for the
correctness of the labelling. This statement is named guaranty and it is a written
promise that the textile, wool or fur products covered are properly labelled. A
separate guaranty covers all the products in a particular transaction. A continuing
guaranty covers all products subject to a particular statute and may be provided by a
seller to a buyer or filled with the FRC. However, foreign companies cannot fill a
continuing guaranty with FTC. In addition, a guaranty received by a domestic firm
from a foreign company will not serve as a legal defence if the importer is charged by
the FTC with mislabelling products. An importer is legally responsible for the proper
labelling of textile, wool and fur products. Importers should test periodically the fiber
content of their products to verify the label accuracy. Importers should be aware that
customs could require their guaranty and test the products.




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3.4.   Legislation on care labelling


The textile wearing apparel and certain piece products should be labelled with the
care labelling. The care labelling rule was promulgated in December 1971 and has
been frequently modified 75 . The rule makes it unfair or deceptive for the
manufacturers and importers to sell these items without attaching care labels stating
“what regular care is needed for the ordinary use of the product”. The care instruction
should be stated in appropriate terms or with any appropriate symbols.

The care labelling is not required from origin. The Customs do not verify the
existence of care labelling. However, the importers are responsible to attach the care
labelling before the marketing of the products.

It is important to notice that the system of symbols used in Europe and designated as
an international standard by the International Standards Organization cannot be used
as care labelling in the US. The symbols, which should be used must be those
developed by the ASTM and designated as ASTM Standard D5489-96c. According to
the American authorities, the system used in Europe does not provide symbols for all
the information required by the Care Labelling Rule. Therefore, the importers should
be very careful and adapt the eventual existing care labelling to the American
requirements.


3.5.   State requirements for textile products

The consultant has made research on State labelling requirements for textile
products. The EU companies and the American importers of EU products have not
mentioned specific requirements for these products. According to importers and to
the American Institute for textile, specific requirements exist in some states for
mattresses, sleeping bags, upholstered furniture, etc. The list of the products subject
to specific State labelling requirements could be obtained in annex 2 of this study.


3.6.   Difficulties experienced by the EU companies with the US labelling
       requirements

The EU companies and the importers of the EU products have stated that the US
legislation is very complex but they have fewer difficulties than some years before,
because they are much more used to this legislation. The importance of the US
market for the EU companies obliges them to adapt and comply with the
requirements. They still consider that the marking of origin of the product and the
complex product description requirements as very burdensome and not consistent
with the international practice in this area.


75
  The Care Labelling Act could be obtained at the web-site of FTC – www.ftc.gov or in 16 CFR – Part
423.


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§ 4. Energy efficient products

4.1.      The appliance labelling rule


The Federal Trade Commission’s Appliance Labelling Rule (16 CFR, Part 305)
intends to help consumers comparison for energy-efficient appliances, lighting, and
plumbing products. The Rule requires manufacturers of most major home appliances
(such as Refrigerators, freezers, dishwashers, clothes washers, Water heaters,
furnaces, boilers ,Central air conditioners, room air conditioners, heat pumps, Pool
heaters) to attach labels that provide an estimate of the product's energy
consumption or energy efficiency. These Energy Guide labels must also show the
highest and lowest energy consumption or efficiency estimates of similar appliance
models. The Rule also requires energy disclosures for certain lighting products and
water use labelling for certain plumbing products.

The rule is very detailed and should be strictly respected by the European producers
or by the American importers. If necessary the EU producer should provide all the
necessary data to the importer to permit the elaboration of the electrical efficiency
label in conformity with the US requirements. The Federal Trade Commission could
submit some products to testing by a designated laboratory at the manufacturer’s
expenses.

Detailed information on the appliance labelling rule and example for appliance energy
guides for all the products could be obtained on the web site of the Federal Trade
Commission76.


4.2.      The home insulation rule


The labelling and advertising of home insulation rule adopted by the Federal Trade
Commission (16 CFR, Part 460), known as “the R-value rule” requires labelling
including the type of insulation, the chart of these insulation, the R-value, which
represents the resistance to heat flows. The home insulation material is defined in the
regulation as any material mainly used to slow down heat flow. Additional information
on the R-value labelling rule could be found on the web site of the Federal Trade
Commission77.

The European industry has not expressed complaints on the home insulation
equipment rule.




76
     http://www.ftc.gov/bcp/conline/edcams/eande/index_applrule.html
77
     http://www.ftc.gov/bcp/conline/edcams/eande/index_applrule.html


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§ 5. Labelling         requirements          under   the   Fair   Packaging        and
Labelling Act


5.1.   Rules

The Fair Packaging and Labelling Act (FPLA), enacted in 1967 (16 CFR parts 500-
503), directs the Federal Trade Commission and the Food and Drug Administration to
issue regulation requiring that all “consumer commodities” be labelled to disclose net
content, identity of commodity, name and place of business of the product’s
manufacturer, packer or distributor. The Act authorizes additional regulations, where
necessary to prevent consumer deception or to facilitate value comparison. The
Office of Weights and Measures of the National Institute of Standards (US
Department of Commerce) is authorized to promote to the greatest practical extend
uniformity of the Federal and State regulations on the labelling of the consumer
commodities.

The term “consumer commodity “means “any article, product, or commodity of any
kind or class which is customarily produced or distributed for sale through retail sales
agencies or instrumentalities for consumption by individuals, or use by individuals for
purposes of personal care or in the performance of services ordinarily rendered
within the household, and which usually is consumed or expended in the course of
such consumption or use“. For the propose of the regulation, are not considered as
consumer commodities – the foods, drugs and cosmetics, meat or meat products,
poultry or poultry products, tobacco and tobacco products, any beverage products
and pesticides, because they are submitted to the requirements of other federal acts.

The basic requirements of the FPLA are as follows:

   -        statement identifying the commodity (e.g. detergent, sponges, etc)
   -        the name and place of business of the manufacturer, packer or distributor
   -        the net quantity of contents in terms of weight, measure or numerical
            count (measurement must be in both metric and inch/pound units)

The FPLA gives specific information of how the net content and measures should be
expressed, the permitted variations, the representation of servings, uses, applications
and the multiunit packages. Some commercial practices are used to express the net
quantity of specific products: camera films, Christmas trees ornaments, replacement
bags for vacuum cleaners, paper table covers, bed sheets, pillowcases, cellulose
sponges, candles and solder.

The Federal Trade Commission has the right to interpretation of the FPLA and could
determine which commodities would be considered as consumer commodities.
According to the Commission, the following commodities are not consumer
commodities under the meaning of the Act:

Antifreeze, artificial flowers and parts, automotive   accessories,      automotive
chemical products, automotive replacement parts, bicycle tires and tubes, books,
brushes (bristle, nylon, etc.), brooms and mops, cameras, chinaware, Christmas light


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sets, cigarette lighters, clothespins (wooden, plastic), compacts and mirrors, diaries
and calendars, flower seeds, footwear, garden tools, gift ties and tapes, glasses and
glassware, gloves (work type), greeting cards, hand tools, handicraft and sewing
thread, hardware, household cooking utensils, inks, jewellery, luggage, magnetic
recording tape, metal pails, motor oil (automobile), mouse and rat traps, musical
instruments, paintings and wall plaques, photo albums, pictures, plastic table cloths,
plastic placement and plastic shelf paper, rubber gloves (household), safety flares,
safety pins, school supplies, sewing accessories, silverware, stainless steel ware and
pewter ware, small arms ammunition, smoking pipes, souvenirs, sporting goods,
toys, typewriter ribbons and woodenware.

However, it is important to notice that many products that are exempt from the FPLA
nevertheless fall within the purview of the weights and measures laws of the
individual States. The FPLA contains as well provisions on the effect upon the State
laws. The FPLA intends to supersede all the laws of the States or other political
subdivisions that provides for labelling of net quantity, which are less stringent or
require different information. The list of the State offices of weights and measures
and the related web sites could be found in Annex 3 of the study.


5.2.   Difficulties experienced by the EU companies with the FPLA

The European companies have not expressed particular difficulties related to the Fair
Packaging and Labelling Act. They consider requirements of the act as not very
complex. They have got used to the requirement to indicate the net quantity in both
pound and metric systems. However, the existence of different state legislation and
the lack of information on this point are considered as an obstacle. The small and
medium sized enterprises find very difficult to find information on the compulsory
labelling requirements in the US.

The main difficulty for the European company is related to standards and conformity
assessment. Many companies have experienced difficulties with UL (Underwriter’s
Laboratories) standards for household appliances. The companies consider
procedures for certification very long, costly and sometimes not in conformity with the
international requirements in this field. In some cases, the European products
certified in Europe, cannot obtain certification in the US.



§ 6. Other labelling requirements in the United States

Some other labelling requirements exist in the United States and must be taken into
account by the European companies willing to export to this market. The Federal
Trade Commission implements labelling requirements for fuels and automotive
products. The Federal Trade Commission is also in charge to implement guides for
the use of recycling logos.

The insecticides, fungicides are under the jurisdiction of the Environmental Protection
Agency.


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Some products that could danger consumer safety (such toys, bicycles) are under
the jurisdiction of the US Consumer Safety Protection Commission.

No complaints have been received by the European industry regarding the labelling
of the above-mentioned products.


§ 7. Main differences in labelling requirements in the US and the
EU


The US and the EU labelling legislations differ on several points. The comparison of
the consultant is concentrated on the US Federal legislation and the EU
harmonisation on labelling requirements. The US State requirements are not
assessed in this analysis.

The EU importers to the United States must also pay attention on the fact that
labelling of the individual country of origin on the products and the containers
(made in EC or EC origin prohibited) is compulsory for customs purposes in the
United States.

7.1.    Labelling of foodstuffs


The US Food, Drug and Cosmetic Act defines the main requirements for foodstuffs in
the United States. The directive 2000/13 defines the labelling requirements for
foodstuffs in the EU.

Several differences could be identified between the EU and the US legislation. The
first important difference is that the EU legislation is less requiring concerning the
form of presentation of the labelling requirements. The principal requirement is that
the labelling should be easily understandable for the consumer.


7.1.1. Nutritional labelling

The main difference is that the EU legislation does not require compulsory nutritional
labelling. The products sold in the European Union should bear nutritional labelling
only in case it formulates nutritional claims. The nutritional labelling in the EU is
regulated by the directive 90/496. The presentation of the nutritional labelling is also
less prescriptive than the US requirements. In US, the nutritional labelling should be
presented in specific form with the indication of the daily value of the ingredients. An
exception from the rule of nutritional labelling is foreseen for the small companies
with the strict criteria to be satisfied and the companies must request to register with
the FDA before exporting their products to the US.

In the EC, the labelling of nutritional foods for which no specific directive has been
adopted must contain the qualitative or quantitative composition or the specific
procedure, which gives to the product its specific characteristics and the available


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energy value expressed in kilojoules or kilocalories, the carbohydrate, protein and fat
content per 100 g or 100ml. Specific directives exists for cocoa and chocolate
products, fruit juices and similar products, preserved milk, coffee extracts and chicory
extracts, jellies, marmalades and chestnut puree. These directives defines the
essential characteristics of the products and therefore their labelling.


7.1.2. Ingredients

The list of ingredients is compulsory in the US and in the EU for the products
containing more than one ingredient. However, the EU legislation does not require
the quantity of the ingredients except is special cases, for example when the
ingredient or some of the ingredients appear in the product denomination.


7.1.3. Lot numbers

The lot number is required under the EU legislation for food products. The Directive
89/396 defines “lot” as a batch of sales units of a foodstuffs produced manufactured
or puckered under the same conditions.


7.1.4. Specific quality claims

The US legislation contains more strict rules on the products which can be labelled
as “light”, “low”, “free”, “reduced”, “good source”. The US requires that these products
respond to special requirements in order to bear specific claims of the labels.

The US and EU legislation on organic labelling are also different. The US requires a
certification by US accredited agency in order to label the food as organic. The EU
regulation 1788/2001 lays down rules for certificate and inspection for imports from
third countries. Starting from July 2002, an original EU certificate issued in the
country of origin must accompany the imported goods and will be verified by the EU
members authorities during customs clearance.


7.1.5. Additives

In the EU, several specific directives exist requiring additional labelling.

The directive 94/34 EC on additives provides that the use of food additives must
always be labelled on the packaging of food products by their category (anti-oxidant,
preservative, colour, etc) with either their name or E-number.

The directive 96/21/EC covers sweeteners. Foodstuffs containing a sweetener must
indicate on the label ‘with sweetener’ in conjunction with the name under which the
name is sold as laid down in the framework labelling Directive 2000/13/EC,
Foodstuffs including added sugars should be labelled in the same way. In the case of
food products containing aspartame, the label should state ‘contains a source of



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phenylalanine’. Finally, food products containing more than 10% added poloyols
should state ‘excessive consumption may produce laxative effects’.

The directives 88/388/EEC and 91/71/EEC on flavouring substances set out the
rules on labelling for flavourings added to foodstuffs, and for flavourings sold as such
to food producers and consumers. The word ‘flavouring’ must be present in the
ingredient list on the packaging of food products when they contain flavourings. The
expression ‘natural flavouring’ may only be used for flavouring substances or
preparations, which are extracted from vegetable or animal materials. For flavourings
sold as such, additional labelling is required concerning their minimum durability,
conditions for storage and use, identification of the producer and identification of
other substances contained in the flavourings (e.g. additives).


7.1.6. Dietetic food

The directive 89/398/EEC 78 on dietetic foods defines the authorisation process is
provided in this directive for the use of the terms “dietetic” or “dietary” either alone,
either in conjunction with other worlds. Under this directive the nutritional claims are
prohibited. There are however possibilities for a derogation.


7.1.7. Other products

The directive 91/321/EEC on infant and follow-on formulas submits these products to
specific additional labelling.

The directive 96/5/EC on processed cereal-based foods requires that the labelling
specifies the age from which these products may be used by children and the
information on the presence of gluten.

The US legislation contains specific provisions on some food products such as the
canned low acidified food or food additives. The producers of low acidified foods
should be registered with the FDA before exporting their products to the United
States and the additives should be authorised for use by the FDA.


7.1.8. Wines, spirits and beers

A labelling approval is also needed for the products under the responsibility of
Bureau of Alcohol, Tobacco and Firearms. These products are wines, spirits and
beers. They must contain in addition of the labelling requirements, compulsory in
Europe, the name of the importer and the warning. The warning should have the
dimensions foreseen in the US provision. The US provisions also oblige to indicate
eventual use of colours, saccharine and sulphites. One should also take into account
that some statements such as “old “ are not permitted for alcoholic beverages under
the US legislation.


78
     This Directive has been amended by Directives 96/84/EC and 1999/41/EC


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8.2.      Agricultural products


It is important to notice that for agricultural products, which are under the
responsibility of the US Department of Agriculture should undergo a labelling
approval before being commercialised. In addition of the other labelling requirements
the products under the responsibility of the USDA must bear the statement US
inspected.

The EU legislation calls for a compulsory beef-labelling scheme, which is completely
implemented since 1 of January 2002. Under this scheme the labels of bovine must
indicate the place of birth of the bovines, the country where it has been raised and
the country of slaughtering with the number of the approved slaughterhouse.

The EU requires a GMO labelling, whereas the US has not specific regulation on
GMO labelling. The regulation 18/2001 governing the environmental release and
commercialisation of the “living” GMO. This legislation requires specific schemes for
the approvals of the GMO and their labelling. The Council regulation 258/97 governs
safety assessment and labelling for most genetically modified foods. A new
regulation on the genetically modified foods is prepared by the EU79. The regulation
49/2000 has set a 1% threshold for accidental contamination such as during
cultivation, harvest, transportation, storage and processing. The Directive 50/2000
provides specific labelling requirements for food and food ingredients containing
additives and flavouring that have been genetically modified or have been produced
from the GMO.


8.3.      Labelling of cosmetics


The main differences between the US and the EU labelling legislation (Directive
76/768 on the approximation of laws of Member States related to cosmetics
products) consist in the ingredient labelling. The substances which cannot be present
in the cosmetics sold in the EU are enumerated in the Annex II of the directive.

The required warnings are also different in the US and in the EU. The warnings are
not needed in the EU for all products. The products and the warnings, which should
be attached on the labels, are also indicated in the annexes of the directive. The US
requirements are stricter concerning the size and place of the information on the
labels. The EU legislation requires the batch number of the products or the reference
to identify the goods.

It is important to notice that there are one essential difference between the European
definition of cosmetics and the US definition of cosmetics. In the US all the products
presenting specific claims are considered as drugs and should be registered as such
and follow the labelling of drug products.


79
     See COM (2001) 182 and 425, COM (2002) 85.


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8.4.   Labelling of drugs


The difference in drug labelling in the US and the EU are not significant. The new
reform of the labelling of the over the counter drugs which will require the
presentation of the labelling requirements in a specific table constitute one of the
most significant differences and the EU exporters of OTC should modify the labels of
the US products accordingly to the new requirements.

In addition, it is important for the EU companies exporting to the US and for the US
companies exporting to Europe to keep informed on the procedures of registration
and market approval for drugs in the EU and US.


8.5.   Labelling of textiles


The US and the EU legislation differ significantly on textile labelling. The only
requirement on EU level concerns the textile names (Directive 96/74). In US several
different legislations exist - the Textile Fiber Products Identification Act, Wool
Products Labelling Act and Fur Products Labelling Act. The US acts are applicable to
the different products and provides mainly for the generic names and percentages by
weight of the constituent fibres present in the products, the name of the importer or
its registration number and the name of the country where the products are
produced. Some additional requirements exist for the products of the Fur Labelling
Act. In the EU the directive is applicable to all products which contain more than 80%
of textile fibers.

In the US legislation the fiber which amount for less than 5% of the products could be
market as others, in the EU fibers amounting for less than 10% could be marked as
others. In the EU the products composed of two or more fibres, one of which
accounts for at least 85 % of the total weight, shall be designated: by the name of the
latter fibre followed by its percentage by weight or, by the name of the latter fibre
followed by the words '85 % minimum` or by the full percentage composition of the
product.

The US legislation also does not recognise the use of ISO symbols for care labelling,
which are widely used in Europe. The symbols, which should be used for the
products exported to the US must be those developed by the ASTM and designated
as ASTM Standard D5489-96c.

8.6.   Other labelling requirements

Other consumer products in the US must be labelled in accordance to the Fair
Packaging and Labelling Act. The Federal Trade Commission implements the act
and can enact additional labelling requirements for some products. The US also have
specific legislation for home appliances. The EU does not have general law on all the
consumer commodities. However the products submitted to declaration of conformity
or third party conformity assessment must be marked with the European conformity


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mark and the relevant directives contain in some cases labelling requirements. The
EU conformity mark (CE marking) provided for by the technical harmonisation
directives (New Approach directives) covers a wide variety of industrial products of
which some are intended for consumers. Examples of such consumer products are
electrical appliances, toys, sport and leisure protective equipment, telecommunication
devices and medical devices.

It must be also noted that in the EU a voluntary eco-labelling is implemented for a
large number of products.


§9.     Legal analysis


Despite the limited number of problems with the US labelling requirements, it could
be useful to analyse some of them according to the provisions of the WTO
agreements.

Some excessive requirements applicable to foodstuffs (e.g. specific nutritional
labelling, prior certification of labels, organic labels) could eventually be challenged
under the Agreement on Sanitary and Phytosanitary Measures (SPS) or under the
provisions of article III of GATT agreement (national treatment obligation) if they are
applicable only to imported products or if there is a discrimination of imported
products in comparison to domestic products. Some technical regulations not in
consistence with the international practice could be challenged under the Agreement
on Technical barriers to Trade (TBT agreement).

The excessive requirements related to the marking of origin could be analysed under
article IX.

In case the rules are not published or sufficiently transparent, the application of article
X of GATT could be foreseen. A detailed analysis of these and other WTO provisions
could be found in Part 21 – Legal analysis.




CEEI –Labelling – Final Report –16 August 2002                                        207
ANNEX 1 US:
ANNEX 1 : Identified state labelling requirements related to food labelling

State /Agency responsible         Laws                       Regulation or materials
                                                             submitted
Alabama – Department of            Alabama Food, Drugs and Sanitary controls,
Public Health, Department                 Cosmetic Act       Production and process
of Agriculture and Industry       Food Services Sanitation controls, thermally
                                  Act                        processed low acid foods
                                  Food Processing Act        packaged in hermetically
                                                             sealed containers
                                                             Acidified foods
                                                             Cacao       products     and
                                                             confectionery
                                                             Smoked        and     smoke-
                                                             flavoured fish
                                                             Frozen       raw     breaded
                                                             shrimps, Dairy products,
                                                             honey
Alaska – Department of            Agriculture and Animal Act Fish inspection, Labelling
Environmental   protection,                                  requirements for fish
office of the Attorney
general
Arkansas – Department of   Arkansas Food, Drug and            Dairy products, honey, fish
Health                     Cosmetic Act
Arizona – department of    Pure Food Control Act,             Vegetable Fat      labelling,
Health services            Processed meat and meat            Dairy labelling
                           products requirements for
                           retail meat establishments
                           Act
                           Bottled Water Act
                           Labelling and Enriched or
                           Fortified Flour Act, Cereals
                           and related Food products
                           Act
California – Department of Sherman Food, Drug and     Bottle water standards, ice,
Health Services            Cosmetic Act, California   olive oil, dairy, honey, food
                           Health & Safety Code       additives, shellfish, alcohol
                                                      in food, provisions on
                                                      adulteration of wine
Colorado – Department of Pure Food and Drug Act       Additives, honey, dairy,
Health                                                labelling of bulk food
                                                      ingredients
Connecticut – Consumer Pure Food and Drugs Diary, honey, proposed
protection               Sulphating Agents, Apple regulation for reduced – fat
                         Juice, Cider, Bottled Water, frozen dessert products
                         non alcoholic beverages,
                         Labelling and packaging of
                         Consumer Commodities


CEEI –Labelling – Final Report –16 August 2002                                    208
Delaware                                                        Apples,      dairy,     imitation
                                                                products
Florida – Agriculture and         Milk and Milk Product Law,    Milk and milk products rule,
Consumer Services                 Ice-cream       and    frozen ice-cream        and       frozen
                                  desserts Law                  desserts rules
                                  Food processing and retail Shellfish, citrus industry
                                  food sale Act                 rules, juices, additives,
                                  Citrus Food law               honey
Georgia – Department of           Georgia Food Act              Packaging and labelling,
agriculture                       Vidalia Onion                 advertising                   and
                                                                representations in general,
                                                                dairy, imitation of honey,
                                                                onions
Hawaii – Food and drug            Hawaii Food, Drug and Shellfish sanitation, dairy,
branch, Food, drug and            Cosmetic Act                  bottled water, pasta, food
Cosmetic Agency                   Bottled Water                 additives
                                  Liqueur
                                  Intoxication liqueur
Idaho – department of             Idaho Food, Drug and Standards                   for       food
health and Welfare                Cosmetics Act                 adulteration, dairy, fruits
Illinois – Public health          Illinois Food, Drug and Good                   manufacturing
Agency                            Cosmetic Act                  practices for processors of
                                                                cacao and confectionery,
                                                                processors of fresh and
                                                                smoked          fish,        food
                                                                manufacturing, processing,
                                                                packing and holding, dairy
                                                                products, additives, eggs
Indiana – State Board of          Uniform Indiana, Food, Drug Dairy         products,        food
Health                            and Cosmetic Act              additives
Iowa – department of              Regulation and inspection of Dairy,       honey,       artificial
Inspections and Appeals           foods, drugs and other sweeteners,                     vinegar,
                                  articles                      imitation labelling,
                                  Adulteration of Foods Act
Kansas – Department of            Kansas Food, drug and Dairy, honey, food additives
Health and Environment            cosmetic Act, Honey Law       and colours
Kentucky – Department for         Kentucky Food, Drug and Bakery products standard of
Health Services                   Cosmetic Act                  identity and labelling
                                                                Shellfish,                apples,
                                                                strawberries
Louisiana – Department of         Louisiana Food, Drug and Bottled water, flour and
Health and Hospitals              Cosmetic Law                  bread, meat and meat
                                                                products,      dairy,     honey,
                                                                shellfish
Maine – department of the         Food law                      Labelling of fresh products,
Attorney General                  Milk and milk products law    frozen dessert products,
                                  Fair packaging and labelling light       dairy       products,
                                  Act                           bakeries,      maple        syrup
                                  Products Controlled Act       processing, apples
                                  Country of origin Statute


CEEI –Labelling – Final Report –16 August 2002                                           209
Maryland - Department of Misbranded           Food    Act,   Oysters, free liquor, hen
Health and mental Hygiene Control         of     Microbial   house identity labelling on
                            Contamination of Food,           egg cartons, dairy, crab.
                            Exemptions from Labelling
                            Requirements for Foods
                            subject      to     additional
                            processing, Labelling or
                            Packing,           Adulterated
                            Drugs/devices,      standards
                            for Cream, Standards for
                            and     labelling    of   Milk
                            Products, Grade A Milk
                            Product Dating
Massachusetts             – Food, Drugs, and Various         Dairy,    backing     powder,
Department of Public Health Articles                         butter/lard,          berries,
                                                             potatoes,     canned     food,
                                                             vinegar, maple, seafood
Michigan – Department of Food   Law     of   1968,           Hazardous         substances,
Agriculture              Communised Meat Law,                Eggs,       Non      alcoholic
                         Egg Law, Weight and                 beverages, diary, apples,
                         measures Act of 1964,               buckwheat             mixture,
                         Hazardous Substances Act            composition standards for
                                                             red pepper and nutmeg,
                                                             smocked fish.
Minnesota – Department of Food Law                           Wild rice, organic food,
Agriculture                                                  dairy, apples, honey, bulk
                                                             foods, oysters, smocked
                                                             fish, fruit syrups, jelly,
                                                             backing powder, salad oil,
                                                             oranges, bottled beverages,
                                                             canned vegetables
Mississippi – Department of Milk and Milk products Sold      Bottles water, milk and milk
Health                      at Retail                        products, grits, honey, syrup
Missouri – Department of Manufacture,         Sale and       Dairy,       apples,     grain
Health                      Distribution of Foods            mixtures
Montana – Department of Food, Drug, and Cosmetic             Dairy, apples, “Montana
Health                      Act.                             farm     products”,    honey,
                                                             mustard seed, bottled water
Nebraska – Department of Pure Food Act                       Deceptive packaging
Agriculture, Office of the
Attorney General
Nevada – Consumer Health Food,         Drugs,      and       Dairy,       nuts,     fruits,
Protection Services        Cosmetics       Adulteration      vegetables,        potatoes,
                           Labels, brands                    onions, honey
New        Hampshire     – New Hampshire Revised             Dairy, apples, potatoes,
Department of Health and Statutes Annotated                  “native”, honey, maple, cider
Human Services                                               vinegar.
New Jersey – Health Food, Drug, Cosmetic and                 Dairy, potatoes
Department                 Device Labelling
New Mexico – Department Food Act, Flour and Bread            Dairy, produce, pinon nuts,


CEEI –Labelling – Final Report –16 August 2002                                    210
of Health and Environment         Enrichment Act                pecans, honey
New York – Department of          N.Y.    Agriculture     and   Cereal flours, milled rice,
Agriculture and Markets,          Markets Law; Adulteration,    macaroni       and       noodle
Division of Food Inspection       Packing and Branding of       products, bakery products,
Services                          Food and Food Products;       imitation of cheese, maple
                                  Manufacture,    Distribution  syrup, sugar, milk and diary
                                  and Sale of Maple Syrup       products, apples, grapes,
                                  and Sugar                     potatoes, honey, olive oil,
                                                                vinegar, refrozen food
North       Carolina      –       Food, Drug, and Cosmetic Milk, Dairy
Department of Agriculture         Act
North Dakota – Department         Food, Drug, and Cosmetic Dairy,           imitation      dairy
of Health and Consolidated        Act                           labelling, potatoes, organic,
Laboratories                                                    flour, beverages, eggs
Ohio – Department of              Administrative     Procedure Dairy,      frozen      dessert,
Agriculture                       Act; Food, Drug, Cosmetic, produce,                   canned
                                  and       Device        Law; fruit/vegetable        labelling,
                                  Administration of the Dairy honey,        maple,      kosher,
                                  Trade     Practices     Law; soaked canned goods, soft
                                  Frozen Dessert law; Dairy drink “dry” labelling, bottled
                                  products    Law;     Sanitary water, vinegar, imitation
                                  Inspection Law; Horsemeat flavoured soft drinks, bread,
                                  Law;      Vinegar       Law; bakery meat, poultry, eggs,
                                  Oleomargarine Law and chocolate               and       cocoa
                                  Regulations; Food, Dairies products, macaroni and
                                  and Drugs; Laws and noodle products, Corn flour
                                  regulations     of     Maple
                                  products;    Frozen     Food
                                  establishment Law; Ohio
                                  Egg Law; Candy Law and
                                  Regulations governing Drug
                                  stores, Confectioneries, and
                                  Candy Factories; Kosher
                                  food Law; Soft Drink Bottling
                                  Law; Flour and Bread
                                  Enrichment Law; Sanitary
                                  inspection Law; bakery Law
Oklahoma – Department of                                        Bottled water, milk, mello-
health, Food Sanitation                                         drink     produce,       honey,
Division                                                        organic,            low-alcohol
                                                                beverages, TVP products.
Oregon – Food and dairy           Food         and        other Meat, dairy, bakeries, non-
Division, department of           Commodities,            Food alcoholic beverages, eggs,
Agriculture                       Establishment      standards frozen desserts, onions,
                                  and standards for Retail potatoes,            nuts,       bulk
                                  Food service Activities       products, balloon loaf, flour
                                                                products, organic
Pennsylvania – Department         General Food Law; Bakery Bakery, Frozen dessert,
of Agriculture                    Law; Non-alcoholic Drinks milk and diary products, milk
                                  Law; Frozen Dessert Law; sanitation, oleomargarine,


CEEI –Labelling – Final Report –16 August 2002                                         211
                                  Milk Sanitation Law; Milk produce, honey, cheery,
                                  and Diary Products Law        fruit syrup, vinegar, lard,
                                                                non-alcoholic        beverages,
                                                                food mixtures, eggs
Puerto Rico – Department          Food, Drugs and Cosmetic Pesticides, poultry, meat,
of     Consumer      Affairs,     Act                           bananas, plantains, sugar,
Department      of   Health,                                    coffee, fertiliser products,
Department of Agriculture                                       eggs
Rhode Island – Department         Food, Drug and Cosmetic Dairy,           frozen      desserts,
of the Attorney general           Act;    Truth     in   Food fruits, kosher, olive oil mix,
                                  Disclosure Law; Frozen mackerel, cider vinegar,
                                  Food products; Farm Milk eggs, pickled fish, poultry,
                                  Holding tanks; Analysis of meats, shellfish, apples,
                                  Milk fat Content in Milk potatoes, vegetables, non-
                                  products,    Frozen    Diary alcoholic bottled beverages,
                                  products;                     drinks and juices, flour,
                                                                Bread, Corn, Cream of
                                                                Tartar
South      Carolina      –        Food and Cosmetic Act         Eggs,         dairy,      frozen
Department of Agriculture,                                      desserts, enriched flour
Consumer Services Division                                      products, rice
South Dakota – Department         South     Dakota     Codified Dairy,      frozen      dessert,
of     Commerce        and        Laws,     Adulterated    and potatoes,                organic,
Regulation                        Misbranded Foods Act          preservative           labelling,
                                                                water,      compound        food
                                                                labelling,      confectioneries
                                                                adulterated
Tennessee – Department of         Foods,       drugs       and Dairy,         produce        with
Agriculture,   Division    of     Cosmetics Act, Dairy Law.     sulphites, margarine
Markets
Texas – Department of Food, Drug and Cosmetic Bottled water, produce, bulk
Health,    State     Attorney Act                     products, “self rising” flour,
General            Consumer                           bread,      honey,      kosher,
Protection Division                                   crabmeat,          cereal/flour
                                                      weight
Texas city of Dallas –        Misbranded Food
Department of Health and
Human Services
Utah – Department of Wholesome Food Act; Dairy Dairy, renovated butter,
Agriculture,      Governor’s Act                      flour/cereal        definitions,
Cabinet                                               bottles water, fruit juice
Vermont – Department of Labelling of Foods, Drugs, Strawberries, Apples, Fruits
Health;    Department      of Cosmetics and hazardous vegetables, maple products,
Agriculture,         Attorney Substances Act, Product eggs,      dairy,     potatoes,
General                       Grades, Standards and sprouts, frozen dessert,
                              Labelling Act           organic, irradiated food
Virginia – Department of Virginia Food Laws           Diary,    frozen      desserts,
Agriculture and Consumer                              apples, organic,
Services
Washington – Department Food, Drug, and Cosmetic Flour, white bread, honey,


CEEI –Labelling – Final Report –16 August 2002                                          212
of Agriculture                    Act                        ground meat, dairies, fluid
                                                             milk,     cheese,     kosher,
                                                             organic, halibut, bacon,
                                                             macaroni
West Virginia – Department                                   Eggs, Flour and Bread,
of Agriculture                                               imitation    honey,     dairy,
                                                             vinegar, sulphites, food
                                                             mixtures
Wisconsin –        Agriculture,   Food regulations           Meat, poultry, dietary foods,
Trade      and      Consumer                                 dairy,     cheese,     butter,
protection                                                   imitation diary, wild rice,
                                                             smocked fish
Wyoming – Department of           None but those of the U.S. Dairy, potato, honey
Agriculture                       Food         and      Drug
                                  Administration




CEEI –Labelling – Final Report –16 August 2002                                     213
       ANNEX 2 US


       Products              Covered         with          State       Labelling            Requirements
       Law Applies To:




Arizona                  x     x         x          x1         x                       x            x         x    x   x

Arkansas                 x     x         x          x                                                         x4

California               x     x     x6 x       x   x      x   x   x   x   x   x   x   x    x   x   x         x    x   x   x5

Colorado                 x     x         x          x                                  x            x         x

Connecticut              x     x     x   x      x   x      x   x   x   x   x   x   x   x    x       x         x    x   x

Delaware                 x     x         x      x   x                      x   x       x    x   x4 x5         x    x

Detroit (MI)             x     x     x   x      x   x      x   x   x   x   x   x   x   x    x       x         x    x   x   x

District of Columbia     x     x         x          x                                  x            x         x

Florida                  x3    x                    x

Hawaii                   x     x         x          x                      x   x       x            x         x

Illinois                 x                                                                                                 x5

Indiana                  x     x         x                             x   x   x   x        x                 x

Kentucky                 x                                                 x                                  x

Maryland                 x     x         x      x   x      x   x   x   x   x   x   x   x    x   x   x         x    x   x

Massachusetts            x     x     x   x      x   x      x   x   x   x           x   x    x       x    x    x    x   x

Minnesota                x     x         x          x                  x               x            x         x    x   x

Missouri                 x     x         x          x      x               x                x                 x

Nevada                   x3    x         x          x                                                         x

New Hampshire            x     x         x          x                  x               x            x         x    x   x

New Jersey               x2,4 x2,4       x2,4       x2,4                               x4           x4        x4




       CEEI –Labelling – Final Report –16 August 2002                                                        214
New York                x

North Carolina          x    x         x         x      x               x   x           x   x            x            x

Ohio                    x    x     x   x    x    x      x   x   x       x   x   x   x   x   x   x   x    x    x   x   x

Oklahoma                x    x         x    x                               x           x                x

Pennsylvania            x    x     x   x    x    x      x   x   x   x   x   x   x   x   x   x   x   x    x    x   x

Rhode Island            x    x     x   x    x    x      x   x   x   x   x   x   x   x   x       x        x    x   x

Texas                   x    x         x    x    1      x           x   x   x   x   x   x   x            x            x

Utah                    x    x     x   x    x    x      x   x   x   x   x   x   x   x   x   x   x        x    x   x   x5

Vermont                 x    x         x         x          x                       x           x        x        x

Virginia                x    x     x   x    x    x      x   x   x   x   x   x   x   x   x       x        x    x   x

West Virginia           x    x     x   x    x    x      x   x   x   x   x   x       x   x       x        x    x   x

Wisconsin               x    x         x         x4                     x               x


           1. If part of sleep equipment (except the upholstered portions of motor vehicles
              other than mobile homes, house trailers and camp trailers).
           2. Except feather products.
           3. Law applies only to sterilization and disinfections of second-hand bedding.
           4. Must be for sleeping or reclining purposes.
           5. Hybrid Floatation Systems with concealed filling materials only.
           6. Only car seats that also act as a baby carrier.




