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Cablegate: Shanghai's Ciq Leadership Calls for More Cooperation

VZCZCXRO7460
RR RUEHCN RUEHVC
DE RUEHGH #0285/01 2100908
ZNR UUUUU ZZH
R 280908Z JUL 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7001
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 0333
RUEHGV/USMISSION GENEVA 0031
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 7571

UNCLAS SECTION 01 OF 03 SHANGHAI 000285

SENSITIVE
SIPDIS

STATE FOR EAP/CM AND EB
STATE PASS USTR FOR STRATFORD/WINTER/ALTBACH/KATZ
DOC FOR ITA - DAS KASOFF, CMCQUEEN, ESZYMANSKI
DHS/ICE FOR IPR CENTER-DFAULCONER
DHS/CBP FOR IPR RIGHTS BRANCH-PPIZZECK
TREASURY FOR OASIA - DOHNER/HAARSAGER/CUSHMAN
NSC FOR KURT TONG, JONATHAN SHRIER
TREASURY FOR OASIA - CUSHMAN, WINSHIP

E.O. 12958: N/A
TAGS: ETRD TBIO PGOV ECON BEXP EAGR CH
SUBJECT: SHANGHAI'S CIQ LEADERSHIP CALLS FOR MORE COOPERATION

SHANGHAI 00000285 001.2 OF 003


(U) This cable is sensitive but unclassified and for official
use only. Not for distribution outside of USG channels.

1. (SBU) Summary: The Consul General (CG) met July 17 with
China Inspection and Quarantine (CIQ) Shanghai Director General
Xu Jinji to discuss ways the two sides can work closer together
on information sharing. CG noted that the U.S. Food and Drug
Administration would soon open an office in Shanghai and
welcomed CIQ's close cooperation with FDA staff. Xu welcomed
more information and training opportunities. He also emphasized
Shanghai CIQ's willingness to resolve import and export issues
with the Consulate. In an earlier meeting at Shanghai's
Waigaoqiao Port, Xu outlined CIQ's efforts to improve food and
product safety and Shanghai CIQ's general operations. He
believes the primary reason unqualified products enter the
States are divergent requirements and regulations between the
two sides. End Summary.

2. (SBU) Xu was joined by Shanghai CIQ Vice Director Xu
Chaozhe, Division Director for Supervision on Health He Yuping,
Division Director for Supervision on Animal and Plant Zhou Guo
Liang, and Deputy Director for Foreign Affairs Li Riming. Other
Consulate officials included Agriculture Trade Office (ATO)
Chief Wayne Batwin, ATO Officer and Econoff.

Context: Holdups with CIQ Inspection Improving
--------------------------------------------- --

3. (SBU) In 2007, the Consulate encountered a spate of issues
with U.S. agricultural imports at Shanghai ports. Many of these
cases involved goods that had been previously imported but
suddenly faced restrictions or enforcement of previously
un-enforced regulations. The situation seems to be improving,
although issues still arise over U.S. agriculture imports. CIQ
has generally been very cooperative in resolving problems. It
has also been cooperative on other fronts, including meeting
with the Health and Human Services Secretary in May and Food and
Drug Administration officials in July. In addition, the
Consulate has also had successful training events with CIQ over
the past year. For example, ATO and CIQ Shanghai co-hosted a
Food Safety Seminar in October 2007. CIQ officials also
recently attended an industry training program arranged by ATO.
Other planned training programs have been postponed until 2008
due to budget consideration on the Chinese side.

Predictability and Transparency
-------------------------------

4. (SBU) At the July 17 meeting, the CG said U.S. exporters to
China would welcome additional guidance as China's regulations
governing food and product safety evolve. Xu also urged the
U.S. side to cooperate closer on providing guidance on U.S.
regulatory changes that affect exporters from China. Training
and clarification of standards would help the respective
countries' exporters meet standards and ultimately improve food
and product safety in both countries. In this regard, Xu
welcomed the establishment of an FDA office in Shanghai and
promised to work closely with the FDA staff.

5. (SBU) Xu noted that all new regulations and policies can be
viewed on CIQ's website, which provides information in English
as well as Chinese, though many foreigners are unaware of the
website. In addition, CIQ plans to establish a new hotline to
field inquiries regarding rules and procedures for CIQ
clearance. Xu added that this will be a channel for foreigners
to inquire directly for clarification on issues. Currently,
most foreigners inquire through their embassies or consulates.
CIQ also occasionally provides training seminars for foreign
traders and asks for feedback on CIQ's work. Deputy Director Xu
Chaozhe added that CIQ not only welcomes information and
feedback on U.S. imports to Shanghai, but also wants to hear
about quality issues on Shanghai area exports to the U.S.

