Why the US and Europe are lobbying against China's latest food safety legislation
- U.S. and European government and trade officials have been putting up a strong defense against potential Chinese legislation that could stand in the way of billions of dollars of food shipments to the second-leading global economy, Reuters reported.
- China aims to get its unwieldy food chain under better control, but its new law would enforce food imports to include health certificates from October to the present beginning next year, even for low-risk products.
- If passed, China's law would be significantly stricter than standards in the U.S. and Europe, which generally only require certification for perishables, like meat and dairy products.
If this legislation becomes law, it could mean notably higher costs for U.S. and European companies that regularly do business in China, ranging from Hershey and Mondelez to Unilever and Kraft Heinz. That's a tough scenario to face, as these businesses have invested in China as a source of future growth potential, especially as sales in the U.S. have slowed.
Many of these companies have also formed partnerships with Chinese companies, such as Alibaba. It's unclear at this point how this legislation could impact those partnerships and what kind of recourse U.S. companies like Mondelez will have to protect themselves.
Between Brexit in the U.K. and Europe, the unknowns surrounding a new presidential administration in the U.S. and now China's impending legislation, global trade has taken a major hit in 2016. From higher barriers to trade to threats of repeal of longstanding trade deals, foreign trade and international relationships in general could look very different in the coming years.