       CEEI –Labelling – Final Report –16 August 2002                                                   215
ANNEX 3 US

State weight and measure offices
Alabama


Steadman Hollis, Director
Weights and Measures Division
Department of Agriculture
P.O. Box 3336
Montgomery, AL 36109-0336
334-240-7133
Toll free in AL: 1-800-321-0018
Fax: 334-240-7175
Web site: www.agri-ind.state.al.us
Alaska


Aves Thompson, Director
Division of Measurement Standards and Commercial Vehicle Enforcement
Department of Transportation and Public Facilities
Huffman Buisness Park, Bldg. O, #6
12050 Industry Way
Anchorage, AK 99515
907-345-7750
Toll free in AK: 1-800-478-7636
Fax: 907-345-6835
Arizona


Sandy Williams, Director
Department of Weights and Measures
4425 West Olive Ave., Suite 134
Glendale, AZ 85302-3844
602-255-5211
Toll free in AZ: 1-800-277-6675 (outside Phoenix Metro area)
Fax: 602-255-1950
E-mail: swilliams@wm.state.az.gov
Web site: www.weights.az.gov
Arkansas


James M. Hile, Director
Bureau of Standards
4608 West 61st Street
Little Rock, AR 72209
501-225-1598
Fax: 501-562-7605
E-mail: mike.hile@aspb.state.ar.us
California


Barbara Bloch, Director
Division of Measurement Standards
Department of Food and Agriculture
8500 Fruitridge Road
Sacramento, CA 95826
916-229-3000
Fax: 916-229-3026
Web site: www.cdfa.ca.gov
Colorado




CEEI –Labelling – Final Report –16 August 2002                         216
David Wallace, Chief
Measurements Standards Section
Department of Agriculture
3125 Wyandot Street
Denver, CO 80211
303-477-4220
303-477-4613
303-477-4818
Fax: 303-477-4248
Web site: www.ag.state.co.us/ics/Measurement/Measurement_Standards.h tml
Connecticut


John F. McGuire, Director
Weights and Measures Division
Department of Consumer Protection
State Office Building, Room 165
165 Capitol Avenue
Hartford, CT 06106
860-713-6168
860-713-6160
Fax: 860-713-7244
E-mail: jack.mcguire@po.state.ct.us
Web site: www.state.ct.us/dcp
Delaware


Steven Connors, Administrator
Office of Weights and Measures
Department of Agriculture
2320 South DuPont Highway
Dover, DE 19901-5515
302-739-4811
Fax: 302-697-4749
District of Columbia


Jeffrey Mason, Chief
Weights and Measures
Department of Consumer and Regulatory Affairs
Market Branch
1110 U Street, SE
Washington, DC 20020
202-698-2130
Fax: 202-698-2148
Florida


Max Gray, Chief, Bureau of Weights and Measures
Department of Agriculture and Consumer Services
Division of Standards
3125 Conner Blvd.
Mail Stop L-29 Building #2
Tallahassee, FL 32399-1650
850-488-9140
Fax: 850-922-6655
E-mail: graym@doacs.state.fl.us
Georgia


Bill Truby, Assistant Commissioner
Georgia Department of Agriculture
Division of Weights and Measures
Capitol Square
Atlanta, GA 30334
404-656-3605
Toll free in GA: 1-800-282-5852


CEEI –Labelling – Final Report –16 August 2002                             217
Fax: 404-656-9380
E-mail: btruby@agr.state.ga.us
Web site: www.agr.state.ga.us
Hawaii


Samuel Camp, Administrator
Measurement Standards Branch
Department of Agriculture
725 Ilalo Street
Honolulu, HI 96813-5524
808-586-0886
Fax: 808-586-0889
Idaho


Tom Schafer, Chief
Bureau of Weights and Measures and Warehouse Control
Department of Agriculture
2216 Kellogg Lane
Boise, ID 83712
208-332-8690
Fax: 208-334-2378
E-mail: tschafe@agri.state.id.us
Illinois


Sid Colbrook, Chief
Illinois Department of Agriculture
Bureau of Weights and Measures
PO Box 19281
State Fairgrounds
Springfield, IL 62794-9281
217-785-8301
Toll free in IL: 1-800-582-0468
TTD/TTY: 217-524-6858
Fax: 217-524-7801
E-mail: scolbrook@agr.state.il.us
Web site: www.agr.state.il.us
Indiana


Larry Stump, Director, Weights & Measures - motorfuel program
State of Indiana
Weights and Measures Division
2525 North Shadeland Avenue
Indianapolis, IN 46229-1787
317-356-7078
TDD/TTY: 317-356-7139
Fax: 317-351-2877
E-mail: lstump@isdh.isdh1
Web site: www.state.in.us/isdh/regsvcs/wtmsr/welcome.html
Iowa


Darryl Brown, Bureau Chief
Weights and Measures
Department of Agriculture and Land Stewardship
H.A. Wallace Building
Des Moines, IA 50319
515-281-5716
Fax: 515-281-6800
Kansas




CEEI –Labelling – Final Report –16 August 2002                  218
Constantine Cotsoradis, Director
Weights and Measures Division
Kansas Department of Agriculture
PO Box 19282
Topeka, KS 66619-0282
785-862-2415
Fax: 785-862-2460
E-mail: ccotsora@kda.state.ks.us
Web site: www.ink.org/public/kda/weights/index.html
Kentucky


Larry Hatfield, Director
Division of Regulation and Inspection
Department of Agriculture
106 West Second Street
Frankfort, KY 40601
502-564-4870
Toll free: 1-800-833-6289
Fax: 502-564-5669
Louisiana


Ronald Harrell, Director
Division of Weights and Measures
Department of Agriculture
P.O. Box 91081
Baton Rouge, LA 70821-9081
225-925-3780
Fax: 225-922-0477
Web site: www.ldaf.state.la.us
Maine


David E. Gagnon, Director
Quality Assurance and Regulations Division
State House Station 28
Augusta, ME 04333-0028
207-287-3841
Fax: 207-287-5576
Web site: www.state.me.us/agriculture
Maryland


Louis E. Straub, Chief, Weights and Measures Section
Maryland Department of Agriculture
Weights and Measures Section
50 Harry S. Truman Parkway
Annapolis, MD 21401
410-841-5790
Fax: 410-841-2765
Web site: www.mda.state.md.us
Massachusetts


Charles Carroll, Assistant Director of Standards
State Division of Standards
One Ashburton Place
McCormick Building, Room 1115
Boston, MA 02108
617-727-3480
Toll free: 1-888-283-3757
Fax: 617-727-5705
Web site: www.state.ma.us/standards/index.htm
Michigan




CEEI –Labelling – Final Report –16 August 2002         219
Patrick Mercer, Director
Weights and Measures Michigan Department of Agriculture
Motor Fuels Quality
940 Venture Lane
Williamston, MI 48895
517-655-8202
Fax: Fax: 517-655-8303
E-mail: mercerp@state.mi.us
Web site: www.mda.state.mi.us
Minnesota


Phil Smith, Manager
Division of Weights and Measures
Department of Commerce
121 7th Place East Suite 200
St. Paul, MN 55101-2145
651-296-5175
Toll free: 1-800-657-3710
Fax: 651-296-0201
Web site: www.dpsv.state.mn.us

Mike Blacik, Manager
Department of Public Service
Energy Informaton Center
121 7th Place, #200
Roseville, MN 55101-2145
651-639-4010
Toll free: 1-800-657-3710
TDD: 651-639-4017
Fax: 651-296-0201
Web site: www.dpsv.state.mn.us
Mississippi


Russell E. Robbins Jr., Director
Weights and Measures Division
Department of Agriculture
121 North Jefferson Street
P.O. Box 1609
Jackson, MS 39201
601-359-1149
Fax: 601-354-6502
E-mail: rusty@mdac.state.ms.us
Web site: www.state.ms.us
Missouri


Roy Humphreys, Division Director
Weights and Measures Division
Department of Agriculture
P.O. Box 630
Jefferson City, MO 65102-0630
573-751-4316
Fax: 573-751-0281
Web site: www.mda.state.mo.us
Montana


Jack Kane, Bureau Chief
Bureau of Weights and Measures
Department of Commerce
1424 9th Avenue
Helena, MT 59620
406-444-3164
Fax: 406-444-4305




CEEI –Labelling – Final Report –16 August 2002            220
E-mail: jkane@state.mt.gov
Web site: www.commerce.state.mt.us/wght&msrs/index.html
Nebraska


Steven A. Malone, Administrator
Nebraska Department of Agricluture
Weights and Measures
301 Centennial Mall South
P.O. Box 94757
Lincoln, NE 68509-4757
402-471-4292
Fax: 402-471-2759
E-mail: stevenam@agr.state.ne.us
Web site: www.arg.state.ne.us
Nevada


Edward M. Hoganson, Administrator
Department of Business and Industry
Measurement Standards
Weights and Measures
2150 Frazier Avenue
Sparks, NV 89431
775-688-1166
Fax: 775-688-2533
New Hampshire


Stephen Taylor, Commissioner
Bureau of Weights and Measures
Department of Agriculture, Markets and Food
P.O. Box 2042
Concord, NH 03302-2042
603-271-3700
Fax: 603-271-1109
New Jersey


Louis E. Greenleaf, State Superintendent
Office of Weights and Measures
1261 Route 1 and 9 South
Avenel, NJ 07001-1647
732-815-4840
Fax: 732-382-5298
New Mexico


Gary West, Director
Standards and Consumer Services
Department of Agriculture
MSC 3170, P.O. Box 30005
Las Cruces, NM 88003-8005
505-646-1616
Fax: 505-646-2361
Web site: nmdaweb.nmsu.edu
New York


Ross Andersen, Director
Bureau of Weights and Measures
Department of Agriculture and Markets
1 Winners Circle
Albany, NY 12235
518-457-3146
Fax: 518-457-5693



CEEI –Labelling – Final Report –16 August 2002            221
E-mail: agmweigh@nysnet.net
Web site: www.agmkt.state.ny.us/
North Carolina


David Smith, Standards Division Director
North Carolina Department of Agriculture & Consumer Services
Standards Division
P.O. Box 27647
Raleigh, NC 27611
919-733-3313
Fax: 919-715-0524
E-mail: standards@ncmail.net
Web site: www.agr.state.nc.us/standard/
North Dakota


Alan Moch, Director
North Dakota Public Service Commission
Testing and Safety Division
600 East Boulevard Avenue
Department 408
Bismarck, ND 58505-0480
701-328-2413
701-328-3337
TDD Toll free: 1-800-336-6888
Fax: 701-324-2410
E-mail: agm@oracle.psc.state.nd.us
Web site: www.psc.state.nd.us
Ohio


Leanard Hubert, Chief
Ohio Department of Agriculture
Division of Weights and Measures
8995 East Main Street
Reynoldsburg, OH 43068-3399
614-728-6290
Toll free: 1-800-282-1955
TDD/TTY Toll free: 1-800-750-0750
Fax: 614-728-6424
E-mail: hubert@odant.agri.state.oh.us
Web site: www.state.oh.us/agr/
Oklahoma


Sancho Dickinson, III, Director
Plant Industry and Consumer Services
Department of Agriculture
2800 North Lincoln Blvd.
PO Box 528804
Oklahoma City, OK 73105-8804
405-522-5879
405-522-5968
Fax: 405-522-4584
E-mail: sdickins@oda.state.ok.us
Web site: www.state.ok.us/~okag/wam.htm
Oregon


George Shefcheck, Administrator
Measurement Standards
Department of Agriculture
635 Capitol Street, NE (mail only)
Salem, OR 97301-2532
503-986-4670
TTD: 503-986-4762


CEEI –Labelling – Final Report –16 August 2002                 222
Fax: 503-986-4784
E-mail: gshelcheck@oda.state.or.us
Web site: www.oda.state.or.us/Measurement_Standards/MSDINFO.html
Pennsylvania


Charles Bruckner, Director
Bureau of Ride and Measurement Standards
Department of Agriculture
2301 North Cameron Street
Harrisburg, PA 17110-9408
717-787-9089
717-787-6772
Fax: 717-783-4158
E-mail: cbruckn@state.pa.us
Web site: www.pda.state.pa.us
Puerto Rico


Francisco F. Aponte, Aide to the Secretary
Department of Consumer Affairs P.R.
Office of the Secretary
Centro Gubernamental Minillas
P.O. Box 41059 Minillas Station
San Juan, PR 00940-1059
787-721-0940
787-721-0960
Rhode Island


Lynda L. Maurer, Supervising Metrologist
Mercantile Weights and Measures Division
Department of Labor and Training
610 Manton Avenue
Providence, RI 02909
401-457-1867
Fax: 401-457-1873
South Carolina


Carol P. Fulmer, Assistant Commissioner
Consumer Services Division
Department of Agriculture
P.O. Box 11280
Columbia, SC 29211-1280
803-737-9690
Fax: 803-737-9703
E-mail: cfulmer@scda.state.sc.us
Web site: www.scda.state.sc.us/consumer.htm
South Dakota


Joe Hjermstad, Director
Division of Commercial Inspection and Regulation
118 West Capitol
Pierre, SD 57501-2036
605-773-3697
Fax: 605-773-6631
Tennessee


Robert Williams, Standards Administrator
Weights and Measures
Department of Agriculture
P.O. Box 40627
Melrose Station



CEEI –Labelling – Final Report –16 August 2002                     223
Nashville, TN 37204
615-827-5109
Toll free: 1-800-628-2631
Fax: 615-837-5015
E-mail: fwilliams@mail.state.tn.us
Web site: www.state.tn.us/agriculture
Texas


Stephen Pahl, Coordinator for Weights and Measures
Texas Department of Agriculture
Regulatory Division
P.O. Box 12847
Austin, TX 78711
512-463-7483
TDD/TTY Toll free: 1-800-735-2989
Fax: 512-463-8225
Web site: www.agr.state.tx.us
Utah


Kyle R. Stephens, Director
Division of Regulatory Services
State Department of Agriculture
P.O. Box 146500
Salt Lake City, UT 84114-6500
801-538-7150
Fax: 801-538-7126
Web site: www.ag.state.ut.us
Vermont


Henry Marckres, Supervisor
Consumer Assurance Section
Department of Agriculture
Food & Markets
116 State Street, Drawer 20
Montpelier, VT 05620-2901
802-828-3456
802-828-2436
Fax: 802-828-2361
E-mail: henry@agr.state.vt.us
Web site: www.state.vt.us
Virgin Islands


Maurice Illidge, Director, Consumer Protection Services
Weights and Measures Division
Dept. of Licensing and Consumer Affairs
Golden Rock Shopping Center
Christiansted
St. Croix, VI 00820
340-773-2226
Toll free: 1-888-800-3522
Fax: 340-778-8250
Web site: www.usvi.org
Virginia


J. Alan Rogers, Program Manager
Virginia Department of Agriculture & Consumer Services, Office of Product and Industry Standards
Consumer Protection
1100 Bank Street
Room 402
Richmond, VA 23219
804-786-2476
Toll free: 1-800-552-9963


CEEI –Labelling – Final Report –16 August 2002                                                     224
Fax: 804-786-1571
E-mail: jrogers@dacs.state.va.us
Web site: www.vdacs.state.va.us/consumer/index.html
Washington


Jerry Buendel, Program Manager
Weights and Measures
Department of Agriculture
P.O. Box 42560
Olympia, WA 98504-2560
360-902-1857
Fax: 360-902-2086
E-mail: jbuendel@agr.wa.gov
Web site: www.wa.gov
West Virginia


Karl Angell, Jr., Director
Weights and Measures Section
Division of Labor
570 West MacCorkle Avenue
St. Alban, WV 25177
304-722-0602
Fax: 304-722-0605
E-mail: angelk@mail.wvnet.edu
Wisconsin


Bureau of Consumer Protection
Department of Agriculture Trade and Consumer Protection
2811 Agriculture Drive
Madison, WI 53718
Toll free in WI: 1-800-422-7128
TTD/TTY: 608-224-5058
Fax: 608-224-4939




                                        PART 9: BRAZIL



§1.     The mission to Brazil


§2.     Products affected by labelling requirements


        2.1.    General labelling requirements

        2.2.    Foodstuffs

        2.3.    Nutritional labelling for foodstuffs

        2.4.    Labelling approval for products of animal origin

        2.5.    Wines and other products from grape


CEEI –Labelling – Final Report –16 August 2002                     225
       2.6.    Labelling requirements for spirits

       2.7.    Fiscal stamps for wines and alcoholic beverages

       2.8.    Labelling requirements for cosmetics

       2.9.    Labelling requirements for textiles

       2.10. Products submitted to certification


§3.    Problematical labelling and marking requirements in Brazil


       3.1.    General overview

       3.2.    Labelling of food products

               3.2.1. Difficulties related to the approval of labelling
               3.2.2. Difficulties related to the new nutritional labelling

       3.3.    Difficulties related to labelling of alcoholic beverages and wine

       3.4.    Difficulties related to cosmetic labelling

       3.5.    Difficulties related to textile labelling

       3.6.    Other difficulties identified in Brazil

§4.    Legal analysis




CEEI –Labelling – Final Report –16 August 2002                                     226
§1. The mission to Brazil


The mission to Brazil took place between the 3 rd of December and 13th of October
2001. The objective was to meet the competent National Authorities, the Member
States Trade representatives and the individual private companies. The consultant
met the following authorities:


   -       Ministry of Development, Industry and External Trade
   -       Ministry of Health (Agency for Sanitary Vigilance)
   -       Ministry of Agriculture
   -       Ministry of Finance
   -       INMETRO

The objective of the mission was to identify sectors, which have experienced
difficulties with marking and labelling requirements and to interview domestic
importers on the difficulties encountered regarding the implementation of labelling
and marking requirements.

The overall conclusion of the mission is as follows:

   1. Brazil possesses very developed legislation on labelling and marking
      requirements, which goes often further than the EU requirements for some
      products.

   2. The main problems underlined by the EU Trade Representatives and EU
      companies concern the complexity of the legislation rather than its
      implementation.

   3. EU exporters and Brazilian importers experience difficulties with the labelling
      of food, spirits and cosmetics products. However, the labelling of some other
      products such as apparel products might create some difficulties due to the
      recently adopted legislation.

   4. The nutritional labelling, recently implemented in Brazil, is viewed as the most
      important problem for the labelling of the food products.

   5. The registration and the control performed by the competent authorities before
      and during the importation procedure, including verification of labels, represent
      a serious difficulty for EU exporters and Brazilian importers.

The report examines the labelling requirements in Brazil and the difficulties occurred
in their implementation.




CEEI –Labelling – Final Report –16 August 2002                                     227
§2.       Products affected by labelling requirements


2.1.      General labelling requirements

The general labelling requirements in Brazil are mainly established by the Law for the
protection of the Consumer (Law 8.098 of 11th September 1990). The law constitutes
the general legal basis when the consumer is not provided with the sufficient
information about the products or their quality.

This law does not enumerate specific requirements for the products’ presentation and
for the labelling requirements. However, according to the law, the (national or foreign)
producer or the importer is responsible both for the product and the information
provided on it. The seller is only responsible when the producer or the importer
cannot be identified or while the product is sold without producer or importer
identification, or when the seller has not provided conform storage of the products.
This law is supervised by a Commission for the protection of the consumer, which is
acting mainly in response to the consumers’ complaints. The verifications of the
respect of this law are conducted most of all, after the commercialisation of the
products. The control authorities have the right to decide whether the product
contains a description sufficient to properly inform the consumer.

The specific labelling requirements should be considered on product-by-product
basis. The difficulty in the Brazilian system is that for some products, several different
regulations are applicable, and the products should comply with all existing
requirements.


2.2.      Foodstuffs


The main regulation applicable for foodstuffs is the Portaria 42 “Labelling of pre-
packaged goods” of the Secretary for Sanitary Vigilance of the Ministry of Health 80..
This legislation implements the Mercosur resolutions on the labelling of food products
(Res. GMC nº 36/93, 06/94 and 21/94). The Portaria 42 is applicable to all foodstuffs
and to alcoholic and non-alcoholic drinks. According to this regulation, products
intended to be sold to the final consumer must be labelled as follows:
      1. denomination of the product
      2. list of ingredients
      3. content
      4. lot number
      5. country of origin
      6. expiry date statement

80                   th
     Portaria 42 of 14 of January 1998.


CEEI –Labelling – Final Report –16 August 2002                                        228
      7. instruction for the use or the preparation of the foodstuffs, when it is necessary
The Portaria 42 gives additional details on the presentation of data on the labels. For
example, the ingredients should be enumerated in percentage and in decreasing
order. The complete denomination of all additives and the nature of aromas used
should be also indicated. The Portaria contains a list of the additives authorised. The
content should be indicated in volume, mass or units. The letter «L» should precede
the indication of the lot number.
The expiry date should be indicated with one of the following expressions "consumir
antes de...", "válido até...", "validade...", "Vence(em)...", "vencimento...", "venc....",
"consumir preferencialmente antes de...". The expiry date statement is not
compulsory for some products, such as fresh fruits and vegetables, wines, liqueurs,
aromatic wines and fruit wines, alcoholic beverages containing 10%vol or more of
alcohol, bakeries and confectionaries, which due to their nature, should be consumed
within 24 hours after their fabrication, vinegar, sugar, bonbons and caramels,
chewing gums, salt, and foodstuffs subjects to specific technical regulations.
The Portaria contains quite exhaustive information on how the label should be
prepared. The text of this Portaria is available on the web site of the National Agency
for Sanitary Vigilance81.
According to the Portaria 42, all information should be presented in Portuguese
language. The use of other languages is allowed, but the different languages should
be clearly identified by the consumer. The Portaria forbids the indication of false or
misleading information on the products labels.
Must be shown on the principal side of the label or the packaging:
      -       the denomination and the trademark of the product,
      -        the country of origin,
      -        its quality pure or mixture
      -        and the normal quantity of the product.
This information should be shown in contrast with the background in contrasting
colours, which guarantee perfect visibility of the information.
The nominal quantity of the product must respect the proportion between the
minimum dimension of the letters and the numbers and the dimension of the front
size of the product as indicated in the table below:

Size of the front size in Minimum dimension of the letters and
cm2                       numbers in mm

More than 10 and less 2.0
than 40

Between 40 and 170         3.0



81
     http://www.anvisa.gov.br


CEEI –Labelling – Final Report –16 August 2002                                         229
Between 170 and 650    4.5

Between 650 and 2.600 6.0

More than 2.600        10.0




The Portaria does not precise whether the labels should be affixed by the producer
before the importation of the products or whether this information can be affixed
during or after the clearance process by the importer. According to the importers, the
information other than the nutritional labelling can be affixed by the importer after
clearance with a sticker.


2.3.   Nutritional labelling for foodstuffs

Nutritional labelling is compulsory in Brazil for all food products. This legislation is
quite recent and has been changed in 2001. According to the Portaria n° 94
published on 1st of November 2000 and the Portaria 34 and 40 of 22 nd of March
200182, all products sold in Brazil should bear a nutritional label. According to the
legal requirements, this label should be written in Portuguese and affixed by the
producer before the product is exported to Brazil. This label can be printed on a
sticker or on the original label. According to the National Agency for Sanitary
Vigilance, the Portaria 42 forbids the use of stickers. However, this option is still
available on a temporary basis for the importers. The fact that the producer or the
exporter should affix nutritional information is also not applicable in practice.

According to the new legislation, the nutritional labelling is not applicable to the
mineral waters and other bottle waters designed for human consumption neither it is
applicable to alcoholic beverages.

The nutritional labelling, is “any description whose purpose is to inform the consumer
about the nutritional property of the food” (Portaria 40). The nutritional facts, which
should obligatory be mentioned on the label are as follows: calories, carbohydrates,
protein, total fat, saturated fat, dietary fiber, calcium, iron, sodium, other minerals83
and vitamins84. The table which should be shown on the label is indicated in the
above-mentioned regulations and in the instructions for the foodstuffs industry85. The
respect of this regulation is very important, given the fact that the high and visibility of
the information on the label is strictly regulated.

The Brazilian Agency for sanitary vigilance has recently undertaken some
steps to facilitate the implementation of the nutritional labelling




82
   Implemented since 22 of September 2001.
83
   when declared.
84
   when declared.
85
    the text of the regulations and the manual could be find on the web-site of ANVISA –
htttp://www.anvisa.gov.br/alimentos/alimentos/legis/especifica/index/htm


CEEI –Labelling – Final Report –16 August 2002                                         230
On the 18th of December 2001, the Brazilian Agency for Sanitary Vigilance has
adopted the Resolution 235. The new Resolution modifies the article 4 of Resolution
40, which renders the nutritional labelling applicable from the 22 nd September 2001.
According to the new Resolution, the nutritional labelling should be applied from 2
January 2002.

The resolution 198 of 11 September 2001 (Resolution on the implementation of
Resolution 39 and 40), deals with the obligation to affix the nutritional label in the
country of origin. The article 6 of the Resolution 235 allows the importer to affix the
nutritional label after the clearance of the goods under its own responsibility.
According to different importers interviewed, this resolution has been adopted under
the pressure of the importers’ lobby and the EU Member State Representatives.

When several products with different nutritional characteristics are packaged
together, a different nutritional label should be attached. According to the Brazilian
legislation a unique label should be used only if the difference in the nutritional
characteristics of the products is between 5% and 10%. In this case, the average
nutritional value should be used for the labelling.


2.4.   Labelling approval for products of animal origin

The importation of products from animal origin, and especially products containing
meat, was forbidden for several months, due to the different animal diseases in
Europe. At the end of 2001, the importation of these products from several European
countries was authorised. The products of animal origin, which will be exported to
Brazil, need a prior approval of the Department for Inspection of the Products of
Animal Origin and the Department for control of the International Trade. This
approval is normally made after an inspection is performed by Brazilian veterinary
inspectors in the country of origin, yet the Brazilian authorities could authorise other
form of approval.

After the prior approval procedure, the label must be approved by Brazilian
Authorities under the Circular N°416/98/DCI/DIPOA . The producer must present the
sample of the label for approval within the special form foreseen in the circular. The
label should display the following information in Portuguese:

   -       the name and the identification of the product
   -       ingredients: in decreasing order and eventually, the additives used
   -       the name of the producer
   -       address of the production unit (city, country)
   -       the registration number of the producer with the Brazilian authorities, the
           stamp of the Brazilian controlling authority and its number could be put on
           the label
   -       the lot number in conformity with the regulation n°371/97 of the Ministry of
           Agriculture
   -       the expiry date, in conformity with the regulation n°371/97 of the Ministry of
           Agriculture
   -       the weight or net content



CEEI –Labelling – Final Report –16 August 2002                                       231
    -       the following expression “label approved by the Brazilian Ministry of
            Agriculture under the number x/xxx.”
    -       the country of origin
    -       the complementary instructions on the conservation and use of the product
            could be shown on the label

According to the Brazilian legislation, the labels of the products of animal origin must
be affixed in the country of origin of the products.


2.5.    Wines and other products from grape


Different legislations exist in Brazil for wine and products from grape, as well for other
alcoholic beverages. Wine should be labelled according to the Resolution 30 of the
Ministry of Agriculture of 15 of January 1997. According to the article 12 of this
regulation, the wine and other products from grape, which are labelled in foreign
language, should bear an additional label or a back-label in Portuguese with the
following information:

        -       The name and the place of establishment of thee producer or the bottler
                and the name and the address of the importer
        -      The number of the register of the product in the Ministry of Agriculture
        -      The denomination and classification of wine, such as the level of sugar
               in accordance with the Brazilian legislation
        -      The ingredients or the composition of additives
                Warning messages “Evite o consumo excessivo de alcool” or “beba con
                moderacão”
        -       The date of validity statement (“indeterminado” could be put for wines;
                sometimes it is better to put “date of validity indeterminate if stored in
                good conditions”)
        -      The Alcoholic strength (graduacao alcoolica: x% alc vol)
-              The country of origin (if the wine is processed in another country, this
               must be indicated on the label – i.e. origin – France, processed in
               Germany)
        -      The net content ( conteudo liquido x litre)
        -      The lot identification.

Under the regulation, the provisions of the Law on the protection of the Consumers
as well as of the decree 99.066/90 are also applicable, as far as it concerns the wine
labelling.

The obligation to indicate the number of the products’ register is considered as the
most difficult requirement. This obliges the importer to apply for the registration of all
types of wine, even if they are produced by the same producers. The products cannot
be imported without the registration and sometimes the Brazilian experts should visit
the production plant in order to grant the registration. Only some 71 kinds of world
well-known high quality wines are exempted from the registration. In order to facilitate
the wine importation, the Brazilian minister of Agriculture is considering the adoption
of a new regulation on wine importation. According to this draft regulation (released


CEEI –Labelling – Final Report –16 August 2002                                        232
for comments as draft regulation n° 49/12 November 2001), only the number of the
registration of the exporter of wine will be put on the label and not the registration
number of the product. According to the authorities and to the importers, this text has
been proposed under pressure of the lobby of the wine importers. This will facilitate
imports of wine in Brazil. The main change represents the fact that wines produced
by the same producers or exported by the same exporter will show the same
registration number. The current system was considered as an over-prescriptive and
hindering the imports.


2.6.   Labelling requirements for spirits

The spirits are submitted to a special regulation, which defines the process for
registration and labelling of spirit products. The relevant texts are the Law 8.919 of
1994 and the Regulation 2.314/97 of 5 of September 1997, recently modified by the
Decree 3.510/2000 of 16 of June 2000 on the composition, classification, register,
inspection, production and taxation of alcoholic beverages.

These regulations provide that every importer and all alcoholic beverages produced
and imported to Brazil should be registered with the Ministry of Agriculture. The
registration of importer as well as of alcoholic beverages is valid for 10 years. The
registration of alcoholic beverages could be required by the importer and the process
could be quite slow. The importer should present the following documents for the
registration procedure:

   -       signature of the trade name of producer
   -       address of the head office
   -       name and type of the product
   -       main composition of the product
   -       process of manufacturing
   -       label sample
   -       authorisation for sale in the country of origin
   -       control analysis carried out by national laboratory

Some EU operators interviewed in Brazil have complained about the fact that the
Brazilian authorities require an original of the control analysis certificate. The original
must be provided for every different size of bottle of the same alcohol. All documents
must be presented in Portuguese. It is not needed to provide a sample of the product
during the registration procedure.

After the registration, the alcohol will receive a registration number, which must be
indicated on the label.

The back label of the alcoholic beverages in Portuguese must include:

   -       the name of the producer or distributor or bottler and the name of the
           importer
   -       the registration number of the alcoholic beverage or of the importer
   -       the denomination of the product
   -       the trade mark


CEEI –Labelling – Final Report –16 August 2002                                         233
   -       the ingredients of the alcoholic beverage
   -       the expression “Indústria Brasiliera”, if the alcohol is produced in Brazil
   -       the net content, expressed in conformity with the Brazilian Norms
   -       the alcohol content
   -       the lot number and the expiry date (it is not compulsory that these two
           information are shown on the back label, they could be displayed at any
           part of the bottle, including the stopper)
   -       the health warning.


As far as the expiry date is concerned, “indeterminado” is allowed on the labels.
However, sometimes it is preferable to put in Portuguese “date of validity
indeterminate if stored in good conditions”. The health warning should be expressed
as follows: “Evite o consumo excessivo de alcool” or “beba con moderacao”. Some
additional requirements exist for the alcoholic beverages with artificial colours or
aromas, which should be indicated on the label. The diet beverages should be
labelled with the word “diet”.

The regulation established also the characteristics for several types of alcoholic
beverages and for some non-alcoholic beverages.


2.7.   Fiscal stamps for wines and alcoholic beverages

The obligation for the wines and alcoholic beverages to bear fiscal stamps was
modified by the Normative Instruction N°73 of 31 August, 2001. The instruction
establishes special register for the producer, bottlers and importers of alcoholic
beverages and specifies the type of fiscal stamps needed for different types of
alcohol.

Before the adoption of this legislation, importers were obliged to affix the fiscal
stamps in customs or even for some type of wines, in the importers warehouse. The
new legislation requires that the fiscal stamps for whiskey be affixed from origin. For
the other alcoholic beverages, the fiscal stamps can be affixed in Brazil. However,
according to the importers, Brazilian authorities are foreseeing fiscal stamps from
origin for all alcoholic beverages.


2.8.   Labelling requirements for cosmetics

Cosmetics are also subject to very strict labelling requirements in Brazil. The new
regulation on cosmetic products is the Regulation 335/99. Before the adoption of this
regulation, the entry of cosmetic products on the Brazilian market was hampered by a
prior registration with the Ministry of Health for all products. The registration of
cosmetics was set up by the law 6360/76 of 23 September 1976, which provides for a
compulsory registration for all cosmetic products. After 1999, cosmetics were divided
in two groups. In group 1 were included cosmetic products without special claims. In
group 2, were included the products with special claims (e.g. sun-filters creams). The
“group 1 products” are submitted only to a notification to the Ministry of Health



CEEI –Labelling – Final Report –16 August 2002                                     234
(Agency for Sanitary Vigilance). The “group 2 products” are still submitted to
registration.

If an importer wants to import product from group 1, he must notify the Ministry of
Health and must present a sample of the label of the product. One month after the
notification, the importer can import the product, without waiting for the approval of
the Ministry of Health.

The importation of products of group 2 is submitted to a registration. The importer
should present a file to the Ministry of health, including chemical formula of the
product, the labels and packaging, the specificities of the products, the mode of
preparation and the results of the laboratory tests performed in the country of origin.
The deadline for registration is 3 months. However, in case of problems, the
registration can take up to 6 months or one year. The importer should wait for the
publication of the registration number in the Official Journal. This registration number
must be on the label. The cost of the registration is around 2500 euros. The
registration is valid for five years. The cost for the renewal of the registration is
around 1250 Euros.

If minor changes are made in the product formula, the labelling or in the specific
claims, a new application for registration should be introduced.

The label of cosmetic products should contain the following information in
Portuguese:

   -       name of the product
   -       trade mark
   -       lot number
   -       expiry date (month/year)
   -       net content
   -       country of origin
   -       producer and importer
   -       direction for use (if needed)
   -       warnings (if needed)
   -       composition and ingredients
   -       fiscal number of the importer
   -       registration number of the product or if it is group one product : a mention
           stating that the product is exempted from notification under Regulation
           335/99.

The Brazilian law of 1977 requires a principal and secondary packaging. However,
this provision is not applied and all the information could be attached on the principal
packaging. If the product is too small the information could be displayed on the
attached notice. However, INMETRO (the Brazilian National Standardisation Agency)
requires that the minimum size of the letters should not be less than 1mm (decree
79.094).


2.9.   Labelling requirements for textiles



CEEI –Labelling – Final Report –16 August 2002                                      235
Labelling requirements have been modified by the Resolution 01/2001 of
CONMETRO of 31 of May 2001, which entered into force 13 of December 2001. The
new resolution implements into the Brazilian legislation the Mercosur Resolution n°
9/2000 on the textile labelling.

According to the new legislation, the textile labels should bear the following
information:

     -     name of the producer, exporter and importer (CUIT number of the importer
           for imported products
     -     country of origin (only the identification of regional blocs is not admitted, the
           country of origin according to the rules of origin should be indicated)
     -     fiber content (expressed in percentage, in decreasing order)
     -     identification of size
     -     care instruction (washing, drying, ironing, etc).

Some rules on the product’s packaging are also included. The country of origin and
the composition should be indicated on the packaging of the product if the packaging
is non-transparent and does not permit to the consumer to identify all the information
displayed on the product 86 . The lobby of the textiles industries has requested to
INMETRO to delay the implementation of the regulation until the end of March 2002,
because the industry was not ready to start the implementation of the regulation by
the mid-December 2001. This request was not accepted.


2.10. Products submitted to certification

Some products are submitted to compulsory certification in Brazil. Their conformity
should be evaluated in accordance with the Brazilian norms, which are similar to the
international norms. The norms are established by INMETRO (Brazilian National
Institute for Metrology, Normalisation and Industrial Quality). The products submitted
to a compulsory certification and the legal texts applicable can be found in the Annex
1.

The products are subject to conformity assessment in Brazil, even if they have been
certified in Europe, given the absence of conformity assessment between the EU and
Brazil. However, some tests performed by the European certification institutes are
accepted, if an agreement exists between the Brazilian Institute and the European
one.

The products, which have undergone successfully the certification procedure, must
be marked with the INMETRO certification logo.


§3.      Problematical labelling and marking requirements



86
  Detailed information on the new rules and the samples of label could be found on the web-site of the
Brazilian textile association - www.abravest.org.br


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3.1. General overview

The consultant has interviewed EU exporters and Brazilian importers of EU
commodities on their problems with labelling and marking requirements.

The companies have stressed that the following requirements impede the trade
between the EU and Brazil:

   -       problems related to the registration and labelling approval
   -       problems related to labelling verification and analysis during clearance
   -       problems related to the transparency of the Brazilian labelling legislation

Labelling as such is often not considered as the most important problem for the
companies importing EU goods in Brazil. However, the labelling requirements are
accompanied with other measures such as registrations, notifications, inspections
and import licences, which render the administrative burden of importation in Brazil
dissuasive for the European companies.


3.2. Labelling of food products

The labelling requirements of food products are very strict and the recent modification
of the nutritional labelling will probably create new difficulties for the European
producers.


