Lambert Speaks to the Press After May Beef Talks

Dr. Charles Lambert
Acting Under Secretary of Agriculture, Marketing & Regulatory Programs
Tokyo American Center

May 19, 2006

ACTING UNDER SECRETARY LAMBERT: Thank you and good morning. It's a pleasure to be back here in Tokyo. We have just concluded meetings that were a full day Wednesday, a very full day yesterday, and then an abbreviated session this morning. The primary focus of this meeting was to present an audit report at the request of the government of Japan, as was agreed to in our last meeting. Barry Carpenter and his team of auditors have audited all 25 plants that were shipping product to Japan during the December 12 to January 20 period. The result of those audits has shown that all product that was produced conformed to the requirements of Japan, and that the plants knew and understand and were meeting the requirements of the market for Japan. Also, at the request of the government of Japan, the AMS auditors reviewed the 35 plants that remain on the list as being eligible to ship to Japan. The team - the auditors - were looking at the measures that were announced by the Secretary following the January 20 incident, looking for the implementation of those measures to be sure that the plants have implemented all new measures, that they maintain the understanding and their ability to ship product to Japan.

The government of Japan has accepted the report. There are a few minor paperwork procedural issues that some of the plants have to resolve before the audit teams from Japan come to visit the plants, but those measures must be corrected in May. We will provide the reports of the implementation of those correction measures, and they will all be prepared and finalized by the time teams come to audit the plants. I'd make it very clear that we have not reached a final agreement on the conditions for resumption of trade. We have a pathway. The government of Japan will sort out its thoughts; they will conduct additional risk communication and get feedback from the public, and then a final agreement as to when and timing and extent of audits that will follow will take place.

We have, on the U.S. side, tabled our proposal. Our position is that all 35 plants were eligible to ship to Japan at the time the provisions for export were suspended and that that suspension should be lifted at the same time for all plants, so that all plants can resume shipping and trade at the same time. It's been now four months, since January 20, that those import provisions have been suspended. Our position is that we need to resume trade as soon as possible and call for an implementation or a lifting of the suspension of provisions that prevent trade, to have that happen by the end of June. The Japanese government has indicated that that would be very tough. However, we have a saying in the U.S. that, gwhere there's a will, there's a way.h We stand ready to work with our counterparts in Japan to help facilitate those audits so that trade can resume in a timely fashion.

We feel that we have done our part. After the January 20 incident, the Secretary promised a full investigative report. We delivered a 475-page report. I was here in March to help explain unanswered questions involving that report. We've been asked to do the audits of the 25 plants. We have done that and found that all plants knew the rules and were producing product that conformed to Japanese requirements, and we've audited the 35 plants to show that they've implemented the new measures announced by the Secretary and that they can still produce and understand how to meet Japanese requirements. So we feel that we've done our part. We have asked the Japanese government to move forward in an expedited fashion so that we can lift the suspension and resume trade.

Before I close, I would like to mention just something that I mentioned briefly in my opening comments on Wednesday. We do have and continue to gather new scientific evidence in the U.S., and I want to put this into perspective as to the true risk of BSE and the true risk of beef. This new analysis of seven years of data in the U.S. is conducted by models that are internationally recognized as being reviewed by international specialists. We expect that peer review to be done very shortly. But this analysis shows that there is an exceedingly low level of BSE in the U.S., the most likely number being between four and seven head of cattle in our herd of 42 million cattle. We are absolutely confident that the measures that we've taken - the SRM removal, the feed ban that we have in place - are more than adequate to protect human health and the herd health. The additional measures that we have agreed to in order to export to Japan exceed any international requirement from the World Animal Health Organization or the international standards, so we are absolutely confident in the safety of U.S. beef. We urge the suspension be lifted so that trade can be resumed. I look forward to answering any of your questions.

QUESTION: I'm Toshio Aritake from BNA. You mentioned about a few minor issues that still need to be resolved - I forgot how you termed it. What are those few minor issues?

ACTING U/S LAMBERT: I should have mentioned the full report and the executive summary - the audit report - is available. It will be on the Embassy website, and I think there will be a linkage to the translated version, as well. But we lay out in there what some of those issues are. I would point out that the nonconformances must be corrected before the end of May and before the auditors review the plant. None of them affected the usability of the product themselves; they more pertain to the process that the plants have in place. One example is that one of the packing plants did not have page numbers on their quality assurance manual. So I mean, it gets down into very small details, but it goes to the requirements that these plants must follow and the process they have to have in place.

