Two years ago, China Law Blog’s Steve Dickinson wrote an article for the Wall Street Journal, entitled, “Food Fumble: China can’t regulate away its safety problems.” In that piece, Steve posited that China’s new food regulations would do little to nothing to improve China’s food safety:

All this activity looks good on paper, but it probably won’t work. Even if one accepts that China’s problem is a lack of centralized food regulation, there are few signs that any of these steps would address that shortcoming in practice. The law’s text provides absolutely no details about how it will be implemented. The law includes no standards, no timeline, no budget, no procedure for obtaining the input of regulated parties and no clear way to resolve disputes. In China today, laws adopted on controversial topics are often vague and leave all the details to later regulation. Often such regulations never appear, rendering the law essentially meaningless. The standards and procedures portion of the Food Safety Law will likely meet the same fate.

But the bigger problem with the new law is that a lack of regulation per se is not Beijing’s problem. Generally comprehensive regulations are already on the books. But as with most countries, China simply does not have the funding or expertise to hire enough qualified inspectors and regulators. China has more than 200 million farmers and more than 500,000 food production companies. The food production system is too vast to allow for meaningful inspection at all stages of the food production process.

Steve was of the view that China needs to allow injured parties to take effective action against negligent food companeis and to change the economic equation for farmers:

One of the most important reforms would be to allow the effective operation of the existing system of private civil litigation and bankruptcy that would allow injured parties to take action independent of the government. It is only when the citizen can use the court system to obtain damages that the food-safety system will ever affect the behavior food producers. As further support, the producer must know that the producer will be forced into bankruptcy if the frequency or extent of litigation is too great.

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A true solution to China’s food-safety problem also would recognize certain economic facts on the ground in the agricultural sector. Chinese farmers and herders are poor and uneducated. Most operate at a loss and only survive by supplementing their income through nonagricultural activities. The same is true of many primary food processors, who sell into a market where partially controlled prices rarely allow them to recoup their costs of production and who are frequently on the verge of going out of business. These people and businesses do not believe they have the luxury of being concerned with standards and rules and procedures. Experience has shown that some will violate the law if they believe this will give them some financial benefit. This is why even the death penalty has not been a sufficient deterrent.

I think it fair to say that Steve has been proven right in that China’s food safety is still poor.

Agreed?

What can/should China do?

4-8-2011 UPDATE: Three children die from bad milk.

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.