June 15, 2006

Senator Robert Bennett, Chairman
Senate Subcommittee on Agriculture, Rural Development, and Related Agencies Appropriations
188 Dirksen Senate Office Building
Washington, DC 20510

Senator Herb Kohl, Ranking Member
Senate Committee on Agriculture, Rural Development, and Related Agencies Appropriations
123 Hart Senate Office Building
Washington, DC 20510


Dear Chairman Bennett and Ranking Member Kohl:

On behalf of the consumer organization Food & Water Watch, I am writing in support of Section 747 of H.R. 5384, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2007 as passed by the U.S. House of Representatives.  As you know, this provision would prohibit the United States Department of Agriculture (USDA) from using funds to implement a recently approved regulation that would permit the People’s Republic of China (PRC) to export processed poultry products to the United States.  We urge your subcommittee to include a similar provision in the Senate version of the FY 2007 Agriculture Appropriations bill.

I understand that you have recently received a letter from some industry trade associations requesting that you not include this provision when the Senate Subcommittee marks-up the FY 2007 bill.  As you know, this provision received unanimous support by the House Subcommittee when it was offered by Congresswoman Rosa DeLauro, and it did not receive any further debate when the full House Appropriations Committee considered the bill or on the House floor when it was eventually passed last month.

We have been opposed to granting the PRC equivalency status on this issue since the rule was first proposed by USDA’s Food Safety and Inspection Service (FSIS) on November 23, 2005.   We filed comments on January 23, 2006 opposing the proposed rule.  In addition, we sent a letter on April 27, 2006 to Secretary Johanns requesting that USDA rescind the rule after it was approved and published in the April 24, 2006 Federal Register. 

Our opposition to this rule has been based on seven reasons:

1.    FSIS Has Poor Track Record Enforcing Equivalency Agreements

FSIS has had difficulty enforcing the equivalency agreements it already has with countries that it has deemed eligible to export to the U.S.  We believe that adding the PRC to the list of equivalent countries at this time would add an additional burden to FSIS which we do not believe it can handle at this time. 
We base our observation on the recent findings of the USDA Inspector General regarding the FSIS equivalency agreement with Canada.  In a December audit report, the Inspector General stated:

… FSIS does not have protocols or  guidelines for evaluating deficiencies in a country’s inspection system that could jeopardize a country’s overall equivalence determination.

The USDA Inspector General made this assessment in her analysis of the FSIS equivalency agreement with our largest trading partner.  If FSIS cannot enforce an equivalency agreement with a country in such close proximity to the U.S., what makes FSIS think it is going to do a better job with the PRC located twelve time zones away? 

FSIS has had a history of inconsistency when enforcing equivalency agreements with our trading partners, as the Inspector General’s audit report points out.   And, FSIS has never proposed removing a country from either 9 CFR Part 381.196 or 9 CFR Part 327.4 (b) for habitual violations.  The manner in which the PRC equivalency rule was processed indicates to us that the PRC will receive preferential treatment in our trading relationship – regardless of what USDA inspectors turn up in future inspection visits to PRC food processing plants.

2.      The Rush to Judgment

The speed by which the PRC equivalency rule was approved is especially disconcerting to us.  According to USDA’s most recent Semiannual Regulatory Agenda that was published in the April 24, 2006 Federal Register, a decision on the rule granting the PRC equivalency status for processed poultry was not supposed to occur until March 2007.   Ironically, that same day, FSIS published the rule granting the PRC equivalency status for processed poultry products.

The sequence of events leading up to the equivalency approval for the PRC leads us to the conclusion that political science and not sound science dictated policy in this case.  And, it should not be a quid pro quo for opening up beef trade with the PRC unless food safety requirements are being met.

The timing for the comment period on the proposed rule came right in the middle of the Thanksgiving-Christmas holiday season.  USDA has done this before on controversial issues to minimize press exposure.  Not everyone reads the Federal Register regularly, so the vast majority of citizens were not aware of this proposal until it was too late.   

While the comment period closed on January 23, 2006, no action on the rule was apparent until I learned from the April 12, 2006 edition of China Daily that the deal was apparently done, in an article entitled, “Chinese Poultry to U.S., U.S. Beef to China.”  Approval of the rule was not posted in the Federal Register until April 24, 2006, but apparently through discussions with the PRC, which were not open to the public, USDA had approved the rule nearly two weeks earlier.

It was obvious to everyone that the approval of the rule was timed for the visit of the PRC President Hu Jintao on April 20, 2006.  Statements made by USDA officials to the contrary were laughable.

The speed with which the Office of Management and Budget (OMB) considered the rule was also astounding – the rule went in their door on April 18 and came out on April 19 – with an official announcement of the approval of the rule by FSIS on April 20 (although official publication in the Federal Register did not come until April 24).   By comparison, a proposed rule that would make it easier for American consumers to identify recalled meat and poultry products has been treated as a ping-pong ball by OMB and FSIS since February 2005 (FSIS recently closed the comment period.  We can only hope that the comments will receive an expeditious review by FSIS and OMB will approve this rule as quickly as it did the PRC equivalency).

