Neville Wang

Qi Wang Phone:- Email- Writing Sample: Capstone Comparative Law Essay I developed this writing sample as part of the MCL Capstone Comparative Law class where I studied comparative consumer law, especially consumer laws and regulations in the U.S., in Europe, and in China. This paper attempts to introduce two consumer protection cases happened in China and the western world respectively, and then discuss how to reform China’s food safety regulation and build a consumers’ rights regime. Building a Consumers’ Rights based Regime in China - A Comparative Law Perspective Since the 2008 tainted milk incident, Chinese parents have put little faith in domestic infant milk powder till this date. They refuse to purchase infant milk powder with a local brand, despite of a vast supply of the local dairy industry. It had been estimated in 2018 that up to 80% to 90% of infant formula purchased in Australia was destined for China. 1 This distrust in domestic consumers is not without reasons, considering infants died or suffered kidney stone illness from digesting melamine tainted milk powder produced by local dairy processors. 2 In May 2020, there was still news that Chinese infants in Hunan Province suffered from body rash, weight loss, and even the so-called “big head” syndrome due to consuming a protein beverage as formula infant food for special medical purposes. 3 This paper attempts to introduce two consumer protection cases happened in China and the western world respectively, and then discuss how to reform China’s food safety regulation and build a consumers’ rights regime. I. The 2008 Chinese Milk Scandal The 2008 Chinese milk scandal was one of the most significant food safety incidents in China. The scandal involved milk and infant formula milk powder along with other food materials and components being adulterated with melamine. According to official estimates, at least six infants had died and nearly 300,000 were sickened from drinking the tainted milk or infant formula. 4 An estimate of 54,000 babies were hospitalized 5. The chemical melamine gives higher appearance of protein content when added to milk, leading to protein deficiency in the milk or formula. In a separate incident four years prior, diluted milk had resulted in 12 infant deaths from malnutrition. 6 The scandal broke on 16 July 2008, after sixteen babies in Gansu Province were diagnosed with kidney stones7. The babies were fed infant formula produced by Shijiazhuang-based Sanlu Group. 8 After the initial focus on Sanlu, the leading domestic infant formula provider, government inspections revealed the problem also existed to a lesser degree in products from 21 other companies, including an Arla Foods-Mengniu joint venture company known as Arla Mengniu, Yili, and, Yashili. 9 Chan, Tara Francis. "Australia Post opens new 'concept store' that will only ship to China". The Sydney Morning Herald. 24 May 2018. 2 Liu, Chenglin, Profits above the Law: China's Melamine Tainted Milk Incident (2009). Mississippi Law Journal, Vol. 79, 2009, at 371. Available at SSRN: https://ssrn.com/abstract=- Baidu Baike. https://baike.baidu.com/item/2020%E5%B9%B4%E9%83%B4%E5%B7%9E%E5%A5%B6%E7%B2%89%E4%BA%8B %E4%BB%B6/-?fr=aladdin, last visited 11 June 2020. 4 The Ministry of Health: Over 290,000 Infants Suffered Urinary Abnormalities from Drinking the Tainted Milk, XINHUA NET, Dec. 1, 2008 5 Jane Macartney (22 September 2008). "China baby milk scandal spreads as sick toll rises to 13,000". The Times. London. Retrieved 2 April 2010. 6 "China 'fake milk' scandal deepens". NBC News. 22 April 2004. Archived from the original on 21 September 2008. Retrieved 25 September 2008. 7 "The tainted baby formula scandal was exposed on 16 July after 16 babies who were fed on milk made from powder produced by Hebei Province-based Sanlu Group in northwest China's Gansu Province were found to have developed kidney stones". Xinhua, 23 September 2008. 8 Id. 9 China seizes 22 companies with contaminated baby milk powder". Xinhua News Agency. 16 September 2008. Archived from the original on 21 October 2012. Retrieved 2 April 2010. 1 The issue raised concerns about food safety and political corruption in China, and damaged the reputation of the reputation of made in China exports. At least 11 other countries stopped all imports of Chinese dairy products. A number of drumhead trials were conducted by the Chinese government. Two people were executed, one given a suspended death penalty, three people receiving life imprisonment, two receiving 15-year jail terms, 10 and seven local government officials, as well as the Director of the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), were fired or forced to resign. 