June 10, 2009

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By Product Safety Letter staff

Importers should have systems in place that consider four aspects of product safety, according to a draft guidance developed by CPSC and seven other federal agencies earlier this year. The Good Importer Practices four principles (reproduced mostly verbatim) are:

• Establish a clear management structure for product safety. Such a management structure would define and document functions, responsibilities, and reporting relationships for those individuals involved in product safety to demonstrate that management places a high importance on the safety of imported products.

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• Assign responsibility for product control and compliance to specific individuals, and ensure they understand their role in the organization.
• Ensure that the assigned individuals have the necessary training, knowledge, experience, skills, and competence to perform product compliance and control responsibilities, whether for finished products, raw materials, or other in-process components.
• Maintain appropriate control activities by having clearly documented policies, specifications, and procedures to ensure product safety, and maintain records to demonstrate how compliance was achieved.
• Establish a process to analyze and evaluate risks in the product life cycle, and develop an approach to control those risks appropriately. This process may include conducting risk assessments.
• Develop and maintain a system for communication and information that allows the sharing of relevant information on safety and compliance within the organization, and, where appropriate, with third parties, including federal, state, and local authorities.
• Establish a formal, documented quality-assurance program designed to control, monitor, and improve operations continually to ensure the safety of products and compliance with all applicable U.S. requirements.

• Know what you are importing.
• Know the details of the product you import, such as its use, the packaging, size, quantity, quality, product composition, specifications, safety concerns, etc. These details can make a difference as to which U.S. requirements apply, and whether the product is in compliance with all U.S. statutes and regulations.
• Know whether the product is intended for commercial sale or use in the U.S. or for foreign markets, as this can help you to determine if the product has been made to comply with U.S. requirements, and is properly labeled. Some imported products are not intended for commercial use/distribution, or are intended solely for foreign markets and, therefore, might not need to meet U.S. requirements for commercial use/distribution. For example, some products are made in the U.S. for sale in other countries, and, therefore, may not meet U.S. requirements. However, if they are subsequently offered for import into the U.S. (commonly referred to as “American Goods Returned”), they must meet U.S. requirements to be lawfully imported.
• Know which regulatory requirements apply.
• Know which U.S. requirements apply to the product, and to its manufacturer. General information about the requirements typically appear on the website of the agency(ies) with jurisdiction over the product.
• Become familiar with the U.S. regulatory agency’s policy statements, guidance, and other available information that it publishes to assist industry and end users. These generally appear on the website(s) of the agency(ies), may answer questions about the importation process, and may provide helpful recommendations on how to comply with U.S. requirements.
• Seek assistance so you know the applicable U.S. requirements and help ensure compliance. Importers can develop internal expertise or seek outside consultants for assistance in understanding, regulatory requirements. As resources permit, agency personnel may respond to general questions, and may issue additional guidance or provide training concerning the statutes and regulations they administer.
• Know the risks and compliance history of the products you import, and of the firms that manufacture, distribute, or transport those products.
• Know the potential hazards or other compliance problems associated with the product.
• Know if any of the firms or individuals involved in the product’s life cycle have previously experienced product-safety problems. For example, know if agencies with jurisdiction over the foreign manufacturer or other entities in the supply chain have previously identified violations relating to product safety by searching the agencies’ websites.
• Know where to find enforcement information on the agency with jurisdiction’s website, if available to the public, that can aid in understanding an agency’s concerns related to specific products and foreign sources, as well as problems previously found. Determine whether the firm has corrected those problems.
• Know if the manufacturer(s) and the product are compliant with applicable U.S. requirements. Ask to see official documentation of compliance.
• Know if the manufacturer and the product are compliant with applicable requirements imposed by the country of production. Ask to see official documentation of compliance. Violations of other country’s requirements can alert you to potential problems.
• Investigate a firm’s reputation and verify its legitimacy by using available public-source information (such as the Internet) or, if possible, by interviewing other customers of the firm. If the product is sold through a trading company, distributor, or other third party, consider investigating that firm as well.
• Determine whether a firm is a subsidiary of a larger company, and whether the importer has recourse against the parent company if the subsidiary defaults on its obligations. Manufacturers may be more likely to comply with U.S. requirements and make a safe product if the importer has recourse against them or their parent company, if they are a subsidiary.
• Be familiar with the relevant U.S., foreign, and international organizations, such as trade associations, that can alert you to emerging problems with the imported products. Communicate with sources known to provide reliable information about compliance or quality issues relative to the products.
• Be alert to information that suggests a product is subject to counterfeiting or other fraudulent activities, such as an offer to sell it at a price well below market value, or a counterfeiting history.
• Know, if possible, whether the product was or could have been exposed to pesticides, other chemicals, or contaminants or improper storage conditions during its growth, harvesting, manufacture, processing, packing, receipt, transportation, storage, importation, or distribution and whether those circumstances could affect compliance and/or product safety. The existence of these conditions can alert you to problems
.