QUESTION: Miho Yoshikawa with Reuters. You said that no times have been set for the restart of trade, but would you say the end of June is one target date you have in mind for the restart of trade? Thank you.

ACTING U/S LAMBERT: I would say that is a target date - the end of June is a target date for all 35 plants to be eligible to ship from the U.S. I would also absolutely reiterate that that has not been agreed to by the government of Japan; those discussions are still ongoing. We will continue the consultations, especially as the government of Japan does their risk communications and gets feedback from the public, we will continue those consultations. But our objective is to get the auditors to the U.S. as soon as possible and to have all 35 plants eligible to ship before the end of June.

QUESTION: Richard Smith from Capital Press of Oregon and Livestock Weekly of Texas. I see Mr. Carpenter here was [inaudible] - I'm sorry I came in late, maybe I missed something. Was there anybody else here on your team? And please tell me the names and the titles.

ACTING U/S LAMBERT: Yes, a couple of the team members have already left. Ellen Terpstra, who is the Deputy Under Secretary for Farm and Foreign Services, was a member of the team. Dr. Bill James, who is with the Food Safety Inspection Service. Barry Carpenter with the Agricultural Marketing Service. AMS does the export verification program and the audits consistent with a plant's ability to meet the criteria of the export verification program. We also had Anne Dawson, with the Foreign Agricultural Service and representatives from the Embassy - Dan Berman and Clay Hamilton and a number of other support people from the Embassy.

QUESTION: My name is Maya Kaneko from Kyodo News. I was wondering, did you agree with the Japanese government on the timing of when the Japanese inspectors visit the 35 plants? And also, did you discuss the possibility of having Japanese inspectors to accompany U.S. officials during snap inspections at those facilities?

ACTING U/S LAMBERT: We did not agree to a timeline as to when those inspectors would visit U.S. packing plants. Wefve said that we are willing to work to facilitate that any way possible, to make that happen as soon as possible. But as I said, the government of Japan is still contemplating some additional steps that they need to take. Also, they need to go through this period of risk communication and consumer feedback. So there's been no agreement yet as to the dates and/or how those plant audits might be structured. We did reach agreement that Japanese inspectors could accompany Food Safety Inspection Service and AMS inspectors during unannounced audits, or as you call them, gsnap audits,h where they would periodically, given a set of reasons, conduct audits of a packing plant on an unannounced basis. And we have agreed to allow Japanese auditors to accompany those teams.

QUESTION: I'm Kyoko Hasegawa from AFP. Could you say that you've reached an overall agreement on the conditions of resuming U.S. beef imports to Japan so far?

ACTING U/S LAMBERT: I would say that we reached agreement on the audit report. Japan did accept the audit report, and that was the primary focus of this meeting. We've talked about next steps and a pathway to the resumption of trade. But, as I said, there are still details to be worked out, and there are no agreed-to timelines as to when those next steps may follow.

QUESTION: My name is Yamada from Japanese Agriculture Newspaper. In the expert meeting at this time, another topic had to do with the risk communication sessions that the Japanese side is holding. And the Japanese government explained this. And as far as the U.S. government is concerned, what are your views with regard to the opinions voiced by the consumers in the risk communication sessions, and how did you respond to the Japanese government on this?

ACTING U/S LAMBERT: The government of Japan did present the results or feedback from the risk communication sessions that they had following our presentation of the investigation of the January 20 incident. And we understand that feedback. As I say, we will continue to work to regain consumer confidence. We are very absolutely confident in the safety of the product that we produce. We have additional scientific evidence that says that the incidence of BSE is exceedingly low to start with. We are taking measures to assure the safety of U.S. beef for U.S. consumers and international consumers. We've agreed to additional conditions for access to the market in Japan, so we are absolutely confident of the safety of our product. We are willing to continue to communicate that message, to work with Japanese officials to develop their message as they do risk communication, to work with industry. Once we regain access to the market, we are willing to continue to do outreach - consumer outreach, consumer education and information - to regain the confidence, to regain our position in this market.

QUESTION: Hi, Joe Coleman with Associated Press. I was wondering if the department has done any forecasts on once you regain access to the market, how long, if ever, do you expect it will take to get to the levels of sales that you had before the original closing of the market in December 2003?

ACTING U/S LAMBERT: To be perfectly honest, I guess our focus has been getting through the necessary steps to assure that we regain access to the market so that we can begin to offer our product to Japanese consumers again. To the best of my knowledge, there have not been any projections of when we might regain our status that we had prior to December 2003. But again, I am confident in the safety of the product. We have a very high-quality product that was strongly in demand in the Japanese market prior to December of '03. We're confident that we can compete on price and quality. And we're confident in the absolute safety of the product. And as I say, we are willing to do the work to regain consumer confidence and rebuild that market base. So I don't think there are any projections at this stage, but I'm absolutely certain in the product and in our will to do what it takes to regain market share and be competitive in this market.