11 The value of the Sanlu company plummeted as a result of the scandal. 12 On 24 September, 2008, Fonterra announced it had written down the carrying value of its investment by NZ$139 million (two-thirds), reflecting the costs of product recall and the impairment of the 'Sanlu' brand because of the "criminal contamination of milk". 13 On February 12, 2009, the Sanlu company was declared bankrupt by Shijiazhuang Intermediate People’s Court. 14 For compensation, the Chinese government set up a one-time compensation package totaling 1.1 billion Yuan (U.S. $160 million). Under the plan, families of children who died from drinking the tainted milk would receive 200,000 Yuan (U.S. $29,000). Those who suffer kidney stone would receive 2000 Yuan (U.S. $292); sicker children would be paid 30,000 Yuan (U.S. $4,400). The compensation package would be paid by the twenty two companies whose products were found tainted with melamine. A remainder of 200 million Yuan (U.S. $29 million) would be used for future health problems that afflicted children might develop. 15 The tainted milk incident highlighted China’s failure to effectively regulate food safety. After the incident, China promulgated a series of laws and regulations to enhance food safety, including the Food Safety Law in 2009 and its amendment in 2015. 16 II. The Thalidomide Disaster In the late 1950s and early 1960s, the use of thalidomide in pregnant women in 46 countries resulted in the "biggest man-made medical disaster ever," with over 10,000 children born with a range of severe deformities, such as phocomelia, and thousands of miscarriages. 17 Thalidomide was introduced in 1956 and was promoted by the German pharmaceutical company Chemie Grünenthal as a medication for anxiety, trouble sleeping, "tension", and morning sickness. 18 It was introduced as a sedative and medication for morning sickness without having been tested on "Two get death in tainted milk case". China Daily, 5 June 2013. "Crisis management helps China's dairy industry recover". Xinhua News Agency. 23 September 2008. 12 Sarah McDonald. "Fonterra posts $139 million impairment charge on San Lu stake". New Zealand National Business Review. 24 September 2008. 13 Michael Field; Andrew Janes, "Fonterra takes 69pc SanLu writedown". Business Day. South Africa. 24 September 2008. 14 Sohu News. http://news.sohu.com/-/n-.shtml 15 Zhu Zhe and Cui Xiaohuo, 22 Dairy Firms to Pay $160m in Compensation. China Daily. Dec. 30, 2008. 16 Andrew Sim and Yilan Yang. China: An Overview of the New Food Safety Law. Food Safety Magazine. April 19, 2016. 17 Vargesson, Neil. “Thalidomide-induced teratogenesis: history and mechanisms.” Birth defects research. Part C, Embryo today : reviews vol. 105,2 (2015): 140-56. doi:10.1002/bdrc- Miller MT (1991). "Thalidomide Embryopathy: A Model for the Study of Congenital Incomitant Horizontal Strabismus". Transactions of the American Ophthalmological Society. 81: 623–674. PMC-. PMID- / 7 10 11 pregnant women. 19 While initially deemed to be safe in pregnancy, concerns regarding birth defects were noted in 1961, and the medication was removed from the market in Europe that year. A brief introduction of how European nations and the U.S. treated or avoided the disastrous drug incident is set out as below. Grünenthal criminal trial In 1968, a large criminal trial began in Germany, charging several Grünenthal officials with negligent homicide and injury. After Grünenthal settled with the victims in April 1970, the trial ended in December 1970 with no finding of guilt. As part of the settlement, Grünenthal paid 100 million DM into a special foundation; the German government added another 320 million DM. On 8 May 2008, Grünenthal announced it would voluntarily pay further €50 million to the Thalidomide Foundation to help to improve the lives of thalidomide victims. 20 The settlement amount was far from sufficient to victims across the world. UK In the UK, the drug was licensed in 1958 and withdrawn in 1961. There were approximately 2,000 babies born with defects, around half of whom died within a few months and 466 survived to at least 2010. 21 In 1968, after a long campaign by The Sunday Times, a compensation settlement for the UK victims was reached with Distillers Company (now part of Diageo), which had distributed the drug in the UK. 22 Distillers Biochemicals paid out approximately GBP£28m in compensation following a legal battle. 