A) Before Entry

• Have knowledge of the firms/persons in the foreign supply chain (e.g., name, address, type of business, etc.), to the extent feasible, from the production or growing of raw materials to manufacturing/processing, packaging, storage, and transportation of products destined for import.
• Know what preventive controls, if any, firms must institute at each critical point in the product’s life cycle, and the steps firms need to take to ensure those controls are being appropriately applied so that the product is safe for end users, such as consumers or healthcare professionals. The presence of inadequate preventive controls can alert you to potential risks.
• Prior to doing business with a supplier, perform an assessment of the supplier to determine if it has implemented an effective product safety program to help ensure you receive a product that meets applicable U.S. requirements. The assessment may include a review of documents, an on-site audit, or both.
• Resolve any potentially significant or questionable information gaps about the firms involved in the life cycle prior to importing their products, because the lack of information can raise concerns about safety and security.
• Obtain written guarantee of compliance from company representatives, if appropriate, based on a consideration of the risks associated with non-compliance and other conformity-assessment procedures employed. Insist on compliance with U.S. requirements in the purchasing contract, and impose remedies if the firm sells you non-compliant products for export to the U.S. Be as specific as possible about safety requirements. This can help ensure you receive a product that complies with applicable U.S. requirements. Firms can establish additional measures to ensure safety through contracts or agreements with others in the supply chain.
• When possible, deal directly with the supplier, or its authorized agent, to avoid fraudulent schemes. Avoid dealing with entities that claim to represent a supplier but cannot demonstrate they are the supplier’s authorized agent or refuse to provide information other than a certification about the supplier.
• When appropriate, require all those in the supply chain to have evidence of compliance with applicable U.S. requirements. Such evidence might include certification, licensing, certificates of analysis, and/or letters of guarantee.
• When appropriate, require foreign firms to train their employees on U.S. requirements applicable to their products when imported into the U.S.
• Establish mechanisms to verify compliance with U.S. requirements [see document for details].
• Periodically reassess monitoring mechanisms, and modify them, as appropriate, to ensure they are working as designed.
• Be alert to evidence that casts suspicion on the product. Ask appropriate questions if there are unusual aspects of the product’s history or transportation route to its final destination, such as: Did the product take an atypical route to get to the U.S.? Is it from a country that does not ordinarily supply that product? Is the price for the product much lower than expected? Is there evidence another country or firm rejected it? Is it entering through a port through which it does not ordinarily enter? Were there events, natural or otherwise, that could have led to problems with the imported product?
• Obtain guarantees or certifications subject to substantiation, if appropriate, that products vulnerable to moisture, contaminants, temperature, or other environmental conditions were maintained under acceptable conditions in transit.

B) At Entry

• Conduct a risk-based monitoring program of incoming products to target your resources where they will likely have the greatest positive impact on safety. Possible mechanisms include the following acts by the importer:
• Examination of shipping records;
• Examination of certifications, certificates of analysis, letters of guarantee, etc.;
• Physical examination of the product, packaging, and labeling; and
• Risk-based product sampling and testing by the importer or an independent third party, to ensure the product is authentic, and meets company specifications and U.S. requirements. Importers should use appropriately accredited laboratories.
• Consider using a licensed customhouse broker who is knowledgeable, trained, and understands the critical nature of accurate filing information to help ensure the accuracy and timeliness of your import filing. Know the correct harmonized tariff schedule number, as well as the correct commodity and product codes, and provide them to the broker/filer.
• Conduct or have an appropriate third party conduct licensed customhouse broker audits to ensure the transmission of accurate and legitimate information to appropriate Federal agencies.
• Refrain from using the services of any broker/ filer that you believe repeatedly provides incorrect information to the U.S. Government.
• Encourage the participation of eligible entities in widely recognized industry-partnership programs that promote additional security measures. This provides a higher level of assurance that firms do not simply have security protocols in place, but are actually following them.

C) During Distribution

• Establish procedures for the routine review and handling of safety complaints from consumers and customers to help ensure that safety problems are identified and addressed quickly. These procedures should include an analysis to determine if any patterns of problems are developing.
• Establish procedures for identifying non-compliant products, and for communicating information and problems regarding non-compliant products within the organization, and, where appropriate, to third parties, including Federal, State, and local authorities.
• In order to identify the source and destination of a potentially violative product, the importer should consider whether it should be able to trace the product from its origin to its destination. This would facilitate the removal of the violative product from the marketplace, as well as identify other implicated products. Importers should consider using contract provisions that require the use of “track and trace” technologies to accomplish these objectives.
• Establish procedures to isolate and hold a product to prevent its distribution in the U.S. until all applicable agencies have issued the relevant releases. If the U.S. Government denies entry, establish procedures to export or destroy the product, or take other action consistent with applicable U.S. laws and regulations. These actions can help ensure an unsafe product does not reach consumers.
• Establish, in advance, procedures for the recall of imported products from distribution channels in the U.S. to limit consumer exposure to unsafe products should they come into the U.S.. Firms should periodically evaluate and modify these procedures, as appropriate. Develop a plan to notify appropriate Federal agencies of the product recall, which may be required by U.S. statute or regulations.
• Establish procedures to notify distributors, retailers, consumers and other end users of unsafe imported products to minimize the exposure of consumers to unsafe products, and to facilitate their timely recall.

• Establish procedures for developing corrective action plans, and for taking corrective and preventive actions if non-compliance with a U.S. requirement or a safety concern should arise. Address the potential need for disposal/ destruction or export of non-compliant products, consistent with applicable U.S. statutes and rules.
• Identify and investigate the root cause of non-compliance with U.S. requirements for products they import, or by foreign firms with which they do business.
• Take steps to remediate and prevent harm from present and future shipments, and to ensure non-compliance and safety problems do not recur. These corrective action plans must, of course, be consistent with the appropriate U.S. agency’s regulations. They could, for instance, include product re-labeling, product re-working or further processing, product export or destruction (if the violative product is already at a U.S. port-of-entry or in U.S. commerce), or a decision not to offer the product for entry into the U.S. Proper corrective action plans are based on practices that ensure the product is in compliance when offered for entry into the U.S., or that will correct any problems prior to marketing in the U.S.
• Work with the non-compliant firm to meet U.S. rules, or stop conducting business with it.

Portions of this article appeared in the January 19, 2009 edition of our premium sister service, Product Safety Letter. It is just one of the hundreds of similar stories that subscribers read over the course of an annual subscription. Subscription information is here