Thursday, October 9, 2008

WWWTOD? - What would the World Trade Organization Do? Milking China Edition

China dominates world markets, especially in manufacturing.

It seems like you cannot buy anything without it being made, assembled, or containing components made in China.

But allowing one country with questionable oversight practices to control your country's access to manufactured goods does not always work out.

China has received some negative PR when several of its products have been found to possess dangerous flaws.

A run down of products from China that have recently turned out to be contaminated:

  1. Dog Food
  2. Toys
  3. Medication
  4. and now, Milk and Dairy Products
It appears that dairy companies and some Chinese government officials, knew that an industrial chemical - melamine - was being added to milk-based baby formula.

This doctoring was done to make the powdered formula seem more protein-rich.

When consumed, melamine can be harmful to humans, especially infants and children.

Apparently, the doctoring was so widespread that at least 53,000 children in China needed medical treatment and at least four died after consuming the tainted product.

China's chief governmental official overseeing quality control resigned and 22 different dairy companies recalled their product.

But that has not stopped the tainted dairy products from being discovered around the world.

Chocolate-company, Cadbury, had to recall products it had made using milk-powder from China. These products were sold not just in mainland China, but also in Hong Kong, Taiwan, and Australia.

Kraft foods has concerns about it's Oreo-brand cookies that are sold worldwide.

Tainted candies are being found by officials in Canada, Europe, and the United States.

China's milk crisis has become a global problem, but what can be done about it?

What are the issues?

Can a nation prevent tainted food products from being imported in this age of free trade and global economies?


Countries can prevent tainted food products from entering their borders, but they must do so in accordance with legal guidelines and with the backing of sound scientific data.

What is the controlling international law?

When a problem revolves around trade of a product across borders, you sound immediately look to the World Trade Organization (WTO) agreements. These are a system of treaties that have established trade guidelines that must be followed by the participating member states.

Both the U.S. and China are WTO members.

The U.S. is one of the original signors in 1995, while China acceded to the agreements in 2001.

This means that both the U.S. and China are bound by the WTO agreements, which limits what they can and cannot do in regards to international trade.

The WTO used to have a plurilateral agreement on regulating dairy trade - the International Dairy Trade Agreement - but this agreement was allowed to lapse in 1997.

Now, the guiding agreement under the WTO is the Agreement on the Application of Sanitary and Phytosanitary Measures.

Annex A 1 (b) tells us that
sanitary or phytosanitary measure are any measure taken:

"to protect human or animal life or health within the territory of the Member from risks arising from additives, contaminants, toxins or disease-causing organisms in foods, beverages or feedstuffs..."

It seems to me that preventing industrial chemicals being used as a food additive from poisoning infants and children is exactly in the province of this Agreement.

Annex C allows member states to check and ensure that products meet sanity & phytosanitary measures so long as they do not impose undue delay or unfavorable processes on imported goods.

So, WTO members have permission to check incoming food imports.

Article 5 of the agreement stops member states from banning food imports without justification. Member states must use risk assessment techiniques appropriate to the circumstances and based on international standards or sound scientific data.

In this case, it is well documented that melamine is harmful to humans. It is a chemical used in plastics production that leads to kidney stones and other health problems when consumed.

Scientific data exists to justify testing and banning products containing melamine.

There are further measures relating to giving notice to exporting countries and dispute resolution, but I think we have enough information to see how this affects you.

What does this mean to the reader?

WTO members have the right to ban food product imports if they have reasonable justification to do so.

They can do so to protect the health of their populace.

They require scientific proof that such a ban is justified.

Here, the weight of evidence justifies banning dairy-related products that are produced in China.

Readers should expect that government agencies will begin testing food with Chinese dairy products in them and banning some of them in the near future.

Already, the U.S. and Europe do not allow that importing of baby formula produced in China. It now looks like that ban may spread to other products with Chinese dairy in them.

Expect these announcements to come from agencies like the U.S. Food and Drug Administration.

I assume such measures will be labelled temporary, "until further notice," as a way to mollify complaints from China and multinational food processors.

China will seek a dispute resolution from the WTO based on the scientific evidence used to justify these bans.