Regulatory framework for the parallel trade of plant protection products

Plant protection products are intended to protect plants or plant products against all harmful organisms or prevent the action of such organisms. However, their use may involve risks and hazards for humans, animals and the environment, especially if placed on the market without having been officially tested and authorised and if incorrectly used. For this reason, a licensing and authorisation procedure is required by law for plant protection products. Plant protection products may only be placed on the market and used in Austria if they have either a license for Austria or are authorised for parallel trade.

As non-marketable, parallel-traded plant protection products can be increasingly found throughout Europe, both suppliers of plant protection products and users of the latter have become more and more unsettled. The following summarises the regulatory framework for the parallel trade of plant protection products.
Regulatory requirements for parallel trade
In Austria, the Federal Office of Food Safety (BAES) is the competent authority for the granting of parallel trade permits for plant protection products, each of which has to be issued individually. The parallel trade application is reviewed by BAES based on the conditions set out in Article 52 of Regulation (EC) No 1107/2009. The product for which a permit is granted by official notice is then allocated an individual number. Additionally, BAES assigns further digits to the registration number of the Austrian reference product so that it can be identified easily. Specifying the country or countries from which the product may be purchased along with its authorisation number in that member state allows the permit holder to trade a plant protection product relative to its reference product in Austria. A parallel traded plant protection product is to be used in the same way as the corresponding reference product in Austria. The same fields of application, conditions of application and restrictions apply. Other plant protection products (such as products from other Member States or third parties) are not legal for trade under the permit number issued for the respective Austrian parallel trade number
The parallel trade of plant protection products is permitted only with active substances that have been authorised in the Member State identified in the parallel trade permit and whose content is identical to a reference product authorised for placing on the market and for use in Austria. Parallel traders have to ensure that the authorisation of traded goods is valid at the time of the trade.
Article 52 of Regulation (EC) 1107/2009 is also applicable to the purchase of plant protection products for "personal use" only, i.e. a parallel trade permit issued by BAES is also necessary before a direct purchase from another EU Member State is legally permissible.

Period of permit validity, deadline for selling and use-by periods
The validity of the parallel trade permit depends on the validity of the corresponding reference product authorisation. If this ends due to expiry, revocation or withdrawal, the validity of any permit granted also ends. For example, if the authorisation of a reference product ends after 10 years, the validity of the permit expires as well. This also applies if the reference product then undergoes reauthorisation. Should the plant protection product in this case still be intended for parallel trade, a new permit is necessary. An exception occurs, however, if the reference authorisation is revoked on application by the authorisation holder. Provided there are no other reasons for revocation or withdrawal, the validity of the authorisation ends in such cases when the reference authorisation would normally have expired.
With regard to selling and use-by periods, plant protection products that have been imported and placed on the market on the basis of a parallel trade permit are subject to the same laws as authorised plant protection products.

Documentation and record keeping
Since parallel traders do not know the composition of the products traded and cannot clearly determine their origin by laboratory analysis, a proof of origin can only be based on the documentation provided. It should go without saying that diligent documentation is crucial for any serious and responsible trading company. Companies that hold a parallel trade permit also need to be aware that they are responsible for the safety of the traded product in the same manner as holders of plant protection product authorisations. In accordance with Austrian regulations (Plant Protection Products Regulation 2011 and Plant Protection Products Act 2011) as well as Regulation (EC) 1107/2009, a meticulous internal documentation is required in order to ensure seamless traceability of the products. The proprietors and farmers have to list the respective plant protection product, including its authorised trade name and plant protection products register number, in all relevant documents, particularly invoices, delivery notes, business records as well as quotes and order lists. Using merely a general term, such as the name of the active substance name and amount thereof, does not suffice. Original packaging from the Member State of origin listing the trade name and authorisation number directly on the packaging container provides the most reliable safety.

The parallel trader may only place that product on the market, which BAES considered as being identical in its official notice. Should the product be purchased by an intermediary from another Member State, increased attention is required. The parallel trader must ensure that the correct origin is given and can also be evidenced by the aforementioned documents. Counterfeit products, often referred to as generics, which are not authorised in an EU Member State, are not considered parallel imports and may not be placed on the market without permit.
Batch numbers and date of manufacture
Based on the batch numbers and date of manufacture, individual production batches can be identified. Only if the original manufacturer's batch number is listed in the Member State of origin, can the goods be directly attributable to a production batch in case of potential problems.
To facilitate inspections and traceability of parallel traded products, the parallel trader is in any case obliged to adhere to the legal requirements of labelling. The original batch number as well as the date of manufacture must be listed on the packaging of the traded product, or the original product's batch number and production date on the packaging still be clearly visible and legible, respectively.

Commercial relationship
Parallel traders often do not obtain products directly from the authorisation holder of the Member State of origin, but through intermediaries. If the goods are not offered in their original packaging, the documentation described above must be available in full. Should the upstream supplier refuse to disclose this data, the suspicion that the product cannot be placed on the market is warranted. Therefore, parallel traders should refrain from such purchases for their own security and safety. In addition, previous experience with such upstream suppliers should be considered. Have problems been encountered with products supplied by a certain upstream supplier in the past, any business or commercial relationship with the respective upstream supplier has to be questioned. Companies operating in wholesale and retail should seek assurances in form of contracts from their parallel traders that only marketable goods of correct origin are traded.

Comments on purchase prices
The price may be an additional indication of the legal origin or the identity of plant protection products, respectively. Business with parallel-traded products is based on price differences between plant protection products markets within the EU. Should the prices quoted in an offer be exceptionally low for now apparent reason, there has to be reason to suspect that these are illegal plant protection products, especially if they are not traded in the original packaging and the documentation is not comprehensive. As with any business, in addition to the profit margins additional costs for transportation as well as possibly for re-packaging, re-labelling and the storage of goods arise. Therefore, these specific minimum prices can generally not be undercut even if price differences between separate Member States exist. Even if the sales prices may be offered with generous discounts in the Member State, it is in most cases not possible to purchase products at prices that are below the minimum selling prices of the authorisation holder.

Businesses trading plant protection products have a special responsibility, as the traded products may pose risks to humans, animals and the natural environment. Since, however, traders of plant protection products traders—as opposed to producers or holders of authorisations—do not know the composition of the traded products, they can only ensure the origin and identity, and thus the safety of the products by using the following parameters:
•    delivery notes, bills of landing, invoices and receipts, on which the trade name as well as the registration number in the Member State of origin of the active substance are listed;

•    original packaging from the Member State of origin;

•    origin of the product from the Member State of origin;

•    batch number and date of manufacture;

•    purchase from reputable traders, upstream suppliers, respectively, whose goods have so far not given any reason for government action.


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