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Regulatory Burdens
CHAPTER
6
Regulatory Burdens 6.1 BURDENS One might argue against the regulatory structure we propose in this study on the basis of the burdens it will place on innovation and businesses. Indeed the regulatory burden should not be underestimated. Approval procedures in particular are lengthy and costly and often their outcome is uncertain.1 By consequence premarket approval schemes are seen as a serious barrier to innovation and trade. Only the strongest companies can afford to submit a product for approval. Thus premarket approval schemes favour large companies over smaller companies and companies from the first world over companies from the third world. In practice companies are observed to avoid approval schemes by not engaging in innovation, by hiding innovation from authorities, by selecting markets without (effective) approval requirements and bypassing markets where safety needs to be proven scientifically. By consequence, premarket approval schemes may not always provide the desired level of safety protection to all consumers.
6.2 OTHER CONCERNS Regulatory burdens are not the only concern the proposed system, and in particular the requirement of premarket approval, raises. Another is WTO compatibility. Premarket approval of several types of products seems to be common among WTO members. These types of products include pharmaceutical products, plant protection products and food additives. Nevertheless, some WTO members have informally contested such premarket approval requirements within the WTO SPS Committee. They argue that the SPS Agreement places the burden of proof on the states that are members of WTO and that the SPS Agreement does not allow for a reversal of the burden of proof such as inherent in premarket approval schemes where the burden is on businesses. So far no formal dispute settlement has resolved this issue. Nevertheless, the case for premarket approval would be stronger if it 1
On this topic see van der Meulen, 2009c.
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Governing Nano Foods: Principles-Based Responsive Regulation
were agreed upon internationally or if authorities setting the trade barrier would provide support in dealing with it.2
6.3 ALLEVIATING BURDENS It can be argued that it is fair to leave the burden to prove safety with the sponsors of innovative foods. The value of such argument seems limited, however, if the practical effects are counterproductive in the sense that innovation is delayed or shifted to countries where consumers enjoy limited protection. It would be better to limit the burdens as far as possible. Measures that can be taken to this effect include the following. First, adoption of a GRAS-like exemption from approval requirement that enables the competent authority to lift the approval requirement for certain products or processes regarding which sufficient data are available for a general conclusion regarding absence of risk.3 Second, avoid requiring scientific proof in situations where the safety of a food is not uncertain because conclusive risk assessment is already available. This argues against an exclusive system and in favour of a generic system.4 Third, active participation of the public sector in risk assessment and serious efforts on the part of authorities to deal with the procedure in an efficient and effective manner, creating as little additional costs in time and finance for the applicants as possible. Fourth, mutual recognition of risk assessment.5 Fifth, strict compliance by public authorities with the obligations applying to them such as, in particular, respecting deadlines for taking decisions. Finally, authorities can do much in terms of compliance assistance. That is to inform businesses willing to comply with their obligations on how to do it and support them in achieving it.
6.4 GLOBAL HARMONISATION? The analysis in this study is largely based on systems found in national (including EU) systems of food law. The question presents itself however, what is the most appropriate level of regulation. Premarket approval schemes currently exist in the USA, Canada, the EU, Japan, Australia and New Zealand. So far these jurisdictions fare poorly in 2
On this topic, see also Szajkowska, 2012, in particular Chapter 3: Science-based regulation? See Section 4.6. 4 See Section 4.3. 5 See Section 6.4. 3
Regulatory Burdens
49
mutually recognising each other’s risk assessment. The consequence is that innovative businesses suffer the administrative burden of multiple approval procedures. Apparently, risk managers do not recognise each other’s risk assessments,6 let alone each other’s risk management decisions. It would be much to their credit if they would manage to terminate this situation. On top of this, many countries do not have the capacity or infrastructure for safety assessment and approval. The level of safety assurance for consumers differs considerably between countries. The Joint FAO/WHO Food Standards Programme has an infrastructure in place for risk assessment at the global level. It would be to the benefit of the whole world authorities, consumers and businesses alike if case-by-case assessment and approval of nanofoods would be concentrated at the global level to be applied by countries that do not have an approval system of their own and to be supported and recognised by countries that do.
6 The closest thing to an exception seems to be that in the USA the GRAS status of a product can probably be based on risk assessment by JECFA or EFSA.
