Reviewing Taiwan’s Regulatory Reasonableness

Should dishwashing detergent be governed by the food safety law? Should marketing surveys for cosmetics require approval by an independent review board?

Through the annual Taiwan White Paper and other channels, AmCham Taipei has sought to call attention to laws and regulations that, while well-intended, have the inadvertent consequence of impairing Taiwan’s economic competitiveness and even disadvantaging consumers. Some such cases arise from the creation of unique-to-Taiwan regulations that are out of step with standard international practices, imposing a heavy compliance burden on businesses. Some others reflect a rules-making process that fails to allot sufficient time for industry and other relevant stakeholders to be consulted and provide feedback.

A new case cited by the Chamber’s Retail Committee exhibits both of those shortcomings. It involves a section of the Food Safety and Sanitation Act (FSSA) that came into effect with little notice in June 2013, at a time when considerable public attention was focused on the question of food safety following a series of food-related scandals. One article of the law deals with “food cleansers,” and seems intended to ensure that substances used to clean food items pose no risk to human health, a thoroughly reasonable goal. But the definition of “food cleansers” given in the law is so broad as to encompass not only substances used directly to disinfect or clean foods but also those used to clean “food utensils, food containers, and food packaging.”

Recently the Taiwan Food and Drug Administration (TFDA) has notified distributors of dishwashing detergent that their products are deemed to be “food cleansers” and thus subject to the provisions of the FSSA. In line with that determination, the regulators have insisted that only food-grade flavorings and colorants may be included among a detergent’s ingredients – even though the product obviously is not meant for human consumption. Further, the ruling was imposed abruptly, effective immediately, with no grace period allowed for companies to alter their product formulas or labeling.

Regulating dishwashing detergents under the FSSA also impacts the way they can be marketed. TFDA has interpreted the legislation as prohibiting “food cleansers” from making various advertising claims, such as being natural or organic, or having an anti-bacterial function. If detergents were instead treated as general consumer products, which is how they are classified in other markets, such claims would be allowed by the Fair Trade Commission as long as they can be substantiated.

Another new development is a determination by the TFDA that consumer surveys regarding cosmetics products need to be conducted under the provisions of the Human Subjects Research Act of 2011. That law previously was frequently applied to pharmaceuticals and medical devices, and was meant to protect consumer rights during clinical trials and other testing. Before such research can be carried out, the proposed protocol must be approved by an independent, third-party institutional review board (IRB). While performing their duty of reviewing cosmetic product advertising, TFDA staff noticed references to the results of consumer surveys and reminded cosmetics companies that they also need to abide by the IRB process since the surveys relate to products touching the human body.

For focus groups and other marketing surveys, the logic of requiring such a review is elusive, especially when the cosmetic products are already for sale on the market, with the safety of the finished products and their ingredients having been evaluated and approved by the TFDA. Yet the burden on industry is considerable. The IRB procedure is expensive (thousands of U.S. dollars per case) and time-consuming, as the board members, moonlighting from academic or other positions, convene only periodically.

No other country in the world regulates detergents under food-safety provisions or subjects cosmetic consumer surveys to such stringent procedures. In both cases the regulator neither consulted with industry about the potential impact nor provided a suitable grace period to prepare for enforcement.

“The result is to raise the cost of doing business, lessen the attractiveness of this market for multinational companies, and possibly even reduce consumer choice,” says AmCham Taipei president Andrea Wu. “Last year the government did a survey and identified regulations in Taiwan that are out of sync with international norms. Here are two more to add to the list.”

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