QUESTION: Dr. Lambert, you talked about consumer outreach. Could you please give us some examples of things that the U.S. government or other entities would like to do to regain the confidence of Japanese consumers?

ACTING U/S LAMBERT: I don't know if there's a program in place at this stage. We do have industry funds, industry associations. The U.S. Meat Export Federation has resources that can be used as matching funds with market development funds in USDA. We have conducted in the past, everything from videos to in-store demonstrations, to tasting panels, recipe availability, pamphlets that spell out the safety and the wholesomeness of the product. So I think there are any number of media and methods - that are proven through communications and public relations and consumer outreach methods and focus groups - that we can utilize and that the industry has expertise with, that we would expect to see brought into play once the market is open and once consumers have the opportunity to access U.S. products.

QUESTION: Kaori Hitomi from Associated Press - AP Television. If only you could say this, but after three days' meeting here in Tokyo, can you say that you are optimistic that the Japan side would agree to your ideas this time? And then the Japan side would agree to actually give you open market access as you said, as soon as possible?

ACTING U/S LAMBERT: I think we're optimistic. As I said, there are no absolute timelines, but we did have very thorough and frank discussions over the past two or three days. We were able to gain acceptance of the audit report, so wefve achieved that objective. We've laid out our position. We stated the facts of the matter and urged the Japanese side to consider our positions, and they've indicated that they will do that. So yes, we are optimistic. We will gain access to this market. We do not have a date certain or an absolute time certain, but we are optimistic that we will persevere in the end, and we will have our product in front of Japanese consumers in the relatively short foreseeable future.

QUESTION: Were there any discussions about limiting the American beef available in Japan to cattle 20 months or under? I know that the U.S. was very interested in raising that limit. I'm wondering if that was part of the discussions of the past three days.

ACTING U/S LAMBERT: There was no discussion. The current agreement - the agreement that we reached in the October 23, 2004 shared understanding - was that for a period of time, the U.S. would market or offer beef from animals 20 months of age or younger. Consistent with that agreement, that is the objective that we have, to resume trade with that product. I've not made any secret that longer-term, our objective is to get more consistent with OIE guidelines. Those guidelines would say that we could legitimately ship beef from cattle of any age, with a designated set of specified risk materials removed. Our stated objective has been to at least expand the age from 20 months to 30 months, consistent also with the agreement that we had in the shared understanding of October 23, 2004, that once trade resumed for a period of time at the 20-month level, we would come back, work with international specialists from the World Animal Health Organization or the OIE, the World Health Organization (the human health organization), and work with Japanese and U.S. technical specialists with an eye to expanding that age limit. We're not there yet. Our primary focus is to regain access for this product, and we'll address those other issues another day.

The OIE - since I mentioned it - their annual meeting is next week. The BSE chapter is also a part of those discussions, and we continue to support and rely on those international guidelines as we discuss reopening markets for U.S. beef, not only in Japan but around the world.

QUESTION: Ishii from NHK. I'm talking about the future. Suppose that trade is resumed, and once again the same problem is detected. What will happen? This time around, there was a total ban, but the U.S. was saying that one facility could have been closed. That was where the discussion diverged. So in this case, there would be a total ban. In this case, pinpoint closure will be the order of the day. Did you discuss any such possibilities? Would you like to assert such possibilities, option of going about any cases in the future?

ACTING U/S LAMBERT: The measures that the Secretary announced on January 20, or right after the January 20 incident, will minimize the likelihood of an incident like January 20 from happening again. We have a number of measures, including closer communication between AMS and the food safety inspectors, more education and training for those inspectors. We have an approved product list that all export certificates and all the product on those export certificates are compared to and assured that they are products that meet the requirements of Japan. That's a system that AMS has put into place since January 20. So there are a number of issues, there are a number of additional measures that have been put in place to assure that the probability of an incident like this happening again will not occur.

Given that, we do realize that we are expecting perfection in an imperfect world. That mathematically, the probability of an event never happening can never be zero. So we are of the opinion - and we have an agreement - in the agreement that was reached with Japan, that in the case of an incident of noncomplying product, that USDA will be notified and that we will immediately suspend the exports and suspend the production of that plant until those errors or those misspecifications are corrected. So we have pointed out that those provisions exist. We have urged that they be referred to and utilized in the future, but at this stage, as I say, our primary focus is on reducing the likelihood of these happening to the absolute human extent possible, and to resuming trade under those conditions.

