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Cablegate: Ustr/Usda Beef Delegation Presses Taiwan On Beef

VZCZCXRO6654
PP RUEHCN RUEHGH RUEHVC
DE RUEHIN #2382/01 2960803
ZNR UUUUU ZZH
P 230803Z OCT 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 7210
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHBK/AMEMBASSY BANGKOK 3854
RUEHBY/AMEMBASSY CANBERRA 4621
RUEHML/AMEMBASSY MANILA 0171
RUEHUL/AMEMBASSY SEOUL 8970
RUEHGP/AMEMBASSY SINGAPORE 7034
RUEHKO/AMEMBASSY TOKYO 9165
RUEHWL/AMEMBASSY WELLINGTON 1889
RUEHCHI/AMCONSUL CHIANG MAI 0312
RUEHHM/AMCONSUL HO CHI MINH CITY 0140
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 06 TAIPEI 002382

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR, STATE FOR EAP/TC,USTR FOR STRATFORD, KATZ,
AND O'CONNOR, TREASURY FOR OASIA/TTYANG, COMMERCE FOR
4431/ITA/MAC/AP/OPB/TAIWAN
USDA FOR FAS/OA, OSTA, OFSO, AND OCRA

E.O. 12958: N/A
TAGS: EAGR ETRD ECON PGOV PREL TW
SUBJECT: USTR/USDA BEEF DELEGATION PRESSES TAIWAN ON BEEF
AND PORK MARKET ACCESS

TAIPEI 00002382 001.2 OF 006


1. (SBU) SUMMARY. During October 17-19 meetings with a range
of senior Taiwan officials and industry representatives, a
USTR/USDA beef trade delegation led by USTR Special Envoy
Ambassador Richard Crowder stressed the importance of rapid
Taiwan action in following the science-based guidelines of
the OIE to facilitate trade in the full range of U.S. beef
and beef product imports, including live animals. The
delegation also raised the pork issue, highlighting the need
for a ractopamine maximum residue limit (MRL) to be
established as quickly as possible. On beef, Taiwan
committed to abide by OIE guidelines, but outlined a
six-month process for an independent risk assessment that the
Ambassador sought to compress. On pork, the delegation was
told that establishment of a MRL will not be possible until
after upcoming elections (Note: most cited the January
legislative elections while COA cited the March presidential
election. End Note). Ambassador Crowder pressed Taiwan to
again show leadership regionally on beef access and called
for greater flexibility in application of interim measures to
permit commercially viable imports of U.S. pork until the MRL
can be established. END SUMMARY.

2. (U) The meetings took place in Taipei on October 17-19.
The USTR/USDA delegation was led by USTR Special Envoy
Ambassador Richard Crowder, and included Deputy Under
Secretary of Agriculture for Farm and Foreign Agricultural

SIPDIS
Services Ellen Terpstra, USTR Director of Agricultural
Affairs Leslie O'Connor, and USDA Office of Science and
Technical Affairs Animal Division Deputy Director Clay
Hamilton. The delegation was accompanied by AIT Agriculture
Chief, and for the meetings with the Vice Premier and the
Minister of Economic Affairs was also joined by the Acting
Director and the Economic Chief.

3. (SBU) In each of the meetings, Ambassador Crowder
expressed appreciation for Taiwan's status as an important
customer for U.S. agricultural products, but stressed that
lack of a rapid resolution to outstanding beef market access
and pork trade disputes could lead to an "explosive" U.S.
reaction and threaten progress on the overall U.S.-Taiwan
economic agenda. On beef, the Ambassador emphasized he is
carrying the same message throughout the region: Since the
OIE classified the United States as controlled risk for BSE,
the U.S. expects its trading partners to follow OIE
guidelines and adopt science-based trade regimes to
facilitate the full range of U.S. beef and beef product
imports. Regarding pork, the Ambassador highlighted the
importance of coordination between the Council on Agriculture
(COA) and the Department of Health (DOH) in lifting the ban
on ractopamine and quickly establishing a maximum residue
limit (MRL) for pork and other food imports containing
ractopamine. Although very limited U.S. ractopamine-free
pork imports are continuing under Taiwan interim measures
triggered by findings of ractopamine residue in U.S. pork
entering the market, the Ambassador underscored the
importance of using an MRL as the basis for a long-term
solution that provides full access to the U.S. pork industry.
He also repeatedly stressed the importance of keeping the
pork market open on a commercially viable basis (not just a
technically open market) in the short term through more
flexible interim measures applied to U.S. pork until the MRL
is established. He also pointed out the urgency of resolving
both of these issues, noting that "time is not our friend."