3.2.1. Difficulties related to the approval of labelling

For the products with special nutritional claims, both a registration of the product and
an approval of the label should be obtained before importation. The importer should
deliver to the Ministry of Health a file on the product characteristics, including a
project of the label. The registration was introduced in early 2000. The importers
were authorised to work with a provisional registration number until September 2000.
The importers should wait for the publication of the registration in the Official Journal
to affix the registration number on the label. The registration is valid for 5 years and
must be renewed afterwards.

According to the importers, once the label is approved, the customs authorities
cannot challenge it during importation. However, several importers have complained,
that customs have tried to challenge the labelling of their products, even if these
labels have been approved.

The importation of products of animal origin is even more difficult. They are under the
jurisdiction of the Ministry of Agriculture. The importation of these products from the
EU was forbidden for several months due to the existence of animal diseases. The
importation from some countries like Italy has been authorised by the end of 2001,
but was submitted to very strict conditions. The veterinary inspection from Brazil
should visit the production plants in Europe and the registration of the product will be
performed. In addition, an approval of the label should be requested before
importation. The procedure is extremely time-consuming. First, it happens that the


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exporters wait for the visit of Brazilian veterinary inspectors for several months.
Second, the importer must wait for the labelling approval.

The energy and dietetic drinks are also submitted to the registration within the
Ministry of Health. The importers of these products should present the files of the
products with a sample of the label during the registration procedure. Some
difficulties have been encountered with the registration of energy drinks. The Ministry
of Health has refused registration for some types of energy drinks.

For other food products, the importers should inform the Ministry of Health about the
importation of these goods and supply the labels of these goods. Once a year, the
importers must supply samples of the goods to the Ministry of Health. Accredited
laboratories perform analyses on the product composition. During the analysis, the
importers are obliged to store the production in their warehouse. They cannot sell it.
According to the importers, this procedure creates additional difficulties. They are
obliged to sign a statement in which they declare that they will not sell the goods
before the end of the analysis. If they are found selling the products, significant fines
are charged.

According to the importers, it is useless to perform analysis for the same products,
every year. They do not understand why these analyses are carried out on the
different packaging of the same product.

The main complaints of the importers concern the lack of transparency of the
Brazilian legislation. According to them, the Brazilian legislation changes very rapidly.
The time allowed the economic operators to comply with the new requirements is
considered too short. It is also alleged that the information provided to the industry
and to the importers is not sufficiently clear to comply with.

In addition, these labelling requirements are often accompanied by licences and
registrations requirements. A large number of the products In Brazil are submitted to
automatic import licences for statistical purposes. Even if the procedure of import
licences seems easy, the importers consider that the existence of several different
procedures is a source of insecurity and represents additional administrative burden
for importers and exporters.


3.2.2. Difficulties related to the new nutritional labelling

During the consultant visit in Brazil, the nutritional labelling was not completely
implemented. However, the importers, who already have complied with these
requirements, have stated that the implementation of this legislation is really difficult.
First, given the fact that nutritional labelling does not exist in Europe, the producers
are often obliged to submit the products to additional tests in order to determine their
nutritional value. Second, the Brazilian legislation is very strict. It requires that the
producer establishes one nutritional label per single product (for example a box of
chocolate contains several different types of chocolates).

The EU exporters and the Brazilian importers have stressed that the changes
introduced by the Brazilian government allow now the importers to attach the


CEEI –Labelling – Final Report –16 August 2002                                        238
nutritional labelling. In the first version of the legislation, the nutritional labelling from
origin was required. However, the importers have expressed the opinion that the
legislation in Brazil changes very often and the requirement for nutritional labelling
from origin could be re-introduced in a very near future. This issue should therefore
be closely monitored.


3.3.   Difficulties related to labelling of alcoholic beverages and wine


As above explained, alcoholic beverages and wines are subject to a specific
registration procedure. During this procedure, the labels of the products must be
approved. In addition to this procedure, analyses of samples are performed for every
shipment of alcoholic beverages.

The importers are obliged to supply to regional office of ANVISA, a sample of all
types of products and all sizes of bottles imported. The importer signs a statement
that he would not sell the products before the end of the analysis (he must store the
products in his warehouse). The analysis takes around two weeks. Sometimes it lasts
more than one month, depending on the volumes to be imported. The results of the
tests are compared with the information stated on the label. If they do not match, the
importer will be obliged to change the labels and can be fined.

Up to now, according to importers, it is allowed in practice to affix stickers for
alcoholic beverages. They can put the labels or stickers after the arrival of goods.
However, the law gives no precise indication on where the labelling of alcoholic
beverages must be affixed. Besides, according to importers, it will be preferable that
the analysis of the products is performed during the registration and not after every
importation of the goods. These analyses are considered by the importers as
discriminatory compared to the treatment for domestic products.

The importers of alcoholic beverages have also underlined some other difficulties
related to the packaging of goods. For example, the importation of the bottles of more
than one litter is not permitted in Brazil. Some importers have also experienced
difficulties related to bottles packaged together with additional promotional gifts. The
customs have requested import licences for these gifts or have applied very high
import taxes.

The new regulation on fiscal stamps is also considered restrictive, because it requires
that the fiscal stamps for whiskey be affixed from origin. This requirement could also
be implemented for other products. The importers of whiskey are obliged to ask for
the fiscal stamps the Ministry of Finance and then to send them to the exporter.
When some fiscal stamps are lost during the transport, importers may encounter
considerable difficulties.

Importers also bitterly complained about the difficult registration procedure for wines.
The new regulation on wine registration is not adopted yet by the Brazilian
authorities, despite the fact that the proposal is studied by the administration already
for several months. The wine importers also consider the additional analysis of wine
during the importation procedure as an obstacle to trade.


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The existence of different non-tariff measures such as registration, labelling and
licensing and the links established among these procedures represent an important
trade barrier for alcoholic beverages and wine importers. For example, when the
importer of alcoholic beverage requires an import licence by introducing electronically
the relevant information to SISCOMEX (the process is called L.I.-licence of
importation), this demand is transmitted to the Ministry of Agriculture (the process is
called – D.I. – deferimento de importacão (authosiation for importation). The Ministry
of Agriculture verifies if the product is registered and gives its approval for the
importation. In order to import the products, the importer should produce the L.I. and
the D.I. Although, the licensing process is called automatic import licence, it seems
not to be completely automatic. A similar process is applied to food products and to
cosmetics, but the responsible authority is the ministry of Health. For some products,
the approval of the Ministry of Agriculture and the Ministry of Health is needed.


3.4.   Difficulties related to cosmetic labelling


Although the registration procedure has been simplified for cosmetic products, the
difficulties related to labelling and to other non-tariff measures still exist. According to
importers of European products, some terms such as “regenerating product” or
“slimming treatment product” are forbidden by the Brazilian legislation. They cannot
be used in Portuguese on the products prepared for the Brazilian market. They must
be replaced with specific terms defined in the legislation.

The Brazilian importers also complained about the fact that the definitions of products
existing in the Brazilian law of 1977 do not comply with the International definitions
for cosmetic products. The definition of “agua de perfume” is one of the most
criticised by the importers, because the flagrance concentration level in the Brazilian
legislation are not in conformity with the internationally accepted one.

In addition, the importers of cosmetics have complained about the existence of
different non-tariff measures. For example, after the request of the importation
licence (LI), the importers of cosmetics should wait for the approval of the importation
by the Ministry of Health (DI). In order to import products in Brazil, the importer must
present the LI and DI during the importation procedure. In addition, during customs
clearance, he should wait for the inspection of the Ministry of Health before receiving
the green light for the importation of the products. The importers stated that they do
not understand why the Ministry of health should authorise twice the importation of
cosmetics. They find the procedure burdensome and time consuming.


3.5.   Difficulties related to textile labelling


During the mission carried out by the consultant in December 2001, the new labelling
requirements for textile products were still not fully implemented. However, the new
regulation could create several problems for EU exporters and importers of the EU
goods.


CEEI –Labelling – Final Report –16 August 2002                                         240
 First, one should notice that the indication of the EU origin is not authorised, the
individual country of origin must be indicated on the label. This means that,
sometimes, the producers and the importers might be obliged to perform additional
tests in order to determine the origin of their products. Second, according to the
importers, the time-limit allowed to the industry to comply with the new regulation was
too short.

According to some importers and customs agents, textile and apparel products
should be labelled from origin at least with the composition of the textile fibres and
the country of origin. The rest of the compulsory information could be affixed on
additional labels or stickers in Brazil. According to the new legislation, symbols for the
care labelling are admitted. The symbols that must be used are ISO symbols, which
are also used in Europe.

According, to the EU trade representatives, the imports of textile and apparels
products from Europe are quite modest, due to the conjunction of several factors.
The European textile products are still expensive for the mid-class Brazilian
consumer. In addition, the tariff (taxes) and non-tariff (quotas, licences, minimum
prices) measures applicable render these products even more expensive and non-
competitive on the Brazilian market.


3.6.   Other labelling difficulties identified in Brazil


Some other difficulties were identified in Brazil. The drugs are submitted to
registration procedure. The legislation governing this registration is the Law 9782 of
29 January 1999. The resolution 391 of 9 of August 1999 has created implementation
rules for the registration of the generic drugs in order to increase the efficacy of the
system. After one year of implementation, it was necessary to amend this regulation
with the Resolution 10 of 2 of January 2001. The registration process was transferred
to ANVISA (the national Agency for sanitary vigilance). The applicants are requested
to present a copy of the label and eventually of the explanation notice in Portuguese
for the approval of the drug.

It is also important to note that the Brazilian Government has introduced new
legislation on Genetically Modified Organisms (GMO) – Decree n°3.871 de
18.07.2001. This legislation requires special labelling for all the genetically modified
products. The legislation was put into force on 31 of December 2001.


§4.    Legal analysis


The European companies experience some difficulties on the Brazilian market.
These difficulties are mainly related to nutritional labelling, prior authorisation for the
importation of some products and sanitary inspections conducted during clearance or
after importation.



CEEI –Labelling – Final Report –16 August 2002                                        241
Some excessive requirements applicable to foodstuffs (e.g. specific nutritional
labelling, prior approval procedures) could eventually be challenged under the
Agreement on Sanitary and Phytosanitary Measures (SPS) or under the provisions of
article III of GATT agreement (national treatment obligation) if they are applicable
only to imported products or if there is a discrimination of imported products in
comparison to domestic products.

Some technical regulations not in consistence with the international practice could be
challenged under the Agreement on Technical barriers to Trade (TBT agreement).

In case the rules are not published or sufficiently transparent, the application of article
X of GATT could be foreseen. A detailed analysis of these and other WTO provisions
can be found in Part 21 – Legal analysis.




CEEI –Labelling – Final Report –16 August 2002                                        242
                                PART 10: ARGENTINA



§1.    The mission to Argentina


§2.    The labelling requirements for imported products

       2.1.    Food labelling

               2.1.1. The requirements
               2.1.2. The implementation

       2.2.    Wines and spirits

               2.2.1. The requirements
               2.2.2. The implementation

       2.3.    Textiles and apparels

               2.3.1. The requirements
               2.3.2. The implementation

       2.4.    Footwear

               2.4.1. Labelling requirements
               2.4.2. Certification of labels
               2.4.3. Other product composition description requirements

       2.5.    Cosmetics

               2.5.1. Labelling requirements
               2.5.2. Implementation

       2.6.    Toys

               2.6.1. Labelling requirements
               2.6.2. Implementation

       2.7.    Electric devices

               2.7.1. Requirements


§3.    Problems encountered by EU companies and importers




CEEI –Labelling – Final Report –16 August 2002                             243
       3.1.    Requirements

       3.2.    Label certification and control before clearance

       3.3.    Label control during clearance

       3.4.    Label control during retail


§4.    Legal analysis




CEEI –Labelling – Final Report –16 August 2002                    244
§1. The mission to Argentina


The consultant conducted a mission in Buenos Aires from 19 November to 25
November 2002 and from 28 November to 2 December and from 14 to 16 December
2001. The mission aimed at meeting the Member States Trade representatives,
some importers of EU products, and the Argentinean Authorities in order to collect
the information on the labelling requirements, their implementation and their impact
on EU exports.

The consultant attended meetings with the following authorities:

Authority                                        Issues addressed
Ministry of Economy,                             Presentation of the study ; policy regarding
                                                 labelling requirements and the research
IRAM                                             Labelling rules and certification (footwear, electric
                                                 equipment, toys and others
Customs                                          Controls carried out by Customs




Main outcome of the mission is as follows:

1.      Among of the countries under review, Argentina appears to be one of the most
        protective markets regarding labelling requirements. Exporters have
        complained about the labelling requirements as such, as well about the
        implementation by Customs Authorities (ex: apparel products). However, these
        problems are often related to other import procedures, such as certification of
        labels (footwear), security certification (toys), registration process (food and
        wines), or import licenses (footwear).

     2. Main products affected by labelling requirements and their implementation are
        footwear, textiles and toys. For these products, the complaints made by EU
        companies and importers in Argentina focused on the same problems: (1)
        additional costs of producing specific labels in the country of origin (textiles,
        footwear), overlapping of burdensome procedures and documents aiming at
        providing the product description (for footwear, the product description is made
        through the certification of labels, the import license, the invoice, the certificate
        of origin). All these documents aim at giving a detailed description of the
        product. Any discrepancy found by Customs among these documents is used
        to block EU exports.

     3. Importers denounce cases of discrimination regarding the control of
        compliance to labelling requirements. The label of an imported product can be
        controlled before the exportation (certification of labels), during the clearance
        process (physical checks) and after the clearance (checks in the retail).
        However domestic products are not subject to such controls.

     4. Labelling is therefore seen as a worrying non-tariff barrier hampering our
        exports to an already complex and protective market.


CEEI –Labelling – Final Report –16 August 2002                                                   245
§2. The labelling requirements for imported products


The Law 22.802 of Lealtad Comercial establishes the basic minimal mandatory
requirements for any product imported in Argentina):

1.       Name of the product
2.       Quality
3.       Country of origin
4.       Net content.

In addition, some products must comply with regulations establishing specific
requirements87: mainly

-        foodstuffs
-        wines and spirits
-        Textiles
-        Cosmetics
-        Toys
-        Electrical devices.


2.1. Food labelling


2.1.1. The requirements


Food labelling is governed by various resolutions. The most important are :

-        National Resolutions 1399/92, 1951/92 ;
-        Resolution 679/93 introducing MERCOSUR Resolution GMC/Res/36/93
         regulating the labelling of packaging foodstuffs, including the alcoholic
         beverages on sale in the MERCOSUR market;
-        In addition, The “Argentine Food Code” as amended by the Ministry of health
         Resolution 686 of 2 September 1998, concerns the ingredient list;
-        Resolución n° 34 of 10/01/96 of Ministry of Health on the packaged foodstuffs
         products commercialised in Mercosur.
-        Resolución 572 of 2/9/98 of Ministry of Industry and Commerce on the meat
         products commercialised in Mercosur.;
-        Law 22.802 of 21 April 1983 and Resolución 100 of 10/05/83 on fruits and
         canned products;
-        Resolución 494 of 6/11/2001 of SENASA on Food products prepared with
         different types of minced meat (picada, molida o feteada). (specific label
         according to the cooking methods).


87
     See www.mecon.gov.ar


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The mandatory data to be affixed to a single label are:

-      Name and address of the manufacturer
-      Name and address of the importer
-      RNPA and RNE registration numbers
-      Name of the product
-      Raw materials (in decreasing order by %of weight)
-      Content (volume)
-      Ingredient list
-      Date of production
-      Expiry date
-      Storage conditions
-      Country of origin (compulsory for some products).


2.1.2. The implementation


In the practice, the EU exporter affixes a sticker with the mandatory data in Spanish.
According to an importer, according to the products, it is required to get the previous
approval from the Health Ministry (for energy drinks) or SENASA (for canned fish) or
to the Institute for Food (INAL). SENASA examines the draft label (product
composition data, net weight, product denomination). INAL requires the original label
and the draft label. It also requires the free sale certificate and samples for testing
purposes. INAL will therefore approve the label before export.

Often, procedures such as approval from the Ministry of Health are more time
consuming and costly than the problems related to the labels. For example, importers
of energetic drinks bitterly complained about the excessive requirements to get the
approval from Argentinean authorities:

The importer must apply for an authorisation. He must provide the following
information to the national Institute for Food (INAL):

-      original label
-      ingredients list
-      short manufacturing method
-      certificate of free sale in the EU
-      nutritional information by canned unit
-      a draft of the label in Spanish

The approval procedure lasts about 4 months. INAL issues a certificate RNPA
(Registro Nacional de productos alimenticios).

The EU exporter must wait for the authorisation is issued to ship the products.

Customs usually will not take samples for testing purposes. However, according to an
importer of foodstuffs, Customs will carefully check if the label information
corresponds with the certificate of origin data and the data contained in the LAPI.


CEEI –Labelling – Final Report –16 August 2002                                     247
2.2.   Wines and spirits


2.2.1. The requirements


Wine and spirits labelling is governed by the provisions of:

-      National Resolutions 1399/92, 1951/92;
-      Resolution 679/93 introducing MERCOSUR Resolution GMC/Res/36/93
       regulating the labelling of packaging foodstuffs, including the alcoholic
       beverages on sale in the MERCOSUR market .In addition, law 24.778 of 3
       April 1997 concerns the required warning statements on all alcoholic
       beverages;
-      Resolutions C 121 of 12/3/93; C 24 of 20/6/97, C1 of 21/11/96 and C9/2001 of
       6/4/2001 of the National Institute of Wines on wines and related products.

The mandatory data to be affixed to a single label are:

-      Name of the manufacturer;
-      Name and address of the importer, wholesale distributor and or local retailer;
-      Importing company’s (health) registration number (RNPA);
-      Name of the product (Type name is authorised under Mercosur resolution, art.
       3 in conjunction with spirits with geographical indications of origin);
-      Alcoholic strength;
-      Content (volume);
-      Brand health registration numbe;r
-      Date of production, year of bottling;
-      Country of origin;
-      Warning statements (drink with moderation and the sale to those under 18
       years is prohibited).


2.2.2. The implementation


According to EU importers and Member States trade Representatives, there are no
major problem regarding the compliance to labelling requirements for wines and
spirits. In the practice, the importers affix the counter-label either in the clearance
process or clear the goods “provided without use” and affix their labels before the
retail phase. They do not consider that the additional label causes a major lost of
time.

However, the registration procedures conducted before the importation are more
burdensome (Brand registration number – RNPA – and Importer’s registration
number (RNE).

Each brand of alcoholic beverage must be registered with the Ministry of health.
Exclusive rights belong to the first company that registers it. The Authorities issue the


CEEI –Labelling – Final Report –16 August 2002                                       248
RNPA number to a specific product brand from a certain origin for each individual
importing company identified with a unique RNE number. Both numbers must be
included on the label.

The applicant for the registration process must prepare a detailed file, including 3
specimens of labels (DTI 12/80 and I/0242/98). The products are being tested. The
wines are analysed by laboratories in Mendoza regarding their composition. The
analysis lasts about 2 weeks. Under the tests results, the importer receives the
certificate and the registration number. The number of analysis must be affixed in the
label.


2.3. Textiles and apparel


2.3.1. The requirements


Over the recent years, textiles and apparel products have been subject to an
increasing variety of protectionist measures (DIEM, certificate of origin legalised in
the country of origin, DJCP, pre-shipment inspection, “canal morado”, labelling rules).
The labelling issue was therefore an issue “among others”. However, it was
considered so prejudicial to EU exports that the European Association of Textile and
Apparel producers (EURATEX) decided in 1999 to launch a TBR complaint against
Argentina covering all import measures applied to textiles and apparel products,
including labelling.

Some operators consider that there has been a worsening of the situation over the
years. The Authorities have reinforced the controls on textile labelling since a
Resolution has been adopted at Mercosur Level and been integrated in the
Argentinean legal Order. Imports are now governed by the requirements of the
Mercosur Resolution of 12 December 2000 88. It has been implemented in Argentina
since June 2001 89. This regulation establishes a model of label for the Mercosur
countries and lists the compulsory data to be affixed on the label:

-      Name and social reason and identification fiscal of the importer. This can be
       substituted by the registered brand name;
-      Country of origin;
-      Name of the fibres and yarns and composition in %: detailed provisions on the
       denomination of fibres;
-      Cleaning instructions;
-      Size.

Minimum size of the letters: 2 mm. The label should be permanent.



88
   « Resolución n° 9 que establece el Reglamento técnico de Mercosur de etiquetado de productos
textiles. »
89
   « Resolución 287/2000 de la Secretaría de Industria incorporando en el ordenamineto juridico
nacional la Resolución Mercosur 9 ».


CEEI –Labelling – Final Report –16 August 2002                                            249
Note that Leather apparel products must comply with the requirements fixed by
Resolution MEOSP 558 of 1987.

2.3.2. Implementation

Customs agents and importers interviewed consider that the situation of the control of
the labelling requirements for apparel products has not been improved:

    Strict control by Customs on the requirements (label in fabric, must be sewed,
     must contain the importer data, including the CUIT etc).

    Industry intervention: according to various customs agents, the presence of the
     “observadores” of the industry associations (cámaras) is still an obstacle (ex
     carpets). The observer is alleged to object to the decision of customs to clear the
     goods arguing that the product is not properly labelled (missing or incomplete
     data). He can also require that Customs ask for product composition analysis
     (tests in laboratories, resulting in delays). The importers denounced the pressures
     exerted by the observers on Customs (threat to launch complaints (“denuncias”)
     against Customs). Their presence is considered as an obstacle to effective and
     fast clearance.


2.4.    Footwear


2.4.1. Labelling requirements


Under the resolution 850/96 MEOSP (labelling requirements for textiles and
footwear), the sport footwear are subject to detailed labelling requirements. The tariff
position more affected is the HS 640411 (footwear with textile upper).

The product must be labelled with two labels /stickers.

1.      cleaning instructions: they must be written with symbols and written
        instructions 90.

2.      Product composition and importer data: the second label contains the following
        information:
-       upper composition with the % of the different components (68% nylon, 32%
        polyester,
-       outsole composition (rubber),
-       lining composition (ex textile, 80% nylon, 20% spandex), sockliner
        composition(ex textile, EVA), country of origin (ex Italy),
-       name of the brand,
-       importer code, importer CUIT.


90
  For example the symbols will show the signs no wah in the washing machine, wash at 30°, no dry in
the sun. . In addition the following text is written : No lavar en lavaropas, lavar plantilla por separado,
no usar jabones con soda cáustica, no dejar restos de jabón, no secar al sol, horno ni centrifugar ».


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2.4.2. Certification of labels

The Argentinean Authorities have issued a complex system of certification of labels
previous to the export of footwear to Argentina. The system has been implemented
by:

-      Resolution 508/99 establishing a mechanism of certification of truthfulness of
       the information contained in the footwear labels;

-      Disposition 921/99 establishing a mechanism of certification through the
       testing of samples. By origin, by manufacturer, composition of principal
       elements (upper, outsole, lining), functionality;

-      Resolution 977/99 (11/08/99): establishing the certificate of importation for
       footwear (non automatic license). It is delivered in a maximum time-duration of
       30 days. Has a validity of 30 days from the date of its delivery.

Under this system, the Argentinean importer must require the approval of the
accredited certification organism on the product composition and on the labels before
importing their products.

Under the procedure, the importer makes a presentation (detailed file) of the product
and sends two samples of the product to be imported to the certification institute
(INTI). The alleged aim of the test is to evaluate the composition of the product and to
assess if the product composition corresponds to the draft label.

Technical specifications are rather detailed. For example, it is required to provide
information on the textile fibres. If the upper is in leather, the importer must indicate
the type of animal (bovine) and the type of finishing (ex coated leather). Details on
the function of the product (“funcionalidad”) are also required.

It is admitted to gather the products with similar technical characteristics in one file.

The time duration of the testing period in INTI is 30 working days. The approval of
label procedure costs 25 USD and 180 USD additional.


2.4.3. Other product composition description requirements

When the certificate of INTI is issued, the importer must provide the Ministry of
Economy (Secretaría de Economía – Lealtad Comercial) with various data in order to
obtain the non automatic license (LAPI):

-      information regarding the constitutive materials;
-      weight and volume of each model;
-      Number of INTI certification;
-      Value of the product to be imported;
-      Draft label.



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It was reported that the Ministry of Industry and Trade has often waited 30 days to
give the License to Footwear importers. This document has a validity of only 30 days.

All these delays render the export management dramatically complex, sometimes
impossible.

In addition, Customs Authorities will carefully check the label of the imported footwear
during the clearance process (see infra).


2.5.   Cosmetics


The main problems for cosmetics are not linked to the labelling procedure but to the
registration procedure, previous to the importation. The label of the imported product
must contain the registration number given to the importer by the Argentinean
administration (ANMAT).


2.5.1. Labelling requirements

The basic Resolutions are:

-      Resolution of ANMAT 337 of 1992 (labelling of hygiene products);
_      Disposition of ANMAT 110 of 15/3/99 .

The mandatory requirements to be affixed to the label of the exported products are:

-      Name of the product (ex “Agua de tocador”);
-      Importer name, N° of importer, address in Argentina;
-      Country of origin;
-      Reference of the ANMAT Resolution approving the product;
-      Caution mentions regarding the inflamability, and the storage conditions (ex
       “no exponer al sol” etc …).

Some terms are prohibited, such as “anti” (anti-wrinkles for example) “reduce” of fight
against”. The importer therefore affixes a white sticker on these mentions if visible on
the original sticker.

Before the importation, the importer presents to ANMAT all required documents,
including a copy of the draft label and the certificate legalised by the Argentinean
consulate in the country of origin. The Argentinean consulate and the Chamber of
Commerce legalise:

-      The certificate of free sale;
-      The formula;
-      The letter of power (carta poder).




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2.5.2. Implementation

According to the importers, there is no specific problem with the labelling
requirements. However, it is estimated that it is quite restrictive to oblige to affix the
registration number. It obliges the EU producer to produce a specific label according
to the importer.


2.6.   Toys


Various measures affect the importation of toy en Argentina. These products are
considered as very sensitive (together with textiles, footwear). The main problem
evoked by toys importers is nevertheless more related to the certification procedures
(safety certification), rather than to labelling requirements as such. However, these
procedures indirectly affect the labels of imported (and domestic) products: the label
must contain various indication related to the certification, it is examined during the
certification procedure.


2.6.1. Labelling requirements

In addition to the basic labelling requirements applied to any consumer goods, the
imported toy must comply with:

-      security warnings;
-      age statements;
-      use statements;
-      specific requirements for textiles.

The label is approved before the shipment is exported.

a)     The “ftalato” statement

Toys are classified into two categories: (1) below 3 years and (2) above 3 years.
Therefore, the label of the imported toy must mention if the toy is destined to a child
of more than 3 years.

For products destined to children of less than 3 years, some specific provisions
apply. Under the Resolution 438 of the Ministry of Health, all products for children
under 3 years old must be tested, in order to avoid the presence of “ftalato”.

If the test results show that the product contains “ftalato”, the product cannot be
imported, except if the product is not aimed to be put into the child’s mouth (“no
destinado ser llevado a la boca”).

Any label affixed to a product for a child below 3 years must contain the mention
“does not contain ftalato”; Any label affixed to a toy for children above 3 years not



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aimed to be put in the child’s mouth, has to be marked with the mention “does
contain ftalato”).

b)     Requirements for textiles

If the toy contains textile materials, the label must contained detailed information on
the composition and the cleaning instructions.

c)     Safety certification

Resolution n° 851/98 on toy’s security has set up a certification process for toys. The
certification is realised by INTI or IRAM. IRAM (Institute of Normalisation) has
concluded agreements with various Foreign certification organisms (SGS, VERITAS)
enabling these organisms to issue the certificates.

The importer must therefore make a presentation (present a detailed file). He must
also send two samples for testing purposes. The accredited laboratory conducts tests
on the product composition and the compliance to several standards (E/71 on
migration; EN/71/2 traction, EN/71/3; EN/50008 electric systems). There are 4
accredited laboratories.

When the tests are conducted, the accredited laboratory informs the certification
organism about the results. The organism should then issue the certificates.

The certificate has a validity of one year (must be conducted every year). The cost of
the certificate is 140 USD/article.

Under the Resolution 851/98, it is required that the label affixed in origin contains the
following provisions:

-      Name of the producer;
-      Name and address of the importer;
-      Caution statements.

The product will be marked with a security stamp and the logo of the certifying entity.


2.6.1. Implementation


Importers of toys complained generally about the burdensome procedure of
certification (time lost). They estimate that the duration period for testing is about 2 or
3 weeks.

According to importers, costs of certificates are estimated to 350 USD/product tested.
Costs of testing are 350 USD/product. It is, however, possible to gather various toys
with the same components into the same family (one unique file). However, each
product added in the family cost an addtional 50 USD.




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For textile dolls, the label should be sewed to the product. The label should comply
with all requirements for textile products.

The importer should avoid importing textiles accessories for doll in separate boxes
(then Customs can require a label for each textile accessory. If they are in a set with
other accessories, there is a greater flexibility.

Complaints also focused on the non recognition of tests conducted in the EU, and on
the short duration life of the certificate.


2.7.   Electrical devices


2.7.1. Requirements

The requirements were implemented by the Resolution 92/98.

The label should contain information regarding:

-      electrical tension;
-      Name of the manufacturer;
-      Country of origin.


§3. Problems encountered by EU companies and importers


Under Argentinean rules and import procedures, the labels of imported products are
controlled on several occasions. For example for foodstuffs, footwear and
cosmetics the labels are controlled before the shipment is exported, during the
clearance process and potentially in the retail phase.

Importers of EU products reported various problems regarding the import procedures,
in particular the documents, the certificate of origin requirements, the “canal morado”,
the penalties, the intervention of industry in the clearance process, the control of
labels). The labelling issue must therefore be assessed in the context of general
harassment affecting the import procedures for certain products. The conjunction
and addition of the different procedures constitute a strong disincentive for EU
exporters and in particular for SME.

Regarding in particular the labelling requirements, four areas of difficulties are
identified:

-      The requirements as such
-      The procedures of label certification and control before the clearance
-      The excessive requirements on product description
-      The control of labels during clearance




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3.1. Requirements


1.      For some products, the requirements are numerous and detailed. For
        example, the labelling requirements for sport footwear regarding the upper,
        sole and lining composition (fibres components must be indicated in %) seem
        excessive (the product composition being already tested by INTI before
        shipment).

2.      Some of the requirements are alleged difficult to comply by EU exporters. For
        textile exporters, for example, it is impossible to know in advance the Fiscal
        registration number of the importer. The EU exporter must therefore produce a
        specific label for each customer.

3.2. Label certification and control before clearance


Importers of footwear complained bitterly about the accumulation of measures
affecting the importation of (EU) footwear in Argentina, among which labelling
requirements. Attention should therefore be drawn on the overall burden for the
importers of these procedures:

1.      DIEM: specific duties applied to footwear are high. Their level depends on the
        available quantities of tariff quotas

2.      Tariff quotas: under the available quantities of the fixed quotas, the applied
        duty varies from 5 USZD to 8.9 USD91. Outside the quota, the applied duty is
        35%.

3.      Under the resolution 850/96 MEOSP, the sport footwear are subject to
        excessive labelling requirements. The position more affected is the HS 640411
        (footwear with textile upper). The product must be labelled with two labels
        /stickers. The first regards the cleaning instructions, which need to be written
        with symbols and written instructions 92 . The second label contains the
        following information: upper composition with the % of the different
        components (68% nylon, 32% polyester, outsole composition (rubber), lining
        composition (ex textile, 80% nylon, 20% spandex), sockliner composition(ex
        textile, EVA), country of origin (ex Italy), name of the brand, importer code,
        importer CUIT.

4.      Certification process: importers complained about this burdensome procedure.
        In particular, technical specifications requested by INTI are burdensome and
        aimed at delaying the whole process. Technical specifications are rather
        detailed. For example, it is required to provide information on the textile fibres.

91
   Resolución 571, anexo 1 derechos especificos de importación, USD/pair. See also Resolución
1506/98 establishing import quotas for footwear.
92
   For example, the symbols will show the signs no wah in the washing machine, wash at 30°, no
trumble, no dry in the sun. . In addition the following tewt is written : “No lavar en lavaropas, lavar
plantilla por separado, no usar jabones con soda cáustica, no dejar restos de jabón, no secar al sol,
horno ni centrifugar ».


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       If the upper is in leather, the importer must indicate the type of animal (bovine)
       the type of finishing (ex coated leather).

       INTI, which is the only organism accredited for that certification, overpass
       often the time-duration of 30 days. After some days, INTI issues a provisional
       certificate attesting that the importer has launched the procedure. He could
       therefore request the LAPI to the Ministry of Industry and Economy. Given that
       the provisional certificate is valid for 60 days, the importer has sometimes to
       wait 60 days to get the Final certificate. However, the importers are against
       this procedure, given the fact that often the definitive certificate does not match
       with the provisional certificate. Given that the Import license is requested
       under the provisional certificate data, there are discrepancies between the
       license and the Final certificate and between the license and the labels (if the
       labels are affixed in origin). Therefore, the importer must re-label the goods at
       its costs in the bounded warehouse! (it is not evident to get the necessary
       approval of Customs to label in the bounded warehouse). This explains that
       various importers wait to have the License in order to produce the labels. They
       affix them, if agreed, in their warehouse (“despacho sin derecho a uso”).
       According to another importer, Customs are more and more reluctant to
       accept the goods to be cleared “sin derecho a uso”.


3.3. Control of labels during clearance


The control of labels during clearance has to be assessed together with the other
import requirements. Most complaints focus on the excessive production description
requirements added to the labelling requirements and excessive inspections.

1.     Some requirements leave an important place to subjectivity, therefore an open
       door for customs harassment (ex textiles: permanent character of the label).

2.     The importers do not understand why a same product is subject to various
       products description requirements. For example for textiles, the product is
       described in the following documents required for clearance:

-      Invoice
-      DCCP/LAPI
-      Certificate of origin
-      Label

       For footwear, the label of the product is certified (approved before shipment).
       The importer must, in addition, describe in detail the identity and the origin of
       the different components of the product in the certificate of origin, the invoice
       the DJCP. Furthermore, the product will be systematically physically checked
       (footwear are always “red canal”) regarding their components and their labels.

       An importer complained also about blockages in case of small discrepancies
       between the DJCP or the LAPI and the label of the imported product
       (typographical errors). This is more unbearable while the label has already


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       been approved by INTI, and that the LAPI has been required on the basis of
       the INTI certificate!

3.     Red channel: some products are considered as sensitive products by Customs
       and are therefore systematically checked regarding their labels. Importers
       complained about the discrimination against domestic products whose labels
       are only checked randomly in the retail phase.

4.     Industry participation in clearance: importers critiqued the industry participation
       (even if they recognised that there were some improvements, since they are
       also authorised to attend the clearance process). According to various
       interlocutors, the industry representatives pressure the custom authority to
       delay or block the goods.

5.     Penalties in case of defective labelling are strict. According to a Customs
       Agent, Customs are entitled to charge huge penalties (from 1 to 5 the CIF
       value: version). On average, the penalties are estimated to be 1.5 %of the CIF
       value. The products more controlled, regarding their labels and subject to
       penalties, are textiles, toys, lighters, footwear, watches.

6.     The importers can be authorised to correct a defective label in the customs
       warehouse. They must affix the appropriate label in 30 days. The Customs
       and the “Lealtad Comercial” officers inspect the products.

7.     Importers can also request the Customs for an authorisation to clear the goods
       without appropriate label without right to use ( “sin derecho a uso”). The
       importer must label the goods in his warehouse and must wait for the
       inspection of Customs. However, this authorisation is not automatically given


8.     Fiscal stamp: in addition to the label in Spanish language, the importer must
       sew the fiscal stamp. This requirement is considered as excessive, time
       consuming and costly (storage costs, etc).

9.     Additional checks on the product composition: despite their detailed labels,
       Customs question often the product composition in order to verify the
       presence of dangerous substances. According to importers and Customs
       agents, there are often abuses. For example, Customs block the import of
       telecommunication cables or electric transformers in order to check if the
       products contain abestos or difenilos policlorados (Customs Instruction DGA
       38/2001 of 30/05/01 prohibiting the importation of products containing abestos
       or difenilos policlorados).

10.    Blockages in case of additional information: some products have been also
       blocked on the motive the labels contained additional information to mandatory
       requirements (ex footwear labelled for other markets or for the EU with
       additional requirements).




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3.4.   Label control during retail


Importers of various products (textile, footwear, cosmetics) allege that the Ministry of
Economy (Lealtad comercial) conducts more severe controls on their products during
the retail phase than for domestic products. This information is however difficult to
verify and to prove.

Importers have conducted controls in the shops and have often found domestic
products not labelled or not adequately labelled.


