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2014 Internationalization of Taiwan Industry Forum

On 3 November, the ECCT participated in a forum titled "2014 Internationalization of Taiwan Industry Forum - Towards an efficient self-regulation system". The forum was organized by the Taiwan Food Industry Association (TFIDA) and the Taiwan Advertisers' Association (TAA) and co-organized by the ECCT. The full-day event featured four sessions on international advertising regulatory systems and policies.

 

Guests of honour:
  • Viktoria Lövenberg, Deputy Head, European Economic and Trade Office
  • Giuseppe Izzo, Chairman, European Chamber of Commerce Taiwan
  • Kenneth Chan, Chairman, Taiwan Advertisers' Association & Chairman, Taisun Group
Guest speakers:
  • Will Gilroy, Director, World Federation of Advertisers
  • Dr Howard Shyr, Chairperson, National Communications Commission (NCC)
  • Hsieh Chi-shen, Commissioner, Fair Trade Commission (FTC)
Moderators:
  • Michael Mou, Co-chair, ECCT Retail and Distribution committee
  • Abigail Lin, Executive Director, Taiwan and Taipei Cosmetics Industry
Panelists:
  • Dr Wang Chin-kun, Chair, International society of Nutraceuticals and Functional Foods (ISNFF)
  • Huang Mei-jung, Managing Partner, CrownPro Attorneys-at-Law
  • Dr Sheu Fuu, Deputy Secretary General, International Life Sciences Institute, Taiwan (ILSI Taiwan)
  • Richard YL Lee, Principle, Via Justice Law office
  • Pascal Thien-Ah-Koon, Co-chair, ECCT Cosmetics committee
  • Helen Wang, Secretary General, Taiwan Advertisers Association
Opening remarks
In her opening remarks EETO Deputy Head Viktoria Lövenberg said that self-regulation had long been a feature of good lawmaking while considering alternatives to regulation in policy making is part of the "better regulation" agenda of the European Commission, which will be at the core of the new Commission under President Juncker. In the context of better regulation, she noted that the discussion is not so much about self-regulation as opposed to hard law or government regulation, but rather about finding ways how law and self-regulation can and should interact.In his opening remarks ECCT Chairman Giuseppe Izzo said that it was most unfortunate that Taiwan's well-earned reputation for producing quality products had recently been tarnished by the unethical behavior of a few companies and individuals. In order to remedy the situation, the right balance has to be struck that roots out and imposes severe punishment on the bad players while at the same time protects the good players, he said. At the same time, we have to ensure the system is stable, predictable and allows businesses the freedom to operate and compete, he added. The chairman made the point that Europe has shown through experience that self-regulation by the industry is the best way to safeguard consumer interests without disrupting business. Taiwan would do well therefore to adopt a similar system.In his opening remarks Kenneth Chan (Yeh-lin), Chairman of the Taiwan Advertisers Association said that this is a critical moment for Taiwan and action is needed to rebuild the image of products made in Taiwan that have been tarnished by the food safety scandals. He praised the so-called "pledge" initiatives adopted by the EU and many other countries around the world and called for joint action to upgrade industry standards and implement a similar system in Taiwan that draws on the best international practices.

 

Session 1: Global policy on food marketing to children
Moderator: Kenneth Chan, Chairman, Taiwan Advertisers' Association & Chairman, Taisun GroupTopic: Responsible food marketing communications
Speaker: Will Gilroy, World Federation of Advertisers
The World Federation of Advertisers (WFA) is a global industry body, established in 1953. It represents some of the world's biggest brands and is not limited to food companies.
Gilroy made the point that the best regulatory system needs a good combination of regulation and complimentary self-regulation (SR).

Industry groups have been discussing responsible food marketing for a number of years. For example, the International Food and Beverage Alliance (IFBA) is an alliance of 11 of the world's biggest food and beverage companies formed in 2008 when CEOs of major food and non-alcoholic beverage manufacturers voluntarily committed to support the World Health Organisation's (WHO) 2004 Global Strategy on Diet, Physical Activity and Health.

Global leaders have been spurred into action following the steep rise in recent years in the incidence of non-communicable diseases (NDCs). In 2011 heads of state came together to discuss NDCs, referring to them as the "AIDS of our generation".

