Trade Perspectives©

1 July 2024

 

The EU announces provisional countervailing duties on electric vehicles from China: Towards escalating tensions or a negotiated solution? 

In a move sparking potential trade tensions, the European Commission (hereinafter, Commission) announced, on 12 June 2024, its preliminary findings in an ongoing investigation into “imports of new battery electric vehicles designed for the transport of persons“ originating in China. The Commission has provisionally concluded that battery electric vehicles (hereinafter, BEVs) made in China benefit from unfair subsidies. To address this concern, the Commission proposes to impose provisional countervailing duties on BEVs imported from China. The duties would range from 17.4% to 38.1% and would provisionally apply from 4 July 2024 for a maximum period of four months. As a ‘retaliatory’ response, on 17 June 2024, China’s Ministry of Commerce announced that it had launched an anti-dumping investigation into the EU’s exports to China of pork products. This reciprocal action highlights the risk of a sustained cycle of ‘tit-for-tat’ trade measures that could negatively impact economic relations and supply chains affecting China and the EU. This article provides an overview of the EU’s provisional findings and provisional measures announced by the Commission and China’s authorities, looks into their WTO consistency and the potential alternatives, and underscores some key concerns voiced by the private sector.

EU trade defence policy and China’s “new three” exports

The EU pursues a trade defence policy designed to protect “European production against international trade distortions” and anti-subsidy measures are some of the key tools within the EU’s toolbox deployed against unfair competition that is deemed to distort the EU’s internal market. According to the Commission, “subsidisation” occurs “when a non-EU government provides financial assistance to companies to produce or export goods” and the Commission may “counteract any trade-distorting effects of these subsidies on the EU market – after an investigation into whether the subsidy is unfair and injuring EU companies”. This happens through the application of so-called countervailing duties, which translate into increased import tariffs, and which aim at offsetting the artificially induced competitive advantage that subsidised products enjoy over the ‘like’ products manufactured in the EU.

In particular, the rules for the proceedings and the imposition of anti-subsidy duties are provided for in Regulation (EU) 2016/1037 of the European Parliament and of the Council on protection against subsidised imports from countries not members of the European Union (hereinafter, the Basic Anti-subsidy Regulation). The EU’s trade defence measures must, furthermore, comply with the international trade rules set out in the WTO Agreement on Subsidies and Countervailing Measures (hereinafter, SCM Agreement), which defines clear procedures for conducting investigations and imposing duties, and includes requirements for transparency, predictability, and non-discrimination. Most significantly, this framework discourages the use of “punitive duties” (i.e., duties that are not in line with the provisions of the GATT and the WTO SCM Agreement).

In practice, in order to identify and address unfair practices, the Commission actively investigates potential distortions from non-EU countries. In recent times, China’s policies have become a clear focus of such investigations, with 41 out of a total of 53 of the EU’s ongoing trade defence investigations looking into measures maintained by China. Notably, some trading partners, including the EU, have accused manufacturers based in China of benefiting from unfair practices in the sectors of solar panels, electric cars and lithium batteries, which have been developed with the help of subsidies and have become leading exports. For instance, in 2023, the President of the European Commission, Ursula von der Leyen, referenced the impact of China’s policies on the EU’s solar industry in her State of the Union address, claiming that unfair practices “pushed out many young businesses” in the EU market due to the heavily subsidised competition from companies in China. These tensions have led to trade defence actions and related countermeasures.          

The investigation on electric vehicles and the announced provisional measures

On 4 October 2023 the Commission announced that it had commenced an ex-officio anti-subsidy investigation regarding “imports of new battery electric vehicles designed for the transport of persons” originating in China. The Commission argues, in particular, that it had evidence to believe that China was subsiding BEVs through grants, loans, tax breaks, and other measures, that allowed Chinese BEVs to be sold at lower prices in the EU and that this was hurting the European BEV industry by giving Chinese competitors an unfair advantage over its European counterparts.

