Expert Analysis: At the Key Stage of License Renewal, What Are the Must-Watch Priorities in the E-Ci

FLOW-wrap: break-word !important"> Consumption yesterday's tweets in Gowang" Set the key points! exporte-cigarettesIf you are notified overseas due to quality problems, you must proactively report and accept verification." Medium We shared the just-released" About Promoting Exportse-cigarette productsGuidelines for the Construction of Quality Assurance Systems."In the interpretation of official policies, it is mentioned There are 18 articles in the Guide, the main contents are:

First, it is clear that enterprises are the responsible entities for the construction of the quality assurance management system for export e-cigarette products;#p#pagination title #e#

The second is to clarify the main contents of the construction of a quality assurance management system for export e-cigarette products, including quality and safety standards, sorting out technological processes, equipping production resources, improving various systems, standardizing product packaging, traceability logistics and transportation, export declaration and filing, etc.;

The third is to clarify the specific requirements for the construction of a quality assurance management system for export e-cigarette products.

Especially the #p#pagination title #e# Articles 13 and 14 have attracted the attention of a large number of practitioners. This tweet I shared with you today Zheng Mingwei's lawyer team Original creation. In this article, Zheng Mingwei's legal team focused on interpreting Articles 13 and 14. It is recommended that people in the e-cigarette supply chain collect and forward this tweet for any time.

Preface: On July 20, 2023, the State Tobacco Monopoly Administration issued the "Guidelines on Promoting the Construction of a Quality Assurance System for Export E-Cigarette Products"(hereinafter referred to as the "Export Guidelines"), which came into effect on the same day. Articles 13 and 14 Regarding export e-cigarettes, they began to associate overseas law enforcement information and required handling of the notified quality and safety issues.e-cigarette industryIn general, the impact is undoubtedly very huge. The previous handling methods such as the US FDA warning letter and import alert red list immediately became a thing of the past.

Zheng Mingwei's lawyer team ine-cigarette enterprisesFDA Import Alerts and Removal Applications Guidelines (2)"(submitted on July 19, reviewed on the 20th, and issued on the 21st) predicts that domestic regulators will pay attention to overseas regulatory information and affect the prediction of domestic authorities will be verified. At the current time when e-cigarette licenses are extended, such regulatory rules will undoubtedly have a very significant impact on some companies notified by the US FDA.

1. Why should the license extension be issued at the critical time and take effect on the same day? When it comes to foreign exchange earnings through exports, it is urgent to delay

The United States is the largest in the worlde-cigarette market。The U.S. agency responsible for tobacco (including e-cigarettes) is the FDA. As of July 20, 2023, the United States has issued warning letters to many leading e-cigarette companies in Shenzhen and Dongguan in China, and has even included them on the import alert list (customs will withhold them first and then inspect them)(see the U.S. FDA Import Alert and Removal Application Guidelines for e-cigarette Enterprises (1) and (2))). Some leading companies do not have a good view of the overall situation, are eager for quick success, and cannot understand the meaning of not having major changes in a century. Faced with the FDA's regulatory measures, they ignore them and are bent on making quick and short-term money. They cannot understand the continuous violation of laws, taking the lead in violating laws, and violating laws multiple times may be targeted by people/institutions with ulterior motives, leading to targeted sanctions for the entire company and the entire industry, thus losing the entire industry, and forcing the industry to move to other countries. Seriously affect my country's policy of encouraging exports to earn foreign exchange.

Zheng Mingwei's legal team has served as lawyers and consultants for three listed companies in mobile phone-related industries in Shenzhen for many years. They have deeply understood the power of U.S. trade sanctions. The ultimate effect is industrial transfer and seeking certificates of origin from other countries. A large number of jobs in my country have been lost, and industrial profits have been shared by Vietnam and other countries.