The debate about issues such as obesity can be highly emotive but this extraordinary meeting drew attention to the severity of NDCs and the need for action. NDCs are the world's biggest killer, accounting for 63% of all deaths globally and will cost up to US$30 trillion over the next 20 years. NCDs will therefore have a direct economic and social impact globally.

In 2010 the (WHO) issued a set of recommendations on the marketing of food and non-alcoholic beverages to children. Since then governments and the industry have reached a general consensus to limit the marketing of certain food and drinks to children, especially those high in saturated fats, trans-fatty acids, free sugars and salt. Members of the IFBA agree with the general direction but also believe that the best way to implement change is through self-regulation.

All countries have considered regulations but only six countries have introduced legislation – the UK, Ireland, Chile Peru, Korea and Taiwan (although only four of these countries have adopted legislation). Most countries, including most EU countries, are still considering their approach and are still giving self-regulation a chance.

The EU endorses a self-regulatory approach. In 2008, the WFA launched the EU Pledge and since then industry in the EU has pledged to change how food is advertised to children under 12 and made a formal commitment to promote good diet, exercise and health. The EU pledge has won the support of the European Commission and the European Parliament.

North America still backs SR and Canada has long had a ban on advertising to children under 13.
Parts of Latin America back regulation. For example, Chile and Peru ban the marketing of foods high in fat, sodium and sugar to children. However in countries where governments have specific regulations on marketing food to children, they are struggling to implement them and in many cases have had to consult with industry in this regard. Therefore other countries have been deterred. Countries in Asia, such as the Philippines are also adopting self-regulatory measures.

As recently as 2003, there was no clear view of responsible marketing. This led stakeholders to come together to put on paper what it means and set codes of conduct to be implemented by national self- regulatory frameworks.

These were in place for many years but consumer groups complained of the things like the cumulative effect of children being exposed to too many adverts. This led to qualitative standards. Companies made commitments to change the way they advertise to children. For example, during peak children TV viewing, they agreed to restrict what can be advertised and when. A holistic approach has been adopted as to what can be advertised and how it is advertised. For example, snacks should not be promoted as substitutes for complete meals and misleading claims have been halted. There is also a monitoring of compliance component. Third-party data from around the world to date shows that there is a very high rate of compliance.

According to IFBA policy, food manufacturers have committed to only advertise products that meet specific nutrition criteria based on accepted scientific evidence and/or applicable national and international dietary guidelines to children or not to advertise their products at all to children. In addition, IFBA members have committed not to engage in product marketing communications to students in primary schools, except if requested by or agreed with the school administration for specific educational purposes. This policy was strengthened in 2011 and, from 2016 onwards, will also expand to cinema, online games, outdoor marketing, mobile and SMS marketing. The enhanced policy also addresses the issue of "appeal" by covering the use of certain techniques, such as licensed characters, movie tie-ins and celebrities that appeal to children under 12.

This initiative has driven individual pledges in 51 countries, representing over three billion people. Most major food companies are also adopting similar policies.

Gilroy concluded that while the industry has succeeded in agreeing to police itself, there are limits as to how much impact this will have on the global battle against obesity and NCDs. Three seminal reports have concluded that food marketing only has a modest impact on people's behavior. While children are very susceptible to food marketing, after they reach the age of 12, the studies show that their choices are not significantly influenced by marketing and advertising. Therefore, the industry's moves are only part of the solution. There is no single way to address obesity and related NCDs given that there are over 100 factors that can lead to obesity. Fixing food marketing therefore should not be seen as a panacea, just one of the ways to address the problem.

Panel discussion
In the panel discussion following Gilroy's presentation, panelists discussed Article 28 of the Food Safety Act, which has very strict restrictions on the marketing of foods high in fat, sodium and sugar. The measures impose severe restraints on the food industry. Panelists agreed that, given recent severe food scandals that have severely damaged consumer confidence, it will not be easy to shift to a SR system in Taiwan. People doubt the effectiveness of SR. The industry will therefore need to work hard to restore trust on the part of the public as well as persuade the government, the public and civic institutions that SR combined with good regulations can be effective. In particular, organizations representing children are very suspicious of SR and doubt that the industry will take action that is not purely in their own interests. There is a need for all stakeholders to come together, to build trust, communicate and educate NGOs to tell them what is happening internationally. Taiwan authorities are very nervous and prone to regulate strictly but it is important to remind authorities of global trends. The industry needs to defend its rights but there is a need for a general consensus. The regulatory mechanisms cannot be overly strict otherwise they will threaten the survival of industry. All parties need to be involved in finding the right balance and creating a concrete and comprehensive framework that works for the benefits of all stakeholders.