4. (SBU) At the Department of Health, the delegation met
with Deputy Minister Wang (Hsiu-Hung) joined by senior staff
including Food Safety Bureau Director-General, David Cheng.
After the Ambassador explained the dual purpose for his visit
to address the beef and pork issues, the Deputy Minister
responded that Taiwan had re-opened its market to U.S. beef
just last year, and must follow administrative procedures in
considering further access. She then turned to
Director-General Cheng, who outlined a 5-step process for the

TAIPEI 00002382 002.2 OF 006


review regarding BSE to include: conducting the risk
assessment, undertaking a U.S. field visit, holding a
Legislative Yuan (LY) hearing that would be open to the
general public, continuing a series of experts committee
meetings (the BSE Risk Advisory Committee), and as a final
step, holding an interdepartmental meeting that includes
participation of the COA and the Ministry of Economic Affairs
(MOEA).

5. (SBU) Cheng did not specify a timeline for the entire
process, but indicated the risk assessment to be conducted on
four categories of beef and beef products still denied access
would take about six months to complete. The Ambassador
called for a more rapid process, and Cheng indicated that
some steps might be collapsed into or done concurrently with
the period required to do the assessment (e.g., carrying out
a field visit). The Ambassador pointed out the OIE had
already done a risk assessment, and asked Cheng whether he
expected a gap in findings. Cheng replied that, "Taiwan will
follow OIE principles, but also has to follow due process"
and stated that he expected that Taiwan's science-based risk
assessment would be the same or similar to OIE. The
Ambassador stated the OIE guidelines should be followed by
members holistically, to which the Vice Minister agreed in
principle while emphasizing that, "Taiwan must have an
independent assessment to convince legislators and
consumers." She added that Taiwan has been rated as
"controlled risk" by the OIE "because it opened up to U.S.
beef, even though Taiwan has no domestic BSE cases." The
Ambassador closed on beef by again urging DOH for a speedy
process that would lead to full implementation of
OIE-consistent access, i.e., all products from animals of all
ages with appropriate specified risk materials (SRMs)
removed.

6. (SBU) Turning to pork, the Ambassador indicated that
shutting down imports or failing to resume trade on a
commercial basis would be explosive politically in the United
States, particularly in Congress. He indicated that moving
quickly to establish the MRL is critical and asked whether
DOH remains committed to doing this. In the meanwhile, he
said DOH appears to have greater flexibility for interpreting
the import regulations than the course currently being taken.
The Vice Minister responded that DOH does not have a
schedule for establishing the MRL, and needs the cooperation
of COA to lift the domestic ban before this can happen. In
the interim, she noted that one of her staff was dispatched
to Washington recently to discuss an improvement plan
involving a list of U.S. exporters that can self-certify to
meet the current standard of ractopamine-free. The
Ambassador expressed appreciation for these efforts, but
reiterated the need for Taiwan to communicate a date for
establishment of the MRL, and to show greater flexibility in
applying its current regulations to ensure commercially
viable import conditions prior to the MRL being established.
He indicated that the proposed list of plants wishing to
self-certify and ship ractopamine-free pork would not achieve
this objective. Cheng responded that new ideas are always
welcome for working toward a solution, and wished to maintain
open lines of communication on the issue. He said that if
ractopamine were not a banned chemical under COA authority,
DOH would be "ready to establish the MRL tomorrow.8 The
Ambassador expressed hope for quick action on the MRL and
interim measures to ensure trade, saying U.S. industry and
Congress are not patient enough for a long wait on this issue.

