Markets vs. Governments:
Contaminated Chinese imports
1 Jul 2007 in Regulatory Economics, Regulatory Policy
Over the past several months increasing evidence has arisen indicating that products manufactured by Chinese firms and exported to the U.S. often do not adhere to U.S. health and safety standards.
Does the federal government need to enact new regulations to deal with these threats?
Possibly. But market forces have led U.S. firms that import food ingredients and consumer products from China to respond, and they have done so much faster, and in more creative ways, than federal agencies could ever do.
New York Times reporter Nelson D. Schwartz says "corporations are stepping up their analysis of imported goods that they sell, making more unannounced visits to Chinese factories for inspections and, in one case, pulling merchandise from American shelves at the first hint of a problem."
Schwartz says some legislators are advocating various regulatory responses such as the creation of a new food safety agency. H.R. 1148 (DeLauro), for example, would create a new Food Safety Administration responsible for administering several laws currently managed by the Food Safety and Inspection Service and portions of the Food and Drug Administration, the Agricultural Marketing Service, and the pesticide program of the Environmental Protection Agency. Combination of these functions into a single "food safety agency" has been an ambition of some legislators for many years, and though H.R. 1148 it is being described as a response to the Chinese import incidents the bill was introduced on February 16, weeks before the pet food incident occurred.
The practical effectiveness of the market's response is evident by the fact that existing law did not give FDA authority either to regulate pet food ingredients or take action in response to the Chinese incidents. FDA devoted significant surveillance resources to help identify the contaminants, trace them back to their origin, and supported voluntary recalls.
By the time a unified food safety agency could be enacted and organized, the market probably will have achieved effective regulation of Chinese imports. Few, if any, U.S. manufacturers and retailers want to poison their customers.
