Political Infighting Could Result in Increased Beef and Pork Duty Rates on April 1...
Dear USMEF Members,
Over the past few months, we have made a number of changes to the Daily News that USMEF reports to you. Our goal is to bring you more insights into important and timely global issues from the senior-level staff we have stationed around the world representing the interests of the U.S. red meat industry.
Today, we are pleased to unveil a new format for our daily news. On some days, we may only have one USMEF-related news story to report. In cases like this, we will report the news to you under identifying banners, such as Trade Policy, Technical Update, Regional Developments, USMEF Program Activities, Market Intelligence, USMEF Perspective or News Release. At the end, we will add links to non-USMEF news articles we think you may find of interest.
While our goal is to give you useful and timely information, we understand that you receive information via e-mail from many sources, so we want to minimize the clutter in your inbox. When practical, we will combine multiple USMEF news briefs under the USMEF Daily News banner – typically e-mailed to you around 1 p.m. Denvertime. In most cases, we’ll provide you with a brief introduction to the article that you can read at a glance. If you want to read more, the full article is a single click away via a link to our Web site, www.USMEF.org. If important news surfaces later in the day, we’ll pass it along to you as quickly as possible.
Over the coming months, we will be making updates to our Web site as well, to add content that our members, and the media who report on our issues, will find useful.
If you have any questions, comments or suggestions regarding the Daily News you receive from USMEF or our Web site, please contact Jim Herlihy, our VP of Information Services, at jherlihy@usmef.org. We appreciate your input and your partnership in creating new opportunities and developing existing international markets for U.S. beef, pork, lamb and veal. Our goal is to provide news you can use for all of our members across all industry sectors.
Sincerely,
Philip M. Seng
P.S. If you are using Microsoft Outlook, the color banner at the top of the USMEF Daily News message may not appear the first time you receive it. If you right-click on it as a “trusted” e-mail source, the e-mail will appear as intended without any further actions necessary. Otherwise add migoe@usmef.org to your safe sender list.
Japan
Political Infighting Could Result in Increased Beef and Pork Duty Rates on April 1
Import duties on imports of beef into Japan could revert to 50 percent from the current 38.5 percent on April 1, due to political infighting between Japan’s governing and opposition parties. A similar but more complicated scenario could face pork imports, where duties could increase from the current 4.3 percent to 5 percent.
The special duty rates (called bound rates) for imported beef and pork are linked in a bundle of taxes that need annual approval by Japan’s legislature, the Diet. This vote involves more than 110 pieces of legislation and affects at least 280 agricultural products. The main opposition party, the Democratic Party of Japan (DPJ), which controls the legislature’s upper house, has focused on the highest profile tax involved — a 25 yen per liter gas tax — which funds road and infrastructure work. The DPJ regards opposition to this as a popular political position because of high oil prices and their effect on food prices. Opposition to the gas tax was the DPJ’s justification for rejecting passage of the bundle of special taxes. Failure to pass that bundle by March 31 will cause the pork and beef import taxes to revert to their higher levels on April 1, the beginning of Japan’s fiscal year.
In January the ruling Liberal Democratic Party (LDP) was planning to force the tax package through prior to March 31 by passing a bill in the Lower House and then submitting it to the Upper House. Under the rules, the DPJ could have delayed passage for 60 days, but after that time it would have become law if the Lower House had passed it again with a two-thirds majority. Instead the two parties came to an agreement that led to passage in the Lower House of a new version of the bill on February 29. Now, however, the DPJ is threatening to renege on this agreement and to defeat the bill in the Upper House, making it impossible (due to the 60-day rule) for the Lower House to force passage of the bill before April 28.
There has been some progress in the last few days, but nothing final will be determined until the middle of next week at the earliest. Some government officials expressed optimism that the issue will be resolved before the end of the fiscal year, perhaps by separating the gas tax from the other taxes, allowing debate on it to continue without preventing passage of the rest of the legislation. This would keep meat import duties at their current levels.
USMEF reported February 20 on the effects that Japan’s political infighting could have on the U.S. beef and pork export industry.
USMEF continues to monitor the situation and will provide updates on how this will affect trade as soon as changes occur. USMEF is also working with the U.S. Embassy to get clarification from the Japanese government on the exact rates pork imports would face if the tax bundle is not passed by March 31.
INSIGHT From Taiwan
Politics Behind Capricious Policy Changes on Pork Imports
The Taiwan government’s decision earlier this month to roll back the limit of detection (LOD) for Ractopamine in imported pork reflects the heightened political power of Taiwan’s hog farmers in advance of key Presidential elections this Saturday, March 22.