§4.    Legal analysis


The European companies have experienced difficulties on the Argentinean market.
These difficulties are mainly related to certification requirements for some products
such as footwear and toys (including label certification). The labels of these products
are verified during the certification procedure. In addition, burdensome labelling
requirements exist for foodstuffs.

The certification requirements could be analysed under the provisions of the TBT
agreement. This agreement imposes stricter requirements for the trade restrictive
effect of the measure than the general agreement. Some excessive requirements
applicable to foodstuffs (e.g. prior approval procedures) could eventually be
challenged under the Agreement on Sanitary and Phytosanitary Measures (SPS).

If some of procedures are found discriminatory or impose less favorable treatment to
imported product, (e.g. obligation to display on the label the name of the importer in
the country of origin), the provisions of article III of GATT agreement apply. This
article imposes the national treatment obligation.

While the rules are not published or are not sufficiently transparent, the application of
article X of GATT could be foreseen. A detailed analysis of these and other WTO
provisions could be found in Part 21 – Legal analysis.




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                                 PART 11: URUGUAY



§1.    The mission to Uruguay


§2.    The EU industry assessment


§3.    Labelling requirements


       3.1.    General labelling requirements

       3.2.    Labelling requirements for foodstuffs

       3.3.    Labelling requirements for alcoholic beverages

       3.4.    Labelling of textiles

       3.5.    Labelling requirements for footwear

       3.6.    Other labelling requirements


§4.    Problematical labelling and marking requirements in Uruguay

§5.    Legal analysis




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§1. The mission to Uruguay


The mission to Uruguay took place on 26 November 2001. The consultant
interviewed Member States’ representatives, EU companies, and Uruguayan
importers of food and industrial products.



§2. The EU industry assessment


The EU companies consider the labelling rules on alcoholic beverages quite
restrictive.

The label should contain all the prescriptions requested by both the Mercosur
legislation on alcoholic beverages and food products, and by the Uruguayan
legislation. In addition to the requirements imposed by the EU, the label should
contain the name and the address of the importer. This should be put on a different
label than the label containing the ANCAP and IMM (Intendancy of the Municipality of
Montevideo) registration number.

The importer should be registered with the national administration for Fuels, Alcohol
and Portland Cement (ANCAP). A second registration concerns the brand
registration IMM, which shows the number of the product in the register of Customs
and Municipality Bromatology division of each province. The latest is required only
when a new brand is introduced on the Uruguayan market. The two registration
numbers are put on a separate label and can be affixed by the importer or the
exporter. Additionally, the Ministry of Economy and Finance Decree 191/1999
requires fiscal stamps, issued by the General Tax Directorate (no costs) only for the
imported spirits.


§3.    Labelling requirements

3.1.   General labelling requirements

Uruguay has implemented some of the resolutions of the Common Market Group of
Mercosur. In addition, some specific Uruguayan legislation is implemented. The
products entering Uruguay must comply with the national legislation, as well as with
the Mercosur legislation adopted by Uruguay. Besides, some municipalities are
entitled to establish labelling rules and inspections.




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3.2.    Labelling requirements for foodstuffs

Labelling requirements for foodstuffs are established by the Decree 315/94
(Reglamento broamtológico national), the Decree 141/92 and the Decree 41/93.
These decrees implement the Mercosur rules on labelling of food products in the
Uruguayan legislation. According to the legislation, the products must bear the
following information on their labels:

   -   name of the product;
   -   country of origin of the product;
   -   name and address of the manufacturer and importer;
   -   net content;
   -   expiry date;
   -   list of ingredients;
   -   lot identification;
   -   use and preparation instruction (as necessary).

In addition, in 1997, the Municipal Authority of Montevideo (IMM) has passed a
bromatologic ordinance confirming the requirements of the national legislation and
explaining how the different compulsory requirements must be showed on the label.
The IMM has also established the sanitary registration for all food and drink products.
Two samples of the products must be supplied for the registration. The food products
should be registered with the customs and with the municipality bromatology division
of each province where the products are to be traded.

According to the Decree 338/92, all food and drink products specified in resolution
S/N of December, 30 1998 should be submitted during the customs clearance
process to an inspection performed by the technical laboratory of Uruguay (LATU.
LATU will deliver a commercialisation certificate for the sale on the Uruguayan
market. This certificate indicates that the imported products comply with the
Uruguayan sanitary and labelling requirements.

The Uruguayan legislation also contains requirements on the additives and colours,
which are admitted in products commercialised in the country.


3.3.   Labelling of alcoholic beverages

The labels of alcoholic beverages should contain the following information (Law
16.753/13.06.96):

   -   product name;
   -   alcoholic strength;
   -   name of producer;
   -   country of origin;
   -   name and address of importers.

The importer should be registered with the national administration for Fuels, Alcohol
and Portland Cement (ANCAP). A second registration should be performed with


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Customs and Municipality Bromatology division of each province. The latest is
required only when a new brand is introduced on the Uruguayan market. The
importer is responsible to perform both registrations. The registrations’ numbers
registration should be shown on specific label which must be fixed on the bottle by
the exporter or by the importer. Additionally, the Ministry of Economy and Finance
Decree 191/1999 requires fiscal stamps, issued by the General Tax Directorate (no
costs) only for spirits, which are imported. This fact represents a discrimination
against imported products.

According to the decree 356/91, the imported wines should be commercialised in
their original bottles, no exceeding 1litter.

3.4.    Labelling of textiles

Decree 59/99 establishes the conditions for labelling of textiles. The importers
should submit to the Section Consumer protection of the General Directorate for
Trade an original and a copy of the note including:

    - the name of importer,
    - his fiscal register number,
    - the 10 digits customs code of the product,
    - the volume imported,
    - the country of origin and
    - a sample of the label complying with the required labelling requirements. The
    label should include the following information: country of origin, name and
    address of the manufacturer, name and fiscal number of the importer, product
    composition and care labelling

If the products are not labelled before customs clearance, the importer will have 60
days after the customs clearance to label the goods. However, in order to obtain the
customs clearance, the importer should present a copy of the note submitted to the
General Directorate for Trade, dully stamped by the latter.


3.5.    Labelling requirements for footwear

The Decree 65/00 of 18 February 2000 has introduced labelling requirements for
footwear. According to this Decree, the labels of footwear should contain the
following information:

-   the country of origin;
-   the name of the manufacture or the importer and the fiscal number of the importer
    ;
-   the principal components of the product.

The label should be affixed in a visible place and should have a permanent character.

The procedure for importation of footwear is similar to those applicable to textile
products. The importers should submit to the Section Consumer protection of the
General Directorate for Trade, an original and a copy of the note including the name


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of importer, his fiscal register number, the 10 digits customs code of the product, the
volume imported, the country of origin and a sample of the label complying with the
required labelling requirements. The importer should have the stamp of the General
Directorate for trade in order to import its products.


3.6.    Other labelling requirements

Uruguay is implementing some other labelling requirements for cosmetic products,
pharmaceuticals, medical equipment and pesticides. Some of these products, such
as cosmetics and pharmaceuticals, require registration with the Ministry of Health.
The labels are verified during the registration procedure. The other products are
subject to special decrees which define the specific data to be mentioned on the
label.



§4.    Problematical labelling and marking requirements in Uruguay

Generally speaking, the European companies have stressed that the registration
procedure for foodstuffs and beverages is burdensome. The registration of the
product in every province is estimated to be excessive.

The importers of alcoholic beverages also consider that the tax stamps applicable
only to imported products represent a discrimination of these products.

Some European importers to Uruguay have complained about the verification of
labels during the importation procedure of textiles and footwear. They consider that
these procedures render the importation more difficult, given that they are often
linked to the import licences procedures.


§5.    Legal analysis


The European companies have experienced some difficulties on the Uruguayan
market. These requirements are mainly related to the obligation to register products
and to put the registration number on the product.

These procedures could be analyzed under article III of GATT agreement if they are
discriminatory for imported products (e.g. the registration number for imported
products should be imposed from origin and could not be modified).

If the rules are not published or are not sufficiently transparent, the application of
article X of GATT could be foreseen. A detailed analysis of these and other WTO
provisions could be found in Part 21 – Legal analysis.




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                                   PART 12: POLAND



§1.    The mission to Poland


§2.    Products affected by excessive labelling requirements


       2.1.    General labelling requirements

       2.2.    Apparel products

       2.3.    Foodstuffs

       2.4.    Alcoholic beverages

       2.5.    Products submitted to B certification

       2.6.    Others


§3.    Problematical labelling and marking requirements in Poland


       3.1.    General overview

       3.2.    Labelling of apparel products

       3.3.    Certification and labelling

       3.4.    Labelling and hygienic inspection

       3.5.    Fiscal stamps for alcoholic beverages

§4.    Implementation of labelling requirements by Polish authorities

       4.1.    Controls of labels during clearance

       4.2.    Controls of labels in retail

§5.    Legal analysis




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§1. The mission to Poland


The mission to Poland took place between 6 and 14 of October 2001. The objective
was to meet the competent national authorities, the Member States Trade
representatives and the individual private companies. The consultant met the
following authorities:

   -       Ministry of Economy
   -       Committee for European Integration
   -       Customs.

The objective of the mission was to identify sectors which have experienced
difficulties with marking and labelling requirements. The overall conclusion of the
mission is as follows:

   -       Poland has make progress in the harmonisation its legislation with the EU
           requirements but still various difficulties subsist in some sectors

   -       The main problems underlined by the EU Trade Representatives and EU
           companies concern labelling of textile products.

   -       The EU importers experience difficulties with the labelling of food products
           as well as with the sanitary inspection which should be compulsory
           conducted on these products.

   -       The certification system in Poland represents an important problem for the
           companies importing household appliances and other consumer products.

The present report examines the general requirements applicable in Poland and the
difficulties experienced by EU companies and their customers.


§2.    Products affected by excessive labelling requirements


2.1.   General labelling requirements

The establishment of a general list containing the Polish labelling requirements is
rather difficult, given the fact that the rules are not contained in general regulation but
differ according to the product.

For products submitted to mandatory standards, the labelling rules are enumerated in
the standard and pictogram of the label. For the other products, regulations by type of
product exist.

The most important act is the Act on Polish language of 7 October 1999 (Dziennik
Ustaw n°90, item 999), which entered into force on the 9th of May 2000. According to



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its article 7, the use of the Polish language is compulsory for “denoting goods and
services, offers, advertising, instructions, information on the property of goods and
services, guarantee conditions, invoices, bills and receipts”. The use of foreign
language terms for common or brand names is forbidden. Any foreign language
rendering of goods and services as well as foreign language offers and
advertisement introduced to legal commerce, shall include a concurrent Polish
version.

The monitoring and performance of these obligations is monitored by the Trade
Inspectorate and the Office for competition and consumer protection.

These laws involved a complete change in the trade practices of the foreign
companies on the Polish market. The difficulties experienced by the foreign
companies were mainly related to the translation of their goods’ brand names into
Polish. However, nowadays, the majority of the companies are able to assure correct
labelling.

The main difficulty related to the current polish legislation is the existence of
numerous mandatory standards containing labelling requirements. The majority of
these standards were elaborated during the communist period. The Ministers were
entitled to declare the standards mandatory for all products sold on the Polish
market. These standards are currently often not in conformity with the internationally
accepted rules for labelling. They cause problems for the European producers.
Moreover, different organisations (such as Polish Centre for testing and certification
or the Polish Sanitary inspection), are in charge of the certification activities and the
market surveillance. They have, in many cases, the responsibility to check the
correctness of product’s labelling.

The consultant has investigated the difficulties experienced by several sectors during
the mission to Poland. Some sectors such as textiles, foodstuffs, alcoholic beverages
and electro mechanic goods have appeared more affected by the labelling and
market requirements than other sectors.


2.2.   Apparel products


The apparel products are the products most affected by the labelling and marking
requirements. The Polish legislation significantly differs from the European
requirements in this field. This creates various difficulties to the European exporters
and to Polish importers.

The Polish norm PN-90/ P-84753 enumerates the requirements which should be
mentioned on the label of apparel products:

   -       the name, the address and the trade mark of the producer;
   -       the denomination and the use of the article;
   -       the fibre composition (in %);
   -       the details over the finishing of the products;
   -       the size;


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    -       the details over the quality of the product;

In addition to the normal paper labels of the products, some details should be sewed
in the products.

           a label containing the name and the trade mark of the producer should be
            sewed on all the apparel products except for bed linen, table linen, toilet
            linen and handkerchiefs;
           a label with the information on fibre composition and row materials should
            be sewed for the articles: with the mark WOOLMARK;
           the articles of wool and wool mixtures;
           the articles of cotton and cotton mixtures;

-       a label with the indications for the washing, ironing and the use of the products
        (in polish or pictograms) should be sewed for all apparel products, except for
        bed linen, table linen, toilet linen and handkerchiefs.

These requirements go far beyond the European labelling rules for textile products,
which render compulsory only the indication of fibre composition. The issue was
tackled several times during the meetings of the EC-Polish Association Council. The
Polish authorities have undertaken revision of this law in Order to render in
conformity with the “acquis communautaire”.

However, during the meeting arranged with the Ministry of Economy, the consultant
has requested information about the evolution of this draft legislation. According to
the representatives of the Ministry of Economy, the draft law is still examined at inter-
ministerial level. Currently, the draft regulation differs from the EU legislation,
because it foresees the existence of six mandatory labelling requirements. The
Ministry of Economy has emitted the opinion that this legislation could be not in
conformity with the EU law. Therefore, it is not certain that the new textile labelling
legislation will be adopted in a very near future.

This legislation is a barrier for EU exporters and Polish importers: the labels of
apparel products are attentively checked by customs authorities during clearance.
During the meeting with the Central Board of Customs, it was confirmed that the
apparel products are the only products for which the labelling is verified during
clearance. The customs apply strictly the mandatory norms and the products cannot
enter into the Polish territory if not correctly labelled. However, the customs have
authorised the importers to label the products in their bonded warehouses and to
present them for clearance again. This “practice” creates additional costs for the EU
exporters. In most of the cases, their products are labelled according to the EU
requirements and they have to re-label in customs. The Polish requirements for
apparel products are believed to be a protection tool for the Polish textile industry.
This industry was very important some years ago but is currently facing some
difficulties to cope with the competitive pressure created by the imported products.




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2.3.     Foodstuffs


The Decree of the Minister of Agriculture of 15th of July 1994 establishes the labelling
requirements for foodstuffs products. 93According to this Decree, the food products
should be labelled with the following information in Polish language:

     -      name of the product;
     -      thermal status (fresh, frozen or chilled);
     -      name and address of the producer or the exporter;
     -      production date;
     -      use by/ best before date;
     -      shelf life;
     -      list of ingredients;
     -      product weight.

According to the Act of Polish language of 1999, not only the products which are
intended for consumer sale, but all products (even those for wholesale or for
industrial purposes) should be labelled in Polish.

However, EU exporters do not consider the requirements as very burdensome, given
the fact that Polish requirements are quite close to the EU requirements. The main
problem for the EU companies is the existence of strict controls performed by
SANEPID 94 (Polish Sanitary Inspection) on labels and the composition of the
products.

The Polish authorities conduct two kinds of inspections. The first is performed when
the product is introduced into Poland for the first time. It is intended to obtain an
authorisation for sale on the Polish market for the product. The importer should
prepare the following documents:

     -      the authorisation form the sanitary authorities of the country of origin
            indicating that the product is authorised for sale in the country of origin
            without sanitary restrictions;
     -      an extract of the analysis of the products and its chemical composition, if
            not mentioned on the label of the product;
     -      the name of the product, the customs point of entry, the address of the
            importer’s bounded warehouse, the labels and the packaging which will be
            used.

Those documents should be submitted to a Polish representation of the company or
to a physical person, domiciled in Poland, which is authorised to request the
authorisation to SANEPID.

In addition, a sanitary inspection performed by SANEPID is required for every
shipment of foodstuff products to Poland. This inspection is done after customs

93
   (Dziennik Ustaw nr 86 – 15/07/1994) “Labelling of food products, formulas and additives allowed
and destined for trade”.
94
   SANEPID is the local branch of the Sanitary inspection. A local branch exists in every Polish region.


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clearance. The product can not be presented for sale without the sanitary certificate.
The importer should invite SANEPID to come to its bounded warehouse and to select
samples for the analysis. Then, the product is subject to different micro-biological and
chemical analysis. The analysis remains valid 6 months. If during this period new
shipments of the same products are received, the sanitary certificate is issued
without new analysis, except when the physical examination of goods reveals some
inconsistency. In some exceptional cases, for companies with a very good sanitary
record, the validity of the analysis can be extended to one year.

Normally, the importers should submit three samples for analysis. In addition, they
should pay for the analysis performed as well as for the issuance of the certificate.
The process can take up to 1 month, which could be too long for the products with
short shelf-live.

In case of refusal of the sanitary certificate by SANEPID, the importer can appeal to
the National Institute for Hygiene.


2.4.   Alcoholic beverages


The alcoholic beverages are subject to the same labelling requirements than those
applied for the foodstuffs products (see 2.3. Foodstuffs). The only difference consists
in the information on the product composition. Although this information is mandatory
for all the products, according to the Ministry of Agriculture, the product composition
is not needed for alcoholic beverages.

Like foodstuffs products, the alcoholic beverages are submitted to SANEPID
inspections for the first commercialisation of the product and afterwards for every
shipment. These inspections could create important additional costs when high-value
wines should be tested.

In addition, two mandatory norms exist for the wines. The PN-A-79122:1996 is
applicable to the grape wines. The PN-A-79121:1998 is applicable to other fruit
wines. These norms determine the minimum level of sugar and water in the wines
and apparently do not creates difficulties for the EU producers.

The main difficulty quoted by the EU exporters and Polish importers is the existence
of fiscal stamps. The fiscal stamps were first introduced for the alcohols with strength
over 18°. Since the beginning of 1996, these stamps are also compulsory for the
alcohols above 18°. Different stamps are applicable according to the volume and the
alcohol degree.

The fiscal stamps must be affixed by the producer, the bottler or the exporter before
the shipment of the products to Poland. The Central board of Customs has stated
that the products should be with fiscal stamps when they arrive in Poland. Special
customs officers are in charge to verify the existence and the correctness of the fiscal
stamps.




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The importer and the representation of the EU company established in Poland are
authorized to ask the Ministry of Finance for the fiscal stamps. Foreign companies
are not authorised to request the fiscal stamp in Poland. The importer should send
the fiscal stamps to the exporter and make a customs declaration. If the fiscal stamps
are lost, the company pays fines according to the tax legislation. The price paid for
the fiscal stamps depends on the volume of alcoholic beverages.


2.5.   Products submitted to B certification

The certification and the marking with the B mark is a very sensitive issue in the trade
between Poland and the EU.

A big number of EU producers have complained about the market access difficulties
related to the certification in Poland. Polish certification is based on the Law on
Certification of April 3rd 1993. According to this law, an important number of products
are subject to the third part certification. The mandatory third party certification
system was consolidated by the Ordinance of the Director of the Polish Centre for
testing and certification (July 21, 1994). This Ordinance has specified the list of
products subject to compulsory certification. These products are marked after the
certification procedure with the so-called “B-mark”. The B mark is given to the
products after third part mandatory certification, when the product is conforming with
the Polish norms. The majority of the Polish norms are mandatory, as the country
does not have producer liability legislation.

In 1998, Poland and the European Union have signed an Agreement in the form of
exchange of letters regarding a protocol of the European Conformity Assessment
Agreement. The purpose of the Agreement is to prepare the adoption by Poland of
the EU certification rules before the accession of Poland to the EU.

According to the Agreement (article 5), for the products originating from the
Community and subject to the mandatory third party certification, the Polish
Conformity Assessment bodies should issue the B certificate automatically, after the
presentation of the relevant documents to the Polish Conformity assessment body.
For the products which are subject to the declaration of conformity in the EC, the
Polish Government will present to the Parliament a proposal for the necessary
amendments to the law on testing and certification. This proposal will allow the
acceptance in Poland of the EC declaration of conformity of producers in the EU
Community. As soon as these amendments will be adopted, such products would be
automatically given a B-certificate by the Polish authorities. The cost of the
procedures is understood to be limited to the normal administrative costs.

The amendment of the 1993 Law on testing and certification was adopted on 22 July
1999. This law provides for the creation of the Declaration of conformity in Poland.
The list of the products was shortened and a number of products were subject to the
producer’s declaration of conformity. The new law organises a procedure for the
verification of the certificate of conformity and the producer’s declaration. According
to the new article 13 of the law on certification “the products coming from country of
origin with which Poland has concluded an agreement on the recognition of
certificates of conformity or producer’s declarations of conformity, shall be admitted to


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the market after a certificate of conformity or producer’s declaration of conformity are
verified by the Polish certifying bodies”.

 The period of time for the verification of conformity can not exceed 21 days from the
date of delivery of a complete set of documents. According to the article 26 “ an
entrepreneur who has introduced, to the commercial traffic, the products which are
subject to safety marking and fail to be marked with this kind of mark, which have
been produced inconsistently with the requirements that make ground for granting
the right to apply that mark or which fall to have the documents admitting the same to
the commercial traffic or which fail to satisfy the requirements marking ground for
such a document being issued, shall pay the State budget the amount equal to 100%
of the sum acquired from the sale of the questioned products”.

The Regulation of the Ministry of Economy of 13th January 2000 clarifies the
procedure of verification of the conformity certificates and of the producer’s
declarations. Under this regulation, the certificate of verification of the certificate of
conformity and of the producer’s declaration is the ground for marking the product
with the B-mark. The regulation provides that within seven days after the submission
of the application, the verification body should conduct a formal evaluation of the said
application. The application meeting the formal criteria shall be registered in the
accredited body on its receipt date. Within a period not exceeding twenty one days
following the registration date of the application, the verification document shall be
issued by the accredited certifying body.

The implementation of the new system was subject to numerous difficulties.

First, some products not subject to certification in the EU, or subject to the
declaration of conformity, are still subject to a mandatory certification in Poland.

Second, the accredited body had various difficulties to implement the verification
system as foreseen by the law.

Third, the majority of Polish standards being mandatory, the existing differences
between EC and Polish standards render the EU products not in conformity with the
Polish standards and they will be submitted to certification.

According to the Ministry of Economy, measures have been taken by the Polish
Government to remedy to these difficulties. In February 2001, a first draft of the new
Law on standardisation has been send for consultations. Its aim is to continue the
harmonisation of the Polish standardisation system. The draft law contains many new
clauses such as the voluntary status of polish norms. The new law on standardisation
is expected to enter into force at latest from the 1st of January 2003.

2.6.   Others

Some other products are subject to labelling and marking requirements, considered
problematical for the EU producers. The footwear is also submitted to compulsory
standard in Poland which contains labelling requirements. However, the application
of this norm is less restrictive compared to the apparel products, because the labels
of footwear are not verified during customs clearance.


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The cosmetic products could also experience problems with labelling requirements.
The cosmetic products are subject to inspections conducted by the National Institute
for Hygiene, which verifies the conformity of the labels with Polish requirements.

All products can be subject to the verification conducted by the Trade Inspection
once the product is put in the market. The trade inspection is responsible for the
protection of the consumer from unfair trade practices and conducts inspections in
the shops on a regular basis.


§3.    Problematical labelling and marking requirements in
       Poland


3.1.   General overview

The situation on the Polish market concerning labelling and marking requirements is
improving with the progress toward the country’s accession to the EU. However,
some problems subsist.

The difficulties can be summarised as follows:

      Problems related to the access to the Polish legislation concerning marking
       and labelling requirements
      Problems related to inconsistency of the Polish labelling legislation with the
       EU legislations
      Problems related to the practices of the Polish authorities concerning the
       implementation of the labelling and marking legislation

The EU companies that have invested or are exporting to Poland have complained
about the requirements concerning the labelling of textile products, the
implementation of the certification legislation, the inspection of food products
conducted by SANEPID and the fiscal stamps for alcoholic beverages.


3.2.   Labelling of apparel products


As above mentionned, the labelling requirements or apparel products are perceived
as the main difficulty for the EU companies working with Poland. The sudden
implementation of customs inspections on the labelling of apparel products in the
beginning of 2000 created important problems for the companies working with
Poland. They were obliged to sew labels in their warehouses or to send the products
back to the country of origin.

According to the EU companies, one of the main problem is to mark the name of the
producer on the label even if the company is the producer is a sub-contractor of the




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importer. This situation could be problematical for the some brand companies that do
not want to reveal the identity of their suppliers.

On the other side, some importers prefer not to label in customs but to send back the
goods because the cost of labelling and storage in warehouse renders the goods too
expensive for the Polish market. They have to employ people for the labelling by
hand, to pay them extra hours in order to reduce the storage costs and to pack all the
goods again. Moreover, according to the companies, the rules In Poland are
changing very quickly and they prefer to stop importation in order not to lose money.
Therefore, a number of companies are looking for similar production on the Polish
market. The strict implementation of these labelling rules has caused a reduction of
the EU exports to Poland, especially for low-value products. According to the
information received, some of the companies have even closed their shops in Poland
because of the problems related to labelling and customs valuation.

The implementation of strict customs inspection for apparel products illustrates the
intention of the Polish authorities to protect more specifically this sector, due to the
importance of Polish apparel industry.


3.3.   Certification and labelling


The labelling requirements in Poland are closely linked to the certification for two
reasons:

      Some of the Polish standards are still compulsory and they foresee strict
       labelling requirements, which are also compulsory;
      The products certified according to the Polish standards should be marked
       with the “B-mark”.

According to the EU companies and their representatives or customers in Poland, the
certification requirements still represent an important problem. First, the list of the
products undergoing mandatory certification is still not clear. Second, some of the
products which in Europe are subject to producer’s declaration are subject in Poland
to mandatory third party certification. The certification units were reluctant to apply
the new system for verification of the certificates and producers declarations.
Sometimes, the Polish standards are not harmonised with the European standards
and the goods should undergo a mandatory certification.

The companies have experienced problems mainly when they put their products on
the Polish market. The certificate of conformity is not required for customs clearance,
but for the marketing of the products. The trade inspection is responsible for the
supervision of the products put of the market. The trade inspection can fine the
importers or traders which are selling products submitted to certification without “B
mark” or products not labelled in conformity with the Polish standards. According to
the EU companies the products can be either seized, either subject to fine and
establishment of B certificate. One company has pointed out that because of the
difficulties encountered with the inspections they prefer rather not to sell some goods.



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The EU products most affected by the certification procedures are the household
appliances, other electrical products (i.e. lamps), bicycles, etc.

Moreover, for some products an additional certification is required when introducing
them for the first time to the Polish market. For example, the toys should be first
approved by the Institute “Mother and Child” before being certified, the building
products should be first approved by the Institute for Building technologies. These
different types of certifications and approvals are very confusing for the EU exporters,
especially for new comers on the market.

According to some companies, the cost of different approval and certification
procedures renders the importation of some products to Poland uninteresting. For the
toys for example, different procedures should be followed: for the toys for children
under 12 moths and toys for children between 12 months and 3 years. The cost of
the first approval is 1,300 PNZ (Polish Zloties) per product reference and the
procedure lasts for 3 months. The cost for the conformity certification is 155 PNZ per
product reference.

These different certifications schemes required in order to commercialise the
products in Poland do not render the procedures very transparent for the EU exporter
and hamper or prevent their business in Poland.


3.4.   Labelling and hygienic inspections


A large number of products are subject to hygienic inspections: these are the majority
of the foodstuffs, but also the inspections conducted on cosmetic products and other
products, such as candles for example.

As indicated above, the SANEPID inspections are conducted on foodstuffs for every
shipment. These inspections cause important delays for importers of EU products.
According to them, when the new laboratory tests are conducted, the products must
stay in the warehouse for three weeks. The situation renders impossible the
importation of food products with a very short shelf-live. According to the importers,
there are no reasons for such strict hygienic inspections of the foodstuffs imported
from Europe. These measures, along with the different types of embargos related to
the BSE and food and mouth disease, render useless the “double 0” agreement
signed between EU and Poland for some types of agricultural products.

On the other hand, the importers seek different possibilities to avoid long storage of
their products and risk penalties by the Polish authorities. According to them, the
procedure is very burdensome, especially for the new-comers on the Polish market,
who are not used to these specific procedures. One has to notice, that according to
some contacts, the big supermarkets established in Poland are selling 90% of
products produced in Poland in order not to face problems with importation and
shortage of stocks.

The verification conducted by SANEPID causes difficulties for the importation of food
products with specific characteristics (e.g. dietetic products, low or high nutritional


CEEI –Labelling – Final Report –16 August 2002                                      275
value products). These products sometimes are not able to get an approval from the
Polish authorities, because the Polish definition of the product is not the same or
because such category does not exist in Poland. Several companies complained that
they cannot label their olive oil product as “extra virgin olive oil” and they were
obliged to change label, because the category “extra virgin olive oil” is not foreseen
by the Polish legislation. The same situation has been experienced with the dietetic
jam: companies were obliged to change the label and to provide a new one without
the mention dietetic.

Importation of products with high energy content or with vitamins is also a source of
difficulties. These products require preliminary homologation, which costs about
1,000 euro. The companies willing to import these products consider the
homologation practices as an important non-tariff barrier.

The companies importing food for cats and dogs have also complained about
excessive verifications, because this importation requires the visit of Polish veterinary
services to the European production plant.

Moreover, the companies have complained about the frequent changes in the Polish
food regulation and the non-sufficient publicity made on these changes. Some
companies have experienced difficulties, because they started new production in
conformity with the Polish legislation, but have not changed the labels. After analysis,
the products were considered as correct, but it was not possible to re-label, because
the shelf-live of the products has expired.


3.5.   Fiscal stamps for alcoholic beverages


The requirement for fiscal stamps for alcoholic beverages in Poland is not considered
as very burdensome for the European operators but they fear some discrimination
between the treatment applied to national products and those applied to imported
products.

First, the foreign company can not get the fiscal stamps, the Polish importer is
obliged to request these stamps to the Polish Ministry of Finance. Second, the
imported products are submitted to additional check of the conformity of the stamps
by the customs authorities, who might order laboratory analysis to verify whether the
alcohol degree corresponds to the fiscal stamp applied on the product. In fact,
different fiscal stamps are applied according to the volume and alcohol degree of the
alcoholic beverages. Third, the European companies consider that the Polish
companies benefit from a preferential fiscal treatment. The foreign companies are
requested to pay the fiscal stamps in advance when the Polish companies can pay
once the products are sold on the market.

Besides, the importing companies can face problems if one of the stamps is lost or if
they are not correctly attached to the bottles. In this case the products can be either
rejected, either destroyed by the customs authorities and the importer will be fined.




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§4.    Implementation of marking and labelling requirements


4.1. Controls of labels during clearance


During the meeting hold with the customs authorities the consultant asked whether
the customs control the labels of products during customs clearance. According to
the customs, only labels of apparel products are controlled. This control has been
introduced in 2000 by a ministerial decision. The Customs justify this control by the
existence of mandatory labelling requirements for textile products in Poland.

However, this justification is doubtful, because mandatory labelling requirements
exist also for many other products (such as foodstuff and footwear). According to the
importers, this verification aims to protect the Polish producers of apparel products.
The regulation exists since 1990 but its implementation by customs is very recent.

According to the customs, the verification of labels is not foreseen for other products
until the adoption and implementation of the Polish authorities of the EU “new
approach directives” in accordance with which, the customs will be obliged to check
the EC marking.

The other market requirements controlled by Customs are the fiscal stamps. The
fiscal stamps are verified during clearance because they represent the proof of the
payment of the excise duties.


4.2. Controls of labels in retail


The controls of labels in retail are conducted by the Polish Trade Inspection. The
Trade inspection is in charge of verifying the conformity of the labels with the Polish
legislation, as well as the presence of the “B mark” on the products submitted to
compulsory certification. The inspection could also request the seller to produce the
SANEPID certificate for specific products, which are sold in shops. According to the
European companies, there is no discrimination between foreign and Polish
companies. However, in some interviews the subsidiaries of EU companies have
stated that they feel more controlled than the Polish companies.


§5. Legal analysis


5.1. Main problems experienced by the EU companies in Poland

The main problems experienced by the EU exporters to Poland are related to the
existence of more prescriptive labelling requirements compared to those in EU (ex.
textile sector, alcoholic beverages) or the existence of specific procedures, which
should be indicated on the label, such as hygienic inspection or certification.



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As Poland is currently negotiating its accession to the EU, the country is obliged to
respect the commitments taken according to the Europe Agreement 95 and to
harmonise its legislation with this existing in the European Union.


5.2. Legal analysis of problems experienced on the Polish market

The technical, sanitary and phytosanitary measures are dealt with in articles 69 and
77. The article 69 stipulates that protection of health and life of humans, animals and
plants, the technical rules and standards are among areas 96 to which the
approximation of laws shall be extended. Article 74 deals with agro and industrial
standards and conformity assessment. According to this article, a cooperation should
be instated. Co-operation shall aim in particular to reduce differences in
standardization and conformity assessment:

To this end, cooperation shall seek:
- to comply with Community technical regulations and European standards
concerning quality of industrial and agricultural food products,
- to promote the use of Community technical regulations and European standards
and conformity assessment procedures,
- where appropriate, to achieve the conclusion of agreements on mutual recognition
in these fields,
- to encourage Poland's participation in the work of specialized organizations (CEN,
CENELEC, ETSI, EOTC).
 The Community will provide Poland with technical assistance where appropriate.

The article 77 provides that, in order to increase the agriculture and the agro-
industrial sectors effectiveness, there is a need to “develop co-operation on health,
animal and plant health, including veterinary legislation and inspection, vegetal and
phytosanitary legislation with the aim of bringing about gradual harmonisation with
Community standards through assistance for training and the organisation of
checks”.

According to article 69, Poland should adopt the EU legislation in the areas of
technical regulations. In addition, Poland is applying for the EU membership and is
following its National Program for the Adoption of the acquis communautaire, which
requires harmonising its legislation with the EU legislation by adopting all relevant EU
legislation. However, the non-respect of the Polish obligations is difficult to be
invoked by the EU operators. The non-respect of the requirements could be analysed
by the association council, but no direct recourse is foreseen for the individuals.

In 1998, Poland and the European Union have signed an Agreement in the form of
exchange of letters regarding a protocol of the European Conformity Assessment

95
  OJCE 1993, L 348/2
96
  Other areas, to which the approximation of laws must be extended according to the article 69 are:
customs law, company law, banking law, company accounts and taxes, intellectual property,
protection of workers at the workplace, financial services, rules on competition, protection of health
and life of humans, animals and plants, consumer protection, indirect taxation, transport and the
environment.


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Agreement. The purpose of the Agreement is to prepare the adoption by Poland of
the EU certification rules before the accession of Poland to the EU. The agreement,
which has entered into force, provides for the reform of the Polish conformity
assessment procedures and for the recognition of the conformity assessment
performed in the European Union. However, the implementation of this agreement
has encountered several difficulties and the EU companies are still experiencing
problems with the recognition of the conformity assessment or the declaration of
conformity performed in the EU (see above 2.5. Products submitted to B
certification).

As Poland is expected to become a member of the European Union, the problems
arising in trade between Poland and the EU are dealt mostly in bilateral consultations
between two parties. However, Poland is member of the WTO and relevant WTO
procedures could also be applied.




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                                   PART 13: KOREA



§1.    The mission to Korea


§2.    Marking and labelling requirements affecting imported products


       2.1.    General presentation of basic requirements

       2.2.    General labelling requirements

       2.3.    Labelling requirements for pharmaceuticals

               2.3.1. The requirements
               2.3.2. Complaints made by the EU pharmaceutical industry

       2.4.    Labelling requirements for cosmetics

               2.4.1. The requirements
               2.4.2. Complaints made by the EU industry

       2.5.    Labelling requirements for foodstuffs

               2.5.1. The requirements

       2.6.    Labelling of wines and spirits

       2.7.    Labelling for textiles


§3.    Implementation: problems faced by the importers of EU products


       3.1.    Controls conducted on the compliance with labelling requirements

               3.1.1. Random checks/ testing
               3.1.2. Other problems

       3.2.    Penalties and additional costs faced by importers


§4.    Legal analysis




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§1.    The mission to Korea


The mission in Korea was conducted from the 24 October to 30 October 2001. The
consultant met

(1) the relevant Korean Authorities (Ministry of Construction, Customs
    Administration, International Quarantine Service, Agency for Technology and
    Standards, Korean Food and Administration) in order to complete the collection
    of relevant labelling requirements and other applicable rules related to the
    importation of the EU products;

(2) the EU Trade Member State Representatives in order to identify the
   companies having encountered recently difficulties regarding the control of
   labels, or additional costs related to labelling requirements;

(3) importers of the EU products most affected by Korean marking and labelling
    requirements (mainly cosmetics , foodstuffs, textile, wines and spirits).

(4) the EU – Korea Chamber of Commerce Representatives in order to discuss
    practical issues regarding labelling rules for cosmetics and other products.


