*EPF203 08/26/2003
Transcript: Veneman Says China's Blockage of U.S. Soybeans "Unwarranted"
(Agriculture secretary says action could be brought to WTO) (2430)

U.S. Agriculture Secretary Ann Veneman said the United States "could" bring an action against China in the World Trade Organization (WTO) regarding China's blockage of U.S. soybean exports to that country.

Briefing reporters August 25 in Washington, Veneman said she would discuss the issue with China's Minister of Agriculture, Du Qinglin, in a meeting later that day. She said China is imposing "unwarranted disruptions" in U.S. soybean exports to China using non-science-based phytosanitary reasons.

Veneman added that during their meeting she and Du would sign a memorandum of understanding to expand cooperation in a number of agricultural areas. The agreement -- a follow-up to the secretary's visit to China in July 2002 -- will provide a new forum to address sanitary and phytosanitary (SPS) issues and to promote sound science in regulations, she said.

The secretary said that even though China's phytosanitary regulations affecting agriculture are not under Du's direct supervision, he "can carry a strong message back and talk about the consequences of not complying with their [China's] obligations under the WTO."

Veneman said that if the soybean trade issue is not resolved by early September, Treasury Secretary John Snow will raise the issue when he visits China.

China is the largest single market for U.S. soybeans, Veneman noted.

On another agricultural trade issue, Veneman said the U.S. Department of Agriculture (USDA) is "on track" to implementing a country-of-origin regulation sometime in the fall. The regulation was stipulated by Congress in the 2002 Farm Bill.

She said the U.S. program to issue permits to import "low-risk" beef products from Canada, announced August 8, is under way, and USDA expects to begin issuing permits "this week." The program is in response to the report of one case earlier in the year in Canada of bovine spongiform encephalopathy (BSE), sometimes known as 'mad cow' disease. The initial low-risk permits, Veneman said, will be for game and beef products from animals under 30 months of age. She said USDA is undertaking a longer regulatory development process for imports of animals under 30 months of age, and eventually of older animals, that will lead to "more normal" cross-border trade.

Veneman also said that USDA is continuing to press Japan on the issue of its "unjustified" high tariff on U.S. beef.

Following are excerpts from a transcript of Veneman's press briefing:

(begin transcript)

I want to also update you today on the BSE [bovine spongiform encephalapathy, also known as "mad-cow disease"] situation. As you know, on August 8th we announced that we would begin issuing permits to allow game products and low-risk beef products to be imported from Canada. That permitting process is underway, and we expect to begin issuing permits this week. Once those imports begin we will closely monitor the process. We are also developing a rule to address the importation of cattle under 30 months of age and other low-risk products. In addition, we are beginning the longer-term work on a rule to reestablish more normalized trade of beef and beef products.

To assist in the continued export of beef products to Japan, we have implemented a voluntary beef export verification program. Under this program assurance is provided through a documented plan and on-site audits that beef products exported to Japan are produced only from cattle slaughtered in the United States.

Following our August 8th announcement, Mexico also reestablished trade with Canada on a basis similar to that which the U.S. did, and other countries have also announced that they are allowing resumption of Canadian beef imports.

We are also working with our NAFTA [North American Free Trade Agreement] partners, Canada and Mexico, and have asked the OIE, the Office of International Epizootics, to develop a more practical risk-based approach to addressing BSE safety issues that impact trade. We feel that the current standards need to be updated in light of recent advancements in the science associated with this disease.

Also on issues related to trade, we are aggressively addressing recent actions by China that are disrupting our soybean trade. China is our single largest market for soybeans, so we watch developments there very closely. We are engaging the Chinese at several levels to resolve the issue and avoid further unwarranted disruptions. In fact, Minister Du [Qinglin] from the Chinese Ministry of Agriculture is visiting the United States, and I will be meeting with him later today. These trade disruptions are not under Minister Du's direct jurisdiction. Instead they are under China's quarantine and inspection agency known as AQSIQ, which is similar to USDA's APHIS [Animal and Plant Health Inspection Service].

However, I will use the opportunity of my visit with Mr. Du to express the strong concern of our government about this matter. Minister Du and I will also sign a memorandum of understanding to expand our cooperative efforts in a number of areas. This agreement is a follow up to my visit to China in July of last year. A key part of this arrangement is the establishment of a biotechnology working group.

This will give us also an additional forum to address sanitary and phytosanitary issues such as the soybean problem with the Chinese, and also to promote the use of sound science in regulations.

Another critical area in trade for agriculture is the current round of WTO [World Trade Organization] trade negotiations. The next ministerial meeting in Cancun begins September 10th. This meeting will be a midterm review of progress under the DOHA round to date. We are currently working very closely with Ambassador [Robert] Zoellick and his team at the United States Trade Representative's Office as we prepare for this ministerial.

I would note that prior to the Cancun meeting we will have another opportunity to talk with reporters, before we leave for Cancun, in greater depth about the negotiations.

Quickly updating on a few other important issues. On July 20th the Food Safety and Inspection Service [FSIS] released a document to guide continuing food safety initiatives. FSIS has been hard at work since that time to support those efforts. On July 25th FSIS established a food safety risk assessment committee with membership from across USDA. This committee is intended to help ensure that we maximize our research, regulatory, and public outreach resources in order to protect the public health and avoid redundancies.

Two weeks ago FSIS established a new technology office, which will expedite the implementation of safe interventions or processes that will eliminate pathogens at slaughter and processing plants. And just last week, FSIS announced that it is establishing new regional centers to bring comprehensive workforce training programs to its field employees across the country.

