Q & A: Analyzing The FDA’s New Import Fees

Food and Drug Administration recently announced plans to implement re-examination fees as part of the Food Safety Modernization Act.

Ben England, Founder and CEO, FDAImports.com

The Food and Drug Administration recently announced plans to implement re-examination fees as part of the Food Safety Modernization Act (FSMA). While the agency says the fee — assessed only for imported food which fails to comply with a food safety requirement — is needed in order to improve the safety of imported products, some fear the new fees will hurt smaller food importers. Food Manufacturing spoke with Ben England of FDAImports.com about the new fees and how they could affect consumers as well as food importers.

Q: How will the FDA’s new fee assessment system work?

A: Food importers whose imported foods are deemed by FDA to be in violation of some food safety requirement, because of an evaluation FDA has performed of records or third party tests or inspection results, will be charged the new fees for FDA to perform any additional review of the imported food — even if the second review also does not involve an inspection. Even without an actual inspection, FDA could deem imported food both "previously inspected" and "in violation of a food safety requirement." Consequently, all future FDA activity, such as reviewing shipping or commercial documents, reviewing third party lab reports, examining the shipment, whether or not a sample is collected or tested, will be activity for which FDA will charge.

Q: What effects could these new fees have on consumers?

A: Because there is a limited amount of margin in food prices, eventually the fees will be passed to the consumer. Perhaps that is understandable if the result would be safer food — but the likelihood is that FDA still will only inspect about 2 percent of imported food, and the majority of imported food shipments subject to the fees will be released into commerce — just as it is today. The only difference is that FDA will collect its expenses from the industry rather than through appropriations.

Q: According to FDA, these new fees will be imposed only on companies importing food the agency suspects is adulterated or contaminated in some way. Is this a fair system? Why or why not?

A: As a policy matter, there are legitimate arguments that can be made advancing the notion the government should only do what it has the funds to do, and the funds to do those jobs should come from the budget. In that regard, perhaps it is "fair" that importers, foreign manufacturers and consumers should pay more for food that is "suspect" and that needs to be "re-examined." And that is what Congress thinks it authorized — but FDA has expanded this authorization beyond credulity and will be charging for time that patently does not involve any examination of the food — whether once or twice. My beef with FDA is not whether it is fair — but whether it is legal. “Inspection” and “examination” contemplate examination of food, shipments and importers’ facilities — not any information FDA obtains that might relate to food originating outside the country.

Q: How does FDA determine if a product could possibly be contaminated and needs re-inspecting?

A: According to FDA, the agency will count many activities as inspections, only two of which involve conduct that anyone could reasonably construe belongs within that categorization. For instance, FDA says it will consider efforts and time spent reviewing epidemiological data (related to a food outbreak and traceback investigation) as an "inspection" even though, in the vast majority of cases, examination of the implicated food does not reveal any contamination. FDA says review of third party inspection reports or third party lab reports will count as an “inspection.” Once a food is "inspected" in one of these ways (or through what we all might agree is an inspection), then anything FDA does related to that imported food or any future imports of that food will count as a re-inspection, even though FDA detentions made "without" physical examination will still count as "re-inspections."   

Q: According to FDA, small businesses can appeal the new fees and ask for a waiver or reduction.  Does this help make the system fair for all importers?

A: Imagine yourself as the small importer: three employees and two containers of imported cookies a month. You make about $20,000 transaction profit from the two containers each month. You still have to pay expenses, employees, taxes, etc. Your imported food is on a countrywide import alert, so FDA issues you an invoice for $1,000 per container after it spends 4.5 hours reviewing your documents. (Your food manufacturer has never been found to sell contaminated product, but it happens to be located in the wrong country.) You appeal seeking a waiver. It takes FDA 60 days to review the appeal, and now you owe $6,000 because two more months have passed. And all of this will happen without any established criteria for ruling on an appeal, no place to which to send the letter, no one identified as accountable for rendering an objective decision and not enough value to interest an attorney.

In addition, FDA’s own Federal Register Notice regarding the possibility of fee waivers states any waivers would not be effective until Oct. 1, 2012—a year after the damage is already done to small businesses. Even if these waivers go into effect, there will be fewer small business U.S. importers around to “enjoy” them.

Q: With imported food recalls on the rise, including the recent Salmonella outbreak from imported papayas, it is clear something must be done to help prevent tainted imports from entering the country. What do you propose is the best plan to both provide FDA with needed resources to protect consumer safety, as well as protect the interests of food importers?

A: FDA has been mandated through the Food Safety Modernization Act to establish a foreign supplier verification program (requiring importers to verify their foreign suppliers comply with FDA's food safety requirements), and FDA has been granted the authority to create a voluntary qualified importer program. FDA should start with the voluntary importer program first. FDA would receive documented evidence proving upstanding importers who already ensure their food products are in compliance, and FDA would learn what works — and therefore what to impose in the mandatory foreign supplier verification program.

Q: What can food importers do to prevent needing “re-examination” of their products in order to avoid these fees?

A: The most important thing U.S. food importers can do is to challenge FDA on the fee. The FDA's plan is, in our opinion, outside the scope of the grant from Congress. It should be challenged and FDA should be required to operate within the bounds of the law. In the meantime, if an importer's supplier is listed on or affected by any FDA import alert that has anything to do with food safety, petition the FDA for removal of the supplier from the import alert before Oct. 1 to have a chance of avoiding the fees FDA will charge for reviewing future import alert petitions. Require testing of imported food (prior to shipment) to ensure the articles comply with FDA standards, but also obtain copies of the foreign supplier's food safety plans and evidence (through implementation records) that the supplier is implementing the plan. Visit the facility and inspect it, or hire someone who can do this work.  

Interview by Lindsey Coblentz, Associate Editor