On March 4, 2007, USMEF and the U.S. Department of Agriculture (USDA) were informed that the Limit of Detection (LOD) for Ractopamine in imported pork shipment would be moved from 1 part per billion (ppb) back to 0.3 ppb for muscle products and 0.5 ppb for offal items. The 1 ppb LOD had been in effect since Dec. 10, 2007, when it had been established based on a review by Taiwanese authorities of validated scientific laboratory methodologies.
Although there are now less than 13,000 hog farms in Taiwan, the hog-raising and pork industry is viewed by contending political parties as being able to deliver a voting block of upwards of 100,000 votes. Despite suffering a major loss in January’s legislative elections, recent polls show the ruling Democratic Progressive Party’s (DPP) candidate Frank Hsieh only 10 percentage points behind Kuomintang (KMT) candidate Ma Ying-jeou. The pro-independence DPP has ruled Taiwan for the past eight years.
While there is a major gulf in political vision and platforms between the two dominant parties, both have shown sympathy for calls from hog raisers to increase border protection from pork imports. Low hog prices and average per-head losses of up to $30 (U.S.) for the industry led to a June ’06 call by the Republic of China’s Swine Association to increase inspections of imported U.S. pork for Ractopamine. Tightened inspections began in late June, resulting in detections of Ractopamine in two U.S. pork shipments in early July 2007.
On Aug. 20, 2007, more than 3,500 demonstrators, including members of local consumer groups, and 30 legislators from both major parties rallied at Taiwan’s Department of Health (DOH) to protest a draft proposal issued the previous week by the DOH calling for the establishment of a veterinary drug residue limit in foods (VDRLF) for Ractopamine. (Just prior to the public pre-announcement by DOH, a third shipment of U.S. pork had been rejected for Ractopamine violations.)
Following the Aug. 20 rally, Taiwan’s Minister of Health Hou Shen Mao agreed in writing to rescind the plan for the establishment of a VDRLF for Ractopamine, which protestors argued contravened an October ‘06 Council of Agriculture (COA) decree banning the use of all beta agonists in domestic livestock production. Because this original COA decree categorically banned the domestic use of beta agonists by name, including Ractopamine, observers believe hog farmers became particularly incensed over DOH’s attempt to establish a MRL (maximum residue level) that in practice would only apply to imports. The COA regulates local agricultural production, while DOH responsibilities include assuring the safety of foods, domestic and imported.
Two further detections of Ractopamine in imported U.S. pork shipments took place in September and November of last year, resulting in the near stoppage of all U.S. pork imports under Taiwan’s “five-strikes-and-you’re-out” inspection policy. Following discussions between the United States and Taiwan in November, U.S. exporters agreed to export compliant product to Taiwan under a heightened inspection regime.
Taiwan’s latest policy shift comes despite the United States meeting its commitment under an “industry improvement” plan for shipping compliant product. Observers believe the recent shift may be related to the white-hot pre-election political atmosphere, plus renewed public protests on Feb. 25 spearheaded by DPP legislator Chang Hwa-Kuan. In that incident, Legislator Chang complained to DOH Minister Hou that the 1 ppb threshold would still allow significant imports of Ractopamine-“tainted” pork from the United States.
Observers note that the upcoming presidential election could provide a fresh atmosphere for discussing current pork import rules. Such discussions may have to wait until after May, when the new president assumes office and announces a new cabinet. One critical question concerns the ease of amending current regulations for the domestic use of certain beta agonists such as Ractopamine. Officials and other analysts postulate that it could be difficult to implement an import MRL for Ractopamine unless regulations regarding domestic use are amended. USMEF understands the COA’s current beta agonist ban is a decree, not law, thus allowing regulatory change without passage through the Legislative Yuan and the rule-making process. Nevertheless, reports of illegal usage and detections of Clenbuterol and Ractopamine in Taiwanese livestock products have increased consumer awareness of the issue, which some believe may complicate efforts to change current domestic regulations.
The rollback of the LOD comes at an inopportune time for U.S. pork exporters. After battling low prices for much of last year, Taiwan pork prices have rebounded to more than NT $ 6,000/per 100 kilograms, a level which in the past has triggered increased pork import interest by Taiwan processors. Taiwan’s average live hog price on March 6 was U.S. $ .91/lb., far above the U.S. $ .66/lb. price of a year ago.
Importers and U.S. exporters have told USMEF that there is increased interest at the moment for U.S. picnics, and that such buying interest could remain high through the spring. However, the new lower LOD is likely to further discourage trade in U.S. pork except for those able to supply Ractopamine-free product. The reduction in the LOD is also a possible indicator that progress towards a science-based policy regarding beta agonists will be put on hold at least until after the elections.
The United States has been the largest supplier of pork muscle cuts to Taiwan in recent years, supplying approximately 50 percent of the average 27.5 thousand tons imported during the 2002-2006 period. Last year, the United States accounted for just under 48 percent of the 13,918 tons of total pork imported by Taiwan. Imports in 2007 were the lowest since 2001 due to low domestic hog prices.