23 The British Thalidomide Children’s Trust was set up in 1973 as part of a GBP£20 million legal settlement between Distillers Company, which distributed the drug, and 429 children with thalidomide-related disabilities. In 1997, Diageo (formed by a merger between Grand Metropolitan and Guinness, who had taken over Distillers in 1990) made a long-term financial commitment to support the Thalidomide Trust and its beneficiaries. 24 Through seven years’ campaign by the now Thalidomide Trust (formerly Thalidomide Children’s Trust), the UK government finally gave survivors a grant of £20 million, to be distributed through the Thalidomide Trust, in December 2009. 25 Australia A Melbourne woman, Lynette Rowe, a victim born without limbs, led an Australian class action lawsuit against the drug's manufacturer, Grünenthal, which fought to have the case heard in Germany. The Supreme Court of Victoria dismissed Grünenthal's application in 2012, and the case was heard in Australia. 26 On 17 July 2012, Rowe was awarded an out-of-court settlement, believed Sneader W (2005). Drug discovery: a history (Rev. and updated ed.). Chichester: Wiley. p. 367. ISBN- Grünenthal GmbH (May 8, 2008). "Grünenthal bietet Contergan-Betroffenen 50 Millionen Euro an – Lösung soll Lebenssituation der Betroffenen verbessern". Pressebox (in German). Retrieved April 30, 2020. 21 "Apology for thalidomide survivors". BBC News. 14 January 2010. 22 Ryan C (1 April 2004). "They just didn't know what it would do". BBC news. 7 July 2004. Retrieved 1 May 2009. 23 "Thalidomide survivors to get £20m". BBC News. 23 December 2009. 24 "About Us". The Thalidomide Trust. https://www.thalidomidetrust.org/about-us/. Last visited 11 June 2020. 25 "Thalidomide survivors to get £20m". BBC News. 23 December 2009. 26 "Australian thalidomide victims win right for hearing". ABC News. 19 December 2011. 2 / 7 19 to be in the millions of dollars and paving the way for class action victims to receive further compensation 27. In February 2014, the Supreme Court of Victoria endorsed the settlement of $89 million AUD to 107 victims of the drug in Australia and New Zealand. 28 Canada The effects of thalidomide increased fears regarding the safety of pharmaceutical drugs. The Society of Toxicology of Canada was formed after the effects of thalidomide were made public, focusing on toxicology as a discipline separate from pharmacology. 29 Testing and approval of the toxins in certain pharmaceutical drugs requires more scrutiny after the disaster. The Society of Toxicology of Canada is responsible for the Conservation Environment Protection Act, focusing on researching the impact to human health of chemical substances. 30 Thalidomide brought on changes in the way drugs are tested, what type of drugs are used during pregnancy, and increased the awareness of potential side effects of drugs. According to Canadian news magazine programme W5, most, but not all, victims of thalidomide receive annual benefits as compensation from the Government of Canada. Excluded are those who cannot provide the documentation the government requires. 31 A group of 120 Canadian survivors formed The Thalidomide Victims Association of Canada, the goal of which is to prevent the approval of drugs that could be harmful to pregnant women and babies. 32 The members from the thalidomide victims association were involved in the STEPS programme, which aimed to prevent teratogenicity. 33 US In the U.S., the FDA refused approval to market thalidomide, saying further studies were needed. This reduced the impact of thalidomide in U.S. patients. The refusal was largely due to pharmacologist Frances Oldham Kelsey who withstood pressure from the Richardson-Merrell Pharmaceuticals Co. She subsequently was given a distinguished service award by President John F. Kennedy. 34 Although thalidomide was not approved for sale in the United States at the time, over 2.5 million tablets had been distributed to over 1,000 physicians during a clinical testing programme. It is estimated that nearly 20,000 patients, several hundred of whom were pregnant women, were given the drug to help alleviate morning sickness or as a sedative, and at least 17 children were consequently born in the United States with thalidomide-associated deformities. 35 Petrie A. "Landmark thalidomide payout offers hope for thousands". The Sydney Morning Herald. 19 July 2012. Farnsworth S. "Supreme Court formally approves $89m compensation payout for Thalidomide victims". Australian Broadcasting Corporation. 