*EPF111 10/25/2004
Transcript: U.S., Japan Agree to Temporary Resumption of Beef Trade
(Trade may be extended following international review, USDA says) (4340)

Japan has agreed to temporarily resume imports of U.S. beef from cattle 20 months of age and younger, easing a 10-month suspension of all beef from the United States.

Under the framework agreement, full beef trade could resume after a July 2005 review of the United States' enhanced livestock surveillance system, according to a joint U.S.-Japan statement issued October 23 in Tokyo following three days of talks.

The enhanced system, which will be reviewed by the United States, Japan, the World Health Organization (WHO) and the World Organization for Animal Health (OIE), was put in place following the discovery in December 2003 of a sole case of bovine spongiform encephalopathy (BSE) in Washington state and months of joint scientific consultations. The livestock surveillance system includes procedures for confirming the age of cattle and certification of the removal of risk materials from carcasses, the statement said.

BSE is also known as mad-cow disease.

Until the suspension, Japan was the United States' main beef market in terms of value. U.S. beef exports to Japan amounted to $1.7 billion in 2003, according to an October 24 U.S. Department of Agriculture (USDA) fact sheet.

The agreement also calls for a resumption of U.S. imports of beef from Japan, said J.B. Penn, under secretary of agriculture for farm and foreign agricultural services. Penn briefed reporters October 23 in Tokyo.

U.S. imports of mostly high quality "Kobe beef" were interrupted in 2001 when Japan found cases of BSE in its livestock herd.

Following is a transcript of Penn's press briefing followed by a U.S.-Japan joint statement on the beef trade situation:

(begin transcript)

J.B. Penn
Under Secretary of Agriculture for Farm and Foreign Agricultural Services

Press Briefing
October 23, 2004, 3:45 P.M.
U.S. Embassy, Tokyo, Japan

MODERATOR: Thank you all very much for coming on such short notice on a Saturday. We appreciate very much your participation and your interest in this important issue. I will not go into detail introducing Under Secretary Penn and Dr. Lambert [Charles Lambert, Deputy Under Secretary of Agriculture for Marketing and Regulatory Programs]. You know them from their previous visits and you have their bios. So I will allow them to speak for themselves and give a short statement on what's been happening and then take your questions. And, when you ask a question, please wait for the microphone and give your name and affiliation. Please keep it to one question and make your question as brief as possible. Today we are on the record, so please use whatever you can. Thank you.

PENN: Thank you, and let me add my thanks to all of you for being here on a Saturday afternoon. Thanks for coming. It's a pleasure to see you all. We are pleased to be able to say that we've been able to conclude a framework agreement that will permit the resumption of trade in beef and beef products between our two countries. Japan is a very important market for U.S. agriculture. It's our second largest market overall, and it was our number one market for beef and beef products. Our trade has been disrupted for ten months, exactly to the day today, following detection of one cow with BSE in December of last year --- an imported Canadian cow found in Washington State. Since that time, we have put in place significant amelioration measures that further strengthen an already robust food safety system; we have implemented an enhanced surveillance system for our livestock herd, and we believe that we now more than fully comply with all international standards.

We recognize that Japan also is in the process of review and modification of its domestic BSE testing and procedures, and our proposal for the resumption of imports is in full compliance with these standards. Our objectives are fully the same as those of the Government of Japan. We want to give the fullest assurances to the Japanese consumers that they are receiving the safest, highest quality beef and products that are on the market today.

I'd like to very briefly review with you the key elements of the framework agreement that we have been able to reach after three days of full discussions.

The first key point is that the United States will implement a marketing program that will include a certification by the U.S. Department of Agriculture that we will only supply products and beef from animals that are twenty months or younger. The age of the animals will be determined by production records, birth records, or by physiological determination --- a grading system.

A second key element of the agreement is that the specified risk materials will be removed from animals of all ages.