U.S. Pork Exports Still an Issue
--------------------------------

6. (SBU) ATO Chief inquired whether there was any change in

SHANGHAI 00000285 002.2 OF 003


Shanghai's policy regarding inspection for ractopamine residue
in U.S. pork. (Note: U.S. pork producers have legally produced
imported meat with traces of ractopamine for years, although
Chinese regulations prohibit the importation of such products.
In early 2007, authorities began rejecting container loads of
U.S. pork products at the port of Shanghai because they
contained traces of ractopamine. However, in the fall of 2007,
Chinese officials temporarily suspended the enforcement of the
regulation. Recently, enforcement of the regulation appears to
have resumed. End note.) Director General Xu replied that
there was no change in China's policy on ractopamine. Traces of
ractopamine had been detected in U.S. pork and therefore U.S.
pork was subject to closer scrutiny. Since the E.U. prohibits
the use of ractopamine and no traces have been found in their
pork exports, CIQ does not inspect them as closely. Xu
emphasized there were only two ways for the ractopamine issue to
be resolved; either both countries agree to acceptable levels of
ractopamine, or the U.S. bans the use of the substance in pork.

CIQ's Olympic Work
------------------

7. (SBU) In response to CG's inquiry on the effect of the
Olympics on CIQ's activities, Xu said there was little
influence. However, CIQ has beefed up its inspection efforts on
steroids and other additives in food that might be consumed by
athletes.

Shanghai CIQ: Big Workload with Few Resources
---------------------------------------------

8. (SBU) During an earlier meeting with Consulate officials at
Shanghai's Waigaoqiao Port, Xu emphasized that food safety is a
concern for both countries and that Shanghai CIQ is doing its
part to ensure the safety of food being sent to the United
States from Shanghai ports. Deputy Director Xu gave an overview
of the Shanghai operations, noting that with only 1,600
employees, Shanghai CIQ must oversee quality inspection and
quarantine operations at China's busiest port. On a yearly
basis, Shanghai CIQ must inspect approximately 250,000 batches
of export goods and 330,000 batches of import goods, many of
which include plant and animal derived products. To conduct
these inspections, Shanghai CIQ maintains 13 branches in
Shanghai port facilities, cargo distribution centers, and other
locations, as well as 4 technical centers, one of which is
devoted to the inspection of imported and exported food.

9. (SBU) Xu pointed out that Shanghai is currently the world's
busiest port in tonnage terms, handling over 600 million tons of
cargo throughput in 2007, of which 250 million tons was foreign
traded goods. The value of the 2007 trade volume through
Shanghai's port totaled over USD 520 billion, a 21.5 percent
increase over the previous year. Container throughput is now 26
million TEU in 2007, a 20.4 percent increase over 2006.
Shanghai is now second only to Singapore in container
throughput. In 2007, Shanghai's port handled 256,226 batches of
food throughput, valued at USD 2.8 billion.

Shanghai CIQ Tough on Import and Export Quality
--------------------------------------------- --

10. (SBU) Of the imported batches of food, most came from the
United States, Canada, E.U., Australia, S.E. Asia and Japan, and
375 batches, or 7.89 percent of total imported batches were
found to be unqualified. The major reasons for import
disqualification include microorganisms, drug residue,
deterioration and exhausted expiration dates. According to Xu,
Chinese exports were disqualified mostly for drug residue and
pesticides reasons, although the qualification rate was 99.6
percent. He acknowledged that Shanghai does not have a
developed food production industry and the export value of food
exported through Shanghai is very small. In 2007, only 12,493
batches of food were exported with a value of USD 417.6 million.
Most of the food exports were destined for the U.S., Japan,
E.U., Australia, New Zealand, Hong Kong, and South East Asia.

SHANGHAI 00000285 003.2 OF 003


11. (SBU) According to Xu, CIQ relies on importers to provide
extensive data in advance of the arrival of the shipment. When
the shipment arrives in Shanghai, CIQ carries out an on-site
inspection, ensuring the documents match the actual goods. If
required, they will take a sample for inspection and testing.
Xu emphasized that lab tests and standards are based on
international standards. In particular, CIQ tests for
microorganisms, pesticides, heavy metals, trace elements,
chemical residues, parasites, pathogens and weeds. Goods that
qualify are released. Those that do not meet standards are
returned to their point of origin or sent for destruction.

12. (SBU) Likewise, CIQ ensures the quality of food exports.
All exported food and raw material derived from animal and plant
sources must come from farms and production plants that are
inspected and approved by CIQ. Xu said that CIQ relies on three
methods of ensuring quality from approved producers: self
inspection and control, regular sanitary inspections by CIQ
authorities and random sampling. He added that as of last
year, all goods that have been approved by CIQ must have a CIQ
mark on its outer packaging. In addition, all food export
enterprises must indicate their name on every product's outer
packaging. This allows for traceability.

Divergent Requirements Allows Loopholes
---------------------------------------

13. (SBU) Xu said that because U.S. authorities do not require
the same information and certificates that the Chinese side
requires, there are some unqualified Chinese goods that enter
the United States. He also noted that all exported goods are
managed locally by the CIQ in the relevant jurisdiction. For
example, food produced in Jiangsu is subject to the oversight by
the Jiangsu CIQ authorities. However, if the food is exported
through Shanghai, Shanghai CIQ also carries out inspection on a
certain percentage. Shanghai CIQ checks to see if the goods
comply with the documents and they bear the CIQ mark. Only
after this inspection are clearance documents given so that
Customs will release the goods. Xu noted that CIQ officers
judge the level of risk of each type of food according to their
previous experience to target certain types of food for more
careful scrutiny. Pharmaceuticals and medical devices do not
fall under the purview of CIQ, only a small number of
traditional Chinese herbs.
JARRETT

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