7 February 2014. 29 Racz WJ, Ecobichon DJ, Baril M. (August 2003). "On-line sources of toxicological information in Canada". Toxicology. 190 (1–2): 3–14. doi:10.1016/S-X-. PMID- Id. 31 "The plight of the thalidomide 'sample babies' who don't qualify for gov't compensation". W5. Retrieved 28 November 2016. 32 Warren R (2001). "Living in a world with thalidomide: a dose of reality". FDA Consumer. 35 (2): 40. PMID- Franks ME, Macpherson GR, Figg WD (May 2004). "Thalidomide". Lancet. 363 (9423): 1802–11. doi:10.1016/S-. PMID- Bren L. "Frances Oldham Kelsey: FDA Medical Reviewer Leaves Her Mark on History". FDA Consumer. U.S. Food and Drug Administration. 28 February 2001. 35 Braun W. "Thalidomide: The Connection Between a Statue in Trafalgar Square, a 1960s Children's Show Host 3 / 7 27 28 Cardiologist Helen B. Taussig learned of the damaging effects of the drug thalidomide on newborns and in 1967, testified before Congress on this matter after a trip to Germany where she worked with infants with phocomelia (severe limb deformities). As a result of her efforts, thalidomide was banned in the United States and Europe. 36 Austria and Switzerland Several other countries either restricted the drug's use or never approved it. Ingeborg Eichler, a member of the Austrian pharmaceutical admission conference, enforced thalidomide (trade name Softenon) being sold under the rules of prescription medication and as a result relatively few affected children were born in Austria and Switzerland. 37 Change in drug regulations in multiple jurisdictions The disaster prompted many countries to introduce tougher rules for the testing and licensing of drugs, such as the Kefauver Harris Amendment(U.S.) 38, Directive 65/65/EEC1 (E.U.) 39, and the Medicines Act 1968 (UK) 40. In the United States, the new regulations strengthened the FDA, among other ways, by requiring applicants to prove efficacy and to disclose all side effects encountered in testing. 41 The FDA subsequently initiated the Drug Efficacy Study Implementation to reclassify drugs already on the market. III. Building a Consumers’ Rights based Regime - A Comparative Law Perspective “When I walk along with any two others, they may serve me as my teachers. I will select their good qualities and follow them, identify their bad qualities and avoid them.” (Confucius) 42 As Confucius teaching goes, China may draw a good lesson from how the western world coped with the long lasting effect of the thalidomide disaster. Indeed, at first blush it seems that the western approach to food or drug crisis is no different from or better than China’s centralized and sweeping legislation and enforcement efforts. However, public participation and supervision is wanting in China’s overall food safety legal framework. In particular, several reasons explains why China has not successfully prevented recurring unsafe milk incidents. First, free flow of information in public crisis do matter. In 1958, an unusual number of deformities in newborns were reported in Germany. However, scientists first assumed nuclear tests to be the reason for that. 43 Only in late 1961, researchers found out that Contergan must be the and the Abortion Debate". Huffington Post. 29 December 2015. 36 "Dr. Helen Brooke Taussig", Bethesda, MD: U.S. National Library of Medicine: https://cfmedicine.nlm.nih.gov/physicians/biography_316.html. 3 June 2015. 37 "10.000 Fälle von Missbildungen" [10,000 cases of malformations] (in German). ORF. 14 August 2009. 38 "50 Years: The Kefauver-Harris Amendments". Food and Drug Administration (United States). Retrieved 6 June 2013. 39 "Thalidomide". National Health Service (England). Archived from the original on 3 December 2013. Retrieved 6 June 2013. 40 Conroy S, McIntyre J, Choonara I. (March 1999). "Unlicensed and off label drug use in neonates". Archives of Disease in Childhood: Fetal and Neonatal Edition. 80 (2): F142–4, discussion F144–5. doi:10.1136/fn.80.2.F142. PMC-. PMID- Bren L, supra note 33. 42 Confucius, Lunyu, The Analects of Confucius, Chapter “Shu Er”, as quoted by Ziyu Liu, Consumer Protection in Choice of Law: European Lessons for China, University of Amsterdam, 2013, p. 5. 43 Thomann, Klaus-Dieter (October 12, 2007). "Die Contergan-Katastrophe: Die trügerische Sicherheit der 4 / 7 cause. 44 In November 1961, thalidomide was thus taken off the market in Germany. 