6
Regulatory Burdens 6.1 BURDENS One might argue against the regulatory structure we propose in this study on the basis of the burdens it will place on innovation and businesses. Indeed the regulatory burden should not be underestimated. Approval procedures in particular are lengthy and costly and often their outcome is uncertain.1 By consequence premarket approval schemes are seen as a serious barrier to innovation and trade. Only the strongest companies can afford to submit a product for approval. Thus premarket approval schemes favour large companies over smaller companies and companies from the first world over companies from the third world. In practice companies are observed to avoid approval schemes by not engaging in innovation, by hiding innovation from authorities, by selecting markets without (effective) approval requirements and bypassing markets where safety needs to be proven scientifically. By consequence, premarket approval schemes may not always provide the desired level of safety protection to all consumers.
6.2 OTHER CONCERNS Regulatory burdens are not the only concern the proposed system, and in particular the requirement of premarket approval, raises. Another is WTO compatibility. Premarket approval of several types of products seems to be common among WTO members. These types of products include pharmaceutical products, plant protection products and food additives. Nevertheless, some WTO members have informally contested such premarket approval requirements within the WTO SPS Committee. They argue that the SPS Agreement places the burden of proof on the states that are members of WTO and that the SPS Agreement does not allow for a reversal of the burden of proof such as inherent in premarket approval schemes where the burden is on businesses. So far no formal dispute settlement has resolved this issue. Nevertheless, the case for premarket approval would be stronger if it 1
On this topic see van der Meulen, 2009c.
48
Governing Nano Foods: Principles-Based Responsive Regulation
were agreed upon internationally or if authorities setting the trade barrier would provide support in dealing with it.2
6.3 ALLEVIATING BURDENS It can be argued that it is fair to leave the burden to prove safety with the sponsors of innovative foods. The value of such argument seems limited, however, if the practical effects are counterproductive in the sense that innovation is delayed or shifted to countries where consumers enjoy limited protection. It would be better to limit the burdens as far as possible. Measures that can be taken to this effect include the following. First, adoption of a GRAS-like exemption from approval requirement that enables the competent authority to lift the approval requirement for certain products or processes regarding which sufficient data are available for a general conclusion regarding absence of risk.3 Second, avoid requiring scientific proof in situations where the safety of a food is not uncertain because conclusive risk assessment is already available. This argues against an exclusive system and in favour of a generic system.4 Third, active participation of the public sector in risk assessment and serious efforts on the part of authorities to deal with the procedure in an efficient and effective manner, creating as little additional costs in time and finance for the applicants as possible. Fourth, mutual recognition of risk assessment.5 Fifth, strict compliance by public authorities with the obligations applying to them such as, in particular, respecting deadlines for taking decisions. Finally, authorities can do much in terms of compliance assistance. That is to inform businesses willing to comply with their obligations on how to do it and support them in achieving it.
6.4 GLOBAL HARMONISATION? The analysis in this study is largely based on systems found in national (including EU) systems of food law. The question presents itself however, what is the most appropriate level of regulation. Premarket approval schemes currently exist in the USA, Canada, the EU, Japan, Australia and New Zealand. So far these jurisdictions fare poorly in 2
On this topic, see also Szajkowska, 2012, in particular Chapter 3: Science-based regulation? See Section 4.6. 4 See Section 4.3. 5 See Section 6.4. 3
Regulatory Burdens
49
mutually recognising each other’s risk assessment. The consequence is that innovative businesses suffer the administrative burden of multiple approval procedures. Apparently, risk managers do not recognise each other’s risk assessments,6 let alone each other’s risk management decisions. It would be much to their credit if they would manage to terminate this situation. On top of this, many countries do not have the capacity or infrastructure for safety assessment and approval. The level of safety assurance for consumers differs considerably between countries. The Joint FAO/WHO Food Standards Programme has an infrastructure in place for risk assessment at the global level. It would be to the benefit of the whole world authorities, consumers and businesses alike if case-by-case assessment and approval of nanofoods would be concentrated at the global level to be applied by countries that do not have an approval system of their own and to be supported and recognised by countries that do.
6 The closest thing to an exception seems to be that in the USA the GRAS status of a product can probably be based on risk assessment by JECFA or EFSA.