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As the Senate tangles over the future of the filibuster, there is concern that business-related legislation of all types could stall, crippling important initiatives. Yet the real action as it affects many American small businesses may be taking place in regulatory offices and courts far from Washington.
Not long ago, to monitor the potential impact of new government regulations, a small-business owner had only to stay in touch with his or her trade group, which would faithfully keep tabs on goings-on in Washington bureaucracies. Those times are rapidly drawing to a close.
FOREIGN BODIES. Now, we have to monitor what's happening not only in Washington but also in Brussels, Geneva, and other places around the globe. This point is being driven home to me as I seek to understand new regulations that could affect the sale of nutritional products in the U.S. I own a stake in a small company that distributes supplements and herbs. The supplement industry, with estimated annual sales of about $18 billion, comprises thousands of small manufacturers, distributors, and retailers.
The problem in trying to anticipate what's coming down the pike: The new regulations have extremely complex terms, and derive from regulatory bodies outside the U.S., including the U.N., World Trade Organization, and European Union. Some of the organizations are virtually unknown to Americans, and their proceedings tend not to make it into the pages of the American business media.
Ostensibly, sales of supplements like vitamins, minerals, and various herbs in the U.S. are controlled by the Food & Drug Administration. Since 1994, legislation has categorized supplements as foods, meaning vendors must sell them like foods, with lists of their ingredients -- and without claims about their ability to improve consumers' health.
WHO'S IN CHARGE. The international efforts impose limits on the range of supplements and the dosages in which businesses can sell them. New overseas regulations due out this summer could, in the name of safety, wind up restricting what supplements are available for general purchase by consumers, and make some obtainable only via a doctor's prescription.
In one example put forth by health activists concerned about the proposed regulations, it might be possible to purchase Vitamin C in tablets of up to 100 milligrams over the counter, with anything higher available via a doctor's prescription. Certain other vitamins and minerals now readily available could end up pulled from the shelves. The U.S. could find itself under intense pressure to accept the new regulations -- despite opposition from most consumers -- or risk being in violation of international trade rules.
Among the organizations setting the rules are:• Codex Alimentarius, a U.N. organization, which has spent the last 13 years developing guidelines for food safety, including the production and sale of nutritional supplements. in November, 2004, it approved such general guidelines as promoting use of supplements to support diet rather than to also help head off or treat diseases and chronic conditions like arthritis or immunity problems.
• The World Trade Organization (WTO), created in 1995 to settle trade disputes, which assumed a potentially pivotal role in the supplement area. That is because, to settle food-related disputes, the WTO relies on the Codex standards and guidelines.
• The European Union, which has generally shown support for Codex and is preparing to ban (beginning this summer) an estimated three-quarters of nutritional supplements from general sale in EU stores. An initial ruling from the European Courts of Justice in April declared invalid the EU regulations, but a final ruling isn't due until next month.
NETTING HELP. All the preceding isn't to suggest there is nothing happening in the U.S. A number of legislative proposals are on the table, some in the same spirit as the international efforts to restrict general sale of supplements and herbs. But, with congressional action uncertain, Washington's influence seems likely to diminish even further. And owners of small businesses increasingly need to look overseas for hints of regulatory trends to come.
On the bright side, the Web does make it easier. While no catchall exists, regularly monitoring your trade group's site, along with industry-related blogs, can provide you with up-to-date information, even if it's just a snippet. And once you hear a buzz about a particular topic, a Google (GOOG) search never hurts. A little due diligence now could save you a big headache down the road.
Gumpert is author of Burn Your Business Plan! What Investors Really Want from Entrepreneurs and How to Really Start Your Own Business. His Web site is www.davidgumpert.com
Edited by Rod Kurtz
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