Pursuant to the Basic Anti-subsidy Regulation, provisional anti-subsidy duties may be adopted to offset said advantage when the Commission has made a provisional affirmative determination, within duly initiated proceedings, in which interested parties have been given an “adequate opportunity to submit information and make comments”, that:1) Imports of the goods targeted by the relevant investigation are being subsidised (even if done indirectly); 2) The EU industry suffered injury; 3) There is a causal link between the subsidisation and the injury found; 4) The imposition of anti-subsidy measures would not be against the EU’s interests; and 5) The subsidies are “specific”. Within eight months of that investigation, on 12 June 2024, the Commission announced that it had provisionally found these criteria to be fulfilled by stating that it had provisionally concluded that “battery electric vehicles (BEV) value chain in China benefits from unfair subsidisation”. Therefore, the Commission pre-disclosed the level of provisional countervailing duties that the EU would impose on imports of such products unless an effective solution were to be found.

These duties, according to the Commission’s Summary of the proposed duties, correspond to the exact amount of the countervailable subsidies as provisionally established by the Commission and would apply from 4 July 2024 for a maximum of 4 months, namely until 4 November 2024. If the provisional findings were to be confirmed by the Commission’s definitive assessment within this 4-month period, definitive countervailing duties may be imposed for a period of five years, which can then be extended following an expiry review. According to the Commission’s ‘Summary of the proposed duties’, the products within the scope of the provisional countervailing duties are “new battery electric vehicles principally designed for the transport of nine or less persons, including the driver, excluding L6 and L7 categories vehicles according to Regulation (EU) No 168/2013”, as well as “motorcycles, propelled (regardless of the number of wheels set in motion) solely by one or more electric motors, including those with an internal combustion range extender (an auxiliary power unit), currently falling under CN code ex 8703 80 10 (TARIC code 8703 80 10 10)”, and originating in China. The following ad valorem provisional countervailing duties would apply for the aforementioned products exported by the following companies, which would be added on top of the regular import duty of 10% levied on imports of BEVs: 17.4% for the BYD Group, a publicly listed Chinese multinational conglomerate manufacturing company; 20.0% for the Geely Group, a Chinese multinational conglomerate; 38.1% for the SAIC Group, a Chinese group of companies, including SAIC Motor Corporation Limited; 21.0% for ‘cooperating Chinese exporting producers not sampled’ as listed by the EU; and 38.1% for all other companies.

The notion of ‘cooperating Chinese exporting producers not sampled’ refers to those producers that cooperated with the Commission’s investigation by granting access and providing relevant information, but were not sampled during the investigation. This means that the Commission, in accordance with Article 27 of the Basic Anti-subsidy Regulation on ‘Sampling’, limited the investigation to “a reasonable number of parties, products or transactions by using samples”. The Commission further noted in a press release that, according to the Basic Anti-subsidy Regulation, sampled companies had the opportunity, after the pre-disclosure, “to provide comments on the accuracy of the pre-disclosed calculations of their individual duties”. By 4 July 2024, the Commission will have to publish in the EU’s Official Journal “a regulation explaining in detail the provisional findings which led to the level of the duties”, and, on the following day, the duties would enter into force. However, before definitive measures are imposed, the Commission needs to reach out “to Chinese authorities to discuss these findings and explore possible ways to resolve the issues identified in a WTO-compatible manner”.

China’s intended retaliation and consultations with the EU

Following the Commission’s announcement, China’s Ministry of Commerce expressed its strong opposition, threatening to take “all necessary measures to firmly defend the legitimate rights and interests” of Chinese companies. At the same time, Chinese officials urged the EU to resolve the issue “through dialogue and consultation”. A day later, however, China’s Ministry of Commerce announced an anti-dumping investigation into the EU’s pork industry, an apparent reaction to the EU’s forthcoming measures. The investigation is scheduled to last one year, until June 2025, with the possibility of an extension, and will focus on imports of pork and its by-products originating from the EU. In this regard, COPA-COGECA, which represents EU farmers and cooperatives, noted that the agri-food sector was always “caught in the crossfire” of trade tensions and demanded support and protection for EU farmers and asked the Commission to ensure that “there is no further escalation”. The beginning of this ‘tit-for-tat’ trade confrontation underscores the potential for unintended consequences, including the potential to disrupt supply chains for both sides.