Another key element is that variety meats will only be shipped from animals that are twenty months of age or younger. In addition, we will be conducting a special study in consultation with Japanese experts to verify that only carcasses from animals twenty months or younger are shipped to Japan. Now, we have both agreed that both sides have to complete regulatory procedures before actual shipments begin, and we have pledged on both sides to complete those procedures in an expeditious manner.

Another key element is that we have agreed to continue the joint scientific consultations. As you know, we have had such consultations underway since April; we have found these to be very beneficial and both sides have agreed to continue these, along with participation by the World Organization for Animal Health and the World Health Organization.

This special marketing program is called a Beef Export Verification Program, or BEV. We have agreed that this BEV program will be reviewed by both sides jointly in July 2005. And to inform this special review, both sides will ask that international experts conduct a special evaluation of the operation of that program, of the scientific developments related to BSE at the time. We will also consider the BSE situation in the United States and any other information that may be relevant to safe trade because of this animal disease.

Now that completes the key features of the agreement that we have reached. This agreement represents the culmination of lots of hard work on both sides. I want to say a special thanks to Mr. Kenichiro Sasae from the Ministry of Foreign Affairs and to his colleagues at MAFF [Ministry of Agriculture, Forestry and Fisheries of Japan] and MHLW [Ministry of Health, Labor and Welfare]. I want to express my appreciation to all of them.

There are still a lot of details that must be worked out, but we are very pleased to have this issue resolved. We think that it is a testimony to our strong bilateral relationship and we're very pleased that we can work through important issues such as this.

We very much look forward to being back in the Japanese beef market. We are very eager to once again be able to supply safe, high quality beef products to Japanese consumers. We are looking forward to rebuilding the market here and to assuring Japanese consumers that we have the safest, highest quality beef products in the world.

Thanks very much for your patience. And now Dr. Lambert and I would be pleased to try to respond to your questions.

QUESTION: I'm Todd Zaun from the New York Times. Just two questions. First, when do you expect exports to resume? Can you give kind of a rough timetable? Secondly, you said that you're going to certify the beef products. Can you be a little more specific about exactly what that means --- is there going to be some kind of seal on the packages that are sold in Japan and will that have information in Japanese about the certification process or do you have any specifics about what exactly that will entail?

PENN: Two good questions. Let me say on the first one that we are talking about the resumption of two-way trade in beef products, not only U.S. exports to Japan, but also a resumption of Japanese exports to the U.S. market.

Both countries have had cases of BSE in their livestock herd, and both countries have differing situations, so we now have to go through the evaluation procedures to ensure that our trade in beef products between both countries is safe. Risk assessments, plant inspections, the regulatory processes that both countries have must be completed before actual shipments can resume. Some amount of time will be required for those processes to be completed, but we are talking a matter of weeks, and the time frame will be different in the United States than it is for Japan.

Now as to your second question about the certifications, we operate several such programs for various food and agricultural products. So, as I indicated, the agreement that we have reached today has several key features including only products from animals 20 months or younger will be shipped. The specified risk materials will be removed. The certifications are that the products that are being shipped actually meet these requirements. Those certifications will be done by the U.S. Department of Agriculture. This particular program, the Beef Export Verification or BEV program, has certain requirements and the certifications are that those requirements have been met.

Q: Thank you very much, my name is Furuya, from Asahi Shimbun newspaper, you talked about the exports of beef for those that have the age of 20 months or less targeted for the Japanese market in this round of negotiations. Now having said that, what about your intentions in terms of exporting beef of other month ages for the Japanese market? Did you discuss that matter in this round of negotiations? What type of requests did you make to the Japanese government? What would you like to see happen going forward as far as the cattle with month age that are not 20 months or younger?