3.     The Devil is in the Details

We were perplexed why FSIS would propose equivalency status to the PRC based upon the results of the 2004 Audit it conducted of food laboratories and of seven slaughter and processing establishments in that country.  The FSIS inspectors found major food safety violations in a number of the food establishments they visited.  Here are some of their findings.

    Dacheng Food Company, Ltd.

    During the preoperational sanitation several deficiencies such as grease, blood, fat, pieces of dry meat and
    Foreign particles were observed on product contact areas of conveyor belts and plastic containers in the
    poultry raw meat area and fried poultry processing area. These deficiencies were corrected by the
    establishment officials immediately in some cases, in others, with delay and not sufficientIy  4 16. 13, i5(a).
    Non-food-contact surfaces of processing tables were observed with heavy grease in raw meat area. This
    deficiency was not corrected by the establishment officials at the time of the Auditor visit 3 16.4(b).
    Direct observation of monitoring activities and their frequencies were not addressed in the HACCP plan. This                   deficiency  was scheduled for corrective action 417.2.
    The pre-shipment review was not performed and was not documented. This deficiency was scheduled for
    correction 4 17.5(3c).

•    This establishment was issued an NOID because of SSOP, SPS and HACCP deficiencies.

    Qingdao Chia Tai Co., Ltd.

    Intensity of 200 foot-candles light was missing at the reinspection stations.  This deficiency was scheduled
    for correction by the establishment officials 9CFR 381 76(c)(1v)
    During the pre-operational sanitation it was observed that the conveyor belt, used for exposed edible product transfer     had several deep cuts in it in the cut-up room. This deficiency was scheduled for correction by the establishment             management 9CFR 4 16.4(d). During the pre-operational sanitation, rusty pipe with flaking paint was observed over         the exposed chiller. This deficiency was scheduled for corrective action by the establishment officials 9CFR 416.4.             Flaking paint from the ceiling, some of it found on the table used for edible product was observed in the several areas     of the cut-up room during the pre-operational sanitation. 'Ihis deficiency was corrected by the establishment officials     9CFR 416.4. There was no pre-chill and no proper post-chilling operation performed by the establishment employees         and inspection service. The corrective action was scheduled by both; establishment and inspection service 9CFR 38         1.76. 

We were astonished to learn that one of the signatories to the industry letter you received – a representative from a major poultry trade association -- admitted that he had not read the 2004 FSIS Audit Report where the above findings could be found.   Yet, he is now prepared to forsake food safety for an opportunity to open up beef trade with the PRC.

FSIS reports that between ten and twenty-five poultry processing establishments will be permitted to export to the United States.  So far, FSIS has only made public a handful of the audit reports from the PRC.  Before any product is permitted to be exported to the United States, we believe that the audit reports for all PRC plants that are considering exports should be made available for public scrutiny.

4.    The Issue of H5N1 Avian Influenza

As you know, the PRC has had 40 outbreaks of the H5N1 strain of avian influenza (AI) in twelve different provinces with twelve reported human fatalities from the disease over the past year.   The rule approved by FSIS does not allow the PRC to process domestic poultry for export to the United States because of the (AI) problem there.  Instead, the rule sets up a convoluted procedure by which the PRC can only process poultry carcasses from countries that are AI-free and are currently eligible to send slaughtered poultry to the United States.  For all intents and purposes, that leaves the United States and Canada.  So, that means U.S. and/or Canadian companies would ship domestic slaughtered poultry to the PRC for processing and then shipped back to the United States for import.  It is bizarre to say the least, and does not make sense economically.  In fact, when first asked about the proposed rule, Richard Lobb of the National Chicken Council stated that he was unaware of any U.S. poultry company that was interested in sending frozen chicken carcasses to the PRC for processing so that it could be shipped back to the U.S.

While the FSIS rule prohibits the PRC from using domestic poultry for export to the U.S., there is no guarantee that is going to happen. We have serious questions about the annual FSIS audit program for foreign plants that are eligible to export to the United States.  We do not believe that the frequency of those visits is adequate to ensure that our equivalence agreements are being adhered to.  FSIS inspectors continually find problems in establishments that are eligible to export to the United States, even in countries with which we have mature trading relationships.  Often, the nature of the violations is similar year after year after year.  The establishments make the required corrections to avoid being de-listed, yet they go back to procedures that violate the equivalence agreement until the next time they get caught by FSIS – which could be years, since FSIS only audits a small sample of foreign establishments eligible to export to the United States annually.

 In the case of the rule for the PRC, we have no assurances that poultry raised and slaughtered in the PRC will not be used for export to the United States unless we have USDA inspection personnel stationed in the PRC processing plants at all times. It is incumbent on USDA to guarantee that the PRC is living up to the letter of the rule.  Furthermore, since the rule calls for only cooked poultry to be exported to the United States, there need to be assurances that the poultry is being cooked to the proper temperature to ensure the safety of the product.  Consequently, USDA should consider stationing inspection personnel in the PRC to ensure that the requirements of the equivalence agreement are being met.

