The 5504 bill, law for the promotion of healthy nutrition.

Gerardo Andrés Rodríguez Wagner,  June 28, 2024

Alegalis - When we are talking about law, there’s always two sides of the same coin, even its sound cliché. The thought of it being one sided its superfluous, and its never as simple as it seems. That’s the case for the bill 5504 of the Guatemalan Congress, Law for the promotion of healthy nutrition (From now onward: "the bill"), the bill is currently in process to became law, just awaiting its third lecture in Congress, this since 2018, the bill, at least in paper, promotes healthy nutrition, intending to avoid morbidity, obesity and premature death and other diseases associated with bad nutrition.

As it seems, this bill works accordingly with the political interests of the current government. The State of Guatemala, consequently, as said in its Constitution, has as its primary objective the protection of life and family, so its not crazy for the Congress to create and pass a bill that protects the health of its inhabitants, by correcting the lack of information on some scientifically proven risks such as whichever processed foods, and saturated fats can create in ones body, detriments to health and, in the most  abhorrent cases, even dead.

In a general view of things, apparently the state of Guatemala is working in good faith, and with the best interests of its people in mind, but as said in the first paragraph, there’s always two sides of the same coin. The creation and approval of this bill, even though it’s very short, only 28 articles according to the downloadable version on the Congress website, caries serious repercussions on the legal system of Guatemala, this article does not intend to explain whatever effects it may have on the technical/scientific point of view, as that may be a better suited, to nutritionists, doctors, and food engineers. But, as said, in the legal department, the bill seems lacking at best.

To understand this we must divide the present article in subsections, the first one, and maybe the most notorious one is about IP law, specifically trademarks and the distribution of products, this may infuriate some marketing departments and some other designers but at the end of the day it’s the part with the biggest impact of the law, the bill describes it as the obligation of the distributor to add to any package this famous octagonal seals, with a black background, and white letters that most say something on the lines of: "Saturated Fat", "Contains a large quantity of sugar", "contains a large concentration of fat", "large quantity of sodium", "Large quantity of fat", "large quantity of sweeteners".

Products may have one or more of the previously noted seals, depending on the product composition substances. In any case, if the products have four or more of this seals, it will be demanded to avoid in any way the use of almost any marketing strategy, this means, no mascots, no product placement, radio nor television advertising, or any other that may promote the product, but is not a prohibition of distribution, just a limitation of advertisement this specified product that may harm the public, may use in the market.

All of this measures may seem similar to the ones that México approved some years ago now, and that’s because the Guatemalan Congress almost made a literal copy of what Mexico made back in the day, while in México this new law didn’t came with its fare share of critics and detractors, according to "El Economista"[1], the impact of this law was in the great scheme of things overwhelmingly positive, as parents took better informed decisions in respect of the food and whatever there were buying to feed their kids.

Its vital to understand than in a balance, where you put in one plate the IP rights that may be affected and the in the other one, the human right of health and life it may be obvious that the State of Guatemala may prefer the latter. This may even affect registered trademarks, and make some registrations void, for example if a cereal has four or more seals, this will make the trademark for said cereal not usable. And even though, its necessary to protect the life and health of the public.

It is true that in Guatemala 46.5%[2] of all children suffers of chronic malnutrition, and a "mere" 5% of all children suffer from obesity, and even though the percentage of children that suffer from obesity pales in comparison to the ones suffering from malnutrition, the state must equally avoid both problems, prevent them, and help the public to avoid health problems if it can. It seems as the intention of the legislature in 2018 was exactly this, to help families understand whatever they where buying, helping from the State, as an administrative part, families, parents and individuals, searching a healthy nutrition, making the information more visual and easier to assimilate.
That said, the other side of the coin, seems a bit more complicated, the law has a chapter specifically dedicated to taxes and sanctions, where it seems that the consumer may suffer a rise on prices on any products that have these seals. As of now, the sellers and distributors in Guatemala are utterly against this law, as the sole existence of this may increase production and distribution costs, making their products less attractive.

With what has been said, it may seem as the bill was made with only good intentions, and with what it protects may be integral for the public, but the reality is that has a lot of legal measures that contradict other laws, and even the constitution. Lets say that the majority of the law describes some obligations for productors, sellers and distributors, and what rest of the bill takes the pecuniary side of things, as it speaks solely of taxes and sanctions, the latter entails that if a product is placed without the seals, if a product is marketed with a legal prohibition for advertisement,   the part responsible for this placement will be sanctioned with a penalty fee of as minimum of five and a maximum of three hundred minimum wages according to the year of the penalty. The bill at this point speaks about another body of regulations which at the time of writing this article, doesn’t exist.
This isn’t as bad as the tax part of the bill, what’s currently described in the bill is that depending on the number of seals a product has it it’s required to pay between a 10% all the way to 35% of the sales cost of the product, this may seem a bit extreme and way to high for a contribution or tax for an specified product, alas this is not the illegal part of the tax regime this bill entails.

The biggest problem of the bill comes with which organ of the administrations is capable of modifying this quota or even collecting these taxes, according to the Constitution this procedure would be an obligation of the Congress to modify the tax quota, and of the Superintendence of tax administration to collect these taxes. But the bill describes that it will be the Ministry of Health that modify and collects, something that the correspondent legislation doesn’t describes as something the Ministry of Health can even do, and contradicts principles of the tax legislation.

Even though the bill seems to be paved in good intentions, its vital to understand and be aware of the repercussions of this becoming a Law. With outmost certainty this will affect designers and marketers, but this will also affect accountants and distributors, as the law lacks clarity in the obligations derived in this soon to be law, specially while describing the tax and sanctions aspect of this, which it seems ignores the current regulations of the Guatemalan legal system.