It should be recalled that, under any circumstance, trade defence tools must always be used by WTO Members with the objective of correcting trade practices violating WTO rules, not for protectionist or retaliatory purposes. In particular, the WTO Agreement on Anti-dumping and the SCM Agreement set detailed substantive and procedural rules for the initiation of anti-dumping and anti-subsidy investigations, and for the imposition of duties that WTO Members must follow. This offers a safeguard for WTO Members to avoid the application of arbitrary measures as means of punishment and retaliation against foreign products. During a visit to China on 22 June 2024, Germany’s Vice Chancellor Robert Habeck emphasised the EU’s adherence to the WTO principles of transparency, predictability, and non-discrimination, and defended that the proposed tariffs were meant to compensate for advantages granted by China, not to punish producers.

In a development potentially signalling progress, on 22 June 2024, China’s Minister of Commerce, Wang Wentao, and the European Commission’s Executive Vice President and European Commissioner for Trade, Valdis Dombrovskis, agreed to discuss the ongoing investigation and the potential tariffs. The Commission explained that “The two sides agreed to engage on the basis of facts and in full respect of WTO rules” and that both parties would “continue to engage at all levels in the coming weeks”. The details of the consultations are not publicly available, but the possibility of securing structural reforms, such as the removal of alleged Chinese subsidies, may be limited. However, scholars propose that discussions on alternative approaches, like “managed trade” (see Trade Perspectives, Issue No. 19 of 23 October 2023), could be explored. “Managed trade” refers to government intervention in international trade through measures like tariffs or quotas to achieve specific objectives beyond pure economic efficiency. It is important to note that such approaches may raise concerns regarding compliance with WTO rules. For example, “Voluntary Export Restraints”, which refers to agreements between trading partners limiting exports, are explicitly prohibited under Article 11 of the WTO Agreement on Safeguards and Article XI of the GATT.

Towards a negotiated solution?

While the EU’s proposed tariffs have not yet taken effect, ongoing consultations between the EU and China offer a chance to resolve the dispute. This developing situation requires that interested stakeholders stay informed and consider seeking legal advice to prepare for potential future scenarios.

 

Food regulation in the ASEAN region: Singapore and Thailand intend to introduce new rules on novel foods and alternative proteins

To further strengthen its novel food industry, on 15 March 2024, the Singapore Food Agency (hereinafter, SFA) and Singapore’s Ministry of Sustainability and the Environment (hereinafter, MSE) launched a public consultation concerning the draft Food Safety and Security Bill (FSSB), which was open until 14 May 2024. The draft Bill aims to, inter alia, clarify and streamline the application process for novel foods through the introduction of a new food category called “Defined Food”. On 23 May 2024, Thailand’s Ministry of Public Health launched a public consultation concerning the “Proposal to develop Regulations and Regulatory measures for Alternative Protein Foods, Plant Protein group”. Notably, the draft regulation foresees rules for the alternative protein industry, namely regarding the labelling of alternative plant-based proteins.

This article discusses the increasing importance of novel foods, including alternative proteins, the relevant legal developments in the Association of Southeast Asian Nations (hereinafter, ASEAN), and looks into the new rules under consideration in Singapore and Thailand.

The increasing importance and relevance of novel foods and alternative proteins

“Novel foods” refer to food and ingredients for foodstuffs that are currently not commonly used for human consumption, thus requiring further assessment by the relevant authority to be approved or placed in the market. Novel foods are becoming increasingly important due to the following factors: 1) Progress in science and biotechnology; 2) Health and nutrition: as novel foods are often created to offer special nutritional benefits, such as a higher protein content; and 3) Environmental sustainability: as novel foods can be created for sustainability reasons, such as plant-based proteins that require less resources (e.g., water, energy) and help to reduce greenhouse gas emissions (GHG), compared to foods obtained through conventional farming.

Meanwhile, “alternative proteins” are categorised as novel foods that contain non-animal protein and are obtained from other sources, namely from microorganisms (e.g., algae), cultivated meat, as well as plant-based protein, which is developed from soybeans, peas, or rice. Alternative proteins have been gaining in popularity due to environmental reasons, notably considering that the global meat industry is responsible for 17.3 billion metric tonnes of GHG emissions annually, representing 35% of global GHG emissions, which contribute to climate change and are detrimental to the environment and biodiversity.

