Island mentality

Just off the coast of Northern France lie the Channel Islands: Jersey, Guernsey, Alderney, Sark and a few others whose tiny populations apparently support a food supplement and herbal remedy sector which some conservative estimates now value at over 100M euro a year.If that volume of supplements was really consumed on the Islands, then the natives would positively glow with good health and rattle too. But, of course, the industry is almost all for export.

For bizarre historic constitutional reasons, the Islands are part of neither France nor the United Kingdom, but have a unique status as British Crown Dependencies. For decades the islanders believed that European law does not apply to them. The result has been that those marketing food supplements and herbal remedies from the Islands have been able to make claims that would be deemed contrary to European legislation on supplements and medicines which applies elsewhere.

Add to that marketing advantage the ability to avoid charging VAT on the millions of mail order purchases sent monthly overseas from the Islands and it's easy to understand why some of the biggest suppliers of supplements in Europe are ostensibly now based there.

Supplement retailers and distributors based elsewhere in the EU are starting to feel the pain, and the governments of the Islands are under pressure to reform their laws to bring their medicines legislation into line with EU Directives and to introduce the provisions of the Food Supplements Directive, the Nutrition and Health Claims Regulation, and associated measures.

The Commission is looking into the matter and the days of trading outside the legislative system which applies elsewhere in the EU look as if they may be numbered, but as is so often the case, the timelines for reform are lengthy and lack any real sense of urgency.

That might be fine in normal situations, but when the Commission sets maximum permitted levels for vitamins and minerals in supplements, as it seeks to do in 2009, then the chances are that the Channel Islands shippers will receive a further massive boost as they are able to continue to market products at potencies which cease to be available throughout the other Member States.

So here we have Commission moves that will increase market distortions and, ironically, reduce consumer protection, as consumers throughout the Union abandon trusted and highly regulated national suppliers and switch instead to internet and mail-order sources. Some of these, of course, are responsible businesses manufacturing high quality products, but others are not and just use the Channel Islands as a convenient mailing address.

So a well-intended Commission measure - to remove barriers to trade and enhance consumer protection - may well have quite the reverse effect. This situation is a case study of what could also happen in relation to many other countries, even if the problem in the Islands is tackled.

What happens when the new limits are introduced if overseas suppliers from Nigeria to Tuvalu step in to fill the void in the market for higher potency products? What hope then of any controls on food quality, avoidance of contamination, and appropriate marketing?

Of course, the Channel Islands benefit from a particular advantage - as they are commonly perceived to be part of Europe - which some overseas suppliers may not enjoy. But in these days of the internet, who knows where a European-sounding business might really be based, if unscrupulous operators want to fully capitalise on these future anomalies?

You won't often hear me calling for more regulation but, on this occasion, the Commission and the governments of the UK and Channel Islands should move swiftly to regulate this market properly. In the case of the Commission, to avoid further damage to responsible suppliers in the Member States; in the case of the UK, to comply with its treaty obligations; and in the case of the Channel Islands, to avoid damage to their reputation as responsible, well-regulated business centres.