U.S. Embassy, Tokyo
February 17, 2006

AMBASSADOR SCHIEFFER: Thank you very much for coming tonight. I know this is late on a Friday night, but we wanted to get this report to the government of Japan as soon as possible. A short time ago, we delivered to the government of Japan a report detailing the results of the investigation we launched after the incident, which resulted in the suspension of U.S. beef exports to Japan. The report with appendices is 475 pages long and can be broken into two parts. That's the report there, and I'll hold it up for you in just a minute. The first part contains the findings made by the Food Safety and Inspection Service, which is a part of the United States Department of Agriculture, headed by Secretary of Agriculture Mike Johanns. The second part contains the results of the investigation made by the USDA Office of Inspector General, which provides independent oversight of the US Department of Agriculture and is responsible to the United States Congress. Both reports largely mirror each other.

According to the investigation, this is essentially what happened:

A Japanese customer ordered specific veal products from a United States exporter, Atlantic Veal and Lamb, on December 27, 2005.

As an aside, under terms of the agreement between our two governments, some meat cuts like veal chops, T-bone steaks, and Porterhouse steaks would be banned from export to Japan because the bone would be left in. Once the bone is removed, however, the meat itself becomes eligible for the Japanese market. Leaving the bone in and not the meat itself was what made this shipment a violation of the agreement guidelines.

Atlantic Veal and Lamb is what is known as a meat fabricator in the trade. That means they process carcasses obtained from suppliers into meat cuts that can be sold to wholesale customers. The supplier in this instance was a company called Golden Veal. Both companies are owned by the same individual, but are located in different places. Each company was certified to export to Japan on January 6, 2006.

The investigation concludes "... this incident was the result of a failure on the part of the exporter and USDA personnel to know which products were eligible for shipment to Japan." In other words, this company and this inspector did not fully understand that products like veal chops could not be exported to Japan.

Since this was the only shipment of veal from the United States to Japan during the period of time that the ban was lifted, no veal products of any kind ever reached the Japanese consumer.

The United States deeply regrets the mistake that was made by the exporter and the USDA personnel. Secretary of Agriculture Mike Johanns has already taken steps to see that it does not happen again. In addition, this report recommends additional steps that will be taken to tighten and strengthen our enforcement mechanisms. Let me stress again, that we are going to provide safe, healthy meat products to the Japanese consumer. We hope that this investigation will assure all our Japanese customers that we take their concerns seriously and intend to honor the agreement we made to open their market to American beef. And with that, I'll be glad to answer any questions that you might have. Let me show you a copy of the report itself.

---

QUESTION: I'm Satoru Suzuki with TV-Asahi. Mr. Ambassador, obviously I have not read the entire report, but my understanding is that when the bilateral beef agreement was violated, that was as a result of a failure on the part of the exporter as well as the USDA inspector. That was so simple mistakes made by those people. Consequently though, Japanese consumers' confidence in the American inspection system, and probably to a great degree their confidence in the safety of American beef, was shaken terribly. And at this moment they are not yet totally confident yet that those mistakes will not be repeated. Probably from their viewpoint, probably the only way to restore their confidence in American beef is to test all the cattle earmarked for consumption in Japan. Mr. Ambassador, after all those things, is the United States government ready now to consider introducing such a 100% testing system if that is the only way to resume beef imports into Japan on a stable and sustainable basis?

AMBASSADOR SCHIEFFER: I think that the United States recognizes the difficult problem we have to overcome the anxieties that exist with the Japanese consumer. But what we would ask the Japanese consumer to take into account is the scientific evidence with regard to testing. And the scientific evidence - not an American standard but the world standard - is that no beef under 30 months of age is susceptible to the BSE problem. As a result of that, we do not believe that any place in the world would require testing of 100% of cattle except for Japan. And so what we would ask the Japanese consumer to do is to look to the scientific standards in that regard. But I want to back up and say again, we have to win back the Japanese consumer. Not only do we have to lift this ban, but we have to win back the Japanese consumer. And we believe that when the Japanese consumer hears all the facts, that they will understand that the science does not demand that kind of test.

