Cablegate: Staffdel Nelson Reviews Food Safety Issues

DE RUEHHI #1372/01 3520839
R 170839Z DEC 08




E.O. 12958: N/A

REF: A. HANOI 1320; B. HANOI 409; C. HANOI 398; D. HANOI 588 E. 2005
HANOI 2236

HANOI 00001372 001.2 OF 003

1. (U) Summary. A Staff Delegation from the House of
Representatives Committee on Energy and Commerce, consisting of
Chief Investigator David Nelson and Investigative Counsel Krista
Carpenter, visited Hanoi from December 4 to 8 to meet with
Government of Vietnam (GVN) officials to review U.S. food safety
concerns, detail recent changes in U.S. laws that likely will affect
Vietnamese fish imports, and learn about Vietnam's response to
melamine contamination in products imported from China. Vietnamese
interlocutors noted their concerns with what they viewed as
inconsistent application of the term "catfish" in U.S. legislation
and regulations to limit Vietnamese seafood shipments to the United
States. Following the visit to Hanoi, the delegation traveled south
to review several fish and shrimp farms in the Mekong Delta to see
how actual practice meshed with Vietnamese claims of proper health
and environmental management for the aquaculture sector (To be
reported septel by Consulate General Ho Chi Minh City).

Vietnamese Authorities Review Fish Safety Scheme
--------------------------------------------- ---

2. (U) Vietnamese authorities described a two-tiered regulatory
system designed to ensure food safety at the farm and at processing
facilities. Fish products make up a large percentage of Vietnamese
exports and the GVN works closely with importing countries to
maintain access to those markets. Nguyen Nhu Tiep, Deputy Director
General of the National Agriculture, Forestry and Fisheries Quality
Assurance Department (NAFIQAD), noted that the Ministry of Health
(MOH), Ministry of Industry and Trade (MOIT) and the Ministry of
Agriculture and Rural Development (MARD), of which NAFIQAD was part,
divided up responsibility for food safety, with each developing
technical regulations and quality standards. MARD covered food from
farm to factory, along with agricultural exports, while MOH handled
agricultural products sold on the domestic market. The Department
of Aquaculture within MARD monitored good aquaculture practices at
the farm level, notably sanitation and hygiene. NAFIQAD took over
monitoring from pond to processing plant, highlighted by routine
plant inspections to ensure compliance. [Note: Consistent with
international recommendations to decrease the number of ministries
involved in regulatory control over food, the Ministry of Fisheries,
including the predecessor to NAFIQAD, was recently reorganized into
MARD. End Note]

The Export Approval Process

3. (SBU) Tiep stated that only those processors that meet national
standards could export. To ensure compliance with these standards,
inspections normally take place two to four times per year, but can
increase to twice monthly if the plant has problems. Samples of
fish taken during the inspections are sent to one of six regional
labs. If the results do not show contaminants, NAFIQAD approves the
facility for export. Over the past year, NAFIQAD has performed
roughly 2,000 inspections of the approximately 560 fish processing
facilities. Only about two to three per month receive a "C" or
lowest rating each month, which results in a suspension from
exporting. Per Vietnamese regulations, Vietnam will negotiate to
meet additional requirements imposed by trading partners, so long as
such requirements remain consistent with the WTO Agreement on the
Application of Sanitary and Phytosanitary Measures (SPC Agreement).
Currently, pursuant to an agreement with the European Union (EU),
MARD created a systems approach to controls, based on an EU
approved-based list of facilities. Per the EU agreement, only those
facilities on the list can export into the EU. The list may be
supplemented and reduced each year following an annual inspection
covering Vietnamese regulations, inspector competence, facilities
and the hygiene conditions of fish products.

4. (SBU) Food and Drug Administration (FDA) current practice and
legal interpretation of U.S. regulations does not support
pre-approval or testing of every shipment. (Note: Nelson noted that
new FDA lawyers in the incoming administration might have a
different view of FDA powers). Currently, pursuant to domestic
regulations, the GVN has approved over 400 of the 560 processors to
export to the United States. At this point, Vietnam relies upon
facility inspections and the integrity of documents, records and
labeling to ensure the quality of exports to the United States. It
performs additional testing only if regulatory officials detect
problems in internal processes or if they learn of tainted

HANOI 00001372 002.2 OF 003

shipments. Following detection of chlorophenicol in fish exports to
the United States in 2003, Vietnam voluntarily tested every U.S.
fish shipment under temporary "emergency" regulations, but stopped
in February, 2007 after Vietnam instituted various systems
corrections (Ref E). Since that time, NAFIQAD claims things have
been improved and has returned to a revised standard regulatory

Fish Farm Regulations

5. (SBU) At the MARD Department of Aquaculture (DA), Director
General Vu Van Dung and his staff reviewed GVN oversight of fish
farms. Currently, the DA is working with targeted fish-raising
provinces to form an overarching aquaculture plan to support the
sector. To ensure the quality of pond raised tra and basa fish, DA
manages all "farm" conditions through tests of 1) ponds and
surrounding areas to ensure water quality, 2) feed quality to
monitor and limit contaminants, and 3) drugs and micro-organism
products to prevent levels above those accepted by Vietnamese law or
by the laws of importing countries. DA also manages the breeding
process. Only fish farms that meet the above standards, maintain
sufficient pond barrier height to prevent contamination of fish
ponds, and can ensure no leakages from the ponds into surrounding
areas can receive certificates entitling them to export fish.