Regulatory developments on novel foods in ASEAN

The progress related to novel foods has led several jurisdictions to regulate such products to provide a proper legal framework supporting the sector’s development and to ensure consumer and food safety. The EU, for instance, introduced its first rules on the authorisation procedure for novel foods in 1997 through Regulation (EC) No 258/97 of the European Parliament and of the Council on novel foods, which was updated in 2015 through Regulation (EU) 2015/2283 of the European Parliament and of the Council on novel foods. In the ASEAN region, rules on the assessment of novel foods are relatively new, as only Singapore and Thailand have adopted specific laws and regulations on novel foods.

In the ASEAN Member States that do not have specific rules on novel foods, such as Indonesia, the approval procedure is based on a case-by-case assessment by the relevant food authority. While rules on the assessment of novel foods are relatively new or have yet to be introduced in several ASEAN Member States, it is interesting to note that ASEAN Member States are home to various cultural foods that use different types of protein alternatives, including plant proteins, such as tofu and tempeh, and already consume foods that are considered novel foods in the EU, such as insect-based food products (see Trade Perspectives, Issue Number 22 of 1 December 2017).

Singapore’s Bill to regulate novel foods

Compared to other ASEAN Member States, Singapore’s legal framework for novel foods is much more developed. In 2020, Singapore became the first country in the world to approve cultivated meat, which refers to meat that is produced by cultivating animal cells in a laboratory. Due to its geography and limited resources, Singapore mainly relies on food imports. Notably, Singapore only has 1% of land that can be utilised for food production, thus the country imports 90% of its food.

In this context, novel foods can be important for Singapore to ensure its food security. In regulating novel foods, the Sale of Food Act serves as the primary legislation that governs food safety in Singapore, including novel foods. In 2019, the SFA issued the Novel Food Regulatory Framework, which serves as a set of guidelines for novel foods, covering, inter alia, the requirement for companies to obtain pre-market approval by submitting safety assessments of their novel food to the SFA for review prior to the novel food being allowed to be placed on the market in Singapore.

Proposed changes under Singapore’s Food Safety and Security Bill

The Food Safety and Security Bill, aims to “consolidate food-related legislation from eight existing Acts”, in order to protect consumers and to strengthen food safety and security. In issuing the Food Safety and Security Bill, the SFA and the MSE are in the process of launching various public consultations on, inter alia, ‘defined food’ and pre-market approval.

Due to the increasing importance of novel foods to ensure food security, the Government of Singapore considers it necessary to further develop its novel food sector, notably by clarifying and streamlining the application process for GMOs, novel foods, and insect-like species.  The draft Food Safety and Security Bill introduces a new category of food called “Defined Foods” to put novel food, GMOs, and insect-like species into one category in order to streamline the pre-market approval process (i.e., approval granted by the SFA prior to being sold in the country). On 15 March 2024, the draft Food Safety and Security Bill was notified by the Government of Singapore to the WTO Committee on Sanitary and Phytosanitary Measures.

According to the draft Food Safety and Security Bill, the category of “Defined Food” refers to: 1) Novel Food, for which no pre-market approval has been granted; 2) Consists of or has as an ingredient a genetically modified food in respect of which no pre-market approval has been granted; or 3) Consists of or has as an ingredient, “in any form (whether whole or in parts and whether fresh, chilled, frozen, dried, smoked, salted or in brine, or as flour) an insect-like species which is not a catalogued insect-like species”. According to the SFA, the streamlined application and approval process for “Defined Foods” would “help to provide legal clarity to companies”. For instance, under current rules, Singapore’s Genetic Modification Advisory Committee is responsible for GMO application. 

The draft Food Safety and Security Bill provides the technical requirements for the pre-market approval for “Defined Foods”, including how the approval is granted and how long it remains valid. For instance, an application for pre-market approval for novel food or GMOs must, inter alia, pay the prescribed fee and the company must have an address in Singapore. The Bill also foresees sanctions in case of non-compliance, where companies attempting to supply foods categorised as “Defined Food” without pre-market approval could be subject to a fine of up to SGD 15,000 (USD 11,047).

By enhancing and streamlining the rules for the pre-market approval of “Defined Foods”, the Bill aims at ensuring the quality and safety of novel foods, which should also lead to enhancing consumer trust in such products. For businesses, the clarification and streamlining of pre-market approval could provide important legal certainty and clarity in developing and registering their products in Singapore. Furthermore, legal certainty regarding the approval and registration of novel foods would likely encourage businesses to invest in the innovation of food technology, such as for cultivated meat.