QUESTION: On the meeting with the Chinese Agriculture Minister, I realize you say he doesn't have primary responsibility on the soybean trade problem, but you said that you would express your concerns. Will you tell him what might happen if China does not promptly lift whatever barrier's it has imposed?

VENEMAN: We anticipate that we will have some pretty strong discussions on this issue. As I indicated in my opening remarks, this is our largest market for soybeans, and this will be an issue that we spend some time on with Minister Du today. I mean even though the agencies that oversee these technical regulations are not under Minister Du's direct supervision, certainly he, at his level, ministerial level, can carry a strong message back and talk about the consequences of not complying with their obligations under the WTO.

In addition, Secretary Snow [Treasury Secretary John Snow] will be visiting China early in September, and we fully expect to have him prepared to raise the issue as well if it's still an issue that needs to be resolved.

Q: What are the consequences.

VENEMAN: I think it's too early to speculate at this time. I mean it is a sanitary issue. We don't believe it's based on science. We do have the ability to go to the WTO. China is now a member of the WTO, so we could bring an ����S and P' action in the WTO if we feel that we can't resolve the issue.

Q: Madam Secretary, there seems to be a sense of urgency at USDA on opening or reopening the Canadian border to live animals. I'm wondering first, why this is, and second, there's a lot of concern about the backup of live animals in Canada that are just waiting to flood across the border, and what precautions are being taken to prevent that?

VENEMAN: As you know, we've spent a considerable amount of time on this issue of Canada and the single case of BSE. The announcement we made on the 8th had several aspects. One was we were going to use a permit process to open the border with respect to boxed beef from animals under 30 months. As you know, animals under 30 months are generally thought to be of virtually no risk of having BSE. Now, we will also begin a regulatory process to look at the lowest risk animals, those under 30 months. That regulation is in process at this point, but it will take some time to actually do the regulation. That will include a risk assessment and so forth.

I think we're going through a very deliberate process. We have a very integrated market. We are trying to use sound science as we move through this decision-making process, and the regulatory process that we will go through, will include, as I said, a full risk assessment. We know these animals under 30 months are of very low risk, and then we'll proceed with a longer regulatory and separate regulatory process to resume more normal trade as I mentioned in my earlier remarks.

Q: I was wondering if you can address the issue of older animals, specifically, bred cows and bulls. Is there any kind of a timetable for when they may start coming across the border again?

VENEMAN: That will be a separate regulatory process that will take a longer period of time because it will be a more complicated risk assessment. But we are taking this in a two-track process, one for lower risk animals under 30 months, that will be on one track of a regulatory process. And the older animals will be a longer regulatory process, and at this point it would be impossible for me to predict at what point those animals might resume trade with the United States.

Q: Ron Hays in Oklahoma City with Clear Channel Ag Network. Madam Secretary, I would be interested to hear your thoughts on the continuing process of USDA to write the rules and regs [regulations] for the mandatory country of origin labeling. We heard from some of your officials just a few weeks ago that perhaps by around the first of October we might have those rules and regs, the preliminary rules and regs out regarding the implementation of mandatory country of origin labeling for next fall. Do you see that on track at this point?

And you might give us your thoughts too about Congress's ideas of maybe delaying that whole process as well through the appropriations process.

VENEMAN: You know, USDA has been charged under the Farm Bill with implementing this country of origin provision which is a very prescriptive law, that is, a law that's very specific in what it's requiring us to do, which is where I think some of the confusion has come about.

We are on track to put a proposed regulation out sometime this fall. I can't give you an exact date. We have been working to implement the law as was specified by the statutes and by Congress. We've been working very closely with our lawyers to make sure we're doing this appropriately.

We had a number of listening sessions all around the country to get input from various interested parties, and so I think that we've done a very thorough and comprehensive job as we've gone through this process.

Now you mentioned the fact that Congress has a provision, at least in the House Appropriations bill, that would delay the implementation of this.

We have not delayed our action in terms of implementation based upon what's in the House bill, because we don't know that that ultimately will come out of the final appropriations bill, so we're moving along as if the timetable is unaffected, which it is at this point, and so I think we're on track, and we'll get the proposed regulation out some time this fall.

Q: The U.S. has obviously been urging Japan to cut back its beef tariffs and to offer some sort of a compromise. What, if there's anything, would happen, if Japan refused to cut back? Are there any consequences to Japan not cutting back its tariffs that have been, that are right now affecting our shipments of beef to Japan?

VENEMAN: "This is a good question because this relates to a provision that Japan used based upon import surges and it's a special provision that they had in their agreement, that allows them to put additional tariffs on if there are import surges. As many of you have heard me say many times before, we believe this is completely unjustified because the surge is an artificial surge.

When Japan got BSE a year or so ago, the demand for beef went down considerably, and so as a result, their traditional levels of shipments also went down. So, now, the surge is over that time period when the demand was down below normal levels. They are now back at normal levels, not above what has been traditional, and so we think that the tariff being imposed under these circumstances is completely unjustified and we continue to strongly make that case to the Japanese officials, including my own discussions with Japanese officials, our embassy, our ambassador, and we will continue to press the point because we do think it's really not a justified use of the tariff.

So we're continuing to work on this issue very consistently.

Q: Would there be any sort of "tit for tat" kind of tariffs, coming back against Japan in a related industry, exports that they sell to us?

VENEMAN: I don't think that's contemplated at this time, but as I said, we continue to press the Japanese very hard on this.

(end transcript)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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