6. (SBU) Responding to Nelson's concerns that some exported fish
might be raised in unsanitary conditions (i.e., under houseboats on
rivers and fed domestic waste or from ponds flooded by polluted
river or rainwater runoff), Dung stated that all tra fish are raised
in ponds. While basa fish are raised in ponds and in rivers; the
"cage farming" in rivers that concerned Nelson had been banned since
the end of 2007. Some of these "cage farmed" fish still made their
way to local, small-scale wet markets, but were not likely to be
exported. DA also had guidelines to handle water quality in typhoon
and flood conditions to ensure contaminant-free fish. As with
cage-farmed basa, some small scale producers of pond-raised tra
might not comply with all requirements, but their products were only
consumed in local, domestic markets. The DA is working to group
these small farms into production cooperatives to upgrade the
fish-raising facilities and technologies.

Staffdel Discusses Impact of U.S. Legislation
on Vietnamese Fish Exports

7. (SBU) Nelson stated that the recently signed U.S. Farm Bill would
move jurisdiction over catfish imports from the Food and Drug
Administration (FDA) to the U.S. Department of Agriculture (USDA).
This change could significantly limit Vietnamese catfish exports to
the United States, he admitted, a fact not lost on our Vietnamese
interlocutors. Many noted the apparent inconsistency of earlier USG
holdings that basa and tra could not be labeled as "catfish" with
the current legislation's likely determination that these fish are
"catfish" for purposes of jurisdiction under the USDA food safety

Vietnam Struggles to Control Safety of Chinese Imports
--------------------------------------------- ----------

8. (SBU) At the Vietnam Food Administration (VFA), Deputy Director
Hoang Thuy Tien detailed Vietnamese problems with tainted products
imported from China, especially the recent wave of melamine
contaminated dairy products. Noting Vietnam's 600 kilometer land
border, extensive nautical boundary, and similarity in crops and
animals grown on both sides of the border, Vietnam tries to stem the
rising tide of uncontrolled Chinese imports. Tien noted both
government-to-government and province-to-province agreements to
control the cross border trade. While Vietnam tries to curb illegal
imports, many Chinese goods (standard and sub-standard) enter
through normal, regulated trade channels or through permitted local
transactions among parties along the border. Without sufficient
laboratory testing capacity on the border or in major cities, the
VFA struggles to determine the quality of imported food products.
In addition to melamine concerns, Tien acknowledged worries about
increased imports of Chinese poultry products (Ref B and C) and
vegetables to respond to shortages in northern Vietnam caused by
recent flooding. Tien did not believe that many Chinese products
were transshipped through Vietnam, instead finding their final
destinations in Vietnamese markets.

HANOI 00001372 003.2 OF 003

Vietnam's Response to Melamine Contamination

9. (SBU) Tien noted that Chinese dairy imports actually form a
relatively small part of the Vietnamese market, with most milk
products arriving from New Zealand, Australia, the Netherlands and
the U.S. Tien claimed that Vietnam only imported milk powder and
sterilized milk liquids from China (Note: Vietnam also imports some
processed foods from China, such as candies, that were found to
contain melamine and had no reported cases of illness due to
exposure to melamine. Though Vietnam recently had uncovered several
instances of melamine contamination in Chinese products, most
products had relatively modest melamine levels, though one test of
Yili brand milk from Sanlu found melamine at 5,000-6,000 ppm.
Following detection of melamine contamination, VFA suspended dairy
imports from China (Ref A). Once VFA detects contamination in an
imported product, it can require re-exportation, use for a different
(and acceptable) purpose, recycling or destruction. According to
Tien, contaminated products with a percentage of melamine below 2.5
parts per million could be used as animal feed, while products above
that level would be destroyed.

Vietnamese Drug Market

10. (SBU) According to Dr. Truong Quoc Cuong, the Director General
of the Drug Administration of Vietnam, the Vietnamese drug market is
valued at about 1.4 billion, with domestic production making up
about half the total. Both Vietnamese companies and joint ventures
operate in Vietnam and Cuong welcomed U.S. companies to enter the
market. Vietnam's medical product exports total about USD 27
million annually. Vietnam exports medical products (mainly
antibiotics, diabetes medication, contraceptive pills, and
anti-malarial drugs) to Eastern Europe, Africa and Latin America.
Vietnam produces active pharmaceutical ingredients such as
amoxycilin for the domestic market and exports to Africa. Vietnam
imports a variety of drugs from countries such as Korea, China,
India, Australia and France.

Vietnamese Drug Safety Efforts

11. (SBU) Per Cuong, his office's top priority was to ensure a
sufficient supply of good quality medicines. To do so, the Drug
Administration applies a total quality management system recommended
by the WHO for drug manufacturing. Cuong highlighted a steady
reduction since 1990 in the amount of counterfeit drugs sold in
Vietnam to 0.03 percent of all medications (an additional 0.3
percent were substandard) in 2007 (note: visits to local pharmacies
and other retail drug centers indicate a substantially higher
figure). API manufacturers operate under the same regulations as
drug makers. It does not yet export to the United States. The GVN
does not have the resources to check all domestic manufacturing
plants or imports and focuses on the most easily counterfeited or
most frequently substandard products, particularly those that may
cause harm to consumers, whether injection, herbal, tablet or
capsule. The GVN will also randomly sample drugs produced prior to
importation, GVN officials try to check the manufacturing facilities
and will continue to do so as necessary after imports commence.

12. (U) This cable was coordinated with Consulate General Ho Chi
Minh City.


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