Thailand to further regulate its plant-based meat industry

Currently, there are various alternative protein products on the Thai market, but there is still a lack of clear guidelines for regulating the safety of these alternative products. Therefore, the Thai Food and Drug Administration (FDA) identified the need to start regulating this sector, starting with plant-based protein, and would eventually explore also introducing rules on cultivated meat and insect-based products, respectively.

The draft regulation published by Thailand’s FDA foresees to cover the labelling and claims for alternative plant-based proteins, namely in the plant-based meat, beverages, and dairy sectors. With respect to “plant-based meat”, the draft regulation provides that “meaty” terms, such as nuggets, tenders, and fillets are allowed, but also that these must be followed by the terms “from plants” or “from [Type of the main ingredient]”. The draft regulation prohibits terms that would cause confusion or misunderstanding among consumers, including any terms that specify the type of animal, names relating to a specific breed or meat quality grading (e.g., wagyu), and the term “clean meat”.

Concerning plant-based dairy products, the draft regulation foresees allowing the terms “milk” and “milk beverage”, as long as they are accompanied by a reference to a plant source, such as “Almond Milk”. However, Thailand’s FDA states that “terms that do not correspond to facts or are deemed ambiguous will not be allowed”, such as the term “dairy-free milk”, as it “cannot accurately describe plant-based alternatives”. Furthermore, terms used to describe dairy processing, such as “skimmed” for milk and “mature” for cheese, would be prohibited. Accurate labelling for such products would be important to inform consumers and could help build consumer trust by providing essential information about the product’s ingredients, and opening new market opportunities, such as by attracting nutrition- or health-conscious consumers.

Thailand’s proposed new labelling rules for alternative plant-based proteins are similar to the rules contained in Singapore’s Sale of Food Act, which allows the use of certain terms for milk and meat to be used on plant-based products, as long as it is accompanied by clarifying words, such as “plant-based” or its ingredient, such as “almond milk”. Overall, the approach to the labelling of plant-based protein alternatives would not be as strict as in the EU, where dairy terms are prohibited for plant-based products (see Trade Perspectives, Issue No. 11 of 4 June 2021).

Other ASEAN Member States to follow suit?

Both developments in Thailand and Singapore reflect the increasing importance and development of novel foods, including alternative proteins, in addressing food security and climate issues. Therefore, as novel foods and alternative proteins will increasingly be circulating in the global market, other ASEAN Member States need to follow these regulatory developments. Notably, other ASEAN Member States, or perhaps even ASEAN as a region, could be using the regulatory frameworks and best practices developed in Singapore and Thailand as models to develop their own laws. By establishing clear and supportive regulations, ASEAN Member States could ensure the legal certainty of novel food approvals and facilitate their market access, which would consequently help to benefit from this emerging sector, such as through increased investment in food technology.

 

Portugal revokes the recommendation of the NutriScore nutrition labelling scheme

On 11 June 2024, Portugal’s Ministry of Agriculture and Fisheries adopted Ordinance No. 162/2024/1 (Portaria n.º 162/2024/1) on a ‘Simplified Nutrition labelling system’, which revokes the Ministry of Health’s Order No. 3637/2024 (Despacho n.º 3637/2024) of 4 April 2024 on the ‘Implementation of the NutriScore system as a public health measure to promote healthy eating’. In Order No. 3637/2024, it had been recommended to make NutriScore the only official front-of-pack (hereinafter, FoP) nutrition labelling scheme in Portugal, replacing some schemes that had been developed by food business operators. The article provides an overview of Ordinance No. 162/2024/1, analyses its rationale and the controversies surrounding NutriScore, and discusses the issue of an EU-wide harmonised FoP nutrition labelling scheme.

Additional forms of expression of the nutrition declaration under EU law

According to Article 35(1) of Regulation (EU) No 1169/2011 of the European Parliament and of the Council on the provision of food information to consumers (hereinafter, FIR), the mandatory nutrition declaration, which refers to the indication of the energy value and of the amounts of fat, saturates, carbohydrate, sugars, protein, and salt, may be complemented by a voluntary repetition of the energy value and the amount of nutrients in the principal field of vision, usually the FoP, in order to help consumers see, at a glance, the essential nutrition information. Additional forms of expression and/or presentation of the nutrition declaration may be voluntarily used by food business operators or recommended by EU Member States, but must be notified to the European Commission (hereinafter, Commission).