7. (SBU) Responding to the Ambassador's concerns, Vice
Premier Chiou I-jen said that beef will be politically easier
to resolve than pork, since Taiwan has very little domestic
beef production, and noted that Taiwan will conduct a risk
assessment on beef imports. Such an assessment should take
place on an accelerated timeline, stressed the Ambassador,
and should follow a holistic approach consistent with the OIE

TAIPEI 00002382 003.2 OF 006


guidelines, rather than a line-by-line mechanism that would
slow the process. Chiou observed that many members of the
previous BSE Risk Advisory Committee (RAC) had resigned after
the previous reviews, and it has taken time to re-invite them
to configure the new panel. He agreed to urge the DOH to set
up the beef review committee as quickly as possible. (Note:
The RAC has already been established, but has not yet
launched formal discussion on the U.S. case. End Note). The
Vice Premier cautioned that Taiwan's many small
pork-producing farmers are a potent political force, and said
it was "highly possible" that an MRL could not be set until
after the January 12 legislative election. The process on
pork is tougher, observed Chiou, as farmers have reacted very
negatively on the issue. COA Chairman Su's outreach efforts
met a further backlash, but the strength of reaction is
slowly ratcheting down. Reiterating the importance of fast
progress, the Ambassador urged a flexible interpretation of
Taiwan import measures that would allow commercially viable
U.S. pork imports in the interim. The Ambassador also
stressed that the market needed to be open to all U.S.
companies, not just specialized farmers. Chiou mentioned
that the COA is trying to persuade pork farmers to follow the
"Japan model", in which an MRL for imports is established
while domestic use of ractopamine is still prohibited. AIT
A/DIR encouraged Taiwan to play a leadership role by becoming
the first economy in the region to move to full access for
U.S. beef and beef products, along with fixing the pork issue
quickly. President Chen is aware of U.S. interest and the
importance of resolving the beef and pork issues, concluded
Chiou.

8. (SBU) Minister of Economic Affairs Steve Chen
(Ruey-long), accompanied by Chief Trade Negotiator John Deng
and a range of senior Ministry officials, observed that
Taiwan remains one of Asia's biggest importer of U.S.
agricultural products, and wants to maintain good trade
relations with the U.S. Since Taiwan has virtually no
domestic beef industry, he explained, "there will be no
excuse for protection of local industry" in opening the
market to bone-in beef imports. Chen said he will encourage
his DOH and COA counterparts to address the beef issue in
accordance with WTO, and science-based guidelines. He
observed that DOH, in particular, is wary of criticisum from
the legislature and remains cautious. MOEA, however,
"supports opening the market" and "sees no reason to further
delay decision-making," stated Chen. He asked the U.S. to
provide Taiwan with information on how others in Asia,
especially Korea, are handling the beef problem. Noting
Korea's pending FTA with the U.S., Chen asserted that Taiwan
will be in a better position to facilitate expanded beef and
beef product imports if Korea does the same, but will not
necessarily wait for Korea until taking action on its own.
Congress will not approve the Korean FTA unless the beef
problem is fully resolved first, said the Ambassador.

9. (SBU) According to Chen, extensive media coverage has
made pork a more difficult problem to resolve than beef. If
the authorities lift the current ban, he asserted, there will
be a dramatic negative reaction from industry and consumers.
Given political sensitivities, Chen said Taiwan needs more
time to build an internal consensus on how best to establish
a ractopamine MRL. In reply, the Ambassador reiterated the
importance of moving quickly and reaching a commercially
viable solution in the interim. Failure to resolve the beef
and pork problems could affect the broader U.S.-Taiwan trade
relationship, he added. Chen replied that Taiwan always does
its best to accommodate U.S. requests, but noted a "sense of
frustration" that past efforts have not always been
recognized by the U.S. Taiwan, he maintained, has made
significant progress in improving IPR protection, but remains
on the U.S. IPR watch list. Taiwan is very eager to
negotiate an FTA with the U.S., he continued, but its
requests have not met with success. A/DIR emphasized the

TAIPEI 00002382 004.2 OF 006


importance of avoiding disruptions in pork trade while Taiwan
devises an MRL. "We will make maximum efforts to avoid trade
disruption," answered Chen.

