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Issues: Fair Trade and Food Safety: an Uneasy Truce

The European beef industry is in crisis. Governments worldwide, reacting to health fears over "mad cow" disease, have closed their markets to British beef. Scientists have been asked to assess what, if any, danger this disease has for humans. Meanwhile, public concerns about the safety of beef have sent prices plunging. The "mad cow" issue illustrates the challenges governments face in protecting the health concerns of their populations while meeting their commitments to free trade. To what extent should British beef have been banned, and for how long?

Restrictions on agricultural trade have been around almost as long as countries have engaged in international commerce. Many such barriers, usually in the form of quarantines, are legitimate attempts to keep harmful pests and diseases from entering areas where they otherwise are not found. But other bans are disguised trade barriers used to protect a domestic industry from international competition, according to U.S. government officials and agricultural industry experts interviewed by USIA.

Many countries impose bans on farm commodities with no justification and have never had to justify them, says Ambassador Ira Shapiro, general counsel at the Office of the U.S. Trade Representative (USTR).

The cost of these numerous sanitary and phytosanitary barriers -- health and safety measures used to restrict imports -- is in the thousands of millions of dollars annually in terms of lost trade globally and in the hundreds of millions of dollars in U.S. commodity exports, says John Skorburg, senior economist with the American Farm Bureau Federation, a four-million-member federation of farm bureaus located in each of the 50 U.S. states.

In an attempt to meld often competing health and trade issues, member nations of the World Trade Organization (WTO) agreed to a set of sanitary and phytosanitary standards (SPS) under the Uruguay Round global trade accord that went into effect January 1, 1995. Relatively untested, these new standards may be the subject of some of the more difficult and contentious trade issues of the coming decade, the officials and experts say.

"This is a growing area of trade disputes," says one U.S. trade official, who declined to be identified. "What is most important is that countries now have to do a risk assessment analysis if a measure is taken to protect human, animal, or plant health. We are beginning to look at what countries are doing with more of an eagle eye because we are going to start questioning whether or not they have made that risk assessment analysis."

In general, the SPS agreement tries to check the use of unjustified, unscientific regulations to restrict trade. Under the new rules, countries have the right to set their own high standards of food safety and animal and plant health. However, any sanitary and phytosanitary restrictions must be based on sound scientific principles. The rules encourage countries to harmonize standards under existing international regulatory bodies, but allow countries to maintain science-based standards that are stricter than international standards. Where restrictions are not based on sound science, they must be discontinued or the country imposing them may be subject to retaliatory trade sanctions.

Also vital to the United States is article 14 of the SPS agreement, which states that countries must accept other countries' inspection and pest disease control measures, even if these measures differ from their own, if the exporting country can demonstrate to the importing country that its measures achieve a level of protection equivalent to that sought by the importing country.

The SPS dispute most closely watched by the Clinton administration and U.S. industry is the European Union's (EU) ban on beef from cattle fed growth-producing hormones. This ban goes against the Codex Alimentarius, the international regulatory body that found the U.S.-used hormones safe if properly administered. The EU restrictions are costing the U.S. beef industry about $90 million annually, and the dispute is currently before a WTO dispute settlement panel.

"It is an excellent test case," Skorburg says. "What it does is give credibility to the idea that sound science should be what is used to take care of any sanitary or phytosanitary disputes."

"I would hope this would set the basis for future sanitary and phytosanitary decisions," one U.S. trade official says, adding that a finding against the EU and in favor of sound science would benefit the whole trading system.

In a separate case, the United States has initiated WTO dispute settlement consultations with Australia over that country's ban of imports of untreated fresh, chilled, or frozen salmon. The ban was implemented because of concern that salmon diseases in the United States and Canada, if transmitted, would devastate the Australian salmon -- a position strongly challenged by both Canada and the United States.

Officials note that Korean inspection requirements and standards and Japanese apple-certification procedures involve products that are not specifically banned from entry but for which onerous health and safety requirements sharply limit and discourage imports. Probably the largest sanitary and phytosanitary dispute currently facing the United States consists of a host of Korean practices aimed at keeping out U.S. commodities.

Korea, the third largest foreign market for U.S. farm exports, requires all fruits to be fumigated; requires incubation testing in which fruit in cold storage must be warmed up for inspection, which causes significant product decay; implements a "zero-tolerance" decay level that requires mandatory sorting through the opening up of each box of fruit or vegetables and removal of each decayed product; requires 100 percent of all shipments to be inspected as opposed to a random, or "suspect," sampling; and maintains unscientifically based standards for processed food.

For a box of fruit to clear port in Korea, it takes, on average, from two to four weeks and can take up to three months, compared to two to three days in most other Asian markets, U.S. trade officials say. The result is that U.S. industry is losing several thousands of millions of dollars annually in what could be sold if the SPS barriers did not exist. The cost of shipping many products to Korea under these new SPS barriers is becoming increasingly prohibitive, they say.

U.S. officials say that despite Korean promises to improve their system, few actions have been taken to remove the barriers. In fact, they say, the Koreans have been notifying WTO officials in Geneva of corrective actions that have never been taken.