QUESTION: Just to clarify that last one: So as of yet, you have not gotten any guarantee from the Japanese government that, in the case of an incident like what happened on January 20th, you haven't agreed on some sort of procedure. In other words, there's no guarantee that if two months down the road something else shows up like this, that the Japanese won't just close down the market again.

ACTING U/S LAMBERT: As I said, Japan is still considering a number of issues that have been discussed. They're going through their consumer outreach risk communications. And we will continue to do consultation as to the conditions for market reopening, and those details have not been worked out yet.

QUESTION: Then, can I put that question bluntly? If the market reopens and just, for example, somebody sends a shipment with some backbone again, there's right now no agreement that Japan could again close the market?

ACTING U/S LAMBERT: There is an existing agreement. The agreement that was in place last time would say that they would contact us, that we would suspend the shipments. We would delist that packer-processor for a period of time until they were able to bring their processes into conformance. So yes, there is an agreement. Our message has been that we expect that agreement to be lived up to should there be an event like this in the future.

QUESTION: This begs the question whether the Japanese violated that agreement on January 20.

ACTING U/S LAMBERT: I think we've been on the record as saying we felt that that was a gross overreaction. Other countries around the world generally reject the product or reject the load. In a worst-case scenario, they suspend shipments from a processor - but rarely. I think never have we seen where on a first violation, in a situation like this, would the whole system be delisted, and I think I was on record at the last press conference I had here saying we felt that was an extreme overreaction, and would urge that consideration be given to not follow that path in the future.

QUESTION: I think there recently occurred three mistakes in beef shipments to Hong Kong, and recently there was another case to Taiwan. Did you discuss with the Japanese government the impact or influence from those cases, or impact on Japanese consumers, from the Hong Kong and Taiwan cases?

ACTING U/S LAMBERT: We had, I guess, a long discussion, a long explanation of the situation both in Hong Kong and Taiwan. And it's important to recognize, to understand, that the specifications in those markets are completely different than in Japan, and that the conditions for those product misspecifications are completely different. In Hong Kong and Taiwan, the specification that we have is for boneless beef only. Prior to December of '03, the U.S. was shipping boneless beef to those markets, and there are tolerances - there are commercial tolerances - for a certain number of pieces of bone in boneless product.

In the NAFTA market, we have a harmonized agreement with Canada and with Mexico that says we accept, in trade among ourselves in boneless beef, a certain amount of product defects, or small pieces of bone. In product that we import from Australia, we recognize and honor those specifications. So the commercial guidelines, the historical commercial practices for the trade in boneless beef, has been to have a tolerance for a certain number of product defects or of bone chips, and that those are commercial issues to be resolved between the buyer and the seller or the importer and the exporter. So that's been traditionally the way that that business has been conducted.

In negotiating the reopening of these markets, OIE guidelines say that you can trade boneless beef without regard to the risk status of a country for BSE, that boneless beef is a risk-free product, but in the interpretation of "boneless" in the post-BSE era, if you will, some of these markets have chosen to interpret "boneless" as meaning zero tolerance for bones, which is a complete change from the tolerances that we've seen, the commercial tolerances, and a complete change from the marketing practices of the past.

It's absolutely important to understand that there's no food safety issue here. The tissues that are remaining - the bone that's remaining - are not SRMs. They do not contain any of the nervous system tissue that would contain prions. It's also important to recognize that this is product from animals of 30 months of age, and so in OIE guidelines, again, these tissues are not defined as SRMs for a country of our risk status. The only true SRMs for a country of our status are tonsils and distal ileum. So it's a commercial issue. There's no food safety. Some countries are interpreting this more literally than others. We are working with those countries to either gain tolerances for bone chips consistent with the commercial code, or to negotiate a broader specification, such as we have with Japan, which allows for bone-in product, and that would reduce the incidence of this a lot.

MODERATOR: Any other questions? So that will be all?

ACTING U/S LAMBERT: If there are no other questions, I would like to thank all of you for your attendance and attention, but also, we've had, I think, some very direct and forthright discussions with our counterparts in Japan over the last two-and-a-half days. They've been very productive. We've approached it from a problem-solving approach, from a cooperative communication approach. Wefve been able to resolve the issue of the in-plant audits and resolve at least an idea of what it takes to resume trade here. And so, I'd like to publicly thank you, and also thank our counterparts in Japan for a productive last two-and-a-half days. Thank you very much.