Our country has an absolute advantage in e-cigarettes. About 90% of the world's production capacity is in China. Leading companies in Shenzhen and Dongguan have established brands in major markets such as the United States and the United Kingdom. For a time, supply of individual brand products was in short supply. Foreign investors paid for orders, and cash and spot trade models have been established. China's leading e-cigarette companies have a strong trading position. Taking into account the total market size of traditional tobacco and the trend of e-cigarettes gradually replacing traditional tobacco, e-cigarette companies are likely to become one of the main players in foreign exchange exchange through exports, with prospects of thousands or even trillions.

Once our e-cigarette companies do stupid things themselves and are maliciously targeted by people/organizations, my country's advantageous industry may collapse, and there is no way to talk about foreign exchange through exports. Therefore, it is extremely important to earn foreign exchange through exports. It is not an exaggeration to introduce the e-cigarette license at the moment when it is extended and take effect immediately.

2. Export guidelines create a level domestic competitive environment #p#pagination title #e#

At present, domestic e-cigarette companies have different understandings of compliance. Some e-cigarette companies invest manpower and material resources to actively comply. Regardless of their barbaric growth, if they do not issue export guidelines and require overseas compliance, it will lead to different management costs and compliance costs between compliant companies and non-compliant companies, which ultimately lead to differences in product costs, affecting fair competition among companies, and even bad money driving out good money. From the struggle between copyright service providers and piracy service providers of audio-visual products in the first 10 years in China, it can be clearly seen that the huge impact of compliance and non-compliance on costs.

Therefore, everything must comply, and all must invest compliance costs, which is a requirement of fair competition.

3. Interpretation of Article 13

Article 13 If there are quality and safety problems in exported e-cigarette products that have caused or may cause damage to human health, the enterprise shall immediately stop the production of relevant products, take corresponding measures to avoid and reduce the occurrence of damage, and report to the local Tobacco Monopoly Bureau.

For already, there must be sufficient evidence, and there is no need to discuss this point too much. The focus of this article is possibilities. Under what circumstances would it be possible?

We understand that the following are typical scenarios that can prove possible:

1. Quality issues have been notified by overseas international organizations and overseas government agencies, and are quality issues involving human health;

2. Abroad, involved in litigation, arbitration or related legal procedures due to quality issues involving human health;

3. Reports and disclosures of quality issues involving human health by overseas authoritative media, periodicals, and websites;#p#pagination title #e#

4. The verification and testing carried out by the company show that there are quality problems involving human health.

The above situations are some typical situations that prove the existence of possibilities. In addition to these situations, companies need to make their own judgment. Only after judging that it is possible does it need to be reported to the Tobacco Bureau.

Generally speaking, companies do not need to report if it is impossible.

4. Interpretation of Article 14

Article 14? If exported e-cigarette products are notified by international organizations or overseas government agencies due to quality and safety issues, the enterprise shall immediately report to the local Tobacco Monopoly Bureau, and the relevant enterprise shall accept the verification and handling organized by the Tobacco Monopoly Bureau in accordance with the law.

We believe this article is the most important one in the guidelines. The keywords in this article are [quality and safety],[notification],[immediate], and [verification and handling]

1. How should quality and safety be understood? Does it refer to quality issues or safety issues? We understand that including quality issues,ruyanExcessive levels of nicotine in the oil also include safety issues, such as batteries that naturally burn the skin. Whether flavor electronic products are quality and safety issues due to taste violations and e-cigarette product design that attract minors is a quality and safety issue needs to be demonstrated in detail in conjunction with relevant U.S. laws and regulations.

2. How should notification be understood? Does it mean public notification? Don't make public announcements count? This article has certain ambiguity. We understand that both public and private announcements count. For example, if it is sent to a company via email, it also counts. If there is an opportunity in the future, write another article to discuss it clearly.