QUESTION: How confident, Mr. Ambassador, are you when and if Japanese consumers, including ourselves in the media, finish reading the entire report, how confident are you Japanese consumers will change their mind?

AMBASSADOR SCHIEFFER: I think what the report has done in a very transparent way is to tell people what has happened. I think it also makes a number of recommendations in addition to the recommendations that Secretary Johanns has already implemented. And I think that that combination should give some comfort to the Japanese that we have investigated this problem, we have answered the question of how could this have happened, and we have taken steps to see that it doesn't happen again. Now I think that the Japanese government is going to want to study this report. That's perfectly understandable. A report of this length is one that is going to take a while to be understood and read. And I think that the Japanese people will have questions as a result of that examination, as you in the media also examine it. But I am confident that we can answer those questions and that we can resolve those anxieties as this plays out over the next few days and weeks. And hopefully, we can reach a point where, not only the government of Japan, but the people of Japan will understand that American beef is safe and is no danger to their health.

QUESTION: Good evening. I am Takagi from Mainichi Newspaper. I have a request to make to my media fellow. I haven't yet taken a look at all at that report. I heard that there is an executive summary being made available to us. Can I ask you to distribute the executive summary to us at this time? Otherwise we won't be able to ask any questions. No one had read that executive summary yet. Of course we cannot read all of them, the report, but please immediately give us the copy of the executive summary.

AMBASSADOR SCHIEFFER: I thought we had them distributed. Let's distribute them. We have the executive summary both in English and the translation of it, so that was to aid you in asking questions ... aid me and in answering them. Do you want to have a chance to digest these for a minute?

QUESTION: Well, thank you so much for giving us immediately the executive summary. I read the Japanese version at a glance, and I have a question. It says that the inspectors of the USDA and the exporters were not familiar with the procedures that need to be taken before making exports to Japan, but you have made a commitment to the EV program, and it should have stated the things that you are eligible for export to Japan. And USDA inspectors and the exporters should have known these, but why was it that they did not have full knowledge? I think that there are four people involved: people from Ohio, an inspector from Ohio, and a New York shipper or fabricator, and the New York inspectors. Why didn't they know such things such were needed to be done? Maybe they were not untrained? And vis-a-vis the USDA, the EV program should have been complied with very thoroughly. And there was a ban of exporting the beef having a vertebra or spinal column. But I wanted to know why these people were not informed about the exact procedures that needed to be taken.

AMBASSADOR SCHIEFFER: Well, I think they were informed about it or there was certainly information that should have been available to them, and they didn't follow that information. Now I think the report says that they were not fully cognizant of what was in the requirement. But what the report also said is that they should have been, and it was the responsibility of the inspector as well as the exporter to know these regulations and to abide by them, and they didn't do it. And why they didn't do it is a matter of conjecture at this point with what was in the mind of the inspector when they didn't do the inspection they were supposed to do. But they clearly were supposed to do it, and they didn't do it.

QUESTION: Maybe there is some misunderstanding. You said they should have done that, but they did not do it, but did they know and they didn't do it, or they didn't know and they didn't do it? Which way is it?

AMBASSADOR SCHIEFFER: It's that they didn't fully understand what they were supposed to do.

QUESTION: Why is it that they did not fully understand? All four of them? Why is it that none of the four involved were cognizant of all the procedures?

AMBASSADOR SCHIEFFER: Obviously, a miscommunication, and they didn't understand the role that they had to play, and they didn't follow the guidelines. The guidelines were clearly given to them, and they didn't understand it. There is some area of misunderstanding as to whether veal products were to be treated the same way that beef products were. They were clearly supposed to be treated that way. And yet this company that was a veal company did not treat them that way. And I would point out to you that veal, that the only companies that were certified to export veal, and the only veal that was involved in export was this portion. Now I would also point out to you that veal itself by definition is meat that is 16 to 17 weeks old. Not 20 months old. So there apparently was some misunderstanding on the exporter's part as to what constituted the necessity to abide by. But you're going to have to ask the veal company as well as the inspector what was in their minds and what was the confusion, but there was clearly confusion on their part as to what was in the guideline and what wasn't in the guideline.

