Posted by Paula Hynes | 06 / 16 / 15 0 Comments

Regulatory compliance has become a focus in recent years.  Products from other countries, particularly China, face additional scrutiny.  From car seats to dog treats, there have been numerous safety problems. 

The two key agencies in charge of protecting our product and drug safety are the FDA (Federal Drug Administration) and the CPSC (Consumer Products Safety Commission).  Product safety issues have become so numerous that both agencies opened offices and created Chinese language websites to help ensure Chinese manufacturers are compliant with our regulations.

According to the FDA website “Based on the volume of imported products from specific areas, problems that have been associated with products over the years and value to be derived from leveraging the activities and resources of trusted foreign counterpart regulatory authorities, U.S. FDA has established a permanent in-country presence in China, India, Europe, Latin America, and Sub-Saharan Africa.” “ To protect American consumers by ensuring that these rapidly increasing Chinese imports are safe, effective, and comply with U.S. science-based standards, FDA must adopt a new regulatory approach: it must increase its capacity for inspecting and analyzing Chinese products before they are shipped to the United States.”

Recalls Under Consumer Product Safety Commission Jurisdiction
By Country or Administrative Area of Manufacture, 2002-2013

Chart showing product recalls by country of origin

Source: Economics and Statistics Administration analysis using data from the Consumer Product Safety Commission.

 

CPSC Compliance

The Consumer Product Safety Commission’s regulations and acts impact many imported goods that we use every day. They have the authority to enforce the product safety standards outlined in the following acts:

  • Consumer Product Safety Act (CPSA)
  • Consumer Product Safety Improvement Act (CPSIA)
  • Federal Hazardous Substances Act (FHSA)
  • Flammable Fabrics Act (FFA)
  • Poison Prevention Packaging Act (PPPA)
  • Refrigerator Safety Act (RSA)

The list of products included is extensive and includes most items made for children, many chemicals, batteries, art supplies, clothing textiles, rope, rugs and some household appliances.  It is the responsibility of the importer or purchasing company to understand whether or not their product or part needs to meet any of these regulations.   While the product itself may not be on the list, one of the component parts may need to meet special guidelines.

To be sure the products comply with CPSC regulations; suppliers must verify that all parts and materials are also compliant.  This can become complicated when multiple suppliers are involved.  There have been reports of suppliers claiming compliance when the end product did not meet the standard.  Several years ago, lead paint was found to be used on children’s toys.  Obviously, this was in violation; however many foreign suppliers are often not aware of the composition of the materials they use.  If a product is in violation and it is seized by customs, the purchasing company may face penalties, may need to destroy the faulty products or make revisions  to meet safety standards.

FDA Compliance

The FDA oversees and regulates food, drugs and cosmetics.  This is not an easy task.  Counterfeit drug makers have become so sophisticated at mimicking legitimate drugs that Chinese authorities work in tandem with the US to stop their proliferation.  New food safety regulations passed in 2011, require importers verify the safety of all imported food.  High-risk foods must be accompanied with third-party verification.

According to their website “As part of FDA’s activities intended to protect the health and safety of U.S. Consumers, FDA often conducts inspections of foreign establishments that produce FDA-regulated articles intended for use in the United States.”  The key here is “FDA regulated articles.”  Off-shore producers must be sure they understand what the requirements are to meet FDA regulations.

It is the responsibility of the purchasing company or importer to understand if their product falls within FDA’s regulations.  If it does, the off-shore manufacturer or supplier must be registered with the FDA, and the registration must be verified.  Some factories have been known to misrepresent their registration by using the qualifications assigned to another manufacturer. 

Many purchasing companies either have a presence at contracted manufacturer’s factories to monitor compliance with FDA and CPSC regulations or they hire third party vendors to monitor the process. 

Ethical Sourcing Audits

Tragedies in China, Bangladesh, and India, have underscored the need for purchasing companies to be aware of how their suppliers operate within their countries.  Consumers are demanding that working conditions, hours and wages improve in these impoverished areas.

In response, many companies have established Ethical Sourcing Audits as a part of their overall corporate responsibility mandate.  These audits may include verification of working conditions, documentation of employee policies, on-site inspections and employee interviews.

Customs

Customs is the last stop on the product’s journey from an overseas supplier.   Since the 9/11 tragedy, the role of the Customs agency has expanded to include border protection as well.  Today the CBP  (U.S. Customs and Border Protection)  is concerned with making sure products coming into this country pose no threat to our National security.  This  oversight includes inspecting containers and shipments to insure that no tampering has taken place.  They are also responsible for collecting all duties, taxes, fees and tariffs.

The increased scrutiny of imported goods has placed some additional burden on importers.  All shipments must be clearly marked with details regarding the contents including country of origin.  Other information may be required based on the product.  Food, drugs and other classifications must follow additional guidelines.

Total Number of Documents Required Per Shipment to Export Goods
Gradient world map showing the number of documents required by importing countries

Source: Economics and Statistics Administration analysis using data from the World Bank, Doing Business project. 

The CBP is also tasked with the responsibility of insuring illegal drugs do not cross our borders in shipments.  Narcotics smugglers are known to stash contraband in shipments.  For this reason, the CBP inspects all aspects of a shipment including the containers, pallets, boxes, etc.  The bottom line is this; it is the responsibility of the importing company to ensure the CBP has the information they need to execute their duties as efficiently as possible.  Failure to do so will add time and expense to the process.  Worse case, the imported goods might be impounded or confiscated for failure to meet customs regulations.

The U.S. Customs and Border Protection Agency has provided a publication entitled “Importing into the United States” with specifics on importing requirements, sample documentation and a list of prohibitions and restrictions.   Some companies use custom experts or licensed customs brokers to help facilitate the process.

 

Are you aware of the hidden risks associated with your offshore supply chain?  Download our new PDF guide

 

Topics: Manufacturing, Made in America, American vs. Overseas Manufacturing


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