PENN: Well, your question is exactly correct. In this agreement, the United States has agreed that we will ship only beef and products from animals that are 20 months or younger. As you also well know, Japan is a special case in that it believes that it has had two BSE cases in animals that were 21 months and 23 months of age. But there is still research ongoing concerning those two animal cases and we are respecting the special sensitivity to the Japanese situation, so for several months we will only ship products from animals that are 20 months and younger. But I also indicated that after an interim period, by July of next year, both sides will jointly review the situation once again. And not only will experts from our two sides review the situation, but we will ask a group of international experts from the OIE [World Organization for Animal Health] and the WHO [World Health Organization] to also assess the situation and to provide recommendations as to when they think the situation could be modified and additional safe trade to occur. This group of international experts will consider the completion of ongoing research between now and July. It will consider our experience in the United States with our enhanced surveillance system. It will consider other new information that will become available. It will consider the Japanese situation. And then it will offer its recommendations as to whether this BEV program, as its now structured, can be modified in such a way that trade could be expanded. We think today is very important for a beginning resumption of trade. Looking forward we think this review in July 2005 will be very important and then we hope, following that, we can eventually return to the normal trade patterns that we had before BSE was discovered.

Q: Steve Herman from Voice of America. So I understand that the big sticking point was about the verification of the age for the cattle, 20 months and under. That Japan was insisting on documentation, although as I understand that for the cattle coming in from Canada, there is really very little documentation and the U.S. says that you could do it by physiological examinations or some other ways. What was resolved in that particular aspect?

PENN: As you well know, the only sure way to know the age of a beef animal is to have a birth certificate for each and every single animal. But beef production in the United States is practiced on a very extensive basis; beef cattle are produced in almost every single area of the United States. We have large herds of animals that are spread over wide geographic areas, so our production system simply doesn't lend itself to having a birth certificate for each and every beef animal born. But we do have, for some proportion of our animals, individual birth records, and we augment these with group, or herd birth records, and we also augment them with artificial insemination birth records. These group and artificial insemination birth records enable livestock producers to tell within a few days the birth date of large numbers of animals, but not the exact birth date.

So we have agreed that we will use all of these production records, and we will augment that with determination of livestock age by physiological means, meaning by a grading system which looks at the particular characteristics of the carcass and determines the animal's age. We had a lot of discussion about the efficacy of such a system and reliably determining an animal's age, and as a result, we are conducting a special scientific study, in collaboration with Japanese experts, to show the accuracy and reliability of these grading standards. Our objective is to ensure that only animals 20 months or younger are made available to the Japanese market. Dr. Lambert and his colleagues, along with Japanese counterparts, expect to have this study completed within the next 45 days, and then we will be evaluating the results of that study.

MODERATOR: Do you have time for one or two more questions?

Q: Jimbo with Video News. You were saying that you do not know how accurate this physiological examination grading system is at this point, and if you do --- maybe Dr. Lambert can answer this --- what is the estimated margin of error for this physiological examination, such as determining the bone density of the carcasses? That's one question. Also, Secretary Penn, what is the expected proportion of U.S. beef coming into Japan which actually have the birth record or certification based on the birth record, and how much will the certification be based on this physiological examination? Thank you.

PENN: Before I turn to Dr. Lambert and ask him to respond, I think it's very important to provide some context on the U.S. beef production system, and that helps to better understand the grading system that is employed. First of all, our system is highly efficient. It is divided typically into three stages, and the idea is to move the animals through the three stages as efficiently as possible, of course to increase the profitability for the operators at various stages in the system.

The key characteristic of the U.S. beef production system is that it produces animals for slaughter at a very young age. Eighty-one percent of the 35 million animals that are slaughtered each year in the United States are 20 months or younger. The other 19 percent are cows and bulls that are culled from the dairy herd or being culled from the beef herd. Now, of this 81 percent that is produced directly for beef and beef products, the three stages are as follows: The first stage is from birth of the calf to weaning from the mother, and this is typically done when the calf is six months of age. The calf then typically is taken and placed on pasture or grazing, in order for it to mature and to add weight. This is typically done for four months. So when the animal is about ten months of age or so, it is then placed in a feedlot where it is fed a high-concentrate, high-energy ration for finishing. The animals are typically kept in the feedlot for a period of four to six months, and thus they are then sent to slaughter when they are 16 to 18 months of age. So the very high proportion of all steers and heifers in the United States that are slaughtered are 20 months or younger. Then this grading system is just used as added insurance to make sure that no animal 20 months or older would be shipped to the Japanese market. Now I am going to ask Dr. Lambert to explain, just very briefly, a bit about this grading system and what the key characteristics are, and how it helps ensure that only animals 20 months and younger are allowed into the Japanese market.