QUESTION: In exporting the meat, I imagine they ought to have known all those guidelines. These are the rules you must follow in order to export to Japan, and I imagine that they all study such procedures, so these people did not do such studies? If you say you don't know exactly as to why it happened, you said this was a mistake; it was an exception. But if you don't know the reason, how can we be sure that these people - other people - know the procedures. The way you explain it, we cannot help but to think that there are many people who don't know.

AMBASSADOR SCHIEFFER: I cannot be sure that you understand what I'm trying to tell you. It's one human being trying to explain it to another human being. I can say it, but you're the one that has to understand it in the same way that I said it if there's some dispute in it. The guidelines clearly existed. They did not follow the guidelines. And they should have. Now, I don't know what else I can say about it.

QUESTION: (Inaudible) It was in the previous question as well, but you conclude that this mistaken shipment was a one-off and does not indicate an overall weakness in the U.S. system. So is it correct to understand that the United States will not accept more stringent regulations from Japan on future U.S. beef imports?

AMBASSADOR SCHIEFFER: No, I don't think that's correct at all. I think that what we have said is we are imposing more stringent requirements as a result of this report and as a result of Secretary Johanns' initial reaction. We have changed the process already in order to have more verification that people understand what these guidelines are. And if the Japanese suggest other things that could work, we're open to listening to that as well. We want the Japanese customer to be confident that the meat that they eat that is imported from the United States is safe and healthy. And we're prepared to listen to any concerns the Japanese government might have and try to address them. All that we ask is that science be the standard that we use and not emotion.

QUESTION: So the U.S. will be prepared to consider, for example, testing more cows, for example, or on more Japanese enforcements in inspecting these processing firms?

AMBASSADOR SCHIEFFER: I think that with regard to the 100% testing, I think I've already answered that question. With regard to having Japanese inspectors somehow in the process, I think we're open to how that would work. And I think we have indicated in the past that if somehow Japanese inspectors could be brought into the process, that that's something we ought to consider, and that's something that we would consider. But tonight, I don't think it is an appropriate time to say what we will or really won't do in the process. We've just gotten the report here. It's a 475-page report. We delivered it to Japan in a quick manner. It is a thorough report. And I think it is something now that we can begin the process of dialogue with the Japanese government as to what will be acceptable to them to reopen the market.

QUESTION: Can I ask, you met with Agriculture Minister Nakagawa today. Can I ask what you discussed?

AMBASSADOR SCHIEFFER: I met with him at 6:30 this evening, and I gave him a general overview of what was in the report. The report itself was not finally made, so I wasn't able to deliver it to him at that point in time, but I gave him a general overview, told him that we were going to have it ready to deliver at nine o'clock tonight and that I was going to have this press conference to try to answer questions after the report had been delivered.

QUESTION: Richard Smith. I write for a number of agribusiness weeklies, including Livestock Weekly of San Angelo. What is your feeling about how the Japanese side reacts to what happened and to what is happening, the explanations from the US side and the explanations that you give yourself? Do you think that the fairness rules considerations of the explanations from the U.S. side?

AMBASSADOR SCHIEFFER: I think that we have to recognize that the United States agreed to observe certain guidelines in the export of beef to Japan. And we didn't observe those guidelines. And there was a mistake made, and it was an unfortunate mistake that has resulted in this ban being reimposed. It is frustrating to all those people who worked for two long years on both sides, both governments, to try get this problem resolved. It's frustrating that this guideline was violated, and that work basically had to be set aside. But I think that what we have to do is look forward and not backward in the sense of trying to regain the confidence of the Japanese consumer. And when we do that and this ban is lifted, then I'm confident that American beef will be consumed in Japan again as it was in prior years.