10. (SBU) Taiwan National Security Council (NSC) Advisor
Connie Yang (Guang-hwa) said the beef import problem would be
easier politically to solve than pork, since Taiwan has very
little beef production and domestic political actors are so
focused on pork, a situation exacerbated by plans to reduce
the size of the LY in the next election. She cautioned,
however, that due to the impending election season, both
sides should "keep a low profile" as they work on a solution
for beef imports. On pork, Yang said the administration told
DOH to interpret current pork import regulations as flexibly
as possible so that some imports could continue, but stressed
that there would be no progress toward resolution on the MRL
until after the elections. (Note: all interlocutors focused
on the January 2008 legislative elections, while COA
mentioned the March Presidential election. End Note).
Ambassador Crowder again emphasized that the U.S. expects its
trading partners to follow OIE guidelines on BSE and adopt
science-based trade policies, and also reiterated that
foot-dragging on the beef and pork disputes is politically
unacceptable in Washington. He added that if import problems
aren't resolved quickly, it would negatively affect the
bilateral trade agenda and "will be difficult to keep the lid
on" negative reaction in the U.S. He concluded by saying the
beef issue is an opportunity for Taiwan to show leadership.
Yang replied that "there was a big cost last time for being
the frontrunner, when Japan and Korea didn't move ahead
similarly."

11. (SBU) The delegation met with local representatives of
the meat trade (including importers and U.S. suppliers) at
AIT,s Agricultural Trade Office. After providing a brief
introduction on the purpose of the mission, Ambassador
Crowder engaged the attendees in a one-hour question and
answer session to discuss the impact of these issues for beef
and pork trade with Taiwan. A quick stocktaking revealed
that very little U.S. pork is now being imported other than
"natural" product and limited shipments from another U.S.
supplier not present at the meeting. One attendee noted
Canadian pork has suffered less impact and wondered why there
have been no positive findings of ractopamine in Canadian
muscle cuts (note: there has been a case of detection in
Canadian pork offal). On beef, those attending expressed
strong support and appreciation for efforts to resume full
trade. The representative of one major U.S. packer estimated
this would increase their sales by 40 percent in Taiwan.

12. (SBU) In addition to the discussion with traders,
representatives of the U.S. producer of Paylean (the brand
name of the ractopamine hog feed ingredient) also attended
and offered insights on their unsuccessful efforts to date
gaining approval for the product in Taiwan. They also
briefed the delegation on the negative public relations and
confusion this issue has sown regarding the documented safety
of Paylean vs. other feed additives (beta-agonists) on the
COA,s ban list that are considered truly dangerous (e.g.,
clenbuterol). They also expressed a view that Taiwan has
misapplied its testing regime for ractopamine by using an
overly sensitive detection limit. As a result, the testing
program overseen by DOH is out-of-sync with the company,s
own published methodology for the product and stricter than
the limits employed in other countries, including Japan and
the United States.

13. (SBU) Council of Agriculture (COA) Vice Minister Lee
(Jen-Chyuan), joined by senior officials including Dr. Watson
Sung of the Bureau of Animal, Plant, Health Inspection &
Quarantine (BAPHIQ), opened the meeting by stating "relations
in agriculture are better than 2-3 years ago." He also
expressed hope that when launched, the Consultative Committee

TAIPEI 00002382 005.2 OF 006


on Agriculture (CCA) would allow the two sides to handle many
issues. Ambassador Crowder agreed and commended the
excellent overall agricultural trading relationship and
market we enjoy in Taiwan. He proceeded to outline the
purpose of the delegation,s visit to six Asian markets as a
mission "intended to deliver a clear, consistent message on
the need for OIE-consistent beef trade." He expressed
appreciation for Taiwan,s early leadership regionally on
reopening to U.S. boneless beef from animals less than 30
months of age, but said the current status of beef and pork
market access issues with Taiwan is "becoming a drag on
overall relations." With the pork trade basically shut down,
the Ambassador urged Taiwan to establish the MRL quickly
while finding an interim solution that allows our exports to
resume "on a commercial not technical basis." He stated
recognition that the issue involves the jurisdictions of both
COA and DOH, and that the solution had become entangled in
political considerations with upcoming elections in January
and/or March (depending on speaker), but warned that "time is
not our friend" given the explosive reaction being provoked
in the United States. The Ambassador stated with emphasis
that U.S. trade access is caught up in finger pointing
between DOH and COA on who is responsible for the current
issue.