LAMBERT: Thank you. The USDA grading system has been in place since 1917. There is science-based evidence that physiological maturity is directly related to the tenderness and eating qualities of beef. Physiological maturity was incorporated into the U.S. grading system in 1965. The USDA graders are certified by the grading service. They are professionals who receive more than 4,000 hours of training before they are allowed to grade carcasses at the packing plants, and they --- we grade about 95 percent of all the young cattle, the steers and heifers that produce beef for retail and restaurants. We grade about 95 percent of the beef that is produced in the U.S. every year. So in the U.S. system and in the world trading system, the value of about $45 billion dollars of boxed beef every year is determined by the relative price differences in USDA quality grades. So it is a well-accepted system that is recognized worldwide.

Having said that, we recognize the ongoing questions and concerns about the relationship of physiological maturity to the actual birth date or the chronological age of livestock that are marketed in the U.S. So that is exactly what this proposed study that myself and others at USDA, in conjunction with Japanese officials, will develop and conduct to show the relationship between physiological and chronological age, and the level of physiological age that can assure that only carcasses from animals 20 months and younger will be available.

MODERATOR: I am sorry, we are out of time. We thank you all very much. I wish we had more time but we have gone almost one hour and that's all the time that we have, so we will be happy to take your questions and get you answers later.

JOINT PRESS STATEMENT FOR THE RESUMPTION OF TRADE
IN BEEF AND BEEF PRODUCTS
by
the Government of United States and
the Government of the Japan
October 23, 2004

On October 21, 22 and 23, 2004, the Government of the United States (USG) and the Government of Japan (GOJ) held Director-General level consultations in Tokyo on the resumption of beef trade between the two countries. During the meetings, the GOJ explained the review process of domestic measures against BSE. The USG explained their domestic measures taken against BSE and presented basic ideas for the resumption of two-way beef trade.

The USG and GOJ, as a result of their consultation, shared the view that under the following conditions and modalities the two countries will resume two-way trade in beef and beef products, subject to their respective domestic approval processes, based upon science. Further details of some conditions and modalities remain to be worked out by experts and working-level officials of both countries by the time of the actual resumption of trade.

A. JAPANESE EXPORT TO THE UNITED STATES

The United States will permit Japanese export of beef and beef products following relevant domestic rule-making procedures.

B. U.S. EXPORT TO JAPAN: MARKETING PROGRAM

The United States will establish a marketing program that enables a resumption of some trade for an interim time period (interim trade program). The operational details of the Beef Export Verification (BEV) Program managed by U.S. Department of Agriculture's (USDA) Agricultural Marketing Service (AMS) will be further worked out by U.S. experts and Japanese, major points of which are as follows:

1. Specified risk materials (SRMs) must be removed from animals of all ages.

a) The range of SRMs is defined as bovine heads (except for tongues and cheek meat, but including tonsils), spinal cords, distal ileum (two meters from connection to caecum), vertebral column (excluding the transverse processes of the thoracic and lumbar vertebrae, the wings of the sacrum and the vertebrae of the tail) of all ages.

b) In regard to treatment of SRMs, USDA will verify the control program of each facility managed by HACCP (Hazard Analysis Critical Control Point) or SSOP (Sanitation Standard Operating Procedures).

2. Beef items including offals and variety meats must be derived from bovine animals verified to be 20 months of age or younger.