The United States plans to request a formal WTO dispute panel unless Korea changes its practices soon, one official says, noting that there is a lot of interest in the case by other countries because there are variations of Korean barriers found in other markets. On July 1, the United States also was to make a determination whether Korea is following through on agreed changes to its "shelf-life" requirements that set a maximum time for products to be on grocery shelves. These were so short that by the time a product had cleared customs procedures, the product was often out of date and could not be sold.

In the case of apple exports to Japan, the phytosanitary requirements are so excessive that many U.S. apple growers who want to export cannot afford to meet the certification conditions, says Chuck Havens, assistant deputy administrator for phytosanitary management at the U.S. Department of Agriculture (USDA).

These requirements include a combination of cold treatment -- for as long as 90 days -- followed by fumigation of the apples with methyl bromide to prevent the spread of codling moths, a small grayish moth very destructive to apples. For fire blight, a disease that turns apple trees black, the trees must be 180 meters away from any hickory trees. Inspectors from Japan, paid for by the U.S. orchards, inspect orchards three times annually -- at the blossom stage, the post-blossom stage, and the early stage of fruit development -- to make sure the trees have not been hit by fire blight.

William Bryant, chairman of W.L. Bryant Company, a firm that provides export-marketing assistance to U.S. growers, points out that the fumigation process, which heats up the apple, and the cooling process are excessive. They are expensive and they reduce the fruit's shelf life. Japan is the only country that requires the United States to fumigate its apple exports, he said, adding that a more thorough inspection process would likely produce an acceptably equivalent level of protection.

Havens notes that the USDA's Animal and Plant Health Inspection Service (APHIS), with about 2,500 inspectors, has one of the world's most extensive systems for the inspection and certification of animals, plants, and certain related products to meet health and sanitary requirements for export from or import into the United States.

"We have sanitary and phytosanitary problems in almost every sector of high-valued horticulture -- packaged fruits and vegetables," Bryant says, pointing to restrictions on grapes, cherries, and Florida grapefruit in China; grapes and citrus in Australia; and grapes and stone fruit in Mexico. U.S. documents and private-sector experts mention other problem areas: El Salvadoran restrictions on U.S. rice, shelf-life problems in Egypt and Saudi Arabia, and unreasonable poultry and beef requirements in Chile and Venezuela.

According to Havens, U.S. growers have refused to meet Mexican requirements that cherries be fumigated for pests that are already prevalent in Mexico or where the cherry is not even host to the pest required to be eradicated.

"We don't believe Mexico has a legitimate need for fumigation of cherries," Havens says. "We don't ship at this point in time. We think we are coming to a place where ... we have a process designed that Mexico will be able to accept, but will not require fumigation."

In regional terms, Asia, particularly China, maintains a host of SPS barriers, officials and industry experts say.

China, which in 1992 agreed not to use SPS barriers, is "not living up to that obligation," says Shapiro, citing Chinese barriers to U.S. citrus products, apples, stone fruit, table grapes, and other commodities.

"China is basically a closed market to us except in commodities they are really in need of, such as wheat," Havens says. "They blanketly prohibit most fruits and vegetables with no published scientific rules to explain the restrictions." Havens cites the example of how discovery of the Mediterranean fruit fly in California led to China's ban on all U.S. fruit, even from areas where the pest does not exist.

"China, on one level, wants to join the WTO," Havens says. "One of the things we must do is convince them that if they want to join they must have transparent, scientifically based rules as the WTO treaty requires."

Concern about the fruit fly also led Argentina, Brazil, and Ecuador to cut off their imports of fresh U.S. fruit, a decision already reversed by Brazil, says Havens. But he stresses that the U.S. eradication system for exotic fruit flies is one of the most extensive in the world. If one or two flies are discovered, the area is saturated with traps, which have proven to be effective in eradicating the pests, he says.

Another difficult SPS issue is karnal bunt, a fungal disease affecting the quality -- but not the safety -- of wheat. Karnal bunt was recently found in durum wheat in the U.S. states of Arizona, California, Texas, and New Mexico. The United States currently has protocols with 21 countries allowing export of its wheat if U.S. inspectors certify that the shipments are from a region that is free of the disease.

The U.S. Department of Agriculture is currently conducting a survey of all U.S. wheat growing areas, to be completed probably in September, with the aim of assuring U.S. trading partners that the incidence of karnal bunt is very localized and that steps are being taken to eradicate it. If karnal bunt is not found, the United States may be able to use articles 24 to 26 of the SPS agreement, which require that countries, for the first time, institute policies that differentiate between regions of a country that may be disease or pest free and regions where pests or disease exist.

One recent success story, officials say, is the decision by Russia to reverse its ban on U.S. poultry because of concerns about salmonella bacteria and residues. Russia is the United States' biggest market for poultry. The United States agreed to test farm flocks to make sure there were no residues and to sear the skin and take a core sample of the bird on the slaughter line -- the procedure used by the Russians to test for salmonella. U.S. officials believe that searing the skin is an imperfect test for salmonella since it kills most of the bacteria that the Russians are testing for. "But if they want it, that's what we are going to do," one official says.

Neither the U.S. government nor the U.S. farm sector is looking to use the WTO as a court to settle the multitude of SPS disputes, officials and farm industry analysts say. Rather, the SPS agreement gives them some new justification in bilateral negotiations to ask countries to explain the scientific basis of their restrictions. The WTO dispute process, they say, is viewed as a last resort when all other consultations fail.