14. (SBU) In response to the Ambassador,s points, the Vice
Minister stated that as a member of OIE, Taiwan would honor
its guidelines. He noted that Taiwan had shown goodwill with
its early resumption in 2005-06, and reiterated they would
follow the OIE. Dr. Sung echoed this point and said COA is
only responsible for "beef-related products other than beef."
He assured the Ambassador that pending U.S. requests on
certain beef-related products already deemed "safe to trade"
by the OIE, such as protein-free tallow, would be discussed
at the upcoming sanitary and phytosanitary (SPS) bilaterals
in November and "should be resolved." The Ambassador noted
that the long process for achieving OIE consistency on these
products combined with the process described by DOH on beef
"is not helping." He asked how best the overall review can
be handled across the two organizations. The Vice Minister
responded that "COA cannot commit on a timeline," given the
split responsibility with DOH, which controls the decision
for many beef and beef product imports. The Ambassador asked
whether COA would be supportive in the interagency process on
following OIE for beef, to which the Vice Minister replied,
"yes."

15. (SBU) On pork, the Vice Minister was far less
forthcoming, stating the issue "has extremely high political
sensitivity, having become wrapped up in the campaign for the
presidency." He also noted that protests by farmers had
forced the DOH Minister to sign a pledge not to act
unilaterally in establishing an MRL as long as ractopamine
remains banned for use domestically by COA. As a result,
according to the Vice Minister, "while a parallel system of
establishing an MRL for imports only is possible
theoretically, it is not possible politically." The
Ambassador asked how best to facilitate COA and DOH agreement
on setting an MRL, and then further stated that the U.S.
cannot abide having such a trade disruption when there is no
rationale for banning ractopamine at the same time Codex has
advanced an international MRL to the final step of its
process.

16. (SBU) The Vice Minister responded that he had asked his
staff to check on the international status of ractopamine and
found several cases of other economies with a policy similar
to what Taiwan had originally proposed. (Note: BAPHIQ's Sung
mentioned the EU, Japan, and New Zealand in this regard
without providing further details on how their policies
compared to Taiwan's situation. End Note.) The Vice
Minister added that Taiwan had not suspended U.S. pork
imports despite several detection cases. The Ambassador

TAIPEI 00002382 006.2 OF 006


responded that the market is only technically open, and the
situation has to be resolved before Congress takes action.
Furthermore, from the standpoint of our WTO relations,
Taiwan,s stance cannot be considered scientific, but rather
seems a policy to handle an election. The Vice Minister
stated the issue was &beyond his ability,8 but agreed to
carry the Ambassador,s message forward.

17. (SBU) COMMENT. We believe the visit fully achieved its
primary objective of conveying to key Taiwan officials the
need for moving to OIE-consistent access for the full range
of U.S. beef and beef products as expeditiously as possible.
Discussions with DOH, in particular, should serve to
invigorate and hopefully compress the review period. The
meeting with the Vice Premier and NSC Senior Advisor revealed
that the process has languished in part due to fallout among
committee members from the tough political environment
surrounding previous reviews that led to reopening for
boneless beef from animals under 30 months of age ahead of
other markets in the region. While it may be more difficult
to secure similar leadership this time, Taiwan officials
consistently stated a commitment to following the OIE
guidelines and providing for a transparent process.

18. (SBU) Resolution of the pork issue, while simpler
procedurally, looks far more difficult politically. We did
not detect any movement on the key obstacle for establishing
the MRL: overcoming resistance from farmers and legislators
to lifting the domestic ractopamine ban in the midst of a
tough election season. Ambassador Crowder pointed out in all
meetings that he is big on follow-up, and that given the
sense of urgency on these issues, the delegation and AIT will
be following up quickly and vigorously to explore ways of
restoring commercially viable conditions for pork trade (as
an interim step until an MRL is established) within the
context of discussions already underway with DOH to provide
an "improvement plan." END COMMENT.

19. (U) This message was reviewed by Ambassador Crowder,
Under Secretary Terpstra, and delegation after departing
Taiwan.
YOUNG

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