The main outcome of the mission is as follows:

1. Most interlocutors (Member State representatives, operators) have qualified the
   Korean market as a relatively open market for EU products. The labelling
   requirements appear at first sight to be less restrictive and more flexible than in
   most of the other markets investigated. First, most of the labelling requirements
   for industrial products are voluntary and not compulsory. This means that EU
   exporters do not have to produce a specific label in the country of origin and the
   importers are allowed to affix the label. Second, labels can be affixed in the form
   of stickers in the majority of cases, either just before the clearance process or in
   the importer warehouse before marketing the products. This situation explains (1)
   the low level of complaints by the EU industry and also (2) the low level of
   problems regarding the controls of labelling requirements.

1. Among the industrial products, there are however products for which labelling
   requirements are compulsory: some textiles (sport apparel products), some
   furniture (children furniture), some automobile devises and some home interior
   devises (glasses). However, for these products, it was confirmed that the labels
   (stickers) could be affixed after the clearance process and before marketing the
   products.

2. Nevertheless, for some products, the labels are strictly controlled by the
   Inspection agencies before the clearance process. They check if (1) the sticker to
   be affixed complies with specific labelling requirements and (2) if the product
   composition corresponds to the information contained in the sticker. This applies


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       to cosmetics, foodstuffs products and wines and spirits. For these products, the
       complaints focus more on the quality control inspections conducted, either before
       or after the clearance process, than on issues strictly related to labels. However,
       a specific attention should be drawn also to registration procedures for cosmetics,
       which include not only product composition requirements but also label
       examination.

3. It must be underlined that some importers consider the controls excessive or, in
   some cases, discriminatory compared to the treatment reserved to domestic
   products. The report quotes some cases on these issues.


§2. Marking and labelling requirements affecting imported products


Products are divided into two categories :


1.       Products subject to voluntary labelling requirements: most industrial
         imported products are subject to voluntary requirements. For these products,
         the EU exporter is not obliged to produce a specific label in Korean before
         export. The products will not be checked regarding their labels during the
         clearance process. The importer could label the product in Korean affixing a
         sticker after the clearance process. This label will therefore be the translation
         of the original label. The importer can also comply with the voluntary
         requirements. These voluntary requirements are issued by accredited
         Agencies of the Korean Government.
2.       Products subject to mandatory requirements: some industrial products
         (some textile products, some furniture products, some automobile devices and
         some home interior devices) are subject to mandatory requirements. In
         addition, other products are subject to specific mandatory labelling
         requirements: wines and spirits, foodstuffs, pharmaceuticals and cosmetics.


2.1.     General presentation of basic requirements


The basic requirements are set in the following texts:

Quality Management and Consumer Product Safety Act. This text establishes
basic principles governing the compliance with the Korean Compulsory Norms
(including on labelling).

Specific Ministry Regulations: implements the provisions of the Law.

In addition, various notifications establish the applicable requirements for imported
goods.




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2.2.      General labelling requirements


The country of origin labelling is required for all commercial shipments imported
into Korea. The Korean Customs Service (KCS) publishes a list of the country of
origin labelling requirements by HS code number. Additional marking and labelling
requirements exist for specific products (pharmaceuticals and food products). These
products are covered by specific regulations issued by the Korean Government
Agencies.

The country of origin labelling is controlled by Customs during customs clearance. It
is the only labelling requirement controlled during the clearance process.


2.3.      Labelling requirements for pharmaceuticals


2.3.1. The requirements


All imported containers and packages must be marked in a conspicuous place with
the following data 97:


-         country of origin;
-         names and addresses of manufacturers and importers;
-         name of the product;
-         date of production and batch number;
-         names and weights of ingredients;
-         quantity;
-         number of units
-         storage method
-         distribution validity date;
-         instructions for use;
-         import license number;
-         effectiveness;
-         Import price and suggested retail price.


2.3.2. Complaints made by the EU pharmaceutical industry


No specific complaint has been received during the survey with the industry or during
the mission.
97
     South Korea : Trade Regulations and standards, American Chamber of Commerce of Seoul.


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2.4.      Labelling requirements for cosmetics


2.4.1. The requirements


     a)      Full labelling
The requirements are contained in various texts, in particular


-         New regulation on Imported Pharmaceuticals, enforced since 24 January
          2000.
-         New regulation on Enforcement of Cosmetics Law enforced on 19 July 2000.
-         Law of Economy and Recycling of resources


The mandatory data to be affixed on the label of the imported product are:


1.        Size of the product;
2.        Manufacturing date;
3.        Product name (make up, etc );
4.        Caution: how to use the product, not to put it on sunshine, or cold temperature
          etc;
5.        Ingredients: list of most important ingredients;
6.        Manufacturer address and full address of the importer and telephone;
7.        Lot number.


b) Prohibition of the third packaging

Under the « Law of Economy and Recycling of resources », only two packaging
surfaces are authorised in Korea for the cosmetics products. Therefore the
cellophane paper considered as a third packaging is prohibited. Recently, operators
have been subject to increasing controls (there was a “grace period” until 1998). This
problem risks affecting significantly EU exporters.

For very small items (pencils) there are only the following mandatory requirements:
name of the product, quantity and name of the importer.


c) Labelling of samples




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Under regulation on Enforcement of Cosmetics Law, the samples, which are not
aimed to be sold in the retail (but distributed), must carry a label and comply with the
labelling requirements.


2.4.2. The complaints made by the EU industry


a)     Samples
EU companies and importers have advanced the following arguments 98:
Testers or samples are already marked “not for sale” Samples are only distributed by
beauty adviser in the shops. The purpose of the label is already achieved by giving
the sample by an authorised person. Regular products are provided with complete
information in Korean. Most samples have very limited space for labelling. In addition,
the wide variety of items makes the individual labelling of samples difficult. Regarding
the testers, they are never given to the public. Therefore, there is no real need to put
labelling.
The additional costs of producing labels for samples are quite significant compared to
the sample value (each label = 30 won). Labelling of samples and testers is therefore
time and money consuming.
Should a product misrepresent compliance with these requirements, the penalty
foreseen is 6 months of suspension of sales for the products, whatever the sizes are.
It shall be imposed on the first violation labelling for samples or tester and 12 months
of suspension shall be imposed on second violation. According to the European
Chamber of Commerce, no other country in the world has so heavy penalty for
violation of labelling.


b)     third packaging

Homologation procedures

Since 1st January 2001, the EU products must be previously approved to be allowed
to affix on the labels and the packaging, the mention « anti-wrinkles » , sun products
or “self tanning” or « whitening ».. The procedures are so burdensome that only until
now one EU product has been approved until now (and two US products).

Importers of cosmetics products have complained about the burdensome procedure
of homologation of cosmetics. A EU company interviewed explained the difficulties
encountered:

-      Testing / information required: the Korean Authorities ask to do in vitro tests.
       The company must define the active elements of the product. In anti-wrinkles,
       there are no active elements but combined elements; the company encounters
       therefore some technical difficulties. The company must conduct two batteries
       of tests with and without active ingredients. According to the EU companies,

98
    Trade issues and recommendations 2001, European Korean Chamber of Commerce,
http://eucck.org/trade2001/html/cosmetics.htm


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          the list of active ingredients is not the unique proof of effectiveness. The EU
          products are made out of a combination of other ingredients, which could be
          also very efficient.
          Publication of the active ingredients: the regulation was made by the
          domestic industry association. The industry wanted to have the public lists of
          active ingredients used in the commercialised products. EU companies are
          against the publication of the active ingredients used in their products. The
          main reason is the risk of copies. The publication renders also difficult to
          launch a new product using new ingredients, because it will be harder to get
          the approval on time.

          Stability tests: the stability tests last at least 6 months. This time-limit is too
          long, given that the life cycle of a new cosmetic product is about 1.5 – 2 years.
          In addition, the EU exporter consider excessive to require the test of stability
          for all cosmetics products. It lasts at least 6 months, is conducted on three lots
          of different products and requires a measurement of all active ingredients,
          every 6 months.


2.5.      Labelling requirements for foodstuffs


2.5.1. The requirements


      a) The compulsory labelling requirements

The product must comply with “The Labelling Standards for Foods” enacted on 1
January 1996 (last revision on July 28, 2000) 99 as well with the Standards of
labelling for Foodstuffs of 2000;7.28 (KFDA).The imported EU product sold in the
Korean market should carry a label in Korean language with the following data (art.4)

-         Country of origin;

-         Name of the product unique name representing the product (not applicable to
          equipment or containers and packages);

-         Product type : (only to specified foods) if a product type is classified in the
          standards and specifications for foods in accordance with the provision of the
          Food sanitation Act, the product type should be indicated.

-         Importer’s name and address;

-         Manufacturing Date, month and year applies only to specified foods.
          Manufacturing date is understood when packing is completed, art; 2). Lot
          number and bottling date should be indicated on liquor products;



99
     KFDA notice 2000 – 36. English version of the text provided by the Korean Authorities.


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-      Best before: shelf life should be indicated on the label. Some products may be
       exempted: sugar, ice cream, edible ice, chewing gum in small packages, and
       liquor. Not applicable on containers and packages;

-      Content: weight, volume or number of pieces (if the number of pieces is
       shown, the weight or volume must be indicated in parentheses);

-      Ingredients or raw materials and the content of the ingredients (only when
       certain ingredients are used for the product name or for part of the product
       name) : the name of at least top five ingredients or raw materials should be
       indicated;

-      Nutritional information for special nutritional foods, health supplementary
       foods, products wishing to carry nutritional labels and products wishing to carry
       a nutrients emphasis mark.

In addition, according to the Labelling standards for food, caution and standards for
use and preservation must also be indicated (when required). For example, for
products that must be kept at a low temperature, it should be indicated. There are
additional detailed requirements for specific products (ex for canned products).

Labelling information should be printed in ink. However, a sticker can be admitted
while due to the characteristics of the product packaging. However, the stickers
should be attached in a way they could not be removed.

Imported food products can be labelled with stickers in Korean language. These shall
be attached in a way they may not be removed and they shall not cover main
labelling information including nutritional information stated on the original container
and package. Name of the exporting (EU) country and the name of the manufacturer
could be indicated in the EU language.

The text provides for acceptable errors in weight indications.

    b) implementation

According to KFDA the foodstuffs products must be labelled with stickers during the
clearance. KFDA controls the stickers during the clearance. It seems therefore that
most of EU foodstuffs are not labelled (Korean sticker) in the EU. The stickers are
affixed during the clearance process by the importer. It seems however that various
products are properly labelled just before the retail phase.

The importer must submit anyway the project of sticker to KFDA when applying for
the import license. During the clearance process, KFDA will inspect randomly the
products and therefore require a sample (to be tested) and a model of the label in
Korean in order to check if the product composition corresponds to what is stated in
the label. When the label does not correspond to the product, the KFDA is entitled to
reject the product.

2.6.   Labelling of wine and spirits



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a)      requirements

Under the “The Labelling Standards for Foods” and the Office of National Tax
Administration’s (ONTA) Decree of 1989 on the Liquor Wholesale Licensing System,
the mandatory labelling requirements to be affixed in Korean language are as follows
(back or front label):

-       Country of origin;

-       Name of the product;

-       Alcohol content: alcoholic strength declaration required in Korean;

-       Importer’s name and address and telephone number;

-       Lot number and bottling date: it is admitted that the lot number be affixed
        outside the label on the bottle itself. However, in this case, its location must be
        indicated in Korean on the counter-label in Korean.

-       Content : volume, in Korean;

-       Additives list statement: Korean legislation prescribes a list of additives,
        required to be indicated on their label. However, the list does not include
        caramel (no need for its use for liqueurs and spirits). Could however, apply for
        wines and beers. In addition, certain colourings permitted for use in liqueurs or
        other spirits must be declared;

-       Health Warnings Label statements A first warning regards the excessive
        alcohol consumption and is applicable to products bottled just after March
        1996 (stating the excessive alcohol consumption may cause liver cirrhosis or
        liver cancer and is prejudicial to minors health100 ). Products bottled since 10
        September 1999 should carry an additional warning message (“the sale of this
        product is prohibited for minors under 19 years old) 101);

-       “Home use” in Korean on every bottle. In the practice, it is affixed on a sticker.
        There are no compulsory dimension but the “rectangular sticker diagonal
        should be above 3 cm). On 27 February 2002, the Korean National Tax
        Service (NTS) announced additional modifications to the existing labelling
        requirements for alcoholic beverage on short notice. The supplementary
        labelling requirements are as follow: “for home use”-“not allowed to be sold in
        restaurants and bars” and “for discount stores”-“not allowed to be used in
        restaurants and bars”. The “for home use” and “for discount stores statements”
        must be in white against green or dark blue background or print the writing in a
100
    The EU exporter can chose among three different messages. The message should be affixed on
the original, the counter-label or in a separate sticker. In this case, it must occupy a surface equal to
10% of the surface of the original (EU) label. It must be legible and on a contrasting background, must
be on Gothic typeface. There are minimal sizes for the characters such as 2.15 mm for recipient above
300 ml ; and 2.45 for recipients below 300 ml. Are exempted samples non sold below 50 ml. and duty
free products.
101
    On the back label or on a sticker (but must represent at least 5% of the surface occupied by the
original label). No exemption.


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       colour that can be clearly distinguished from the main label’s background
       colour and outline with the box.

-      Other general requirements: labels should also show in Korean:
             a)    Brand name
             b)    Sales license number
             c)    Return and Exchange Office;

-      Off and on trade: bottles destined for the “Off” Trade (e.g. retail sales via
       supermarkets/chain stores) should be distinguished from those for the “on”
       Trade (e.g. bars and restaurants). To note: under the new liquor licensing
       system, the maximum proportion in all supermarkets’ turnover that may consist
       of alcoholic beverages sales is 50%).

b)     Complaints of the EU Industry

The consultant attended various meetings with the European Association of Spirits
producers (CEPS) and the members, who provided detailed information about the
problems encountered. Complaints form industry were also collected during the
mission (Member States and Importers)

Main EU industry critics focus on:

-      Health warnings: The Scotch Whiskey association has sought (without
       success) modifications to the minimum print sizes and related volume
       thresholds for health warning.

-      Excessive general requirements: The industry consider excessive that
       labels must show in Korean the brand name, the sales license Number, the
       Return and Exchange Office (source: Scotch Whiskey Association). However,
       in the practice, this is not required for on sales (restaurants and bars).

-      Geographical indications: Korean sparkling wines offered for sale use the
       name “champagne”, in violation of the French geographical indication and
       mislead consumers on the quality of the products. 102 . The issue has been
       addressed to the Korean Authorities and the Korean Industry, without success.

-      Look alike products: In 2001, a number of whisky products presented in the
       market, potentially mislead the consumers about the content, the quality and
       the origin as they are packaged similar to imported brands of Scotch whisky
       brands and thus appearing to be of Scottish origin.

-      “For home use” and “for discount stores” requirements: The new
       labelling standards for alcoholic beverages have been perceived as
       constituting an unnecessary obstacle to international trade, likely invoking
       great burdens on imported products. Considering the costs involved, the
       importers asked for the importers asked for full explanation as to the
       convincing rationae for changes. The importers and the EU delegations have
102
  Issue addressed by the « Wines and Spirits Committee of the European Chamber »: Trade Issues
and recommendaztions 2001, idem.


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          estimated that the time limit imposed for compliance is insufficient. It was first
          set for April 1st 2002, after extended to July 1st 2002. After negotiations with
          the concerned parties the implementation was postponed to 1 st of October
          2002 with a further 2 months given when stickers can be used to utilize old
          stock. The importers have also complained that the wording “for discount
          stores usages” will denigrate their product. The National Tax Service has not
          considered these complaints and did not change any details in the regulation.
          It showed only limited flexibility regarding the re-extending of the grace period.


2.7.      Labelling for textiles


a)        General requirements for apparel products

According to Korean rules, the apparel products imported into Korea must carry a
label in fabric, sewed to the product, with the following data:

-         country of origin;
-         fabric composition, fibres content in %, in decreasing order (below 5% “other
          fibres”). The trade denominations (Lycra …) is authorised);
-         Name of the manufacturer;
-         Name of the importer;
-         Size;
-         Cleaning instructions (international symbols).

The imported product must also carry a paper label with the price of the product (CIF)
and the estimated retail price.

In practice, the EU exporters also affix a label in English with the fabric data, and the
sufficient data to process to the clearance. Then, the importer affixes the required
label in Korean language. Sometimes, the importer sends to the exporter the labels in
Korean to be sewed on the product 103.

Labelling requirements for outerwear, Middle Wear, Underwear

On 3 July 2001, the Public Notice No. 2001-384 was formulated by the Agency for
Technology and Standards, MOCIE 104.

The mandatory requirements are (article 2):

1.        Indication of name fibre and composition;
2.        Size;
3.        When appropriate “waterproof”, “water repellent” or fibreproof;”
4.        When appropriate (stuffed products), stuffing materials:
-         name of textile fibre (in % for certain products)
-         garments, quilts and under quilts with down: indication of the nature of down
          cotton bird down or others, with composition indication in %.
103
      Information kindly transmitted by ICE, Seoul.
104
      See www.ats.go.kr


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-      Caution for use
-      Manufacturer’s name
-      Date of manufacturing (year and month)
-      Importer’s name
-      Address or telephone number (inc.area code)
-      Country of origin.

Under Article 4, the country of origin, the manufacturing date, the importer’s name,
address and telephone No. (including area code) of importer should be shown.
Distributor’s name and address or telephone can be additionally shown.

The Notice establishes a labelling method. This method foresees in practice the use
of permanent labels. However, for certain products, stickers are still allowed:

“Labels should be in distinct letters attached to a position easily recognisable by the
consumers – unless this is inconvenient or ugly – and in a manner that the label
cannot be detached or removed (no paper labels, tags or stickers). Yarns, fabrics,
wadding, foundations, undershirts, panties, socks, gloves, swimwear, gymnastic
wear, scarves, muffles, handkerchiefs can be labelled with paper labels, tags or
stickers if labels are not detached or removed until distributed to the end users. When
products are sold to the end users in packages containing 2 more units (exl.pairs) of
the same product, labelling on the package is sufficient” 105.

b)     Complaints of the EU Industry

No specific complaint was made on the requirements. The main issue is that, in most
of the cases, the importers affix themselves the label in Korean after the clearance
process. This explains the low level of complaints from EU companies (confirmed by
ICE).


§3. Implementation: problems faced by importers of EU products


During the mission to Korea, the consultant interviewed the Member State
representatives, the importers of EU products, the authorities on the implementation
of labelling requirements. The answers given by importers of various products on
their difficulties focussed on the following concerns:

-      overall burden of the product description requirements (3.6).
-      additional costs for importers.


3.1.   Controls conducted on the compliance with labelling requirements




105
  English translation of this text kindly transmitted by the Austrian Trade Commissioner Office in
Seoul.


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The interviews conducted with foodstuffs importers wine and spirits importers
confirmed that problems are not directly related to labelling requirements as such,
but to inspections carried out by the Korea Food and Drug Administration on the
imported products during clearance.

Various problems are reported:

-      Excessive checks
-      Problems caused for small inconsistencies with the requirements.


3.1.1. Random checks / testing


The Korea FDA has published “Inspection Guidelines for Imported Foods etc. in
2000. These guidelines aim at improving the equity, fairness, rapidity and
effectiveness of inspection of imported foods. They describe in details the processing
procedures for pre-arrival import report (art.3), the procedures for import report (art.4)
and the sampling procedures for the laboratory inspection (art.6). The document
describes the inspection of foods requirements (art. 8) and other aspects.

Therefore, there are different steps to be followed in the control procedure:

-      The local KFDA Authority receives an application form
-      Revision of the application form
-      Sampling and analysis request
-      Analysis in other officially recognised inspection laboratory
-      Approval of the inspection report

Another Korean Authority (the National Veterinary Research and Quarantine
Services) is in charge of the controls on products of animal origin. The Member
States have reported various problems related to the acceptance of the certificates.


The problems reported are related to:

-      Change in classification after testing: after testing, the KFDA has decided to
       re-classify a product declared and labelled according to another classification.
       For example, imports of jam were reclassified as “fruit dessert”, which needed
       another labelling (additional costs). The company could not oppose to this re-
       classification.

-      Time lost: for wines, when the shipment arrives to the port, the importer sends
       a sample of each type of wine imported and a counter-label in Korean
       language. The first time of importation, the product is tested. Tests last at least
       15 days. On the second shipment, the tests will last about 3 days. According to
       other importers, the first test is mandatory and the other tests (next shipments)
       are made randomly.




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-      Importers of foodstuffs also complained about the burdensome sanitary
       procedures. It is alleged that the KFDA waits 3 days after the importer
       declaration to start the procedure. The first shipment of a product newly
       imported will be automatically checked. The next shipments will be only
       subject to random inspections.

       On each shipment, quarantine authorities take a sample. They make random
       checking (for example, on an average of 50 different products regularly
       imported, at least 4 types of products are checked and send to the laboratory).
       The first test (chemical and biological inspections) lasts about 10 days. The
       laboratory requires the importer to give a detailed description of the food. The
       EU exporters are reluctant to give the detailed list of ingredients with their
       percentages. The importer also provides a sample of the label of the product
       tested. The laboratory will therefore compare the product composition with the
       label. If the information on the label is not correct, the KFDA rejects the goods.
       However, according to the Food Law, it is possible to re-label the product
       adequately under surveillance of KFDA (Guidances, art. 11, phrase 3 rd, of
       31/7/2001). It is alleged that, in various cases, the label is refused. The
       importer must pay 400 EURO by inspected items as a fine. Therefore, the
       importers consider that in some cases the KFDA takes unjustified decision on
       the non-conformity of the labels.

       The time duration of testing for random inspections is around 5 days because
       not all the tests are performed.

-      Requirement of the business licence n°: the obligation to affix on the back
       label the business licence number renders difficult for the EU exporter to
       produce the labels in advance. If the importer stops to import during 6 months,
       its license would be void. If the importer changes the name of the company, he
       must apply for a new license number.

3.1.2. Other problems

During interviews, importers and Member States trade representatives have
mentioned the following issues:

-      Non-recognition of the “made in the EU”. EU is not recognised as a country
       of origin. Therefore, a specific mention of the Member State of origin must be
       affixed.

-      Penalties imposed on EU cosmetics: the Ministry of Environment has
       prohibited the importation of cosmetics with a third packaging (cellophane).
       Several controls were conducted in the shops. Officers give a week to the
       retailers to remove the cellophane from the packaging. This damages the
       products, provokes additional costs. As above-mentioned, the penalties are
       extremely strict (6 months suspension at the first infraction). The importers
       prefer to remove the packaging. This requirement will pressure the importers
       not to buy anymore EU products (perfumes are usually packed with
       cellophane) or oblige the EU exporter to produce a specific packaging for
       Korea.


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-      Labelling of samples (cosmetics) The Agency of Technology and Standards
       and the Korean national Institute of technology and quality require affixing
       labels on the samples complying with the national labelling requirements.

-      Cosmetics labels Since July 2000, these products are required to follow a
       very burdensome procedure of homologation (see supra). The products are
       not anymore allowed to be labelled with the words “anti-age”, “whitening” etc
       without homologation. The Korean authorities pretend that, in absence of
       homologation, the consumer is given misleading information. In addition of this
       new requirement, all files already presented to Korean Food and Drug
       Administration are currently blocked. EU companies are not informed about
       the reasons justifying the refusal of their files. The domestic products have
       adapted easily to this new law.

-      Licensing system for foodstuffs: importers complained about the fact that
       the requirements for the delivery of the import license include an examination
       of the labels. In its application file, the importer must provide to KFDA:

1.     The application form;
2.     The sticker to be affixed in Korean;
3.     The original label;
4.     The ingredient lists with the manufacturing process;
5.     The shelf life;
6.     The health certificate;
7.     The foot and month disease certificate.

This procedure is considered too burdensome by the EU companies.


3.2.   Penalties and additional costs faced by importers


Some importers of foodstuffs products have complained about the controls
conducted by KFDA and the Consumer Agency on imported products in order to
check the compliance with labelling requirements. The controls are alleged to be very
strict and the penalties quite important. For example, for 5 removed stickers in a
assortment of individual packaging of imported butter, an importer got a penalty: of 7
Mio WON (or 6,200 EURO or the obligation to stop its business during 15 days).
They allege that foreign products are more controlled regarding the labels than
domestic products. This worries also the retailers who become more reluctant to buy
imported products.


§4.    Legal analysis


The European companies have experienced some difficulties on the Korean market.
These difficulties are mainly related to strict labelling requirements for spirits,



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foodstuffs and cosmetics and to excessive inspections conducted on some imported
products.

Some excessive requirements applicable to foodstuffs, spirits and cosmetics (e.g.
strict requirements for additives) could eventually be challenged under the
Agreement on Sanitary and Phytosanitary Measures (SPS) if they are designed to
protect human health. Other product related requirements (e.g. specific packaging
requirements for cosmetic products) could be challenged under the provisions of the
TBT agreement. The two agreements impose stricter proportionality test on the trade
restrictive effect of the measure than the general agreement.

If some procedures are found discriminatory or impose less favourable treatment to
imported product (e.g. stricter controls on the compliance between the indications on
the label and product composition conducted on imported products), the provisions of
article III of GATT agreement could be invoked. This article imposes the national
treatment obligation.

If the rules are not published or are not sufficiently transparent, the application of
article X of GATT could be foreseen. A detailed analysis of these and other WTO
provisions could be found in Part 21 – Legal analysis.




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                                    PART 14: JAPAN



§1.    The mission to Japan


§2.    Labelling requirements for imported products


       2.1.    Food labelling

       2.2.    Textiles and apparel

       2.3.    Furniture and other products

       2.4.    Controls of labels


§3.    Problems encountered by EU companies and importers


§4.    Legal analysis




CEEI –Labelling – Final Report –16 August 2002              296
§1. The mission to Japan


The consultant conducted a mission in Tokyo from 11 March to 15 March 2002. The
mission aimed at meeting the Member States Trade representatives, some importers
of EU products, and the Japanese Authorities in order to collect the information on
the measures applied to imported wood products, their implementation and their
impact on the EU exports. The mission has been kindly organised with the support of
the EC Delegation in Tokyo, which arranged the meetings with the Ministries, and the
Member States trade representatives.

The consultant attended meetings with the following authorities:

Authority                                        Issues addressed
Ministry of Economy, Trade and Industry (METI)   Presentation of the research; policy regarding
Mr Namba, Manufacturing industries bureau        wood products; technical standards and labelling
                                                 requirements for wood furniture
Ministry of Agriculture (MAFF)                   Situation of the domestic industry
Mr.Tetsuya Kurata, Deputy Director for wood Standards (JAS) applied to wood products
products
Int’l Standardisation, standards and Labelling
Division, General Food Policy Bureau
Customs, (MOF)                                   Measures applied for imported woodworking
Mr Teruaki Kato, section Chief, International products, controls carried out by Customs
Affairsand Research Division, Customs and Tariff
Bureau
Mr Yukari Kawanaka, Chief, Customs clearance
division
Mr Shuji Namri, Team leader, Customs clearance
Div.



Main outcome of the mission is as follows:

1.     Among of the countries under review, Japan appears to be one of the most
       open markets regarding labelling requirements, even if some problems subsist
       regarding the food additives and the certification and labelling of the biological
       products.

2.     However, there is a concern from some Member States and some operators
       regarding the existence of different standards for product composition
       (additives) and regarding the certification and the labelling of the organic food
       products. These operators would welcome therefore a bigger deregulation and
       a greater recognition of the EU standards by Japanese Authorities.

3.     If other difficulties are sometimes quoted regarding the penetration of the
       Japanese market, these are however not directly linked with “traditional”
       market access trade barriers. They are more caused by difference of
       language, lack of transparency of some technical rules and the complex import
       structure offered by the Japanese market (based on various intermediaries in
       the import and distribution channels between the EU company and the final
       consumer).


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§2. Labelling requirements for imported products


2.1.   Food labelling


Food labelling is governed by the JAS system, which is a mixed system of voluntary
and mandatory labelling and provisions of the Food sanitation Law (art. 11).

According to the information provided by the Ministry of Agriculture and the Ministry
of Health, the mandatory data to be affixed on a single label are:

-      Name and address of the manufacturer;
-      Name and address of the importer;
-      Name of the product;
-      Raw materials (in decreasing order by %of weight);
-      Content (volume);
-      Expiry date;
-      Storage conditions;
-      Country of origin (compulsory for some products).

Data of the manufacturer / importer

There are no specific formal requirements regarding the name and addresses of the
manufacturer and the importer.

Name of the product

There are no specific requirements. The name of the product should not be
translated into Japanese.

Ingredients

Under the Japanese rules, all ingredients should be listed in the labels.

Under the Food sanitation law, there are additional requirements on the additives.
The EU exporters should use as a basis the positive list accepted ingredients. The
positive list can be requested to the Standard Division of the Ministry of Health.

Under the Food sanitation law, there are also additional requirements on the
presence of allergens for some products:

           -   Eggs;
           -   Wheat;
           -   dairy milk products;
           -   “soba” (type of spaghetti);
           -   peanuts.




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The presence of these products, as part of raw materials in processed foods, should
be indicated. For example if a given product contains milk proteins, this should be
indicated on the label. There is a tolerance level (1 to 9 dg) under which it is not
compulsory:

In addition, there are 19 items that could cause less serious allergy reactions, in
which Japanese Authorities encourage the industry to indicate their presence in the
food processed products (voluntary):

These are mainly:

           -   Salmon eggs;
           -   Shrimps;
           -   Kiwi;
           -   Beef;
           -   Crab;
           -   Walnuts;
           -   Salmon;
           -   Soya beans;
           -   Chicken;
           -   Pork;
           -   Mushrooms;
           -   Peach;
           -   Apple;
           -   Gelatine;
           -   Pan potato.

Expiry date

The products presented to retail should carry an expiry date of above 5 days validity.
If this requirement can appear rather strict, it seems however that the implementation
in the shops is rather flexible. According to the officials of the Ministry of Health, if the
expiry date is passed, the retailer should not be authorised to present the food
products in the shelves. However, there is apparently no legal requirement to force
the retailer to remove the products from the shelves and to discard the products, if
presented after the best before date (!) (even if, under the article 4 of the sanitation
law, it is prohibited to sell “non hygienic products”. It is therefore necessary that the
product causes some “sanitary concern” to be considered as a violation of the
sanitation food law).

There is however a project to create a Council, independent from the Ministry of
Health, in change of the control of compliance to sanitary standards (type of safe
authority). Japan is still under the shock of recent scandals where domestic
producers have mislabelled the foodstuff products and which had resulted in serious
health damages.

Storage conditions

Regarding the storage conditions, there is some flexibility left to the producer to
indicate the best storage conditions recommend to the consumer. The Japanese


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rules propose a rough wording that can be used as an example (it is not mandatory
to stick to this specific wording). It must therefore be said whether the product can (or
not) be stored at the room temperature or need to be stored in the refrigerator. It
should be also added (if necessary) whether the product should be stored in a place
where there is no direct sunlight.

Country / place of origin

Under the JAS system, it is required that some products should be labelled with the
country of origin (ex mandatory for the fresh fruits and other perishable items). For
perishable marine products, it is compulsory to indicate the name of the water area,
name of the port or prefecture in which the seafood has been fished.

For some processed foods, it is now also compulsory to indicate the place where the
raw material was produced (ex for pickled plume, pickled scallion). This measure was
introduced after some problems occurred with Chinese plume imported to Japan to
be processed into pickled plum. Same obligation is enforced since February 2002 for
salted macarro, opened macarro and backed dried seaweed, since April 1 st, 2002, for
other pickled products and from June 1st, 2002, for dried bonito. It seems however
that this requirement will be only enforced on Japanese products, provided that the
imported product carries the indication of the country of origin.

Additional requirements

Under the sanitation law, there are additional labelling requirements for specific
products. For dried meat, for example, the label should contain in addition to the
above mentioned data:

           -   name of the meat used as raw material;
           -   indication that the meat is dried;
           -   method of sterilisation;
           -   additives.

Organic Food


The shift towards more quality products

Labelling of the organic food is also an important issue for our exporters. In addition
to the existing JAS system, the Japanese Authorities have adopted new rules for the
organic and biological products and for biological wines. In principle, the imposition of
stricter rules governing the biological products could favour the exportation of the EU
products already certified and of high quality. The recent scandals involving
Japanese food distributors have influenced the public opinion and the customers
towards higher quality products.

The requirements

Under the new rules adopted by the Japanese Authorities, there is a compulsory
certification procedure. This has been implemented since 1/1/2002. It is now strictly


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forbidden to sell organic products without the approval of the Japanese Authorities
(JAS marking).

The importation of an organic product can either go:

                          1. though certified importers or
                          2. directly from the EU exporter to the customer but it must
                             be labelled with the eco-label before shipment. This eco-
                             label is given by an organisation previously registered in
                             Japan as a FRCO. In the EU there are already 250
                             organisations registered authorised to conduct the
                             certification of organic products. Therefore these
                             organisations must apply to be registered.

The approval of the EU accredited organisms

However, EU exporters and EU trade representatives have also expressed their
concern regarding the implementation of the certification process as foreseen by
these new rules.

The Japanese Authorities have signed a an equivalence agreement with the EU on
the certification systems. Under the other Agreements signed by the EU with other
trade partners, each party communicates the list of the accredited bodies and this list
is automatically accepted.

However, the Japanese Authorities have decided that the Ministry of Agriculture must
give its approval on a case-by-case basis (organism after organism). This is a
condition to deliver the « JAS » marking. Until now, only one EU organism has been
accredited (Austria bioguaranttee) by MAFF. Some other Foreign organisations
(China and US) have also been accredited.

GM0

Since 1st April 2001, Japan has enforced new rules for GMO labelling. Provisions
cover about 30 products processed with corn, Soya and potato (Soya beans, corns,
rape seed, cotton seed are under exam).

They have authorised levels of incorporation of 5%. The presence of a GMO product
must be indicated in the label. The threshold level is being superior to the one applied
in the EU but this should not cause major difficulties to the EU producers.

The quarantine authorities will take samples and proceed to testing at the port of
entry. In addition, sanitary control is conducted by local Municipal officers on the retail
market.

Today, few products are OGM labelled.




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Alcohols

Alcoholic beverages are covered by the Liquor Tax Law administered by the National
Tax Agency. JAS Law is also relevant. The National Tax Agency has also recently
presented two new models of labels.


2.2.   Textiles and apparel


EU Textile producers had also to adapt to the labelling rules. For example, as
cleaning instructions are concerned, the symbols used in the EU are not accepted.
Cleaning instructions are to be affixed in a text in Japanese language. However, the
importance of the market for most of the apparel producers justified the additional
costs resulting from the requirements to produce a specific cleaning instructions label
for Japan. Most of them affix the cleaning instructions before shipping the goods to
Japan (ex Italian exporters which are mainly SMEs)

METI is working on the revision of the relevant JIS standards (JIS L 0217) so as to
harmonise it with the latest revision of ISO 3758 in May 2001. The drafting will be
finalised by March 2003 and the revision will be announced in the autumn 2003 (after
a WTO TBT notification).


2.3. Furniture and other products


Under the Quality Indication Law applicable to consumer products, there are some
mandatory labelling requirements for some consumer products.

According to the METI officials , these requirements apply to the following products :

           -   Textiles : some 35 products are concerned.
           -   Synthetic resin products : bathrooms, kitchen, plastic bags and
               polyester bags.
           -   Electronic appliances : refrigerators, cocker, water boilers, washing
               machines, electric coffee maker.
           -   Miscellaneous : various products.
           -   Furniture : wood and non wood products.

If we take the example of furniture, the products covered are desks, tables and chairs
(in wood and other components).

It is not compulsory for the EU producer to affix the label in the country of origin.
Therefore the label can be affixed by the importer just before the retail. There are no
compulsory requirements concerning the size of characters.

The compulsory data to be affixed are:

           -   Size or dimension of the item


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           -   Material (ex natural wood)
           -   Surface processing (if resin)
           -   Cushion material
           -   Care instruction (ex : not to expose to sun). This is mandatory only for
               some components : for synthetic leather.

2.4. Control of labels

Under the Consumer Quality law, the importers are responsible for the compliance of
their products with Japanese requirements.

If there is a problem (information missing on the label), this will depend upon the
contract concluded between the Japanese importer and the EU exporter. If a label is
missing, METI will issue a warning to the importer. The METI will verify that the
importer has notified the exporter the compulsory requirements to be affixed on the
label. The exporter should however give all necessary information on the product
composition to the importer if he affixes the label.

The Japanese Trade Fair Commission controls the labels under the Law for the
prevention of illegal prices and illegal labelling.

The Centre for the Food Quality labelling and Consumer Service purchases goods
and checks the products distributed. It also conducts inspections in the plants. This
organism belongs to the MAFF. However, due to the administrative reform, it has
become independent.

Once a violation has been identified, the MAFF will ask the retailer to correct the
product mislabelled. If the label is not adequately modified, an order will be issued
against the retailer. A fine of max 500,000 yen can be issued. Local governments can
also issue an instruction on behalf of MAFF.