To use FSIS’ logic, perhaps FSIS should approach Indonesia – which seems to have the highest incidence of H5N1 in the world  – and offer that country the same arrangement as we are offering the PRC.  We believe that FSIS is taking far too many risks with this rule and should be exercising extreme caution when opening up trade with countries that have experienced H5N1 in their poultry populations.

5.    Will U.S. Consumers Really Know What They are Eating?

The background to the PRC rule made the assertion that U.S. consumers would not be required to purchase processed poultry products from the PRC.    FSIS does not have mandatory country-of-origin labeling authority, so there is no guarantee that consumers will know they are purchasing poultry products from the PRC.  In fact, during the House appropriations hearings this year, both Agriculture Secretary Mike Johanns and Under Secretary for Food Safety Richard Raymond were asked about this issue.  I suggest that you read the transcript of those hearings, especially the exchange between Congressman Virgil Goode and Under Secretary Raymond during the March 8, 2006 hearing.  As you know, if canned cooked poultry is sold directly to consumers in retail, then the product will be labeled as originating in the PRC. However, if the processed poultry is sold to a firm that uses it as an ingredient, or if it prepared as part of a meal in a restaurant there is no requirement that the final product be labeled with the poultry’s country of origin. 

Ironically, in the narrative approving the PRC rule, the FSIS comment reviewer chose not to deal with this issue claiming that it was not under FSIS jurisdiction.   If this area of policy is not under FSIS jurisdiction, why was the claim that consumers would be able to determine if poultry was processed in the PRC made as part of the proposed rule?

6.     The Impact on Small Domestic Poultry Processors

In approving the PRC rule, FSIS dismissed the fears expressed by some commenters – including my own – that our domestic processors would face increased competition from cheap imports.  The FSIS reviewer of comments contends that since there is such a small amount of product that will be imported under this rule, it will have a negligible impact on domestic processors.  Furthermore,  FSIS contends that it would force our domestic processors who could not compete to become more efficient.   So, one can infer from that statement that if “inefficient” operations do not change business practices, they should go out of business.  I find it disturbing that it is official government policy to use trade agreements to force “inefficient” domestic operations to shutter their doors. It is no secret that the PRC is interested in exporting more food products to the United States.  The imports under this rule are just the beginning.  The PRC will continue to press the United States to import processed poultry raised in that country, and once they satisfy FSIS regarding the operations of their slaughter facilities, we should expect the PRC to export frozen carcasses to the United States in the future.  Our domestic poultry industry could become overwhelmed with cheap imports from the PRC.  In referring to the rule, Congresswoman DeLauro made this observation during congressional hearings, “This is the camel putting its nose under the tent.”

There needs to be more attention paid by this Administration to the implications that the trade deals we are executing will have on the domestic production system.  I am very concerned that FSIS has just opened the floodgates to an onslaught of cheap poultry products from the PRC that are going to put our farmers and processors at a competitive disadvantage.


I suggest that you read the comments submitted by small processors when this rule was first proposed and you will note the concern expressed by these individuals about the competitive disadvantage they will face from the PRC.

7.    Rewarding Illegal Activity

The PRC has been caught trying to smuggle banned poultry and poultry products into the U.S.  We know that the top echelon of USDA was aware of this issue because a November 19, 2005 St. Louis Post-Dispatch article on this issue entitled, “Banned Asian Poultry Being Smuggled into U.S.,” was included in the “AgNews Summary for USDA Executives” prepared by the USDA Office of Communications on November 21, 2005.   According to that article, “Chinese-raised poultry, banned in the U.S. out of fear of spreading diseases, is nonetheless reaching markets and restaurants in this country after escaping detection at borders.”  On November 23, 2005, FSIS published the proposed the PRC processed poultry rule in the Federal Register.  So, should our trade policy be based on rewarding those countries that break international trading rules?  We believe that the PRC rule should not have even been proposed because of the illegal smuggling of poultry into the U.S.  Illegal smuggling of poultry and exotic birds has been identified as a major vector for the spread of H5N1 around the world.  That alone should have sent up red flags at USDA when it came to the PRC.

We believe that Congress needs to reassert its oversight over the trade deals which the Executive Branch negotiates.  The PRC equivalency rule which FSIS has approved does not make any sense to us.  It is a political deal of the worst kind and is putting U.S. consumers at risk.  Consequently, I urge you to follow the lead of the House and cut off the funds to FSIS from executing this rule.

Should have any questions regarding this letter, please feel free to contact me at (202) 797-6550.

Sincerely,

Wenonah Hauter, Executive Director


Cc:  Senator Thad Cochran
        Senator Robert Byrd
        Members of the Senate Subcommittee on Agriculture, Rural Development, and Related Agencies Appropriations
        Congressman Henry Bonilla
        Congresswoman Rosa DeLauro