Session 2
Moderator: Michael Mou, Co-chair, ECCT Retail and Distribution committee

Topic: The regulation of deceptive and misleading advertisements by the Fair Trade Commission
Speaker: Hsieh Chi-shen, Commissioner, Fair Trade Commission (FTC)
Commissioner Hsieh gave an overview of Taiwan's regulations on deceptive and misleading advertisements and how the FTC monitors compliance. In Taiwan advertisements that are both false and misleading are banned. This does not outlaw creative licence or humour. For example, an advertisement for spicy noodles, implying that eating the noodles will cause those eating them to shoot flames from the mouth, while obviously false, is still permitted.

Hsieh made the point that while the FTC regulates many disciplines it is not omnipotent. It frequently needs to consult with experts or health authorities when analyzing adverts. For example, the ROC Direct Selling Association has established a code of ethics as a guideline to company employees, distributors, consumers, complainants and the general public, which could be a reference for other industries.

Panel discussion
Self-regulation is already happening to a limited extent in Taiwan, such as in the direct marketing industry but the use and acceptance is not yet strong.

The cosmetics industry in Taiwan is subject to a pre-approval validation process that is very time-consuming while guidelines are not clear enough. This results in inconsistent rulings. In many instances, for example, companies are fined for what would be regarded as reasonable adverts in other countries.
For example, companies have been asked to remove claims such as hand cream can protect your skin.
This is unlike the situation in France, which has a purely self-regulatory system of 1,000 industry players that define benchmarks and regulations. If any company goes too far, the industry committee publishes the indiscretions of violators. This is very bad for a company's image and therefore works as a very effective deterrent. Panelists also made the point that SR helps the government to be more effective by freeing up resources.

Session 3
Moderator: Abigail Lin, Executive director, Taiwan and Taipei Cosmetic Industry

Topic: Towards an effective advertising self-regulatory mechanism
Speaker: Dr Howard Shyr, Chairperson, National Communications Commission

Chairman Shyr acknowledged that a good regulatory environment cannot rely exclusively on the government. Multiple stakeholders have to be part of the system. What is needed is not just government but good governance. It is also important that there is fair competition to ensure consumers get enough choice.

Taiwan's recent food scandals stem from a traditional and mistaken mindset that consumers just want cheaper and larger quantities when what they really want is better quality.
Those with the traditional mindset need to recognize that building a reputable image is more important than short term gains.

Shyr admitted that Taiwan has a regulatory jungle governing advertising as there are many overlapping categories of adverts based on products sold or services provided as well as overlapping and sometimes competing authorities in charge of various aspects. This is not only confusing but also often results in various agencies evading responsibility for sensitive issues on the grounds that it is the responsibility of another agency. This is very inefficient and wastes a lot of energy and resources, which is a real problem given the government's limited budget. Shyr therefore supported the concept of self-regulation of marketing and advertising by the industry.

He recommended that industry and government hold multilateral discussions and come up with a coordinated system. By harnessing and pooling the resources of the private sector, the system could be much more effective.

According to Shyr, "empowerment" is a key component of success. He explained that all stakeholders must be empowered in order for co-governance to be effective. It is important for the industry to set up a multiparty platform which includes civic groups. This is the first step in the process of establishing and building mutual trust.

In addition, the environment must be fair and complaints must be dealt with effectively. The adjudication process must be fair. There must be stiff punishments for violations and a strong surveillance mechanism. All stakeholders have to believe that the mechanism is fair, effective and works for the benefit of all.