On 20 May 2020, the Commission adopted a Report to the European Parliament and the Council regarding the use of additional forms of expression and presentation of the nutrition declaration (hereinafter, ‘front-of-pack’ or FoP Report) (see Trade Perspectives, Issue No. 11 of 5 June 2020), which responded to an obligation set for the Commission by Article 35(5) of the FIR, to submit a report on the use of additional forms of expression and presentation, on their effect on the internal market and on the advisability of further harmonisation of those forms of expression and presentation. The Commission may accompany the FoP Report with proposals to modify the relevant EU provisions. It had been expected that the Commission would “endorse” or “recommend” the NutriScore scheme in the FoP Report, as the EU’s ‘harmonised’ FoP nutrition labelling scheme, but the Commission decided not to do so under Article 35(5) of the FIR and published the FOP Report without any legislative proposal.

 

As part of the EU’s Farm to Fork Strategy, launched in 2020, the Commission has been in the process of reviewing the EU’s rules on food information provided to consumers. The Farm to Fork Strategy aims, inter alia, at facilitating “the shift to healthy and sustainable diets”. The revision of the EU rules on food information is, inter alia, intended to help consumers make healthier food choices by introducing standardised mandatory FoP nutrition labelling. Regarding the revision, an official reportedly said in 2022 that the Commission was “still assessing the outcome of the past impact assessment and the consultations it held with EU Member States and stakeholders”. Some reports suggested that the decision on which scheme to recommend had been put back to the second half of 2024, after the elections to the European Parliament which have been held in early June 2024.

The controversial NutriScore scheme on the overall nutritional quality of foods

In October 2017, following a series of experimental and large-scale studies, France had adopted the NutriScore scheme (see Trade Perspectives, Issue No. 16 of 7 September 2018). The Commission’s FoP Report describes the scheme in a neutral way stating that NutriScore, which is “based on the UK Food Standards Agency nutrient profiling model, indicates the overall nutritional quality of a given food item. The label is represented by a scale of five colours, from dark green indicating food products with the highest nutritional quality to dark orange for products with lower nutritional quality, associated with letters from A to E. The algorithm to calculate the nutritional score considers both negative (sugars, saturated fats, salt and calories) and positive elements (protein, fibre, fruits, vegetables, legumes and nuts)”.

The NutriScore label does not display any information on the energy values, the amount of nutrients, or the reference intakes, but only displays an overall score. Notably, the Commission considered the NutriScore scheme as a scheme providing information on the overall nutritional quality of foods and not as an additional form of the nutritional declaration on the FoP in the sense of Article 35(1) of the FIR.

The implementation of NutriScore in six EU Member States, despite opposition

The NutriScore scheme has been implemented in six EU Member States, namely in Belgium, France, Germany, Luxembourg, the Netherlands, and Spain, as well as in Switzerland. Despite the widespread use, there are also critical voices. More specifically, Italy has voiced its opposition to the scheme and advocated for the Nutrinform scheme, which displays the percentage of nutrients and energy from a recommended daily intake without ranking the product.

On 1 August 2022, the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) published three resolutions regarding certain companies, according to which the NutriScore nutrition labelling scheme must be discontinued in Italy, if it is not substantiated and accompanied with certain warning messages, because it is likely to deceive consumers (see Trade Perspectives, Issue No. 16 of 19 September 2020).

The initial recommendation of NutriScore by Portugal’s Ministry of Health

Portugal was poised to become the eighth European country to recommend the FoP nutrition labelling NutriScore scheme, but its new Government revoked the recommendation of NutriScore for FoP nutrition labels in the country. On 4 April 2024, the Secretary of State for Health Promotion of Portugal’s Ministry of Health recommended in Order No. 3637/2024 the optional implementation by economic operators of the NutriScore scheme as a public health measure to promote healthy eating.

In the Order, it was argued that, “different simplified labelling systems, (…)may (…) confuse consumers (…), with negative consequences for the promotion of healthy eating”. Therefore, it was considered “imperative to implement a single nutrition labelling system, as well as to encourage its use among the various economic operators in the food sector”. The Order concluded that “the simplified nutrition labelling system NutriScore, particularly after the first revision of the algorithm in 2023, has adequate scientific robustness, is implemented in a wide range of European Union countries and is already used by several national economic operators in the food sector. In this way, it is positioned as the simplified nutritional labelling system with the best conditions to be adopted in Portugal”.

