The chairman of the New Zealand Infant Formula Association says the free trade agreement (FTA) with China doesn’t feel like a FTA to him in the light of the impasse.
Michael Barnett told Dairy News the rules being imposed by the Chinese are distorting and regulating the New Zealand market and calling into question the FTA partnership.
Barnett says the problem centres on the Chinese backing down on some ‘transitional’ arrangements that would allow entry into China of infant formula products already produced or on their way.
“The Chinese testing agency had been in New Zealand and had audited a sample of infant formula manufacturers.
“They indicated they would get back to MPI by May 1 and would identify those who had passed the audit and were therefore capable of sending product into the China market.
“Just prior to May 1 we were advised that of the 13 audited, one had passed, but we were advised by MPI that they felt they would be able to get more across the line.”
Barnett says the difficulty at that point is that as well as manufacturers there is a range of brand holders – people who have a brand and get a manufacturer to make that for them and export that into the China market.
“What the Chinese said was that they would insist on their being a ‘close relationship’ between the brand holder and the manufacturer but
they did not identify what that ‘close relationship’ was.
“They asked the sector here in New Zealand, and MPI, to make some suggestions as to what that might look like. As a transition they said that if there were other brand holders who had product made by [these approved] manufacturers – product either made, on a [New Zealand] wharf, on the water or on a wharf in China – there would be a transitional period during which they would accept all that product.”
But the Chinese changed the rules last week and scrapped the transitional arrangements and it is this decision that’s upset the Infant Formula Manufacturers.
“My frustrations are two-fold,” says Barnett. “Firstly, the sector here in New Zealand is dependent on MPI to create a platform that’s going to allow us to do business, and at the moment we don’t have that platform.
“Secondly, the Chinese agencies themselves have not been able to agree on their own processes so they have used a blunt instrument to control the supply chain.
“Another major frustration for me is that there seems to be constant reference to brands, whereas it shouldn’t be the number of brands that is the issue, but rather the quality of the content in the containers.”
Barnett says though MPI appears to have the interests of his group at heart, he wonders if the ministry has been caught out by the speed at which the Chinese have acted. He also wonders if MPI is still finding its way from being a regulator to being a trade facilitator.
While Barnett says the move by China appears to favour the larger companies, he sees no reason why smaller companies cannot meet the criteria.
“It is possible for a small exporter to be able to manage and provide the traceability required. What the Chinese have asked for is that the exporter and the manufacturer be in a ‘close relationship’, but they have not determined what that is.
“About 20-30% of the market is the small innovative creative entrepreneurial companies that have created a supply chain into a market and they are not to blame.
“Sanlu and botulism were not caused by the small guys, yet the small guys seem to be subject to collateral damage. They are absolutely dependent on MPI creating a platform for them to continue to do their business and at the moment that’s not being delivered.”