§3. Problems encountered by EU companies and importers


The lack of complaints on the labelling requirements

The situation of Japan is quite different compared to other markets examined in this
study:

As far as the requirements are concerned, there are only few complaints made by the
EU industry. Requirements can be different in Japan compared to the EU
requirements made under the EU Directives. However, EU exporters have not
mentioned differences as unbearable barriers. The reasons explained by the
operators (mostly foodstuffs products interviewed during the Foodex Fair on 12
March 2002):

   In all sectors covered (textile, foods, wines, cosmetics), the EU companies adapt
    to these requirements. In some cases (ex big brand companies, delicate products
    difficult to manipulate), the EU companies produce and affix themselves the


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    required label on the basis of the information communicated by the importer. This
    is the case of large companies and companies manufacturing specific products.
    Big companies have integrated in their costs, the production of different labels for
    each export market. In Japan, the presentation is very important. Therefore some
    operators prefer to produce the label. Some products are also delicate and
    difficult to be handled with care (confectionery). It is therefore estimated
    preferable to integrated the Japanese requirements in the original packaging
    rather than let the importer to affix a sticker.

   However, most of EU companies (most companies interviewed in the Foodex
    Fair), leave the Japanese importer with the burden of counter-label or sticker. The
    importer affixes the sticker either in the clearance process or in its own
    warehouse, before the retail phase.

   There are no complaints regarding the controls conducted during the retail phase
    (no discrimination found).

   Therefore, Japan does not present the problematic issues of “who” and “how”
    affixing the required label. There is no compulsory obligation to affix the label in
    the EU Member State of origin, there is no problem to affix or to correct the label
    in the clearance process.

   The main problems are linked to the related procedures which will influence the
    definition of the label. In this context, most of the problems are related to the
    product composition (foodstuffs) and the certification issues (organic food).


Product composition

Foodstuffs

The following difficulties have been mentioned in interviews :

           -   The positive list of additives;
           -   Some problems with the product composition;
           -   The organic food certification.

The positive list of additives

The food additive issue is considered by most of the interlocutors as a long-standing
issue.

Various exporters face a problem of non compatibility with the EU rules. The
additives accepted in the EU are often not in the positive list set up by Japanese
Authorities. This list is alleged to be not in conformity with the CODEX Code.
Sometimes, it is the level of additives which is different and prevented exports. For
example, for the Dijon Mustard, the level of So2 is about 1000 ppm, while in Japan it
is about 30 ppm. The exporter must therefore redo the receipt for the Japanese
market. This is however not possible for small series of products or for small and
medium companies.


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Confectionery producers and energy drinks producers have been affected (Austria
and France). They had to develop a product with a different formula exclusively for
the Japanese market or to leave this market. Provolone producers desiring to sell in
Japan, have to adapt the processing formula for Japan (there is a natural additive not
accepted by Japanese authorities).

Another possibility is also to try to make the additives accepted by the Japanese
Authorities. However, this solution requires the preparation of a solid file and results
in long delays. The average time duration for the acceptance of a completed request
filed by a EU exporter is estimated to be of 6 months (in some cases, it was 1 year
long). In addition, the requirements for the file are rather exigent. The file must
contain a detailed description of the product.

In addition, while imported, the sanitary authorities will automatically control the
compliance of the imported product with the sanitation Law. There are some
complaints regarding the testing methods in clearance. Sometimes there are conflicts
on the ingredient composition, which result in a less favourable classification of the
product.

However, this affects a rather limited number of products (most exported foodstuffs
products are wines and spirits -60% of French exports-, 8.5% waters, cheese and
meat representing respectively only 3% and 5%).

Other problems with product composition

   Some alcohol producers also complained about the maximum alcohol content
    (producers of snaps, Apricot liquor Level admitted 10 ppm). Therefore, they
    cannot export to Japan.

   Source water producers must submit a file in order to be accepted. In France,
    the source waters have a statute similar to those of the mineral waters.

   Some producers have also left the market given the excessive technical
    specifications to give on the production process of their products and on the
    ingredients (ex producers of “zacher torte”).

   Whiskey : Under the liquor tax law, the Japanese definition of whiskey does not
    specify that the product has to be matured. Therefore it is accepted that some
    whiskey which are not matured are labelled as whiskey. There was a complaint
    from the scotch whiskey association regarding this issue.

Organic food certification

The following difficulties have been underlined:

   The identity of the organisation currently accredited for the certification : until now
    the EU organic products could have been imported with a certification made by
    the Member States embassies declaring that the imported products complied with
    the EU rules for organic products. As explained above, only one EU organism has


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    been accepted. In the present situation, the EU exporters have two solutions: to
    have their products certified either by a Japanese accredited Institute or by an
    importer. Both solutions are however very expensive for our producers.

   The ongoing procedures of approval : under the advises of the Japanese
    administration, the European Commission has controlled and supervised the
    preparation of the files to be submitted to the Japanese Authorities for approval.
    However, this process has been very long and burdensome. It has been often
    delayed by the Japanese Authorities alleging that there were information missing
    (among the required data : personal addresses of the members of the boards of
    the applicant companies). In March 2002, the Authorities were still examining 17
    files. Only one has been accepted in March 2002. These delays have prevented
    various companies from exporting. For example, some operators interviewed in
    the Foodex Fair (ex an exporter of frozen vegetable products) have waited one
    year until the accreditation of their organism.

   In addition, the procedures for the accreditation are rather expensive : 500 EURO.
    The stamps have to be sold in Japan. Some operators fear that Japan completely
    close the way to the certification.

   For exporters of organic food, there are currently no other solution than to find
    importers “certified”, which is more expensive and restricts the number of clients.
    The Member States trade offices provided the certified importers with a
    Declaration attesting that the product has been processed according to the EU
    rules. The importer is then allowed to affix the eco-label on the product and to add
    the JAS logo. It is alleged that the ministry obliges the importer to provide the
    certificate in order to bring back the liability to the EU producer.

Conclusion

   Compared to others countries under review, labelling requirements applied by
    Japan cause fewer difficulties to our exporters than those applied in other
    markets. The importance of the market is also a good incentive for the EU
    companies to adapt their labels and packaging to the Japanese requirements. In
    Japan, the presentation of labels and packaging is considered as very important.
    Therefore, our companies do not consider (in general) these additional costs as
    unbearable. When labelled in the country of origin, the imported products do not
    generally encounter difficulties with the Japanese authorities during or after the
    clearance process. If a label has to be corrected, this can be done in the importer
    warehouse before the retail.

   If the EU company can or does not want to afford additional costs of a specific
    label or even of a sticker (which will be allowed), the importer can affix it before
    retail.

   Exporters and importers encounter other type of difficulties which are indirectly
    linked with the labelling issue. These are the requirements on products
    composition. It is long, difficult and costly to get the approval from Japanese
    authorities on additives not included in the positive list.



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    There is also a concern regarding the implementation of the certification system
    for the organic food. The delays taken in the approval of organisms accredited in
    the EU have already had a negative impact on potential exports. This situation
    should find a rapid solution in order to allow our companies that are well placed in
    the organic food business to gain new market shares in Japan. Our products are
    competitive in price and quality. Some member States’ producers (Italy, Spain
    and France) are particularly keen to increase their exports. It has also to be
    underlined that Japanese Authorities seem to have strengthened their position on
    certification, therefore penalising the imported products. At the same moment,
    there is a lack of an independent consumer body, which reports problems with the
    products marketed in Japan.

   Operators and Member States’ representatives mentioned another issue
    considered as more important than labelling: the necessity to put in contact the
    shops and the EU producers. There is a strong need to find the way to do a
    campaign to inform the Japanese public (final consumers and buyers) that they
    could directly buy their products in the EU. The distribution system in Japan
    remains very complex. The existence of intermediaries renders the products more
    expensive for the shops and the consumers. The idea is to establish a contact
    between the EU producers and the final consumers. An idea launched by some
    trade representatives is to favour the creation of the EU buying offices in Japan in
    order to stimulate this trend and to provide necessary information. This issue
    could be outside the scope of the research but the EU companies operating in
    Japan have insisted that the problem should be mentioned in the study.


§4.    Legal analysis


The Japanese market is one of the most opened markets among those under review.
However, the European companies have experienced some difficulties on the
Japanese market. These difficulties are mainly related to the restriction of some
additives for food products and to difficulties in the import procedure.

Some requirements applicable to foodstuffs (e.g. strict requirements for additives)
could eventually be challenged under the Agreement on Sanitary and Phytosanitary
Measures (SPS) if they are designed to protect human health. The SPS agreement
imposes stricter proportionality test on the trade restrictive effect of the measure than
the general agreement.

If some of the procedures are found discriminatory or impose less favourable
treatment to imported product the provisions of article III of GATT agreement could
be used. This article imposes the national treatment obligation.

The difficulties experienced during customs clearance could be challenged under
article VIII GATT, imposing the reduction of customs formalities.

If the rules are not published or sufficiently transparent, the application of article X of
GATT could be foreseen. A detailed analysis of these and other WTO provisions
could be found in Part 21 – Legal analysis.


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                                PART 15: AUSTRALIA



§1.    The mission to Australia


§2.    The labelling requirements for imported products


       2.1.    Food labelling

       2.2.    Textile and apparel

       2.3.    Goods subject to mandatory standards under the Trade Practice Act

       2.4.    Control of labels

               2.4.1. Controls conducted by AQIS
               2.4.2. Controls conducted by the Australian Customs
               2.4.3. Controls conducted by ACCC



§3.    Problems encountered by the EU companies and importers

       3.1.    The low level of complaints on labelling requirements

               3.1.1. The EU companies practice
               3.1.2. The States labelling requirements

       3.2.    The more balanced assessment on compliance control by authorities

       3.3.    Concern expressed by importers and EU companies


§4.    Legal analysis




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§1.     The mission to Australia


The consultant conducted a mission to Australia from 4 to 8 of March 2002. The
mission aimed at meeting the Member States Trade representatives, some importers
of the EU products, and the Australian Authorities in order to collect the information
on the labelling requirements and their impact on the EU imported products. The
mission started in Sydney (meetings with Member States, importers and forwarding
agents) and ended in Canberra (meetings with Authorities and the EC delegation).
The EC delegation had kindly arranged meetings with the following authorities:

Authority                               Issues addressed
Dpt of Foreign Affairs and Trade        Presentation of the research; policy
                                        regarding labelling requirements
Australian Customs Service              Measures applied for imported Controls
                                        conducted by Customs on imported
                                        products regarding the labels. Customs
                                        labelling requirements.
AQIS (Quarantine and Inspection Service Inspections carried on imported products
Dpt of Industry, Tourism and resources  Labelling database




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Main findings


The main outcome of the mission is as follows:

   During the survey with the EU industry, some complaints were collected regarding
    the labelling requirements for textile products (and in particular carpets). As far as
    the importation procedure for foodstuffs is concerned, the EU companies have
    also expressed their concern about the new provisions of the Food Standard
    Code, which will be implemented at the end of 2002. Finally, it was also explained
    that different state requirements could constitute a barrier for the EU exports,
    while a product exported from the EU should transit or be exported to various
    States.

   The mission enabled to find out that the requirements for textile products are not
    unbearable for our exporters. According to the Member States trade
    representatives, no major complaints have been received recently. Complaints
    were more related to standards (ex anti-fire standards) than to the labelling
    requirements.

   Regarding the new provisions of the FSC, it is too early to comment their
    implementation. The interviewed importers have however expressed some
    concern about the more detailed product description requirements and were
    worried to see how AQIS will assess the labels of the products imported starting
    from the next year. However, ANZFA has stated that the new food standards are
    much less prescriptive than before. If the product composition is more detailed on
    the labels, this will also result in a lower level of physical checks (for the food
    products surveillance) at the entry point, and therefore will fasten the clearance of
    the imported goods.

   The label of the imported goods should carry a certain number of minimal
    mandatory information required by AQIS and Customs. However, depending on
    the good, certain other mandatory data (importer data) can be affixed by the
    importer after the clearance process, just before the retail phase.

   A positive element of the implementation of the labelling requirements by
    Australian Authorities is that in the majority of cases, when the label of product is
    found defective either by AQIS or Customs, it can be re-labelled by the importer.
    In some exceptional cases (intentional defective labelling), the product could be
    destroyed or sold by Customs.

   It should be noticed that at least 2/3 of the EU foodstuffs products controlled are
    hold in Customs because of defective labelling. Often, some important and
    essential data is missing on the labels (country of origin, importer’s data, lot
    number missing, label is not in English). These errors could be in most of the
    cases easily avoided.

   Labelling requirements are numerous (at federal and state levels). However,
    Australian Authorities have made a significant effort to render all requirements


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    easily available on their web sites. It is important to note that the database on all
    labelling requirements will soon be implemented by the Authorities.

   This will certainly facilitate the collection and the comparison by our exporters of
    all state requirements. It is important to note, however, that according to all
    interlocutors (importers, authorities, member States) the differences between the
    states’ labelling requirements and the federal requirements do not constitute an
    important source of concern.


§2. The labelling requirements for imported products


2.1. Food labelling


Imported foodstuffs products, wines and spirits should meet Australian standards
(either in vol1 or vol. 2) of the Food Standard Code (FSC) and all mandatory
information must be present on the label.

The Food Standards Code

The Food Standard Code is under revision

Food labelling is governed by the Food Standards Code. The Food Standard Code
prescribes Australian food manufacturing and most labelling standards. The Australia
New Zealand Food Authority has recently revised food standards. A transition period
has been decided until the end of 2002. The ANZFA website provides information
both on «old standards («volume 1) applied until 31 December and new food
standards (volume 2) to be enforced from the 1st of January 2003. Both volumes of
FSC can be consulted on the ANZFA web site

Food standards are established by ANZFA after consultation with State and Federal
and New Zealand authorities as well as with Industry. The food standards are
administrated and policed by the various state health authorities, as the standards
are adopted by reference into the various State/Territory Food or Health Acts (listed
in volume II, Standard I.I.I.).

According to the ANZFA officials interviewed, the new rules are much less
prescriptive than the current ones. The objective of the new code was to elaborate
more general standards and replace the individual standards made on product-by-
product basis.

Food packaging legislation is administered under the various State/Territory Trade
measurement or Weights and Measures Acts. The Trade Measurement (Pre-packed
articles) Regulations primarily describe how the volume statement, the name and
address of the packer must appear on the food packaging. The EU exporter should
therefore check which are the State requirements, according to the State of final
destination for texts and legal cases.



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The mandatory labelling and packaging rules

Certain labelling requirements under the Food Standard Code are mandatory: they
must appear on a label, and must respect a specified format of print size. The
mandatory data to be affixed for foodstuff products is as follows:

-      Name and address of the manufacturer
-      Name and address of the importer
-      Name of the product
-      List of ingredients
-      Content (volume)
-      Expiry date
-      Lot marking
-      Storage conditions
-      Country of origin

Data of the manufacturer / importer

The label should contain the complete name and business address of the importer.
The address must show the road or street number (if any), road or street, suburb,
town, state and territory (FSC part A1 (2).

Name of the product

There are no specific requirements.

Ingredients

Under the FSC all ingredients should be listed in the labels. Each package must carry
a nutritional information panel (FSC, 1.2.8). There are new provisions on the
presence of allergens. The imported food product has to be marked with “allergen
labelling”. However, there are no formal requirements («contains peanuts»
accepted).


Expiry date

The best before date is mandatory if the product has less than two years shelf life.
The best before, under the new rules is prescribed in the following format: «Best
before dec 02» or «Best before 12 02».

Lot marking

For the traceback of the product for health or safety reasons. The letter L, followed by
the year and date of packing must be indicated. (FSC Part A1 (3).

Storage conditions




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The label must include a statement on any specific storage conditions required in
order to ensure that the food will remain consumable during a specified period.

Country / place of origin

Compulsory. It should be reminded that made in EU/EEC is not accepted by
Australian Customs Authorities.

Standard print

Some products should be marked with a minimum print size (ex wines: 1.5 mm). In
addition, the FSC (current rules) also states that all mandatory information must be
shown (1) in the English language, (2) distinctly, legibly and indelibly, (3) so as
conspicuously visible to a prospective purchaser, (4) in standard type, (5) in
characters of uniform size, style and colour, and (6) in such colours as to afford a
distinct contrast to the background (vol 1 FSC part A1). Under the new rules (less
prescriptive but similar intent): «Unless otherwise expressively permitted by this
Code, each word, statement, expression or design prescribed to be contained,
written or set out in a label must wherever occurring, be so contained, written or set
out legibly and prominently, such as to afford a distinct contrast to the background,
and in the English language». Any information in other languages must not negate or
contradict the information in English». (vol. 2 1.2.9.)

State requirements

According to ANZFA, the FSC is a national document and is automatically adopted
into each of the States. According to ANZFA, there are no or only few different state
labelling requirements. In any case, no complaints have been received by the EU
companies on the Australian State requirements.

Alcohols

Mandatory statements

The Food Standard Code prescribes Australian wine manufacturing and most
labelling standards. The Australia New Zealand Food Authority has recently revised
food standards. The ANZFA website contains both «old standards» (volume 1) and
new food standards (volume 2). The new requirements will be enforced at the end of
2002.

Food standards are established by ANZFA after consultation with State, Federal and
New Zealand authorities as well as with Industry. The food standards are
administrated and policed by the various state health authorities, as the standards
are adopted by reference into the various State/Territory Food or Health Acts (listed
in volume II, Standard I.I.I.).




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In particular, there are specific provisions regarding the size and style of print,
labelling and advertising, additives, contaminants, residues, processing aids 106, and
the definitions of spirits and liquors107

Mandatory statements to be affixed on the back, neck, front, and label of the
products to be imported (not in bulk) in Australia are 108:

            -   product denomination: winery name/trade mark/business or brand
                name. Under the FSC, the wine must have an appropriate designation
                on a label, such as «wine» or «Chardonnay» (variety» or generic
                name). The designation must be of a standard type of 3 mm. (FSC, vol.
                2-1.2.2.

            -   name and address of the importer

            -   country of production: this statement is deemed to be correct where the
                name and address of the manufacturer are present in the label and the
                address contains the name of the country in which the alcohol was
                made or produced109. For wines produced with blend from two or more
                countries of origin, each country in a blend must be marked (ex
                Produce of France 90%, Chile 10%).

            -   alcoholic strength : mandatory in the form «X% alcohol by volume» or
                «X% ALC/VOL» or words and expressions having a similar effect
                expressed in the nearest first decimal place. It must be conspicuously
                visible and may be on a front, back or neck label. The minimum size is
                1.5 mm. If a mixture of capital and lower case is used, the minimum
                print height for the capital is 2.5 mm and a proportionate size for the
                lower case.

            -   Volume statement: mandatory in front label, in litres or, where not
                exceeding 1000 ml, in millilitres. Size: 3.3 mm. (it is the only mandatory
                requirement in the front label)

            -   Lot number

            -   Units of alcohol statement: mandatory for all alcohol drinks, in terms of
                «contains approximately ….standard drinks». (for example, wine at
                12.5 ° contained in a bottle of 750 ml will be labelled as «contains
                approximately 7.4 standards drinks».

            -   Best before: only for wines where plastic or other non glass packaging
                is used and which shelf life is less than 2 years. However, if a the
                description and presentation of the wine claims or implies certain
                qualities (freshness, drink now etc …) then, a best before date in


106
    Food Standard Code, Preliminary provisions, General standards.
107
    Food Standard Code, Alcoholic beverages definitions.
108
    Except the volume statement, only in the front label.
109
    Information kindly transmitted by the Scotch Whiskey Association and verified during the mission.


CEEI –Labelling – Final Report –16 August 2002                                                    314
                respect of that quality may be required even if the wine is packed in
                glass110.
            -   Standard drink information: for wines produced o packed after 22/12/95.
            -   Additives: if any.

For product imported in bulk, it will be compulsory to add on the label the details of
the bottle or the packing number allocated by the appropriate State Weights and
Measures office. For the spirits bottled in Australia from imported bulk spirits, the
words «bottled in Australia» must appear on the label in standard type.

Are not mandatory: the details of the producer, their date of bottling, and the
ingredient list, the additives list, nutrition statement or health warning statement.

The FSC requires that all the mandatory information for a wine label shall also be
reproduced in the outer carton, if the product is to be offered to consumers in the
carton111. Individual gift cartons are required to comply with all mandatory labelling
requirements.

Under the Trade Measurement (Pre-packaged articles) Regulations, the name and
address of the packer, or of the person for whom the articles were packed is
required. The carton must indicate either the total volume of the inner package or, the
number of packages and the volume of each package (eg.12 X 750 ml).

Wine casks should be marked as any other type of container, but in addition, they
should carry a best before date.(FSC, vol. 2, standard 1.2.5).

Woods barrels and other wood packaging are controlled by AQSIQ in order to verify
the absence of foreign vegetal or animal organism in the wood112.

Restricted terms

Under the Australian Food Standard Code, some terms which are generally used in
the EU labels are defined as follows:

     Age terms: the words «matured», «old», or «very old» or suggestions implying
      that the spirit has been matured for a period of not less than 2, 5 or 10 years may
      not appear on the label unless the spirit has matured in wood for a period of not
      less than 2 years (in the case of «matured»), 5 years (in the case of «old») and 10
      years (in the case of «very old»).

     Pure: the word «pure» shall not be used in a label or attached to a package
      containing food, unless used to describe (a) a single ingredient food which
      contains no additives or (b) an ingredient which complies with (a) and is used in a
      food which contains no additives.
     Cream: shall not be written in the label or attached to a package containing
      liqueur the content of which do not comply with the liqueur definition established
      by the Food standard Code.
110
    « Australian Wine label law », Australian Wine and Brandy Corporation (updated January 2002).
111
    FSC, vol. 1, p        art. A1, vol 2-1.1.1. and 1.2.1.
112
    For detailed description of the treatment required by AQIS, see - www.affa.gov.au


CEEI –Labelling – Final Report –16 August 2002                                                  315
2.2. Textiles and apparel


All textile products imported into Australia must carry a label with mandatory data:

           -   country of origin: the product must be transformed significantly in the
               country indicated “made in” and if 50% of the production costs have
               been spent in this country. To be marked “product of”, if all raw
               materials are originating from the country indicated in the label.


2.3.   Goods subject to mandatory standards under the Trade Practice Act


Under the Trade Practice Act applicable to consumer products, there are some
mandatory labelling requirements for some consumer products. In particular:

   Beans bags (TP regulation): must carry a label warning of choking hazard of
    lightweight beads and any openings must be child resistant.

   Care labelling – clothing and textile products: (based on AS/NZS 1957:1998 –
    gazette 15/7/98). Instructions for the correct care and maintenance of clothing,
    household textiles, furnishings, upholstered furniture, bedding, piece goods and
    yarns. Instructions must be accessible at the point of sale, in most cases
    permanently attached; there are however some exceptions.

   Children nightwear and limited daywear having reduced fire hazard (Based on
    AS/NZS 1249:1999). This mandatory safety stipulates two flammability labels.

   Cosmetics and toiletries (TP Regulation as amended) unless covered by the
    therapeutic goods Act, all cosmetics and toiletry products must be labelled with a
    full list of their ingredients.

   Elastic luggage strap: (TP Regulations notified in the Commonwealth of Australia
    Gazette dec. 1989 and October 1999): stretch tie-down straps and cords,
    including octopus straps must carry a label warning of eye injury if overstretched.

   Paper patters for children’s night-clothes (based on AS 1249, Gazettal of AS
    1249-1990 occurred on 20/1/93. Gazettal of AS 1249:1999 occurred on 2/9/99).
    Must carry a label advising of flammability of certain fabrics.

   Tobacco products (TP regulation) cigarettes, cigars and smoking tobacco to carry
    warning and explanatory labels.

   Toys: there are various standards governing the labelling of toys. First, regarding
    the age grading and age labelling on toys packages: all toy packages should
    suggest age of use. In order to help the manufacturers, a set of guidelines has
    been included in AS 1647. Typical designation are «recommended for children


CEEI –Labelling – Final Report –16 August 2002                                     316
   from eighteen months to three years» or «Not recommended for children under
   three years of age». Second, there is a mandatory cautionary labelling: specific
   labelling requirements imposed by AS 1647 cover such products as crib gyms,
   electrically-operated toys, chemistry sets, swim aids and such toy features as
   functional points and edges (ex: paper doll scissors and toys sewing kits needles).
   Cautionary labels must be bold, legible and conspicuous, printed in contrasting
   colour. Should a manufacturer misrepresent compliance with AS1647 standard,
   the company will be subject to a prosecution.

The Database on labelling requirements

In the coming months, Australian Authorities will set up an electronic labelling
database. The database will present the different requirements, product by product.

The setting of this database was required by the domestic industry in order to ensure
the compliance of their products with the various state and federal labelling
requirements.


2.4. Control of labels


In most of the cases, at least two authorities will control the compliance of the
imported products with labelling and marking requirements:

           -   AQIS (the Australian quarantine service): before the clearance process
           -   The Customs Authorities during the clearance process
           -   The ACCC representatives, after the clearance process (in the retail
               phase)


2.4.1. Controls conducted by AQIS

Regarding the foodstuffs products (food and wines), AQIS will control the compliance
of the products aimed to be imported with the provisions of the Food Standard Code

           -   the batch number
           -   the country of manufacture
           -   best before date for products with a shelf life of less than 2 years
           -   the ingredient list.

According to AQIS, 2/3 of the products of the products checked ,(or 3% of total
imports), are retained in customs since they are found not complying with the
labelling requirements. While the inspection finds a product not in conformity, AQIS
issues a holding order to the importer. The following five shipments of the importer
will then be hold for inspection. After 5 consecutive inspections, the holding order
may be revoked. The products not in conformity are re-exported except if the product
is so contaminated that requires its destruction, if the product can be re-categorised
as an animal feed or if the non compliance problem could be easily resolved. This is
the case for a defective labelling (majority of the holding orders affecting EU exports).


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According to AQIS, the system should be modified in the coming months. Instead of
inspecting the 5 next shipment of the same product of the same producer (exporter),
the AQIS will carefully inspect the 2 next shipments received by the same importer.

It has been recognised by various Member States trade representatives (Italy, Spain)
that most of the products held in Customs for mislabelling could have avoided the
holding, if the exporter would have respected the basic labelling requirements. Often,
the product is hold because the product’s description in English is missing (list of
ingredients), the country of origin is mot mentioned, inadequate lot number, no
standard drinks mentioned in alcohol, no best before date for chocolates etc ….
These problems could therefore be avoided.

It has to be underlined that there is however, some discrepancies between AQIS
stating that some products are hold because of the information missing and other
sources (importers) stating that the importer’s information can be affixed after
importation in their warehouse. According to AQIS, they can accept white canned
products, provided that the products mention at least the mandatory information:
name of the product, imported by/vendor data, lot identity, best before date, and
nutritional information.

In all cases, the importer has affixed a new label or corrected the existing label in the
customs warehouse.

According to AQIS, the importer can always deal with the food before inspection and
correct a defective label.

AQIS checked the goods identified by ANZFA after a risk assessment has been
reduced. ANZFA will classify the product either in the category of «risk food» (more
controlled) or into the category of «surveillance food».

For surveillance food, under the new rules, the physical controls have and will be
reduced. For example, recently it has been decided that AQIS will not check anymore
the alcohol content and will only conduct visual and labels checks on the alcohol and
spirits. The FSC has moved towards a more detailed consumer information. AQIS
cannot spend too much time on tests controls (for example, they check the existence
of a nutritional panel but loose less time in tests analysis). These will be rather
conducted by State Authorities during the retail phase.

ANZFA decides which are the products considered as «risk food» depending on the
previous compliance history (ex tuna). These products are therefore carefully
checked by AQIS upon arrival. They take samples and hold the products until the
tests are performed (at least 10 days). The presence of heavy metals, pesticides,
max. residus limits, the colours additives allowed, etc is verified.

In total , 2/3 of the products checked are held on the basis of defective labelling and
1/3 for other reasons such as the presence of heavy metals, pesticides.




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2.4.2. Controls conducted by Australian Customs

Under the Commerce (Import) Regulations 1940 implementing the Commerce (Trade
Descriptions) Act 1905 113 , Customs Authorities control some mandatory data that
shall be affixed on the labels of the imported goods.

              -   country of origin: made in + name of the country. The “made in EU” or
                  “made in EEC” as country of origin is not accepted;
              -   a fair description of the product
              -   if necessary, the quantity (in volume or weight). If the weight is
                  indicated, it is compulsory to indicate whether if it is a net or gross
                  weight.

Customs Authorities do recognise that the definition of the trade description is very
broad, and is sometimes difficult to enforce. There are mainly three aspects to be
respected:

1.       The requirements should be indicated on the labels
2.       The goods cannot carry a false trade description.
3.       The label should be permanent.

The customs labelling requirements must be affixed on the goods before the goods
are presented for clearance. Some data can, however, be affixed after the clearance
(importer data).

However, in the majority of cases, the importer will be allowed to correct a wrong
label, except if there is doubt about the intentional wrong labelling (e.g. false country
of origin). In this case, Customs can decide either to destroy or sell the goods.


2.4.3. The control conducted by ACCC

ACCC is the Authority, monitoring the compliance with the requirements of the Trade
Practice Act. The Acts covers two main areas: (1) the competition and (2) the
consumer protection (Part IV). Under this act, if a product caries a statement, it must
be correct (sections 52 and 53). If a consumer makes claim, the ACC officials will
verify if a given statement on a label is correct or not. Section 52 deals with the
prohibition against misleading deceptive conduct. Section 53 (a) and b)) deals with
the country of origin mention (If the country of origin is mentioned, this should be true.
According to criteria followed by ACCC, the product must be substantially
transformed and that at least 50% of the production costs must be spent in the
country stated as origin country). The «made in EU» cannot be accepted under the
legislation (according to ACCC, «a consumer would be entitled to ask: «Where is the
EU?»).

Any person and even the competitors are entitled to invoke of the Trade Practice Act
in front the Australian Court. For example, rice imported from Pakistan was labelled


113
      see - http://www.customs.gov.au


CEEI –Labelling – Final Report –16 August 2002                                        319
«pure bashmati rice». A claim was made and the importer was took the importer to
the Court, because the product was found mislabelled.

Australia being a federal country it is important to determine the competence of the
Federal Government and the State Governments. For foodstuffs, often the State
territory Health Authorities will pursue on basis of the Health Act. However, when
there is a «national matter», ACCC is competent in this case the deficient labelling
must be however sufficiently public detriment. According to ACCC officials, even if
the legislation in the states can vary, this does not require the importer or the
domestic producer to affix a different label according to the state of final destination.
There is a mutual recognition principal: if an importer brings a given product in one
State and it is accepted in this state, it will be accepted in another State.


§3. Problems encountered by EU companies and importers

3.1. The low level of complaints on the labelling requirements


As far as the labelling requirements are concerned, there are only few complaints
made by the EU industry. EU exporters have not mentioned differences as
unbearable barriers.


3.1.1. EU companies practice

   In general, (textile, foods, wines, cosmetics), the EU companies got used to the
    labelling requirements. As it is the case for other markets (Japan), EU companies
    (ex big brand companies) produce and affix themselves the required label on the
    basis of the information easily available on the web sites. This is the case of big
    companies and companies producing specific products (wines, foodstuffs). Big
    companies have integrated in their costs the production of different labels for each
    export market. Therefore, various operators prefer to produce and affix the
    labelling in the Member State of origin (ex France). Some products also are
    delicate and difficult to be handled with care (confectionery). It is therefore
    estimated preferable to integrate the Australian requirements in the original
    packaging rather than let the importer to affix a sticker. Anyway, the original label
    should carry the compulsory data for customs purposes (see supra).

   Sometimes, the importers affix the counter-labels in their warehouses (a separate
    sticker which contains all data not compulsory for clearance, such as importers
    data).

   Therefore, Australia does not present the problematic issues of «Who and how»
    affixing the required label. There is no compulsory obligation to affix the label in
    the EU Member State of origin. It is possible to affix or to correct the label during
    the clearance process, if AQIS or Customs found that label is not conform with the
    requirements.




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3.1.2. The states labelling requirements

   The fact that Australian States are entitled to issue specific labelling requirements
    was not identified as a major difficulty for the EU exporter, importer or retailer of
    the EU products (as it is the case in the US, for the retail of wines and spirits for
    example). Under the Australian constitution, there must be free trade among the
    different states. The same standards established at federal level on foods,
    pharmaceuticals, medical devices, motorcycle equipment are adopted by the
    States.

   Even if some states can and have developed additional and different labelling
    requirements (ex weights and measures, volume requirements for alcohol,
    warnings for tobacco), the basic requirements are generally similar. Importers of
    spirits and tobacco stated that it is possible to issue a single label complying with
    all state requirements. For example in South Australia, there is a state
    requirement on the bottle deposit «5 cents refund at collection deposit when sold
    in S.A». The importer can add this mention to the label of products sold in other
    states. ANZFA recognised that States can have other requirements but it is not
    considered as a problematical issue given the mutual recognition principal
    between States.

   Other interlocutors stated that there is a formal agreement signed in 1995
    between the States and the Federal power which allows a recognition by states of
    different requirements (if a producers complies with the State requirements in one
    State, this should be recognised by the others). It is nevertheless interesting to
    note that some officials recommended that the EU exporter complies with the
    stricter requirements (in order to be on the safe side), which enables to think that
    the issue is may be more important than explained.


3.2.   The more balanced assessment on compliance control by Authorities

During the survey with the industry and the mission, there were no specific
complaints collected regarding the controls conducted during the retail phase (no
discrimination found).

However, some importers reported having experienced some difficulties given the
diversity of Authorities conducting the compliance control to Australian labelling
requirements (in the retail phase). For example, an importer of wines and spirits
complained that for the same products, controls (and sanctions imposed) can be
conducted by at least three different authorities on different legal basis:

           -   ANZFA under the FSC
           -   Weight and measures, under the Weight and Measure Act
           -   ACCC under the Trade Practice Act.

For the control of the alcohol content, the authorities are reported to have different
standards regarding the tolerance level of error. This can lead to a situation when
one authority accepts the label while another will reject it. It can be estimated that


CEEI –Labelling – Final Report –16 August 2002                                       321
those different provisions and controls are not transparent.

ACCC has recently decided to require the retirement from the shelves of a product
labelled and imported as scotch whiskey, arguing the label was mis-representing.
The product was imported with alcohol degree of 37°, which is lower than the
content admitted for scotch whiskey (40%). Following that decision, the Customs
Authorities agreed not to allow the non-conform products to use the denomination
scotch whiskey. However, on the same complaint, ANZFA and Weight and Measures
have not taken a decision.

3.3.   Concern expressed by importers and EU companies

Even if most of the operators adjust their labels in order to be able to comply with
Australian requirements, there is a certain concern: regarding the new labelling
requirements contained in the FSC (will be applied in 2003) and some other
requirements for consumer goods.

In particular:

   Ingredients/product composition: it is estimated that the new requirements to
    indicate the content of each ingredient will cause some difficulties for «ready to
    drink products» (compulsory to give a percentage of each defining ingredient).
    The product definition is sometimes too detailed (for example , for «pims», they
    have to provide the detailed composition of this blend of spirits). These importers
    of spirits do estimate that the labelling of spirits should be rather based on the
    alcohol content and not on the product composition and processing details.

   Labelling of dairy products: in some cases, (ex. Baylies) the mention «Fresh
    Irish dairy product» is not accepted and the importer has to affix a specific
    mention attesting that the product is a dairy product.

   Labelling of mineral water: imported EU mineral water was found containing
    excessive volume of fluorite (Sweden) and therefore was stopped by AQIS
    Authorities.

   Herbal medicine: requirements are considered too strict for imported products
    (Sweden).

   Carpets labelling: the imported carpets have to comply with anti-fire standards
    and labelling requirements. Some Belgian exporters and their customers
    encountered difficulties to comply with these very strict requirements.

   Pharmaceuticals: different labels should be attached according to the type of
    product (whether a product is curative or not). This results in additional costs and
    prevents SMEs’ exports .

   «Made in»: Australian Authorities (ACCC) still refuse the made in the EU.
    However, it seems that under certain rules, the made in the EU could have been
    accepted since 1998.



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Conclusion


   Compared to other countries under review, labelling requirements in Australia
    cause fewer difficulties to our exporters. Most of the exporting companies
    (foodstuffs, wines) have adapted their labels and packaging to Australian
    requirements.

   If the EU company does not want to afford the additional costs of a specific label
    or even of a sticker (which will be allowed), the importer can affix them either
    before clearance (mandatory customs and AQIS requirements) or before retail.


   Difficulties of exporters and importers are rather related to the compliance with
    Australian standards than the affixing of a specific label. Two examples can be
    quoted. The first concerns the food standards, which often do not match with EU
    standards. For mineral water, for example, EU exports were stopped given the
    differences in the aluminorite level (same occurs for energy drinks, fish canned
    products, etc.). Second, in the textile sector, the anti-fire requirements for children
    nightwear or for carpets render the exports difficult. The affixing of the
    corresponding label remains therefore a secondary problem.