3. Bovine animals included in the BEV Program for Japan must be traceable to live animal production records which indicate that they are 20 months of age or younger at the time of slaughter. Records that will be used to verify this requirement by the USG must meet at least one of the following criteria:

a) Individual Animal Age Verification

b) Group Age Verification

c) Insemination Age Verification

d) USDA Process Verified Animal Identification and Data Collection Services

4. Experts of both countries will continue to consult on carcass grading and quality attributes with a view to verifying physiological age to evaluate carcasses to be 20 months of age or younger. Additional information will be developed by USDA for consideration by the experts, including a special physiological maturity study (Terms of Reference attached in the Annex). This study will involve examination of maturity grades of samples of representative cattle. When the carcass grading system objectively demonstrates that it can verify physiological age to evaluate carcasses to be 20 months of age or younger, it will be used as a method to satisfy the BEV program requirement.

C. DOMESTIC PROCEDURES AND TIMING OF RESUMING TRADE

The necessary modifications to U.S. and Japanese regulations would be completed expeditiously so the United States and Japan will resume two-way beef trade immediately after completing their respective domestic procedures. In Japan's case, such domestic approval process includes deliberation by the Food Safety Commission. Both countries will undertake these domestic procedures and endeavor to resume the beef trade as soon as possible.

D. CONTINUED JOINT SCIENTIFIC CONSULTATIONS

1. Joint consultations by the U.S. and Japanese experts will be continued to help both sides gain a fuller understanding of the pathogenesis and patterns of the BSE disease. Specific topics to be addressed would include (but not limited to): BSE definition and testing methods; transmissibility; and current and ongoing research including the Japanese transgenic mouse assay.

2. Other international experts including from the World Organization for Animal Health (OIE) and the World Health Organization (WHO) would be invited to participate in the consultations.

3. The consultations would begin immediately and be conducted to provide information to be available for the BEV Program Review (as described in E below).

E. BEV PROGRAM REVIEW

The BEV Program (as described in B above) will be reviewed for modification as may be appropriate in July 2005. The joint review by officials of the Governments of the United States and Japan will take into account a scientific review to be conducted by OIE and WHO experts. The conclusion of the review, including the action to be taken, will be made by the consensus judgment of both Governments. In Japan's case, it will be subject to deliberation by the Food Safety Commission.

Scientific Review. Experts from the OIE and the WHO will be asked to review existing and new information to be compiled during operation of the BEV Program and to provide guidance as to modifications that might be appropriately made and assure consumer safety in U.S.-Japan beef trade. The information to be reviewed will include:

-- Information made available by the joint scientific consultation as described in D above;

-- The United States BSE status according to OIE criteria to be reviewed; results of the U.S. enhanced surveillance program; U.S. feed regulations; and the range of BSE amelioration measures in place in the United States;

-- Cut-off age for BSE testing; and

-- Other relevant scientific information.

F. PREVENTION OF TRADE DISRUPTION

Both the United States and Japan have food safety systems in place that are sufficiently robust such that identification of a few additional BSE cases will not result in market closures and disruption of beef trade patterns without scientific foundations.

G. AUDIT SYSTEM

Following equivalency audits of each country's relevant food safety system and resumption of trade, both countries will cooperate to audit each side's facilities on a regular basis.

ANNEX

Terms of Reference: Physiological Maturity of Beef Cattle Carcasses

The USDA Agricultural Marketing Service (AMS) will conduct a special study in which steers and heifers of known ages (births identified within a one month period) are slaughtered and evaluated for physiological maturity. The purpose of the study is to determine an expected end-point maturity that will assure the exclusion of steers or heifers with a chronological age greater than 20 months from a certification program for export to Japan. This evaluation of physiological maturity on a representative sample of the U.S. fed-beef slaughter population will provide a reliable assessment of the age of cattle. The study, in consultations with Japanese experts, will be designed and the data analyzed utilizing internationally recognized sampling and statistical methods.

The study will be completed and a report presented within 45 days.

(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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