3. How long is it immediately? This article is unclear. According to general civil litigation and administrative litigation rules, in Article 103 of the Civil Procedure Law, the corresponding court action for immediate execution is completed within 48 hours. Therefore, you can refer to the provisions of the Civil Procedure Law and notify the Tobacco Bureau immediately or within 48 hours.# p#pagination title #e#

4. What does verification processing mean? Verification and processing are two actions. On the one hand, the Tobacco Bureau conducts verification to confirm the problem and also gives the opportunity to defend the enterprise to avoid unjustly accusing the enterprise; on the other hand, processing is to request rectification after confirming the problem. Rectification here should include filing complaints to overseas regulatory agencies through due process and proving compliance, and removing red lists and other notification lists. That is to say, it needs to be solved both at home and abroad before it can be regarded as complete rectification. If no rectification is made, it is expected that license extension, change, issuance and other matters will not be processed temporarily.

Although there are different interpretations, we believe that companies also need to report to the Tobacco Monopoly Bureau for notifications that occurred before the Export Guidelines came into effect (before July 20, 2023). However, for such notifications, it may be a bit difficult to require companies to make judgments immediately (within 48 hours) from the effective date of the Export Guidelines and report to the Tobacco Monopoly Bureau. Therefore, if an enterprise does have difficulties, it can take the initiative to apply to the Tobacco Monopoly Bureau for an extension of the report. At the same time, it is not ruled out that local tobacco bureaus will subsequently provide guidance on the time grace window during the specific implementation process.

5. How to respond

According to Article 14, enterprises need to make judgments immediately (within 48 hours, if there are difficulties within 48 hours) from the effective date of the Export Guidelines on July 20, 2023. Make judgments and report notifications that are quality and safety issues to the Tobacco Monopoly Bureau, otherwise they may be deemed to be overdue. As far as the information currently available is concerned, the U.S. FDA has issued warning letters to many e-cigarette leading companies for adulteration and labeling errors, and even included them on the import warning list. However, this involves many specific situations and does not directly equals quality and safety issues. For example, some were targeted by law enforcement because they lured minors to use it, some were because they did not submit a PMTA application, and some were because the label content was wrong. These reasons cannot be said to be equal to quality and safety issues.

How should we judge whether it is a quality and safety issue notification, especially whether violations such as flavor violations and e-cigarette product design to attract minors are quality and safety issues, and how to persuade domestic regulatory agencies to relevant notifications do not involve quality and safety issues. How to explain to domestic regulatory agencies issues such as FDA appeal procedures and timing? Legal professionals and technical professionals who understand the U.S. FDA system are required to assist in completing the project.# p#pagination title #e#

Overall, the regulatory authorities must strictly control and love the advantageous industry of e-cigarettes. Unless it is indeed a very typical illegal enterprise, they will generally give opportunities and time to rectify, especially a leading enterprise. It is particularly difficult to cultivate one. At this stage, it should be the idea of" treating diseases and saving people ".

If e-cigarette companies were still waiting and hesitant about whether to comply, the promulgation of the" Export Guidelines "requires all e-cigarette companies to comply with regulations and comply with all domestic and overseas rules, which means the beginning of the era of fair competition for exporting e-cigarette companies, the end of the era of barbaric growth, and the country cultivates the wisdom of towering trees. Although there are pains, this is the only way to keep the e-cigarette industry continue to earn foreign exchange for the country's exports and cope with major changes unseen in a century.

The author of this article is:

Zheng Mingwei, Master of International Law from Shenzhen University, Director of the Corporate Comprehensive Business Committee and Equity Partner of Beijing BOC (Shenzhen) Law Firm.

Lin Hongping, Master of Civil and Commercial Law, Huazhong University of Science and Technology, Master of Advanced Accounting, Chinese University of Hong Kong;

Jiang Yubin, LL.M., University of Birmingham, UK;#p#pagination title #e#

Yang Aoyu, Bachelor of Laws from the University of Hong Kong, Doctor of Laws from the University of California, Irvine, passed the California Bar Examination.