QUESTION: Satoko Hara. I'm from Nippon Television. I've got a couple of questions. First question is about Japanese consumers. I think that you might already understood that Japanese consumers are quite different from American ones. I guess that you might already understood that you need some special effort or special appeal to Japanese consumers to get the consumption back before the ban of the import. And if you had any plan to appeal Japanese consumers as an ambassador to Japan. I have some other questions.

AMBASSADOR SCHIEFFER: Let me answer that one first, and then you can ask another. I know that the argument is often made that Japanese are somehow different than Americans when it comes to food safety. I don't believe that's true. I don't believe Americans would want to eat beef if they thought it was dangerous or that it was somehow a threat to their health. They wouldn't do that. The difference is that Americans are satisfied that the standards that are in place produce that kind of product, and there has not been the decline in beef sales that there has been here in Japan. What we have to do is we have to appeal to that same desire for a healthy product to the Japanese, and we have to present our case in an open, transparent way. And I'm confident that we can do that. For whatever reason, that confidence has been shaken. We know that. We know that we have to overcome it, and this is a two-step process. We have to get the ban lifted. But the second part is we have to go to the consumer and tell them the case and assure them of the process that goes on that gets safe, healthy beef to them for consumption. I think we can do that. But this first thing is that we have to convince the government that the ban can be lifted without causing any danger to the Japanese people. And that's what we're about right now.

QUESTION: Thank you. My second question is about the timeline. Japanese government keeps saying that it would take quite a long time to explain about 475 pages report, definitely. How do you see the timeline to reopen the Japanese market?

AMBASSADOR SCHIEFFER: I hope that we can both move quickly to understand what's in the report and to ask whatever questions need to be asked. And hopefully we can have answers that will resolve it as quickly as possible. From an American standpoint, I'm satisfied that the product is safe today. But I understand that the Japanese don't agree with me on that, so I think we have our work cut out for us, but hopefully we can do that work and that we can resolve it in the not-too-distant future.

QUESTION: I'm sorry. One more question. Is Dr. Penn coming to Japan?

AMBASSADOR SCHIEFFER: Is Dr. Penn coming to Japan? I don't know about that right now.

QUESTION: Hello, I'm Momiko Hino from TV-Asahi. I'd like to ask you if you could elaborate a little bit more about concrete plans the United States will be taking to enforce the exporting mechanism, like in relation with the exporting companies in Kansas or other states?

AMBASSADOR SCHIEFFER: There are a series of recommendations that are in this report. Unfortunately, we didn't have time to translate the whole report and all that. But basically the recommendations all are to do more things on training, to do more things where more people have to sign off on these exports. For instance, there was only one signature that was required by the inspector on this shipment. Henceforth there will be two signatures that will be required. There is a whole set of recommendations that will be implemented with regard to noticing the people on the specific products that can be exported and all that. Instead of a blanket certification for a plant, the plant will receive detailed items that will say, for instance that things like, "you can't export veal chops," "you can't export T-bones and porterhouse steaks" - I've said it in layman's language, they'll say it in technical language, but that sort of thing - so that we can have more opportunity to check that these guidelines are being followed, more opportunity to see that they produce the kind of results that both governments and both publics want.

QUESTION: Are those plans in the report?

AMBASSADOR SCHIEFFER: They are. And Secretary Johanns had 12 items that he recommended, and I think there are another 15 that are in here. And I think we have a handout for that, don't we? Do we want to start handing those out, too? I'm sorry. We should have done all that at once.

QUESTION: Satoru Suzuki with TV-Asahi again. Simply, Mr. Ambassador, do you believe it possible for you to convince the Japanese government to reopen Japanese beef market before the midterm elections?

AMBASSADOR SCHIEFFER: I don't think we ought to postulate these things on the basis of when elections are held. I think we ought to just stick to the science and do it based on what is good science, not what is good politics. And I'm confident that we'll be able to be successful in that. Do you want to look at those recommendations for a minute before I leave? I think you will see that a lot of them are fairly technical in nature. Anybody else? Okay, well thank you very much.