§4.    Legal analysis


4.1.   WTO rules


The Australian market is not considered as a very difficult market for the European
exporters. However, the European companies have experienced some difficulties on
the Australian market. These difficulties are mainly related to the implementation of
food standards, the fire labelling for textile products and the existence of various
State requirements for foodstuffs.

Some requirements applicable to foodstuffs (e.g. strict requirements for additives,
specific product standards for foodstuffs to avoid diseases) could eventually be
challenged under the Agreement on Sanitary and Phytosanitary Measures (SPS).
The SPS agreement imposes stricter proportionality test on the trade restrictive effect
of the measure than the general agreement.

Fire labelling requirements for textile products could be challenged under the
provisions of the TBT agreement if their trade restrictive effect is more important than
the advantage for the consumer.

If some of the procedures are found discriminatory or impose less favourable
treatment to imported product the provisions of article III of GATT agreement could
be evoked. This article imposes the national treatment obligation.




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If the rules are not published or sufficiently transparent (e.g. State requirements
which are not published or difficult to find), the application of article X of GATT could
be foreseen.

A detailed analysis of these and other WTO provisions could be found in Part 21 –
Legal analysis.


4. 2. Mutual recognition agreement with Australia


The EU and Australia do not have a general trade agreement. However, the EU and
Australia have signed in 1998, a Mutual Recognition Agreement in relation to
conformity assessment, certificates and markings114.

The two parties should recognise the conformity assessment, testing and marking
performed by authorised bodies. The agreement however applies only to the
products expressly included into the annexes. The annexes include the following
products: medicinal products GMP inspection and batch certification, medical
devices, telecommunications terminal equipment, low voltage equipment,
electromagnetic compatibility, machinery, pressure equipment and automotive
products.

However, the application of this agreement has encountered several difficulties and
the agreement is still not completely implemented.




114
      OJ 1998, L229


CEEI –Labelling – Final Report –16 August 2002                                       324
                                    PART 16: CHILE



§1.    The EU industry assessment

§2.    The mission to Chile

§3.    General labelling requirements

§4.    Labelling requirements for foodstuffs

§5.    Labelling of alcoholic beverages

§6.    Labelling of food for medical use and drugs

§7.    Labelling of cosmetics

§8.    Labelling of textiles

§9.    Legal analysis




CEEI –Labelling – Final Report –16 August 2002       325
§1. The EU industry assessment

The EU companies have not expressed complaints on the labelling and marking
requirements in Chile. Chile is considered as an open market and the labelling
requirements and procedures are estimated to be transparent.


§2. Mission to Chile


The Mission to Chile has been conducted from 17 to 19 December 2001. The
objective of the mission was to meet the competent authorities, the EU Trade
representatives and the importers of EU products.



§3. General labelling requirements

The general labelling requirements in Chile are established by the Law N°19.496 on
the protection of consumer rights. The article 32 of the Law states that the basic
information on national and imported products, such as their identification, the use
instructions and guarantees should be in Spanish. This information should be legible,
conspicuous and in conformity with the regulations applicable in the country. Other
languages are also permitted on the label. The information shown on the label cannot
be misleading for the consumers.

In addition of these general labelling requirements, Chile has additional labelling
requirements on foodstuffs, drugs and foodstuffs for medical use and cosmetics.


§4.    Labelling requirements for foodstuffs


The labelling requirements for foodstuffs are established by the Decree N°977 of
1997 (Decreto supremo N°977, D.O. 13.05.1997). This decrees applies to all the
foodstuffs designed for human consumption and to additives. According to the
Decree, the labelling of pre-packaged foodstuffs should contain the following
information:

   -   food name;
   -   net content expressed in units of the decimal metric system;
   -   name and legal address of the manufacturer, packer, distributor or importer of
       food products, according to the case;
   -   country or origin (compulsory for the domestic and imported products);
   -   the number and the date of the resolution and the name of the Health Service
       that authorises the establishment that elaborates or packs the product or allow
       the entry;



CEEI –Labelling – Final Report –16 August 2002                                    326
   -   the date of manufacture or date of packaging of the products, which should be
       indicated on a visible place and in the following order:
               the day, with two digits
               the month, either with two digits or the first three letters of the month
               the year, with two digits;
   -   the date of expiry, presented in the same way as the date of production;
   -   all ingredients and additives must appear on the label with the specific name in
       quantity or percentage and in decreasing order;
   -   additives indicated with their specific names;
   -   storage instructions;
   -   use instructions if needed.

It has to be underlined that for imported products, it is required to affix to the label the
day and the number of the Resolution of the Health Service authorising the
importation of the products.

This authorisation is given after inspection by the Health Authorities of the products to
be imported at the port of entry. However, for the products which are frequently
imported, the Health service could authorise the labelling in the country of origin. This
authorisation should be requested by the importer or his representative. A previous
importation is then be considered as reference. Its resolution N° is to be indicated on
the labels in the country of origin. The products imported under this modality must
have been stamped on the package with its lot number.

All the information, specified in the decree, which is not indicated on the original label
or is not in Spanish, or is not indicated in conformity with the provisions of the decree,
must be attached on additional label.

The nutritional labelling is only required for the products with nutritional claims. The
nutritional labelling contains the energetic value in Kcal, the quantity of proteins,
carbohydrates and fat in grams, the quantity of any other nutrient, dietetic fibre or
cholesterol.

It must be also noted that the importation of agricultural products from animal origin is
authorised only if the establishment of the producer is homologated by the Chilean
Sanitary Services. In order to be inspected by the Chilean Sanitary Services, the
producer should already been homologated in the European Union. The inspectors
should be sent to the European Union in order to certify the establishment in the EU.
The homologation is valid for a 2 year period.

The importation of genetically modified food (GMO)is prohibited in Chile.

There are specific standards defining the essential characteristics of the products for
milk and milk products, ice-creams, fat and oils, meat products, fish, seafood, eggs,
products with cereals, sugars and honey, jams, canned products, pickles, dehydrated
soups, spices, condiments and sauces, mineral water, non-alcoholic drinks and food
for special dietary uses.

No complaints have been addressed by the European exporters or EU Industry
associations regarding the labelling of foodstuffs in Chile.


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§5.       Labelling of alcoholic beverages


Law N°18455 of 31 October 1985 and Decree N°78 of 31 July 1986 provides for the
labelling requirements applicable to alcoholic drinks and liqueurs :

According to these requirements, the labelling of alcoholic beverages should indicate
at least the following mentions:

-         the name of the product (generic and/or fantasist name);
      -   the name of the manufacturer or bottler;
      -   the country of origin;
      -   the name and the address of the importer or distributor;
      -   the volume of the product should be expressed in metric units;
      -   the alcoholic strength should be expressed in degrees Gay Lussac;
      -   the composition should be indicated for the cocktails.

The labels can not contain indications which do not correspond to the natural
characteristics of the products. The indications must be in Spanish, with the
exception of the name of the product, which can be in other language.

The alcoholic beverages must be registered in Chile before importation. This
registration is required under Article 59 of the Law 18.455. The registration procedure
must be performed by the importer.


§6. Labelling of food for medical use and drugs


The labelling of food for medical purposes and drugs are regulated by the Supreme
Decree N°1876 of 1995. These products are subject to pre-marketing registration
with the Institute of Public Health115. The application for the registration must include
inter-alia 3 copies of the labels in Spanish, as well as copies of the packaging and
information notice. The label of the products must contain at least the following
information:

      -   the name of the product ;
      -   the pharmaceutical form;
      -   the net quantity;
      -   the formula composition: active ingredients;
      -   the name and address of the producing laboratory and the importer;
      -   the administration of the product;
      -   the use instruction and the precautions for use;
      -   if the product needs prescription or not;
      -   the expiry date;

115
  Information on the registration procedures might be obtained on the web –site of the Institute for
Public Health – www.ispch.cl


CEEI –Labelling – Final Report –16 August 2002                                                 328
   -   the number of the Institute for Public Health register (ISP) followed by the lot
       identification of the product;
   -   the storage conditions;
   -   other information, which could be considered necessary by the Institute for
       Public Health and which will be attached after the registration procedure.

The labels should be attached on the external part of the packaging and they should
not be in contact with the product.


§7. Labelling of cosmetics


The cosmetics should also be registered with the Institute of Public Health prior to
importation (Supreme Decree 1876). The importer applying for the registration should
present 2 copies of the label and of the information notices. The labelling of cosmetic
products should contain the following information:

   -   the name of the product;
   -   the cosmetic form;
   -   the net content according to the metric system;
   -   the complete formula including first the active ingredients. If it is not possible to
       list the formula on the product, an additional information note should be
       attached to the product ;
   -   the name and address of the manufacturer and the importer;
   -   the use instruction and precautions;
   -   the expiry date;
   -   the number of the Institute for Public Health register (ISP) followed by the lot
       identification of the product;
   -   any other information, which could be considered necessary by the Institute for
       Public Health and which will be attached after the end of the registration
       process.

No problems with the labelling requirements have been reported to the consultant
during the research and the mission in the Chile. The procedures are well known by
the importers and the time limits for their realisation are not considered as excessive.


§8.    Labelling of textiles


According to the importers, care labelling is needed for the apparel and textiles
products. However, the EU care labelling is accepted and the importers have not
experienced difficulties with the Chilean requirements.




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§9.    Legal analysis


European companies and EU Industry associations did not complained about specific
difficulties regarding the Chilean labelling requirements. The rules are considered to
be transparent and in conformity with the internationally used practices.

If the operators want to check the validity of a given measure under the WTO
requirements, a detailed analysis of the main provisions regarding labelling
requirements could be found in Part 21 – Legal analysis.




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                                PART 17: PARAGUAY


§1.    The EU industry assessment

§2.    Labelling requirements

       2.1.    General labelling requirements

       2.2.    Labelling requirements for foodstuffs

       2.3.    Labelling requirements for alcoholic beverages and beer

       2.4.    Labelling of textiles and footwear

       2.5.    Other labelling requirements


§3.    Problematical labelling and marking requirements in Paraguay


§4.    Legal analysis




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§1. The EU industry assessment


According to the EU companies, Paraguay implements burdensome certification
procedures for some products (foodstuffs, some industrial products and alcohol). The
goods should be accompanied by a special conformity certificate. A laboratory
analysis should also be performed in Paraguay. The number of the certificate must
appear on the label.

As far as alcoholic beverages are concerned, the product should be registered as the
other products for human consumption with the Ministry of Health and Social Welfare.
The procedure is burdensome (application form of minimum 6 pages) and the brand
registration is valid for 5 years. The number “RSPA” (Registrao Sanitario de
Productos Alimenticios) must be included on every package, which reaches the
consumer.

Moreover, the importer registration number (the RUC: Registro Único de
Contribuyentes”), along with his name and address, should also be affixed to the
label. In addition, fiscal stamps must be applied to each bottle by the importer during
Customs clearance as a proof of payment of the ISC. The stamps’ cost is Gs 1.00
per bottle. Finally, the labelling should be in Spanish and should respect Paraguayan
and Mercosur legislation.



§2.    Labelling requirements


2.1.   General labelling requirements


Paraguay possesses a wide range of labelling requirements. The country has
adopted the majority of the Mercosur labelling regulations on foodstuffs, cosmetics
and pharmaceuticals. In addition, Paraguayan authorities implement some additional
labelling requirements, for example, specific labelling for locally produced and
imported bier. In some cases, the imported products must be registered before
importation by the Ministry of health according to the Paraguayan Sanitary code and
the registration number must be shown on the product’s label.


2.2.   Labelling requirements for foodstuffs


The labelling requirements for foodstuffs are established by the Decree 8.734/95.
This decree transposes in the Paraguayan legislation all the Mercosur resolutions
adopted by the Group of common Market and concerning the technical specifications
of goods. The resolutions related to labelling of the foodstuffs are the following:

GMC/RES/41/92 concerning the size of the labels of packaged products;


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GMC/RES/12/93 concerning the labelling of packaged foodstuffs;
GMC/RES/18/94 concerning the nutritional labelling of packaged foodstuffs;
GMC/RES/21/94 concerning the declaration of ingredients of packaged foodstuffs;

According to these regulations, the products must respect the compulsory size of
letters for the indication of the net content of the product. The required size of letters
depends on the size of the principal display panel:

Size of the principal display panel                     minimum size of the letters
In cm²                                                   in mm
Less than 10 and more than 40                             2.0
Between 40 and 170                                        3.0
Between 170 and 650                                       4.5
Between 650 and 2600                                      6.00
Over 2600                                               10.00.

The compulsory information which must appear on the label is the following:

-      The list of ingredients (in decreasing order);
-      The name and address of the producer and the importer and the registration
       number of the importer;
-      The net content;
-      The country of origin;
-      The lot number;
-      The preparation and the use instructions (if needed).

In addition to this labelling requirements, the nutritional labelling is compulsory for all
food products with nutritional claims. For the other products, the nutritional labelling is
not compulsory. The nutritional labelling must indicate the energetic value, the
proteins, fat, lipids and alimentary fibres and nutritional value.

Under the Decree 1.635/99 116, the registration for all food products, additives for
human consumption and drinks is compulsory. It is conducted by the Ministry of
Health (National Institute for Food Nutrition). Without registration, the goods are not
allowed for clearance.
The products of animal and vegetal origin are exempted form this registration.
However, they must be registered with the Ministry of Agriculture. The registration is
valid for 5 years and should be renewed after this period. The registration number
must appear on the labels of food products, drugs and additives.


2.3.       Labelling of alcoholic beverages and beer

Labelling of spirits and wines

Labelling of spirits and wines is also subject to requirements of the Decree 8.734 on
labelling of packaged foods, including alcoholic beverages. In addition, the Decree
1.632 defines some specific labelling requirements.

116
      implementing article 175 of the sanitary code.


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Therefore, the mandatory requirements are:

-   The product description;
-   The trademark;
-   The net content;
-   The country of origin;
-   The name and address of the producer;
-   The lot identification;
-   The ingredient list (apparently the spirits are exempted from this requirement)
-   The name and address of the importer (can be attached in the country of origin or
    on arrival in customs).

According to the national Paraguayan legislation (Decree 43.321 of 1932), the date of
bottling, the alcoholic strength, the brand registration number and the importing
company registration number must be shown on the label.

Labelling of beer

Under the Resolution N° 6/98 of the Ministry of Industry and Commerce, the labelling
of beer (as required by the article 1 of the Decree 18.567/97) should be an original
labelling. It cannot be subject to any subsequent modification.

The article 1 requires the following data to be shown on the labels of beer products:

-   The name of the product;
-   The list of ingredients;
-   The net content;
-   The country of origin;
-   The name and address of the manufacturer;
-   The name, the address and telephone number of the importer
-   The lot number
-   The date of bottling
-   The number of the registration of the product with the ministry of health
-   The alcoholic strength


2.4.   Labelling of textiles and footwear

Labelling of textiles and footwear is established by the Decree 18.568/97. This
Decree applies to the products of chapters 61,62,63,64. All these products must
show the following information on the label:

-   The country of origin;
-   The name and address of the manufacturer;
-   The name and fiscal number of the importer;
-   The product composition:
    for the textiles- the fiber composition should be indicated with a special mention of
    the recycled materials



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    for the products of chapter 64 (footwear) the composition and materials of the
    upper part, inner part and the soles must be indicated
-   The care labelling is compulsory for apparel products.

The products must be labelled from origin and presented for customs clearance
with labels complying with the Paraguayan requirements.

The Ministry of industry and Commerce have issued the Resolution 4 of 1998
providing that the labels of apparel products must be sewed to the product. For
footwear, the information should be stamped or put by sticker on the product.


2.5.   Other labelling requirements


Paraguay implements some other labelling and packaging requirements. The country
has transposed in its internal legislation almost all Resolutions of the Mercosur Group
of Common Market.

They concern for example:

-   The establishment of registers for cosmetic products,
-   The list of permitted colourings,
-   The list of ultra-violet filers permitted for use,
-   The requirements for registration of pharmaceutical products,
-   The registration of cosmetic products,
-   The list of the ingredients used in products for personal hygiene, cosmetics and
    perfumes.

 It is important to notice that for all products requiring registration; the registration
number should be affixed on the label before importation. The importers must present
a copy of the labels for the registration procedure.


§3.    Problematical labelling and marking requirements in
       Paraguay


The European companies have mainly complained about the registration procedures
for food products, beverages and cosmetics. The procedures are slow and additional
inspections are performed during customs clearance. The labelling of textiles and
footwear products, which should be performed from origin, is also considered as
problematical. However, it seems that in some cases, the application of the
Paraguayan requirements is not very strict and the correction of labelling can be
performed in Customs.

However, the companies exporting to Paraguay must be informed about the labelling
requirements and packaging conditions established in the country, in order to avoid
delays during customs clearance and additional penalties.



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§4.    Legal analysis


The European companies have experienced some difficulties on the Paraguayan
market. These requirements are mainly related specific certification procedure
foodstuffs and alcoholic beverages.

The procedure could be analysed under the scope of the SPS Agreement if its aim is
to protect human health from additives contaminants and diseases. The trade
restrictive effect of the measure could not be more trade restrictive than necessary to
protect human health.

The rules could be analysed under article III of GATT agreement if they are
discriminatory for imported product.

While the rules are not published or are not sufficiently transparent, the application of
article X of GATT could be foreseen. A detailed analysis of these and other WTO
provisions could be found in Part 21 – Legal analysis.




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                                 PART 18: COLOMBIA



§1.    The EU industry assessment

§2.    Labelling requirements

       2.1.    Labelling requirements for food products

       2.2.    Labelling of alcoholic beverages

       2.3.    Labelling of cosmetics and drugs

       2.4.    Labelling of textile products

       2.5.    Project for eco-labelling in Colombia


§3.    Problematical labelling and marking requirements in Colombia


§4.    Legal analysis




CEEI –Labelling – Final Report –16 August 2002                        337
§1. The EU industry assessment


No complaints have been expressed by the European companies exporting to
Colombia. This is mainly due to the fact that those companies are mainly working
with local importers used to the Colombian procedures. Colombia does not have
specific labelling requirements, except for foodstuffs, alcoholic beverages, cosmetics,
pharmaceuticals and textile products.



§2.       Labelling requirements in Colombia


2.1.      Labelling requirements for food products


Food products are subject to special labelling requirements aiming at protecting the
consumer health. These requirements apply to the domestic and imported goods. All
food products imported in Colombia must be previously registered.

The National Institute for Vigilance for Pharmaceuticals and Foods (Instituto Nacional
de Vigilancia de Medicamentos y Alimentos –INVIMA) is competent for the
registration of the goods in the sanitary register 117 . The registration is required
according to the Decree 3075 of 1997. According to this decree, all food products
introduced in Colombia should be registered in the sanitary register. The registration
is not required only for natural foods, such as fruits and vegetables that have not
undergone any transformation, frozen meat which have not undergone any
transformation and food imported for industrial use. The registration is valid for 10
years.

In order to obtain the registration, the importer should submit the following documents
to INVIMA:

      -   the application form with the name and address of the applicant, the name and
          the address of the producer, the name and the mark of the product;
      -   the certificate for free sale from the country of origin;
      -   the payment of the registration tax.

The importer should also submit two copies of the label of the product to be
commercialised. The registration should be obtained before the entrance of the
product. According to the law, the products should be inspected during customs
clearance in order to determine if all the labelling requirements are correct and if the
product is registered.


117
   The EU companies exporting to Colombia can find all the necessary information and the guide on
products registration and labelling on the Internet site of the National Institute for Vigilance of
pharmaceuticals and foods – www.invima.gov.co


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The following information should be indicated in Spanish on the label of the food
products:

      -   The name of the products;
      -   The ingredients of the product in order of predominance;
      -   The name and the address of the importer and producer;
      -   The number of units;
      -   The instruction for storage and use (when required);
      -   The expiration date;
      -   The number of the registration in the Sanitary register.

According to the law, the products must be labelled from origin but apparently, the
Colombian competent authorities tolerate the stickers.


2.2.      Labelling of alcoholic beverages


The alcoholic beverages are also subject to the registration in sanitary register by
INVIMA. The registration is required by the Decree 3192 of 1983, as modified by
Decree 365 of 1996. The registration is valid for 10 years. The documents to be
presented are the same as for the registration of food products.

The labelling of alcoholic beverages should show the following information:

      -   The name and mark of the product;
      -   The name and address of the importer, manufacturer or bottler;
      -   The number of the sanitary register;
      -   The net content ;
      -   The alcoholic strength;
      -   The health warnings “es exceso de alcohol es prejudicial para la salud” and
          “prohíbese el expendio de bebidas embriagantes a menores de edad”.

This information should be attached on the front or on the back label of the product. It
must be clearly legible in Spanish.


2.3.      Labelling of cosmetics and drugs


Cosmetics are also subject to specific labelling requirements. All cosmetics imported
in Colombia must be subject to the registration in accordance with the Decree 218 of
1998. The national authority responsible for this registration is INVIMA, as it is the
case for food products and beverages. The importer must provide INVIMA with all the
necessary technical information 118 and the copy of the label aimed to be sold in
Colombia.

The label of cosmetic products must contain the following information:

118
      The list of technical and other documents might be consulted on www.invima.gov.co


CEEI –Labelling – Final Report –16 August 2002                                            339
   -   The name and address of the importer;
   -   The name and address of the manufacturer;
   -   The country of origin;
   -   The content
   -   The ingredients;
   -   The lot number
   -   The instruction for use;
   -   The number of sanitary register;
   -   The country of shipment ;
   -   The expiry date.

The labels should be normally attached in the country of origin . However, the
customs tolerate that stickers be affixed during clearance.

The harmonisation of the labelling requirements for cosmetics products has been
achieved at the Andean Community level by the Decision 516 of the Andean
Community. The decision requires that the cosmetics be registered in the sanitary
register of one of the Andean community’s countries.

The drugs are subject to a similar registration procedure. In addition to the labelling
requirements needed for cosmetic products, the drug label must contain: the generic
name and the commercial name of the drug, the net weight and volume, the weight
or quantity of the active ingredients, the license number and the lot control number.


2.4.    Labelling requirements for textile products


Textile products are subject to specific labelling requirements under the Decree
087/93. However, these requirements are not considered by the EU companies
difficult to comply with. The information required includes the name of producer and
importer, the country of origin, the textile care instructions and the percentages of
fibre content. These requirements are mandatory for textiles and apparel products.


2.5.    Project for eco- labelling in Colombia

The Colombian ministry of Environment has decided to introduce an official eco-label
for the products sold in the country. A contract has been signed with the national
agency for certification (ICONTEC), which will be responsible for delivering of the
eco-labels. The ICONTEC will be, for the time being, solely responsible for the eco-
labels delivery. However, the Government is planning to accredit other certification
agencies.

The Government has subject three categories of products to eco-labelling (paper,
detergents and related products). Currently, only 30% of the products on the market
fulfil the criteria for ecological labelling. The eco-labelling will not be compulsory and
the procedure will be the same for domestic and for imported products. Colombia



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wants to promote its project on regional level and to propose the adoption of eco-
labelling by all the countries of the Andean community.


§3.    Problems with the labelling requirements in Colombia


The European companies have not mentioned particular problems with the labelling
requirements in Columbia. The registration procedures are mainly conducted by the
Colombian importers and they support the charges of the administrative burden. The
fact that the customs tolerate stickers to be affixed during clearance allows the
importers to apply the necessary labelling requirements after the arrival of goods.

Some products are subject to mandatory standards in Colombia and should be
accompanied with the certificate of conformity and the mark of the ICONTEC.
However, the Columbian standards comply with the relevant international standards
and some international certification organisations are allowed to issue the Colombian
certificate of conformity.


§4.    Legal analysis


The European companies have not expressed specific difficulties regarding the
Colombian labelling requirements. This is due to the fact that European operators are
using local agents. In case the operators want to check the validity of given measures
under the WTO requirements, a detailed analysis of the main provisions regarding
labelling requirements could be found in Part 21 – Legal analysis.




CEEI –Labelling – Final Report –16 August 2002                                    341
                                 PART 19: INDONESIA



§1.    The EU industry assessment


§2.    Labelling requirements

       2.1.    General labelling requirements

       2.2.    Labelling requirements for foodstuffs

       2.3.    Labelling requirements for alcoholic beverages

       2.4.    Other labelling requirements


§3.    Problematical labelling and marking requirements in Indonesia


§4.    Legal analysis




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§1. The EU industry assessment


No specific complaints have been made by the European industry concerning the
labelling requirements in Indonesia. According to the EU exporters, the Indonesian
rules for labelling of food products have recently changed. It is difficult to evaluate
the impact of their implementation until now.

The Indonesian government is also implementing new rules on genetically modified
food and irradiated food. Marking, packing and labelling of tobacco products, alcohol
beverages and cosmetics should also respect the Indonesian requirements. The
drugs are submitted to a registration process in Indonesia, which might take between
100 and 300 days.


§2.    Labelling requirements

2.1.   General labelling requirements

The labelling requirements in Indonesia have become stricter after the removal of
some tariff and non-tariff restrictions (such as the pre-shipment inspection for the
majority of goods and import licences).

Indonesia has adopted new rules on food products labelling, as well as a pre-market
inspection for these products. Some machinery and electronic products must be
subject to certification procedures. Nevertheless, it seems that the Indonesian
standards are consistent with the International and European standards.

Since 14 January 2000, the imported electronic products should be accompanied by
a document that guarantees the free maintenance of the product for at least one
year. A manual along with complete information about the product use and
specification should also be enclosed.


2.2.    Labelling requirements for foodstuffs

Food labelling is required under the Government regulation N°69 of 1999. However,
the National Agency for Drug and Food Control (BPOM) is still preparing the
guidelines for the application of this law. In addition, according to the law N°7 of
1996, the foods should be registered and labelled before the sale in Indonesia. The
registration is performed by BPOM and the foodstuffs should be tested in order to
obtain the registration. The producers must disclose detailed information on the
products. The registration number must be indicated on the products’ labels. The
comments on this procedure vary according to the companies interviewed. According
to some companies, the procedure is easy, whereas other estimate that the
procedure constitutes an obstacle for their imports to Indonesia. It seems that the




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procedure depends very much on the local importer and his ability to negotiate with
the local authorities.

The new regulation N°69 makes compulsory the labelling in the Indonesian national
language Bahasa. This constitutes an important change for our companies, since
English was admitted on the labels. Nevertheless, it is still not clarified by the
competent authorities if Bahasa is the only language admitted on the label. Some
interpretations of the law seem to admit that the products should be labelled only in
Bahasa and any additional inscriptions in other languages would not be admitted.
This requirement will oblige EU exporter to create special labels only for Indonesia.
The publication of the guidelines will probably clarify this point.

According to the new regulation, the label should be permanently attached and easy
to see and read. However, according to some exporters, stickers are admitted by the
Indonesian authorities.

The label should mention:

   -   The name of the product;
   -   The list of food ingredients as well as any additives and their individual net
       weights;
   -   The name and address of the importer;
   -   The expiry date for the products with shelf live;
   -   The registration number of food
   -   The lot number
   -   The nutritional information (should be mentioned in the following order – total
       energy in detail by virtue of energy number value stemming from fat, protein
       and carbon hydrate, the total values of fat, saturated fat, cholesterol, total
       carbohydrate, fibre sugar, protein and mineral.
   -   The instruction for use and preparation (if needed)
   -   The instruction for storage (if needed)

Some additional requirements are applicable for special types of food.

For irradiated food, the label should contain the name and address of the irradiation
agency, if the irradiation is not performed by the producer himself, the date of the
irradiation in month and year, the name of the country where the irradiation took
place.

For the food resulting from genetic modification, the words genetically modified food
should be recorded on the label. However, the share hold for the application of this
rule is still not defined.

Processed foods for infants, children under five years of age, pregnant or breast
feeding mothers, special diet use of elderly should contain consumer information on
any procedure to use.

The import of “halal food” is subject to special requirements. All products, except pork
meat products, products containing alcohol and intoxicants, blood and blood products



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and foods containing ingredients such as gelatine and enzymes can be certified as
“halal food”.

The products certified must bear the inscription “halal food” on the label. The
products can only be certified by a Muslim authority. In order to facilitate the
certification of “halal” food, in 1994, the Indonesian government has created the
Indonesian Council of Ulama (AIFDC). As soon as the AIFDC receives the
application, a team of auditors is be sent to audit the factory in the country of origin. If
all conditions are respected, AIFDC issues “the halal certificate”. The certificate is
valid for 2 years, except for imported meat for which new certificate is required for
every shipment. One month before the expiration of the certificate, the producer
should apply for a new one. The certificate can also be issued by a competent
Muslim Institution in the country of origin.

One should notice that the “halal” certificate is a very important issue in Indonesia,
given the fact that it concerns the largest Moslem population in the world. Therefore,
the existence of the “halal” certificate is essential for the majority of the food
processing industries.


2.3.   Labelling of alcoholic beverages

As Indonesia is a Muslim country, the sale of alcoholic beverages is strictly regulated.
A brand registration is required for all the alcoholic beverages. Test of the products
are required in order to obtain the registration. However, according to the European
exporters, the brand registration has not a determined validity and does not constitute
a barrier for their exports.

The alcoholic beverages should also be labelled according to the Government
Regulation N°69 on Food labelling and advertising. However, some of the
requirements of the regulation could be problematical for alcoholic beverages, if
applied strictly. For example, the raw materials and ingredient listing, “best used
before date” and the importer full name and address are considered as over
prescriptive for the labelling of alcoholic beverages. Given the fact that the new
regulation is still not fully implemented, the importers label their products with the
following information:

   -   The brand registration number;
   -   for the products distributed to Member of Association of Pubs, hotels,
       Restaurants and Institutions (PHRI), the logo of the importer and the PHRI;
   -   The name of supplier;
   -   The country of origin;
   -   The trademark;
   -   The percentage of alcohol by volume;
   -   The net content.

The implementation of the new labelling requirements could create additional
difficulties for the EU exporters, if the Indonesian authorities decide that they have to
implement strictly the provisions of resolution N°69.



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2.4.      Other labelling requirements

Some other labelling requirements should be taken into account. Drugs, cosmetics
and medical devices are subject to the registration with POM. Samples for tests
should be presented. The duration of the registration process is highly dependant on
the product’s nature. The registration number should be printed on the label119.



§3.       Problematical labelling and marking requirements in
          Indonesia


The European companies have not formulated specific complaints concerning the
Indonesian labelling requirements. However, they have expressed their concern
about the implementation of the new labelling requirements for foodstuffs contained
in the resolution N°69. The strict application of these requirements could create
significant difficulties for the EU exporters. The main incertitude is linked to the
following points:

      -   Is it compulsory to affix the labels in the country of origin?
      -   Is it compulsory to not have any foreign language on the label?
      -   Is it compulsory to put the expiry date and ingredient statement on the labels
          of alcoholic beverages?

The adoption of implementation guidelines by BPOM might answer to these
questions. However, the issue should be closely monitored.


§4.       Legal analysis


The European companies have experienced some difficulties on the Indonesian
market. These difficulties are mainly related to strict labelling requirements for spirits,
foodstuffs and drugs.

Some excessive requirements applicable to foodstuffs, spirits and drugs (e.g. strict
requirements for additives) could eventually be challenged under the Agreement on
Sanitary and Phytosanitary Measures (SPS) if they are designed to protect human
health against additives, contaminants and diseases. The agreement imposes stricter
proportionality test on the trade restrictive effect of the measure than the general
agreement.

If some of procedures are found discriminatory or impose less favourable treatment
to imported product (e.g. stricter controls on the compliance between the indications
on the label and product composition conducted on imported products), the

119
   More information on the registration and labelling requirements for food, drugs and cosmetic
products might be obtained on the BPOM web-site www.pom.go.id


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provisions of article III of GATT agreement could be evoked. This article imposes the
national treatment obligation.

In case the rules are not published or sufficiently transparent, the application of article
X of GATT could be foreseen. A detailed analysis of these and other WTO provisions
could be found in Part 21 – Legal analysis.




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                                    PART 20: EGYPT



§1.    The EU industry assessment


§2.    Products affected by excessive labelling requirements

       2.1.    General labelling requirements

       2.2.    Labelling requirements for industrial commodities

       2.3.    Labelling requirements for foodstuffs

       2.4.    Labelling of alcoholic beverages

       2.5.    Labelling of textile products


§3.    Problematical labelling and marking requirements in Egypt


§4.    Legal analysis




CEEI –Labelling – Final Report –16 August 2002                     348
§1. The EU industry assessment


Egypt is considered as a country with extremely strict labelling requirements, which
could be seen as trade restrictive for the EU companies. Excessive labelling
requirements affect EU imports of textile, meat, cosmetics and footwear. For
example, labelling requirements for textiles include the obligation to mention the
name of the importer, the name of the producer, the registered trademark, the raw
material and in case of blended fabrics, the blend on every third meter of imported
fabrics. All cloths have to carry the same indications as fabrics. In addition, other
burdensome requirements such as the date of manufacture and the weight per sqm
in grams are required. However, these requirements are not applied very strictly.

       The labelling requirements are also reported to be burdensome for meat
                        products, cheese and other foodstuffs.


§2.      Products affected by excessive labelling requirements


2.1.     General labelling requirements

European products imported to Egypt must comply with very strict Egyptian labelling
requirements. Decision 16/1993 of the Egyptian Government provides for compulsory
use of the Arabic language for the labelling of all industrial commodities. Decree
N°553 of 1998 amends Law 118 of 1975, adds two provisions to article N°275 of
1991 and imposes a, origin labelling for the imported products. The decree stipulates
that the imported products can leave the customs zone, only when the shipment is in
accordance with all the Egyptian labelling conditions. The decree states also that it is
compulsory to re-export the products if the inspection shows that those products are
not in accordance with labelling conditions. When the products are allowed to leave
the customs territory and to be stored in the importers warehouse, the importer
cannot sell the products until all the results of the analysis and the inspections are
ready and the products are released by the Egyptian authorities.

The verification of the labelling requirements and of the other requirements is
performed by the General Organisation for Import-Export Control. Until the
Government Decree 106 of April 2000, several agencies had been responsible for
taking samples and performing inspection of the goods. For example, for food
products in some cases, the intervention of the Radiation department of the Ministry
of Energy and Electricity (radioactivity inspection), Ministry of Health and the
Veterinary office of the Ministry of Agriculture. Government Decree 106 of 2000
transfered the administrative authority for food inspection to the General Organisation
for Import-Export Control. This measure aimed to reduce the time needed for
inspection purposes, but the implementation of the measure created difficulties due
to the absence of necessary laboratory equipment.




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2.2.   Labelling requirements for industrial commodities


For all the industrial commodities entering in Egypt, the Customs authorities are
required to check the existence of the following of the labels on the products, in
Arabic language:

   -   The product name and its trade mark;
   -   The technical data according to the stipulations and standard specifications;
   -   The international data or marks according to the nature of commodity;
   -   The country of origin;
   -   The production date and if necessary the expiration date.

All these details have to be printed or sealed with indelible ink directly on the
packages or on the original card of the products.

For the apparatus, machines and equipment, details written on each item have to be
the same as those written on the package. The same rules apply to the country of
origin.

According to the Egyptian authorities, all products must respect the Egyptian
standards. Conformity with Egyptian standards will be assessed during the clearance
procedure. The majority of the Egyptian compulsory standards concern food
products, engineering products, textiles and clothing products. Egyptian standards
are periodically reviewed to ensure their relevance to the current requirements. The
majority of the Egyptian standards are compulsory but only 25-30 conform to the
international standards. According to Decree N°42 of 1994 amended by Decree
N°180/96, goods which conform to ISO/IEC standards, as well as with the national
standards of Japan, US, Germany and France, will be accepted unless specific
requirements apply in Egypt.


2.3.   Labelling requirements for foodstuffs

Egypt requires restrictive labelling for foodstuffs. All products should be packaged in
appropriate packages, which should be clean, intact and odourless so as to preserve
the product and not affect its characteristics. Production and expiration date must be
shown on the products packaging. Information on the label should not be able to be
erased, scratched or altered in any way.

The labelling must include the following information:

   -   The name and address of manufacturer;
   -   The brand and trade mark;
   -   The country of origin;
   -   The type of product or grade;
   -   The production and expiration date (should be marked as follows: Prod: (word
       in Arabic) 03/11/00 – Exp (in Arabic) 03/03/01.;


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   -   The product use instructions (optional);
   -   The product ingredients;
   -   The storage instructions and storage temperature;
   -   The net weight;
   -   The gross weight and the total number of packages per case or carton;
   -   If the product contains preservatives, the percentage of each preservative
       should be indicated;
   -   If the product is meat or poultry, the following statement must appear:
       “slaughtered according to the Islamic ritual” or “Halal slaughtered”.