Ukraine
Ukraine Is Not Issuing Import Permits
The U.S. Department of Agriculture (USDA) has informed USMEF that Ukraine is not issuing import permits for beef and pork. USMEF has no other details but is working to find additional information.
Dear USMEF Members,
Over the past few months, we have made a number of changes to the Daily News that USMEF reports to you. Our goal is to bring you more insights into important and timely global issues from the senior-level staff we have stationed around the world representing the interests of the U.S. red meat industry.
Today, we are pleased to unveil a new format for our daily news. On some days, we may only have one USMEF-related news story to report. In cases like this, we will report the news to you under identifying banners, such as Trade Policy, Technical Update, Regional Developments, USMEF Program Activities, Market Intelligence, USMEF Perspective or News Release. At the end, we will add links to non-USMEF news articles we think you may find of interest.
While our goal is to give you useful and timely information, we understand that you receive information via e-mail from many sources, so we want to minimize the clutter in your inbox. When practical, we will combine multiple USMEF news briefs under the USMEF Daily News banner – typically e-mailed to you around 1 p.m. Denvertime. In most cases, we’ll provide you with a brief introduction to the article that you can read at a glance. If you want to read more, the full article is a single click away via a link to our Web site, www.USMEF.org. If important news surfaces later in the day, we’ll pass it along to you as quickly as possible.
Over the coming months, we will be making updates to our Web site as well, to add content that our members, and the media who report on our issues, will find useful.
If you have any questions, comments or suggestions regarding the Daily News you receive from USMEF or our Web site, please contact Jim Herlihy, our VP of Information Services, at jherlihy@usmef.org. We appreciate your input and your partnership in creating new opportunities and developing existing international markets for U.S. beef, pork, lamb and veal. Our goal is to provide news you can use for all of our members across all industry sectors.
Sincerely,
Philip M. Seng
P.S. If you are using Microsoft Outlook, the color banner at the top of the USMEF Daily News message may not appear the first time you receive it. If you right-click on it as a “trusted” e-mail source, the e-mail will appear as intended without any further actions necessary. Otherwise add migoe@usmef.org to your safe sender list.
Japan
Political Infighting Could Result in Increased Beef and Pork Duty Rates on April 1
Import duties on imports of beef into Japan could revert to 50 percent from the current 38.5 percent on April 1, due to political infighting between Japan’s governing and opposition parties. A similar but more complicated scenario could face pork imports, where duties could increase from the current 4.3 percent to 5 percent.
The special duty rates (called bound rates) for imported beef and pork are linked in a bundle of taxes that need annual approval by Japan’s legislature, the Diet. This vote involves more than 110 pieces of legislation and affects at least 280 agricultural products. The main opposition party, the Democratic Party of Japan (DPJ), which controls the legislature’s upper house, has focused on the highest profile tax involved — a 25 yen per liter gas tax — which funds road and infrastructure work. The DPJ regards opposition to this as a popular political position because of high oil prices and their effect on food prices. Opposition to the gas tax was the DPJ’s justification for rejecting passage of the bundle of special taxes. Failure to pass that bundle by March 31 will cause the pork and beef import taxes to revert to their higher levels on April 1, the beginning of Japan’s fiscal year.
In January the ruling Liberal Democratic Party (LDP) was planning to force the tax package through prior to March 31 by passing a bill in the Lower House and then submitting it to the Upper House. Under the rules, the DPJ could have delayed passage for 60 days, but after that time it would have become law if the Lower House had passed it again with a two-thirds majority. Instead the two parties came to an agreement that led to passage in the Lower House of a new version of the bill on February 29. Now, however, the DPJ is threatening to renege on this agreement and to defeat the bill in the Upper House, making it impossible (due to the 60-day rule) for the Lower House to force passage of the bill before April 28.
There has been some progress in the last few days, but nothing final will be determined until the middle of next week at the earliest. Some government officials expressed optimism that the issue will be resolved before the end of the fiscal year, perhaps by separating the gas tax from the other taxes, allowing debate on it to continue without preventing passage of the rest of the legislation. This would keep meat import duties at their current levels.
USMEF reported February 20 on the effects that Japan’s political infighting could have on the U.S. beef and pork export industry.
USMEF continues to monitor the situation and will provide updates on how this will affect trade as soon as changes occur. USMEF is also working with the U.S. Embassy to get clarification from the Japanese government on the exact rates pork imports would face if the tax bundle is not passed by March 31.