Panel discussion
Panelists agreed that advertising is a combination of science and art, combining many factors including consumer psychology and cultural values. It is also constantly evolving to reflect changing attitudes and trends. A great deal of research and effort work goes into producing adverts. If authorities censor them, the hard work is destroyed. Moreover, telling companies what they can and cannot say restricts the freedom of speech.

Given the complexity, it is not realistic to expect the government to regulate such a complex industry. That is why there is a need for self-regulation by the industry. No company wishing to survive would risk ruining its reputation or brand, which is why companies have a strong motivation to act responsibly. Another important factor is that competitors are able to complain about their opponents. This is why SR works. Panelists made the point that SR does not replace governments but for marketing and advertising, 99% of issues can be resolved by SR so that governments can concentrate on other problems. SR therefore makes the government's job much easier.

While all these things are well-known by reputable companies, there is a huge gap between them and less advanced companies. If Taiwan is to move towards self-regulation, there needs to be transition period and a mechanism to raise all companies to a reasonable standard.

Government, industry and NGOs need to find a way of co-regulation. It is also important to produce an independent body that is trustworthy.

There are many ways to exercise legal compliance but the best way is voluntarily. The government should work towards this type of system but first they need a mandate from all stakeholders

Session 4
Moderator: Kenneth Chan, Chairman, Taiwan Advertisers' Association

Topic: Where to next for Taiwan? An in-depth look at some best practices from the EU and Singapore
Speaker: Will Gilroy, Director, World Federation of Advertisers
The EU experience is unique in that there are 28 countries but they share a common commitment to act responsibly. A number of other countries have made similar commitments to good practices. The EU pledge was made in 2007 to the European Commission. It is transparent, participative, accountable and self-monitoring and includes a very broad range of stakeholders from doctors, industry, advertisers and government. Participants have agreed not advertise products to children under 12 years, except for "better for you products" and to refrain from communication related to products in primary schools. Independent third party auditors have been engaged to develop media-buying guidance for companies, oversee annual compliance and impact monitoring, develop annual reports covering TV, print, online, including company-owned websites and report back annually to the European Commission.

It is a complicated process but has been endorsed by the EU's commissioner for health and, as a consequence, the EU has decided not to regulate food marketing.

Singapore also followed the EU precedent by introducing food and non-alcoholic beverage guidelines for children. It started as a commitment by 14 major food manufacturers, which was codified by the Advertising Standards Authority of Singapore (ASAS). The new code addresses issues of both placement and appeal and includes common nutrition criteria, agreed by the Ministry of Health.

Gilroy went on to offer a possible way forward for Taiwan.

Step 1 is to establish a committee of stakeholders such as consumer organizations, media, health promotion authorities and the industry

Step 2 is to agree to and define common nutrition criteria of what companies can and cannot advertise, based on consensus. This should include an agreement on core provisions such as not advertising to children, marketing placement and advertising, the use of characters, toys or games.

Step 3 is to differentiate according to various media.

There are four things not covered by the guidelines: the product itself, including packaging; ordinary displays at points of sale; sponsorship, such as sponsors' names and trademarks and the use of brand equity characters.

Step 4 is monitoring compliance. Every brand fills in a compliance certificate. If an advert is placed in children's channel, for example, media owners first need a compliance form. If an advert is placed in family viewing but is deemed to be of primary appeal to children under 12 (and the product is not compliant) then it can be subject to consumer or competitor complaints.

The benefits of this type of system are four-fold: It is fluid and transparent offering constant monitoring and evaluation; it uses the existing advertising ecosystem as gatekeepers and enforcers; it has built-in incentives for the food industry to innovate and reformulate and there is no cost to taxpayers.Panel discussion
In the final panel discussion, panelists agreed on the challenges facing SR and Taiwan and some basic principles. Most consumers in Taiwan are wary of self-regulation so it is up to industry to prove it is viable but the industry also needs the support of the government. For self-regulation to work in Taiwan, industry players should invite all stakeholders such as the consumer foundation, civic groups, government (such as TFDA officials) to be involved in the dialogue. There is a need for cooperation to restore consumer confidence. This should include cooperation among industry players. Communication is key and must be consistent. In addition, Taiwan should learn from the EU and Singapore when devising the right formula for Taiwan. Finally, there is also a need to educate the public on the benefits of self-regulation.

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