Date
12 December 2017
Parallel goods traders will be salivating once the government relaxes or lifts the export ban on infant formula. Photo: HKEJ
Parallel goods traders will be salivating once the government relaxes or lifts the export ban on infant formula. Photo: HKEJ

Why it is premature to relax or lift export ban on baby formula

In her policy address, Chief Executive Carrie Lam Cheng Yuet-ngor said she is going to review the existing export control on powdered infant formula, which has been in place for over four years, giving rise to widespread speculation that she might relax or even lift the ban soon.

Her plan was immediately supported by political parties representing the industrial and business sectors as well as local pharmacy chambers, which argued that as local parents now no longer have to scramble for baby formula like they had to back in 2013, there is simply no justification for the government to stick to the ban.

However, I have serious reservations about reviewing the existing two-tin limit on baby formula at border checkpoints at the moment.

If we look back at the rationale behind the ban when it was introduced in 2013, we will see that the policy was not only intended as an emergency measure to guarantee supply for local parents and infants, but also to crack down on parallel goods trade, or to put it more bluntly, the smuggling of baby formula from Hong Kong into the mainland.

The problem is, four years on, while local parents might no longer have to worry about the availability of baby formula on the open market, cross-border parallel goods trade has remained as rampant as ever.

The only difference perhaps is that, thanks to the ban, baby formula is no longer on the shopping list of grey goods traders, who are making big bucks out of smuggling other commodities into the mainland.

But considering that the export control on baby formula has failed to fulfill its initial purpose of curbing illegal grey goods trade across the border, I just don’t see any justification for relaxing the ban right now.

In fact, relaxing or lifting the ban will almost certainly provide the rocket fuel for the already rife grey goods trade across the border, and one can easily imagine how things in the main streets of Sheung Shui, Yuen Long and Tuen Mun would look like once the ban is relaxed or lifted.

Besides, relaxing or lifting the ban on baby formula exports could result in a lot more nuisance for cross-border passengers and commuters as grey goods traders carrying their bulky “luggage” filled with cans of infant formula will only add to the congestion of our public transport.

But while it is still premature to relax or lift the export control on baby formula, the government should expedite the proposed establishment of a shopping mall near the boundary, so as to draw grey goods traders away from the main streets of our border towns and minimize their nuisance to the local population.

This article appeared in the Hong Kong Economic Journal on Oct. 25

Translation by Alan Lee

[Chinese version 中文版]

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JC/CG

HKEJ contributor

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