Special labelling for frozen meat and poultry

In November 1997, the Egyptian Government issued Decree N°465 adding new
labelling requirements for the importation of frozen meat and poultry. The decree
requires that all the products must be packaged in sealed bags. The labels must be
inserted inside the package as well as outside the package. The label must include
the following information.

   -   The country of origin;
   -   The producer name and logo;
   -   The name of the slaughter house;
   -   The name and address of the importer;
   -   The name of the entity, that issued the “Islamic Slaughter” certification.

Restriction for use of food additives

The Egyptian regulation contains specific requirements for artificial colours. The
ministry has increased the number of artificial colours used in food products to 40
colours instead of 11 previously allowed. The scientific name of the colour and the
percentage must be indicated on the analysis certificate.

All preservatives should also be indicated on the labels.

As far as flavourings are concerned, the Ministry of Health does not have a positive
list of approved flavourings. However, all flavourings, which conform to the Codex
alimentarius or the rules of the World Health Organisation are approved in Egypt.

Shelf –life requirements

Contrary to the normal practice applied in other countries, where the producers
determine the validity of the products, in Egypt the government is establishing the
date of validity of the products. Any product that exceeds its established self-life date
is considered no longer fit for human consumption. In 1994, the Government
declared that all food products should have at least 50% of the Government
established shelf-life remaining at the time of importation, otherwise the products
would be rejected. The shelf-life is calculated from the date of the production until the
date of completion of all the customs procedures and import certification in the
Egyptian port of entry. Some exceptions to this rule are accepted for cereals and
green coffee.



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In addition, some products can be exported to Egypt only if they are shipped from the
country of origin. This rule is established by Decree 619/98 and concerns some 55
consumer goods. .

2.4.      Labelling of alcoholic beverages

Labelling of imported alcoholic beverages in Egypt is very specific given the fact that
they are submitted to high import taxes and are allowed for sale only in special
establishments such as hotels. For these reasons, the labelling of alcoholic
beverages is less strict than the labelling of other commodities. The labels should be
in Arabic and they have to state the importer name and mention ”specially imported
for tourist establishments”.


2.5.       Labelling of textile products


Since 1998, new requirements for labelling of textile products have been
implemented. These requirements are considered burdensome, excessive and
costly. There is obviously no direct link between these rules and the announced
objective of consumer protection.

These requirements are contained in:

      1. Decree n° 1 of the Ministry of Trade and Supply of 1st January 1998 120 setting
         requirements for textile products. These include inscriptions on the selvage of
         the fabrics.

         - “the name of the importer and the country of origin shall be inscribed on the
           selvage in the fabric, at the beginning as well as the end of the cloth,
           providing the length of the cloth shall not be less than 30 meters” (article 2,
           A)

      2. Decree n° 1 of the Ministry of Industry of 1 January 1998 on technical provisions
         for fabrics establishes stricter requirements regarding the marking of imported
         knitted and woven fabrics. According to interviews conducted with Customs
         authorities and the Egyptian Standard Body (EOS), these requirements come in
         addition to these of the Ministry of Trade.

Woven fabrics (more detailed requirements):

 According to the Decree “woven fabrics are to be prepared in the form of cloth at
  least 30 m long. Clothes are to be packed in bales which must be bound in a cross
  structure or with new elastic which is not fixed.

The following information must be given on fabrics, clothes and bales: ”




120
      Egyptian Wakayeh/Government Bulletin - Issue n° 1 (Supplement) (A) dated 1 January 1998


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 Fabrics must be marked every 3 meters with the following information: “name of
  the manufacturing company or factory and/or registered trade mark, along with the
  name of the importer or the agent. (...) name of the item and the type of raw
  materials and in the case of blended fabrics, indication of the blend. (...) the
  specification of the country of origin”

 All cloths has to carry a label indicating identical information as is required for
  fabrics. In addition, the label must contain: “date of manufacture, (...) length of
  cloth in meters and width of fabrics in cm (...), the cloth length must be no less
  than 30 meters. (...) weight per sqm in grams. (...) type of dyeing of prepared
  fabrics. (...) yarn count (warp/weft). (...)number of threads in warp and weft per unit
  length (cm). (...) type of preparation used and, for treated fabrics (fire, water,
  moth), indication of type and date of treatment ”.

 Bales are to be marked in Arabic language and the language of the country of
  origin with the following information: “name of items. (...) number of clothes in bale.
  (...) total length contained in bale in meters. (...) gross bale weight. (...)net bale
  weight. , (...) sequential number of bale. (...) name of the manufacturing company
  and/or its registered trade mark, along with the name of the agent or importer. (...)
  date of manufacture. (...) specification of the country of origin”.

Knitted fabrics

 The Decree does not foresee specific marking requirements for knitted fabrics.
  However knitted clothes and corresponding bales are subject to requirements
  close to these imposed on woven clothes and bales (see above) (point 8 of the
  Decree). In the case of knitted fabrics, interviews conducted by the consultant only
  revealed that the requirements of the Decree of Ministry of Trade apply (marking
  on the selvage at the beginning and the end of the fabric).

New marking requirements on packages

 Circular n° 12/1998 of the Ministry of Trade and Supply (General Organisation for
  Export and Import control) imposed new marking requirements on every package
  of industrial commodities imported into Egypt: these are to be written in Arabic and
  in clear indelible handwriting. According to this piece of legislation, the following
  elements are to be taken into consideration (point 1.a):

   1. Writing the product’s name or its trade mark
   2. The technical data is written on the packages by the manufacturer according to
      what is stipulated upon in the applicable standard specification (numbers or
      specific marks)
   3. The international data on marks are written down according to the nature of the
      commodity
   4. The country of origin.
   5. The production date and the expiration date must be written according to the
      applicable standard specification.

All these details have to be printed or sealed with indelible ink directly on the
packages or on the original card of the production entity.


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However, until now, there has been no specific complaint made by the EU industry
concerning these requirements.



§3.    Problematical labelling and marking requirements en Egypt

The main difficulty for European exports to Egypt remains the multiplicity and non-
transparency of the Egyptian labelling requirements. Importers are not always
informed about all the requirements of Egyptian legislation and the obligation to
prepare the label in the country of origin.

Marking in the country of origin for the majority of products is also considered as very
burdensome. According to the Egyptian legislation, the use of stickers is not allowed
and mistakes on the products cannot be corrected in customs. If the products do not
respect the Egyptian labelling requirements, they must be re-exported to the country
of origin. According to some importers, this strict requirement is not respected in
practice. The importers are allowed to correct the label in customs by using stickers.
The only requirement for which stickers are not admitted is the production and expiry
date. The importers should re-export the products, which have incorrect production
and expiry date requirements.

In addition, the existence of strict labelling requirements along with product standards
requirements, legalisation of the documents by the Egyptian embassy in the country
of origin and import inspection of goods, is considered as an important obstacle to
trade by the European companies. Nevertheless, according to some of the EU trade
representatives in Egypt, companies are now used to the new requirements, but
consider that the strict application of these requirements will render trade almost
impossible.

The same remarks have been expressed as regards the labelling requirements of
textile products. Conformity with strict labelling conditions for textiles and apparels is
not verified by customs, otherwise, this could represent a significant obstacle to EU
exports.


§4.    Legal analysis


4.1.   Main problems experienced by the EU companies in Egypt

The main problems experienced by the EU companies in Egypt are related to the
numerous and complex labelling requirements applied for different products. In
addition, the EU companies find that the Egyptian labelling requirements are not
transparent and the texts are alleged difficult to find. The companies also complain
about the controls performed by the Egyptian authorities on certain products before
retail.




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The Egyptian authorities require labelling in the country of origin. However, this
requirement is not applied very strictly, except for the production and expiry date for
foodstuffs products.


4.2.      Legal analysis of problems experienced on the Egyptian market

The following analysis is based upon the 1978 Co-operation agreement between the
EC and Egypt121. However, this agreement, which can be characterised as a ‘donor-
recipient’ agreement, may soon become obsolete. As the region and the two Parties
have changed out of all recognition since then, it was time for a new agreement, for a
different and more equal relationship. Therefore, the Euro-Mediterranean Association
Agreement between the European Union and Egypt was signed on 25 June 2001. It
is a more complete agreement than the 1978 one. This agreement is still not into
force.

The old agreement does not contain particular provisions on customs cooperation
and technical requirements. This means that if some Egyptian labelling requirements
are found burdensome or discriminatory, they can not be challenged under the scope
of the existing agreement. In addition, the agreement provides for the possibility to
apply restrictions of imports, exports or goods in transit justified on grounds of public
morality, public policy or public security, the protection of the health and life of
humans, animals or plants (article 32). Such prohibitions or restrictions must not,
however, constitute a means of arbitrary discrimination or a disguised restriction on
trade between the Contracting Parties.

These provisions do not go beyond the WTO requirements and could not be applied
in case of difficulties experienced with the Egyptian labelling requirements. The new
Euro-Mediterranean Agreement contains more precise obligations on customs
cooperation and technical requirements and conformity assessment. These
requirements are similar to those existing in the association agreements with the
East-European countries.

Until the entry into force of the Euro-Mediterranean Association Agreements, some
difficulties encountered by the EU companies in Egypt could be challenged under the
WTO provisions. The relevant WTO provisions which could be used are the
Agreement on Technical Barriers to Trade, The Agreement on Sanitary and
Phytosanitary measures, GATT articles III, VIII and XIX related respectively to
national treatment, facilitation of customs procedures and transparency. (see below
part 21 – Legal Analysis).




121
      OJ 1978, L266


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                            PART 21: LEGAL ANALYSIS



§1.    The Global approach of the WTO regarding labelling requirements

       1.1.    Labelling requirements within the scope o the TBT Agreement

       1.2.    Labelling requirements within the scope of the SPS Agreement

       1.3.    Labelling requirements within the scope of GATT

§2.    The TBT provisions

       2.1.    General obligations included in the agreement

       2.2.    The scope of the agreement


§3.    The SPS provisions

§4.    The GATT provisions

       4.1.    The discrimination in the application of labelling requirements

       4.2.    Labelling requirements and customs formalities

       4.3.    Transparency and implementation of labelling requirements

       4.4.    The marking of origin

       4.5.    Exceptions

§5.    Conclusions




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The consultant had to analyse the most damaging labelling requirements in the light
of GATT and other WTO agreements. The diversity and the complexity of the
labelling requirements identified in the study make it difficult to formulate general
conclusions defining which labelling requirements can be considered as WTO
consistent or not. It is of course impossible to give an in-depth analysis regarding
each measure in each country. Therefore, the analysis will focus on the most
complex and damaging labelling requirements.

The essential problem is to identify to what extent the labelling requirements are
covered by the WTO provisions and which of them fall within the scope of the WTO
agreements. In addition, the labelling and marking requirements could be analysed
under several WTO provisions depending on their nature and their purpose. The
absence of an express mention of the labelling requirements in the WTO texts and
the absence of the WTO case law concerning this issue render the analysis rather
difficult. This part of the report will draw a picture of the main WTO requirements that
could be applied in the field of labelling and marking requirements. These
requirements include the general WTO provisions such as article III and article X, but
also the provisions of Agreement on the Technical Barriers to trade (TBT) and the
Agreement on the Sanitary and Phytosanitary requirements (SPS).

One must take into consideration that labelling requirements can sometimes be
justified by reasons linked to the protection of human health or the consumer’s
protection. However, the proportionality test is not applicable in the same way in the
General Agreement and in the specific WTO Agreements.

This report will try to give a global vision of the WTO regime. Thereafter, it will detail
the provisions of the different texts.


§ 1. The general approach of the WTO regarding labelling
requirements


One of the main problems is to decide which WTO provisions cover labelling
requirements. Labelling must be defined as the obligation imposed by the authorities
of a country to all operators to affix a label on a product commercialised on the
territory of that country.

Nearly all countries require a label on most of the products commercialised on their
territory. The purpose of this label is to inform accurately customers about the origin
and the composition of the product, the instructions of use, etc.. In some countries,
however, the requirements are much stricter. Some countries require for example,
the indication on the label of the name, and sometimes even the registration number
of the importer of the product. Other countries require an indication on the label of the
registration number under which the product has obtained a sanitary registration in
the country of origin. Some others require an application for labelling approval before
importing the product and a mention of the approval number on the item.



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The obligation imposed on a producer to affix a label with such precise mentions on
products exported to a country may, under certain circumstances, constitute an
obstacle to trade. The producer has to know in advance the country where the
products will be exported, and the name of the importer. This is not always an easy
task. He has to wait for the export before affixing the label. This generates additional
costs for the producer. Sometimes he is even not authorised to affix additional labels
or to correct mistakes during customs clearance but is obliged to re-export their
products or to destroy them. The recent tendency, especially as far as the foods,
drugs and pharmaceuticals are concerned, is to impose to affix labels, complying with
all compulsory requirements of the country of destination, in the country of origin.


1.1. Labelling requirements within the scope of the TBT agreement


The 1947 GATT provisions did not fully deal with technical barriers. This explains
why a specific agreement was concluded in 1979, at the end of the Tokyo Round.
This agreement has been replaced in 1995, by the new WTO Agreement on technical
barriers to trade (TBT). This new text deals both with the establishment of technical
regulations and standards and the assessment of conformity (which can be
considered as the implementation of the regulations and standards). It covers both
agricultural and industrial products (Art. 1:3). It does not cover some matters dealt
with by the Agreements on government procurement and on sanitary and
phytosanitary measures (Art. 1:4).


1.1.1. The restricted definition of labelling requirements

The TBT agreement establishes stricter rules than the General Agreement and
permits to challenge more easily some labelling requirements. However, the TBT
agreement does not cover all technical regulations. According to the Annex 1 of the
Agreement, a technical regulation is defined as a “document which lays down product
characteristics or their related processes and production methods, including the
applicable administrative provisions, with which compliance is mandatory. It may also
include or deal exclusively with terminology, symbols, packaging, marking or labelling
requirements as they apply to a product, process or production method”. A standard
is a “document approved by a recognised body, that provides, for common and
repeated use, rules, guidelines or characteristics for products or related processes
and production methods, with which compliance is not mandatory. It may also include
or deal exclusively with terminology, symbols, packaging, marking or labelling
requirements as they apply to a product, process of production method.”


1.1.2. The labelling concerning             the   non-product   related   process   and
       production methods

The TBT definition does not seem to include the unincorporated labelling
requirements. The unincorporated labelling requirements are those requirements that
are not related to the process and production methods such as the obligation to put
the importer number on the label of the product or the registration number of the


CEEI –Labelling – Final Report –16 August 2002                                      358
product or the fiscal registration of the importer. The definition also does not seem to
include the non-product related process and production methods. The non-product
related process and production methods are those production methods, which do not
modify the essential characteristics and the appearance of the product. This covers
for example the organic labelling, the GMO labelling and the eco-labelling. The extent
of the labelling requirements covered by the TBT Agreement has never been subject
to a panel in WTO. Yet, the question whether the eco-labelling is covered by the
provisions of the Agreement has been recently discussed in the WTO technical group
on trade and environment. Besides, the European Union has proposed to extend the
scope of the TBT agreement to labelling requirements.


1.1.3. The recent rulings of the WTO dispute settlement bodies

In their recent rulings, the dispute settlement bodies seem to have adopted a broader
definition of the technical requirements. In 2001, the appellate body in the case EC-
Asbestos122 has decided that the key part of the definition of technical regulation is
that the document has to lay down “product characteristics”. In this regard the
appellate body stated:

“the characteristics of the product include in our view, any objectively definable
features, quality, attribute or other distinguished marks of the products. Such
characteristics might relate inter alia, to a product composition, size, shape, colour,
texture, hardness….”.

According to the Appellate body the examples of Annex 1.1. “indicate that product
characteristics include not only features and qualities intrinsic to the product itself, but
also related to characteristics such as means of identification, the presentation and
the appearance of the product”.

The Appellate body did not decide if the concerned EU measure regarding asbestos
was a technical regulation prohibited by the TBT agreement because the panel had
not provided sufficient information for the analysis of these matters.

The first panel dealing exclusively with the TBT agreement was released in May 2002
in a case involving the EU denomination of sardines123. The panel has decided that
the EU regulation on the denomination of sardines is a technical regulation and is not
consistent with the provisions of article 2.2. of the TBT. The panel recalls the
definition of the Appellate Body in the Asbestos case and analyses the EU measure
according to this definition.

These two ruling seem to apply a broader definition of the technical measures.
However the question remains still open in absence of clear provision of the TBT,
because the examination is still provided on case by case basis.

As a conclusion, one could consider that labelling requirements related to the product
and production methods such as the marking requirements showing that the products
are in conformity with the national standards or registration number showing that the
122
      WT/DS135/AB/R (5 April 2001)
123
      WT/DS231/R


CEEI –Labelling – Final Report –16 August 2002                                         359
product is in conformity with the national standards could be considered as being
covered by the TBT agreement. These requirements could be compulsory (technical
requirements) or voluntary (norms).

According to the majority of the legal doctrine, the requirements related to nutritional
labelling or food ingredients should also be included in the TBT. Nevertheless, their
inclusion under the scope of the present text of the agreement is more controversial
because the requirement to indicate the nutritional value of the product or the
ingredients of the product could hardly be considered as a document, which lays
down the product characteristics or their related process or production methods. The
requirement to indicate the nutritional value is regardless of the characteristics of the
product. It does not require that the product possess specific characteristics or
specific energetic value. Some of the labelling requirements related to non product
and process related method nevertheless seem to be covered by the TBT according
to the new definitions given by the dispute settlement bodies. Anyway, in the absence
of clear legal basis they should also be examined under GATT article III-4.


1.2. The labelling requirements within the scope of SPS agreement

Some other requirements related to foodstuffs should be analysed under the SPS
agreement. The Annex 1 of the SPS agreement covers all laws, decrees, regulations,
requirements and procedures “applicable to protect human or animal life or health
within the territory of the Member from risks arising from additives, contaminants,
toxins or decease causing organisms in foods, beverages or feedstuffs”. These
regulations can include process and production methods but also packaging and
labelling requirements directly related to food safety. One should notice that the
definition given in the SPS agreement is broader than the definition of the TBT
agreement because it clearly includes the non product and production methods
labelling and packaging requirements.

All measures related to obligation to indicate additives or colours in the foodstuffs or
the obligation to indicate the number of the national sanitary inspection which
determines whether or not the product is suitable for human consumption could be
considered to be under the scope of the SPS agreement. Likewise, the GMO
labelling could be eventually considered to be covered by these provisions, given the
fact that the effects of GMO food on the human health are not still clarified.


1.3. The labelling requirements within the scope of GATT

All measures that cannot be challenged under the TBT and SPS must be analysed
under the provision of the General Agreement. These are the requirements to
indicate the name of the importer; its fiscal number and the requirements to indicate
on the label a specific register number.




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§ 2. The TBT provisions


The objective of the TBT Agreement consists in eliminating all unnecessary obstacles
to international trade, which may result from Member States’ use of technical
regulations and standards. Consequently, the Agreement covers not only the
preparation, adoption and application of technical regulations, but also the obstacles
which result from the existence of various national standards, even if the procedures
mentioned above, do not create any problem. In this perspective, the Agreement tries
to promote, as strongly as possible, the use of international standards.

Countries have different approaches in dealing with the technical requirements,
standards and conformity assessment. However, this can create significant trade
obstacles. The exporter who wants to export his products to third markets can be
obliged to follow a multiplicity of different standards, which are sometimes
contradictory. Countries also apply compulsory certification and assessment for
different products. The TBT agreement tries to address these issues in order to
facilitate international trade.


2.1. The general obligations included in the agreement

2.1.1. Proportionality test

The agreement establishes a proportionality test between the trade restrictive effect
of the technical measure and the legitimate objective pursuit by the latter. The
proportionality test required in the TBT agreement, is much more stricter than this of
the General Agreement. According to the article 2.2. “the technical measure should
be not more restrictive than necessary to fulfil a legitimate objective, taking into
account the risks non-fulfilment would create”.


2.1.2. Legitimate objectives

The legitimate objectives considered in the agreement are national security
requirements, prevention of deceptive practices, protection of human health and
safety, animal or plant life and health or the environment. This list is not considered
as exhaustive, other legitimate objectives can be included by the case law. The
contracting parties should find the equilibrium between the protection of the legitimate
objective and the trade effect of the measure. If the trade effect is more restrictive
than required to fulfil the legitimate objective, the measure should be modified. In
addition, the article 2.3. of the agreement requires the modification or the elimination
of measures “if the circumstances giving rise to their adoption no longer exist or if
changed objectives or circumstances or objectives can be addressed in a less trade-
restrictive manner”.




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2.1.3. Unnecessary obstacles

The concept of “unnecessary obstacle” is of course essential for the implementation
of the Agreement. As far as labelling requirements are concerned, it should be
determined whether the establishment of additional labelling requirements related to
the product, process and production method could be justified by a legitimate
objective and if the measure adopted is proportional to the fulfilment of this objective.
For example, if the product must be marked with the logo proving its conformance to
the international standards, it should be assessed whether the national standards
according to which the product is tested, are in conformity with the international
standards, and to which extent the tests already performed in the country of origin
are taken into account for the conformity assessment of the imported product.

When the products are required to respond to particular conditions in order to have a
special denomination or to be authorised to bear special labelling or labelling claims,
it should be assessed to which extent the procedure of the country of destination is in
conformity with the internationally used one and if this procedure does not constitute
an indirect protection of the national industry and therefore, an unnecessary barrier to
trade.


2.2. The scope of the agreement

The TBT agreement applies to both compulsory and voluntary technical
requirements. The compulsory requirements could constitute a real obstacle to the
international trade and they are governed by rules concerning their preparation,
adoption and application detailed by the Agreement (Art. 2 and 3). As far as the non-
compulsory standards are concerned the agreement requires governmental bodies to
ensure that their standardisation bodies are complying with the code of good
practices (Art. 4).

If the Member States do not use an available international standard or if no proper
international standard exists, they are bound by procedural obligations. They must
publish their intention to introduce a national technical regulation, and they must
notify the WTO secretariat. Moreover, they must provide further details to other
Member States if asked and they must also allow comments, discussion and
amendments (Art. 2 § 2). It must be underlined that this obligation is stricter than the
general notification requirement established by the Ministerial decision concerning
notification procedures. It is wide, and covers all technical information linked to the
procedure. It also implies a limited translation obligation. Some restrictions have been
introduced in case of an emergency. The TBT also includes provisions on the
information, which should be supplied by the enquiry points, established in all the
contracting parties.

The Agreement often refers to trade regulation having “significant effect” on trade.
The notion of “significant effect was also a part of the “standards code” and the
committee supervising the code has issued a recommendation suggesting some of
the factors to be taken into account in accessing the significance of the effect of the


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regulations. The Committee said that consideration should be given to such elements
as the value or other importance of imports in respect of other importing or exporting
countries concerned, the potential growth of these imports and the difficulties for
producers in other countries to comply with the proposed technical regulations. This
means that a technical measure could be considered as significant for the
international trade if it concerns an important volume of the international trade or if
the importers could experience difficulties to comply with.

The new approach of the TBT agreement consists in the fact that it concerns not only
the governmental bodies but also the local governments and the non-governmental
bodies. It is obvious that the obligations imposed to the local and non-governmental
bodies are less strict than those imposed to the central governments. However, the
article 3 demands members to take such “reasonable measures as may be available
to them” to ensure the compliance of the local and non-governmental bodies with the
provisions of article 2. The extension of the scope of the TBT agreement means that
not only the governmental regulatory measures but also the measures taken by
independent bodies or on local level could be challenged under the agreement.

As far as the labelling requirements are considered, the obligations of the Members
are mainly linked to the procedures aiming to verify the conformity of the imported
products to national standards. During this procedure the importers must present
labels, copy of the products and, if the product is approved, to put the registration
number on the label. The number certifies that the imported products conform with
national standards. These procedures should be in conformity with the provisions of
the TBT agreement governing the preparation, application and adoption of standards
and the provisions governing the conformity assessment.

The main problem experienced by the European exporters is that the national
technical regulations and standards are different from the internationally accepted
ones. In addition, they require to make changes to the product. In this case, it should
be verified whether the national requirements are in compliance with the international
requirements and whether they are more prescriptive than required for the
achievement of the legitimate objectives. Moreover, articles 4 and 5 establish some
additional provisions. According to article 4, the standards are to be based on
products requirements in terms of performance rather than design or descriptive
characteristics, where appropriate. According to article 5, the importers are granted
several rights in the procedure of the conformity assessment: they have to benefit
from the same procedures as the national companies including the right to mark their
products with the conformity mark. The conformity assessment procedures should be
completed as expeditiously as possible and with the obligation to apply the most
favourite nation treatment and the national treatment clause, etc. When, the
importers’ rights are not respected, a procedure might be brought under the scope of
the TBT agreement.

The provisions of the TBT agreement grant the most complete protection to the
importers but the agreement cannot be applied in all the cases, as far as labelling
requirements are concerned. A special extension of the agreement to labelling
requirements might be necessary in order to include all the labelling requirements
and submit them to a specific regime in the scope of the WTO.



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§ 3. The SPS provisions


The Agreement on SPS requires that “the members shall ensure that any sanitary
and phytosanitary measures is applied only to extent necessary to protect the human
animal and plant life of health, is based on scientific principles and is not maintained
without scientific evidence”. The only exception to the scientific evidence is the
precaution principle established in article 5.7. The precaution principle enables the
Member, when the scientific evidence is insufficient, to adopt provisional sanitary and
phytosanitary measures on the basis of available pertinent information. In this case,
the Members must follow the development of the relevant information about the
measure and modify their measure accordingly when sufficient evidence is available.

As mentioned above, the labelling and marking requirements which can enter under
the scope of the SPS agreement are related to the protection of human and animal
health from additives, contaminants, toxins or decease-causing organisms in food,
beverages and foodstuffs. According to the Annex A of the agreement, it includes all
the relevant “laws, decrees, regulations and requirements concerning packaging and
labelling requirement directly related to food safety”. The protection of health is thus
the essential criterion. This implies that all the labelling packaging requirements
related to additives, contaminants, toxins or decease-causing organisms are covered
by the agreements. Therefore, all other requirements (such as nutritional labelling
requirements) are not included under the scope of the agreement and they might be
subject to the provisions either of TBT or of the General Agreement.

As examples for labelling and marking requirements falling within the scope of SPS,
one can mention the requirements to indicate the additives or colours on the labels,
the requirements to submit the product to specific controls for the presence of
prohibited additives and contaminants and to indicate the control number on the label
of the product. The GMO labelling is considered as covered by the agreement and
one of the most important questions is to know whether the OGM labelling is covered
by the precautionary principle.

The Agreement recalls the most favourite nation treatment and the national
treatment. These principles are of course compulsory in the field of the application of
the sanitary and phytosanitary measures. In addition, the agreement foresees that
the legal requirements shall not be applied in a manner, which constitutes a
disguised restriction to the international trade.

Some exceptions to the obligation of the agreement are permitted to allow members
to establish an appropriate level of sanitary and phytosanitary protection. These
measures cannot however be more trade restrictive than required. They must
achieve an appropriate level of sanitary and phytosanitary protection, taking into
account the technical and economic feasibility.

The SPS agreement contains, as the TBT agreement, provisions on harmonisation.
The members are required to base their sanitary and phytosanitary measures upon
international standards, guides and recommendations where they exist (Art. 3-1). In


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the “hormone case” panel, the Appellate Body124 denied that the obligation to base
national measures on international standards has the same meaning as “conform”
with the international standards. A measure conform to the international standards is
also based upon it, but the converse is not true. A measure that adopts some
elements of the standard is based on it. The measures which wholly conform with the
international standards is presumed necessary to protect human, plant and animal
health and conform to the GATT obligations. The WTO members can introduce
measures that result in a higher level of protection if there is be a scientific
justification for doing this. The member countries are required to notify their trade
restriction measures and to establish enquiry points.


§ 4. The GATT provisions


When the labelling requirements are not covered by the provisions of the TBT and
SPS agreement, the legality of the labelling requirements should be assessed using
the general principles of GATT. This question of the legality of the labelling
requirements has become a very important one. Many trade partners of the EC resort
to labelling legislations, about which European operators often complain. Labelling
seems to be one of the aspects that the “new protectionism” has taken in the last
years, after the dismantling of quantitative restrictions and the lowering of tariff
protection in the Uruguay Round negotiations.

This question is also very difficult from the legal point of view. There is no specific
legislation regarding excessive labelling requirements in the WTO framework. There
is by now, no case law on the matter. Therefore, the classical principles have to be
applied.

There is no problem to justify in se labelling requirements. Those cannot however be
excessive. They can neither be applied in a way that would lead to discriminations
between domestic and imported products, or between products originating from third
countries.


4.1.     The discrimination in the application of labelling requirements

The GATT is based on the “non discrimination” principle. This has two meanings. In
the application of labelling requirements, there can be non-discrimination between
the products originating in third countries (most favoured nation clause, Art. I GATT),
and there can be non discrimination between national and imported products
(national treatment clause, Art. III GATT).


4.1.1. The national treatment clause

According to the principle established by article III of the GATT, the national products
have to be subject to the same labelling requirements as the imported ones. In some

124
      WT/DS26/AB/R


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countries, this is not the case. The label has to carry information (telephone number,
fiscal number...) concerning the producer and/or the importer, when national products
are only required to mention the producer’s name (or sometimes even nothing).
There is consequently a difference of treatment between domestically produced
items and imported products. This difference is of a great importance. The fact that
the producer has to know the name of the importer before affixing a label, has been
denounced by operators as a major obstacle to trade.

According to article III-4, “the products of the territory of any contracting party
imported into the territory of any other contracting party shall be accorded treatment
no less favourable than that accorded to like products of national origin in respect of
all laws, regulations and requirements affecting their internal sale, offering for sale,
purchase, transportation, distribution or use”.

This means that the imported products shall be subject to the same marking
requirements than national products. Two panels have taken the view that the
exposure of a particular imported product to a risk of discrimination constitutes by
itself, a form of discrimination125. In addition, the infringements to article III can be
established without any proof of injury. The mandatory legislations discriminating
imported products fall within the scope of article III, whether or not effectively applied.
The application of additional requirements such as the obligation to mention the
importer’s name or fiscal number should thus be perceived as non conform to article
III.

On the other hand, it is important to add that not only the regulations should be the
same for imported and domestic products but also their application should not be
rendered more difficult for the imported than for domestic products. For example, if
the imported products should be labelled in the country of origin and if there is not a
possibility to modify eventual mistakes in the labels, it might be considered that
imported products are discriminated compared to domestic products. An other case
of discrimination is when the labels must be approved by the competent authorities
before importation of goods. Once approved the labels of domestic products are not
anymore challenged by the authorities whereas the labels of imported products are
challenged again in customs. However, the provisions of GATT are not always
adapted to the new requirements that exist in the field of labelling and marking
requirements and the absence of relevant case-law renders the analysis very
complicated.


4.1.2. The MFN clause

According to the MFN clause, every advantage granted to the products originating
from one State has to be applied to similar products originating from all the WTO
Member States. In particular cases, members of regional integration groups are
exempted from some labelling requirements.



125
   Report of panel on the EU- payments and subsidies paid to processors and producers of oilseeds
and related animal-feed proteins, BISD 37S/86 ; Report of panel on the US –measures affecting the
importation, internal sale and use of tobacco, DS44/R.


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This kind of exception cannot be covered by article XXIV of the GATT. This article is
devoted to the customs unions and free trade areas (FTA), exceptions to the
principles of the GATT. In the Report of the Working Party of 1991 on the Free-Trade
Agreement between Canada and the United States, a member of the Working Party
said that “article XXIV § 5 (b) did not stipulate that a FTA party could waive the
application of “other regulations of commerce” (...) with respect to the other party”.
This reasoning seems correct. Article XXIV § 8 (b) states that a free-trade area is “a
group of two or more territories in which the duties and other restrictive regulations of
commerce (...) are eliminated (...)”.

The difference of treatment between labelling requirements for members of a regional
integration group and those applicable to third countries can only be justified if the
labels are considered as “restrictive regulations of commerce”, which is not the case
here. As a consequence, it can be considered that the exemption of particular
labelling requirements for some products originating in Member states of a regional
integration group is not covered by article XXIV of the GATT. It therefore violates
article I of the GATT.


4.2. Labelling requirements and customs formalities

If no evidence of discrimination can be found, the excessive character of some
labelling requirements can nevertheless be challenged.

Article VIII § 1 c) of the GATT states that “the contracting parties recognise the need
to reduce the effects and the complexity of import formalities”. It could be considered
that, as far as some labelling regulations require the provision of the information
about the importer, they are import formalities. If they are too burdensome, they could
be considered as violating article VIII § 1 c).

An increasing number of countries require that the imported products should be
inspected when entering the territory in order to verify that the product is conform with
the indication on the label. When some slight discrepancies are found between the
product and the label, the items must be destroyed or re-exported. There is no
possibility to modify the labels. This practice could be in contradiction with the article
VIII-3 if disproportion exists between the errors found and the penalty imposed.
According to article VIII-3 “no contracting party shall impose substantial penalties for
minor breaches of customs regulations or procedural requirements”. The provisions
of article VIII are applicable to documents, certification, analysis and inspection,
quarantine, fumigation and sanitation. The control of labelling requirements in
customs can therefore be challenged under these provisions.


4.3. Transparency and implementation of labelling regulations

One of the main complaints of the EU exporters concerns the transparency of
labelling regulations. It is often impossible to find all the labelling and marking
requirements applicable to a given product. The labelling laws and regulations in third
countries change very often without sufficient transitional period allowing the
exporting companies to conform to the regulation. These problems could be


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challenged under GATT Article X. According to that provision, all the laws,
regulations and administrative procedures of general application or applicable should
be published in a manner that enables the governments and traders to become
acquainted with them. In addition, the members of WTO are obliged to administer all
the laws and regulations in a uniform, impartial and reasonable manner.

This allows the challenge of labelling requirements which are applicable in order to
favour domestic producers or producers of other importing countries. Various
measures could be criticised according to this article: the controls in retail which are
more concentrated on imported products or the analysis and inspection process
which are more strictly applied to domestic products, in order to register the product
before commercialisation.


4.4.      The marking of origin

An increasing number of countries are requiring the marking of origin of the imported
products. Marks of origin are meant to indicate the origin of the product on the
product itself for the information of the consumer (“made in USA”). Its regime has
been given in article IX of the GATT. It aims at preventing deceptive practices from
the producer and/or the importer.

According to Article IX-2, “the contracting parties recognize that, in adopting and
enforcing laws and regulations relating to marks of origin, the difficulties and
inconveniences which such measures may cause to the commerce and industry of
exporting countries should be reduced to a minimum, due regard being had to the
necessity of protecting consumers against fraudulent or misleading indications.”
According to Article IX-4, “the laws and regulations of contracting parties relating to the
marking of imported products shall be such as to permit compliance without seriously
damaging the products, or materially reducing their value, or unreasonably increasing
their cost.”

In 1956, a working party noted that “the question of additional marking requirements,
such as an obligation to add the name of the producer or the place of origin, or the
formula of the product, should not be brought within the scope of any
recommendation dealing with the problem of marks of origin. (...) Requirements going
beyond the obligation to indicate origin would not be consistent with the provisions of
article III, if the same requirements did not apply to domestic producers of like
products”.

The scope of this provision is thus limited to that problem. According to a 1991 panel
report concerning the US restrictions on imports of tuna, this article cannot be
invoked about mark requirements of another nature. It also does not concern the
marking of products generally126.

It must be emphasised that marking can also generate problems regarding
intellectual property, trademarks or geographical names of products. This was


126
      BISD 39S/155 (1993) - unadopted


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examined at length by the panel report adopted in 1987 about some restrictive
measures applied by Japan on imported wines and alcoholic beverages127.

In recent years the most important problem encountered by the European exporters
is the non recognition in some countries of the EU origin. It is thus required to put the
individual member state origin. This requirement is in some cases costly for the
European producers because they have to prepare special labels for certain
countries and to perform additional analysis. It must be stated that the article IX-1
does not provide for national treatment but only for most-favourite nation treatment. A
country can decide not to require the marking of origin for the locally produced
products. However, on the other side, article IX requires that the adoption and the
laws and regulations related to the country of origin should reduce to a minimum the
difficulties and inconveniences caused to the commerce and industry of the exporting
country. It could be argued that this article requires that the EU should be accepted
as a country of origin in order not to cause inconvenience to the European industry.

Another problem encountered with the indication of the country of origin is the fact
that in some case the country of origin should be indicated on the product in a
permanent manner and this can partially damage the product. According to the article
IX-4, the regulations of third country could not require marking of origin which
damage the product or reduce its value or represent an important cost for the
producers.

In some cases, the products are destroyed or resent to the country of origin if they
are not marked with the country of origin or a penalty is applied. According to the
article IX-5, no penalty should be applied to the party, which fail to comply with the
requirement of the country of origin prior to importation unless appropriate marking is
deliberately delayed.

The