45 In contrast, the tainted milk crisis was covered up by Sanlu and the local government for several months before suspicion circulated online and newspapers finally blew the whistle. As early as December 2007, Sanlu had received a number of consumer complaints from parents who found a red substance in their babies’ urine, after feeding them Sanlu formula, and about some babies who were hospitalized. 46 Later, Sanlu twice reported the incident to the local government in August 2008, but the government neither disclosed the information to the public nor reported it to the superior government until the media blew the whistle in September 2008. 47 This stark contrast illustrates the importance of media and the public to hold producers and regulators accountable. Second, both cases highlight the importance of judicial remedy to consumers’ rights. In the thalidomide case in Australia mentioned above, a victim led an Australian class action lawsuit against the drug's manufacturer, Grünenthal and was awarded an out-of-court settlement, believed to be in the millions of dollars and paving the way for class action victims to receive further compensation. In February 2014, the Supreme Court of Victoria endorsed the settlement of $89 million AUD to 107 victims of the drug in Australia and New Zealand. In contrast, the Chinese government arranged for a mainly one-time compensation package, which many of the victims’ parents deemed too small to accept. The victims’ parents were excluded from the decision process in making the compensation plan. Furthermore, the government directed courts not to hear private litigation brought forth by the victims’ parents, in fear of social unrest that an unfair judgment could spark or massive compensation verdicts that exceed the government’s package. Even if the courts had been allowed to hear the tainted milk cases, many of the parents would not choose to do so. Because the courts generally do not grant more compensation than the government’s compensation plan and judicial compensation standards for tort are extremely low. Additionally, there has been no punitive damage in Chinese Tort Law. 48 Third, both cases also highlight the important of enforcement of consumers’ rights in the realm of consumer protection. In the thalidomide case in UK, the victims, their families, and especially trustees of the Thalidomide Trust worked hard in launching a seven-year long campaign, and finally persuaded the UK government to give survivors a grant of £20 million, to be distributed through the Thalidomide Trust, in December 2009. In contrast, the Chinese government has been taking hardline measures against private enforcement by victims’ parents. A victim’s parent, Mr. Zhao Lianhai, set up a website, www.jieshibaobao.com, to share information among victim families and organize them not to sign the compensation deal offered by the companies. On January 2, 2009, Mr. Zhao and some other victims’ parents planned to give a press conference to solicit support from the public, the police detained them. 49 In 2010, Mr. Zhao was arrested and sentenced "harten" Daten". Deutsches Ärzteblatt (in German). 104 (41). pp. A-2778 / B-2454 / C-2382. Retrieved April 8, 2015. 44 Wiedemann, Hans Rudolf (September 1961). "Hinweis auf eine derzeitige Häufung hypo- und aplastischer Fehlbildungen der Gliedmaßen". Die Medizinische Welt (in German):- Kulke, Ulli (November 21, 2011). "Das "harmlose" Schlafmittel und der große Skandal". Welt (in German). Retrieved May 12, 2020. 46 Ye Tieqiao, Gongsu Jiguan Pilu Sanlu Yinman Shisshi Zhi Dunai Wailiu [Sanlu's Cover-up Caused Poisonous Milk to Enter the Market], ZHONGGUO QINGNIAN BAO[CHINA YOUTH DAILY]. 1 January 2009. 47 Liu, Chenglin, supra note 2, at 399. 48 Id, at- Id, at 408. 5 / 7 to two and half years’ imprisonment for crime of provocation. 50 IV. Conclusion In conclusion, to stop incidents like the tainted milk scandal from happening again, China has to build consumers’ rights based regime that put consumers’ rights not only on words, but also on deeds. As illustrated in the thalidomide case in the western countries, private litigation and public involvement in consumers’ rights protection would not disrupt the social order. On the contrary, private litigation can serve as a social safety valve, protecting consumers’ interests while maintaining social stability. Therefore, this article recommends the Chinese government to respect judicial independence and become accountable to the public, especially, the media, as watchdog of consumers’ interests. 50 The judgment (2010) Da Xing Chu Zi No. 318 is available at http://www.fae.cn/zy/detail383377_df.html. 6 / 7