The revocation of the recommendation on formal and substantial grounds

The Ordinance adopted by Portugal’s Ministry of Agriculture and Fisheries on 11 June 2024 argued that the Order adopted by the Ministry of Health on 4 April 2024 was not legal. Notably, Portugal’s Ministry of Agriculture and Fisheries stated that the General Directorate of Food and Veterinary (i.e., Direção-Geral de Alimentação e Veterinária, DGAV) had not been consulted before Order No. 3637/2024 was issued. According to the Ministry of Agriculture and Fisheries, the DGAV was responsible “to promote the development of national regulations in the food area”, including on the “labelling of food products”. Portugal’s Ministry of Agriculture and Fisheries also acknowledged that the DGAV was the “national authority” in the sense of the FIR “with regard to the provision of information to consumers on foodstuffs and the guarantee of standards for nutritional labelling systems”.

The Ministry of Agriculture and Fisheries also argues that there were substantial concerns with the NutriScore scheme, stating that the FIR provided that “legislation on food information should be sufficiently flexible, while stipulating that food information provided voluntarily must not mislead the consumer or be ambiguous or confusing for the consumer”. In this regard, the Ministry of Agriculture and Fisheries added that the DGAV had expressed “reservations about legislative options implemented in some Member States”, such as the NutriScore, which it considered, led “to confusing classifications and does not take into account the model of Portuguese food products”. In light of these considerations, the Ministry of Agriculture and Fisheries revoked the Order No. 3637/2024, providing that “The adoption of any simplified nutritional labelling system is optional and of voluntary use by operators” and that it “must bear in mind models that are suitable for Portuguese food products”.

Is NutriScore misleading consumers?

Portugal’s Ministry of Agriculture and Fisheries considers that the Nutriscore scheme misleads consumers with its classifications “and does not take into account the model of Portuguese food products”. Article 7(1)(a) of the FIR provides that “Food information shall not be misleading, particularly as to the characteristics of the food and, in particular, as to its nature, identity, properties, composition, quantity, (…)”.

Regarding whether FoP nutrition labelling schemes like NutriScore may be misleading, Italy’s Ministry of Economic Development (hereinafter, MISE) had argued in the past that the NutriScore label led “consumer to believe that, regardless of their dietary needs, the green product is preferable to others of the same product category” and that consumers were “encouraged to consume it (without limits) on the assumption that the green colour distinguishes a food that certainly does not harm health”. In addition, Italy’s MISE stated that consumers “could therefore be pushed to buy mainly products with the “green light” without evaluating the balance of the diet”. According to Italy’s MISE, the NutriScore scheme was characterised by an “arbitrary classification of positive foods (fruits, vegetables, fibre and proteins) and negative foods (salt, sugars and saturated fats)”.

Therefore, arguably, there appear to be indications that NutriScore labels on food may indeed mislead “as to the characteristics of the food and, in particular, as to its nature, identity, properties, composition”. It must be noted, however, that the algorithm that calculates NutriScore’s nutritional values was revised in 2023 and that the revision now imposes stricter parameters for milk and breakfast cereal products, while olive oil and other fats of vegetable origin are ranked better than in the previous algorithm.

Schemes providing information on the overall quality of foods are not appropriate

The case of Portugal shows that FoP schemes providing information on the overall nutritional quality of foods, such as NutriScore, do not appear to be appropriate under the current legal framework of the FIR and may be misleading. As the Commission works towards a harmonised FoP nutrition labelling scheme at the EU level, it should be ensured that such scheme be science- and evidence-based, not lead to unjustified de jure or de facto discrimination among foodstuffs, and not mislead the average consumer as to a food product’s nutritional value, while being overall consistent with common dietary guidelines. Additionally, food labelling must be simple and easy to understand, but not so simplified as to provide no meaningful information.

 

Recently adopted EU legislation

Trade Law

 

Trade Remedies

 

Food Law

 

Ignacio Carreño, Joanna Christy, Tobias Dolle, Alejandro López Bo, Alya Mahira, Stella Nalwoga, and Paolo R. Vergano contributed to this issue.

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