INSIGHT From Taiwan
Politics Behind Capricious Policy Changes on Pork Imports
The Taiwan government’s decision earlier this month to roll back the limit of detection (LOD) for Ractopamine in imported pork reflects the heightened political power of Taiwan’s hog farmers in advance of key Presidential elections this Saturday, March 22.
On March 4, 2007, USMEF and the U.S. Department of Agriculture (USDA) were informed that the Limit of Detection (LOD) for Ractopamine in imported pork shipment would be moved from 1 part per billion (ppb) back to 0.3 ppb for muscle products and 0.5 ppb for offal items. The 1 ppb LOD had been in effect since Dec. 10, 2007, when it had been established based on a review by Taiwanese authorities of validated scientific laboratory methodologies.
Although there are now less than 13,000 hog farms in Taiwan, the hog-raising and pork industry is viewed by contending political parties as being able to deliver a voting block of upwards of 100,000 votes. Despite suffering a major loss in January’s legislative elections, recent polls show the ruling Democratic Progressive Party’s (DPP) candidate Frank Hsieh only 10 percentage points behind Kuomintang (KMT) candidate Ma Ying-jeou. The pro-independence DPP has ruled Taiwan for the past eight years.
While there is a major gulf in political vision and platforms between the two dominant parties, both have shown sympathy for calls from hog raisers to increase border protection from pork imports. Low hog prices and average per-head losses of up to $30 (U.S.) for the industry led to a June ’06 call by the Republic of China’s Swine Association to increase inspections of imported U.S. pork for Ractopamine. Tightened inspections began in late June, resulting in detections of Ractopamine in two U.S. pork shipments in early July 2007.
On Aug. 20, 2007, more than 3,500 demonstrators, including members of local consumer groups, and 30 legislators from both major parties rallied at Taiwan’s Department of Health (DOH) to protest a draft proposal issued the previous week by the DOH calling for the establishment of a veterinary drug residue limit in foods (VDRLF) for Ractopamine. (Just prior to the public pre-announcement by DOH, a third shipment of U.S. pork had been rejected for Ractopamine violations.)
Following the Aug. 20 rally, Taiwan’s Minister of Health Hou Shen Mao agreed in writing to rescind the plan for the establishment of a VDRLF for Ractopamine, which protestors argued contravened an October ‘06 Council of Agriculture (COA) decree banning the use of all beta agonists in domestic livestock production. Because this original COA decree categorically banned the domestic use of beta agonists by name, including Ractopamine, observers believe hog farmers became particularly incensed over DOH’s attempt to establish a MRL (maximum residue level) that in practice would only apply to imports. The COA regulates local agricultural production, while DOH responsibilities include assuring the safety of foods, domestic and imported.
Two further detections of Ractopamine in imported U.S. pork shipments took place in September and November of last year, resulting in the near stoppage of all U.S. pork imports under Taiwan’s “five-strikes-and-you’re-out” inspection policy. Following discussions between the United States and Taiwan in November, U.S. exporters agreed to export compliant product to Taiwan under a heightened inspection regime.
Taiwan’s latest policy shift comes despite the United States meeting its commitment under an “industry improvement” plan for shipping compliant product. Observers believe the recent shift may be related to the white-hot pre-election political atmosphere, plus renewed public protests on Feb. 25 spearheaded by DPP legislator Chang Hwa-Kuan. In that incident, Legislator Chang complained to DOH Minister Hou that the 1 ppb threshold would still allow significant imports of Ractopamine-“tainted” pork from the United States.
Observers note that the upcoming presidential election could provide a fresh atmosphere for discussing current pork import rules. Such discussions may have to wait until after May, when the new president assumes office and announces a new cabinet. One critical question concerns the ease of amending current regulations for the domestic use of certain beta agonists such as Ractopamine. Officials and other analysts postulate that it could be difficult to implement an import MRL for Ractopamine unless regulations regarding domestic use are amended. USMEF understands the COA’s current beta agonist ban is a decree, not law, thus allowing regulatory change without passage through the Legislative Yuan and the rule-making process. Nevertheless, reports of illegal usage and detections of Clenbuterol and Ractopamine in Taiwanese livestock products have increased consumer awareness of the issue, which some believe may complicate efforts to change current domestic regulations.
The rollback of the LOD comes at an inopportune time for U.S. pork exporters. After battling low prices for much of last year, Taiwan pork prices have rebounded to more than NT $ 6,000/per 100 kilograms, a level which in the past has triggered increased pork import interest by Taiwan processors. Taiwan’s average live hog price on March 6 was U.S. $ .91/lb., far above the U.S. $ .66/lb. price of a year ago.
Importers and U.S. exporters have told USMEF that there is increased interest at the moment for U.S. picnics, and that such buying interest could remain high through the spring. However, the new lower LOD is likely to further discourage trade in U.S. pork except for those able to supply Ractopamine-free product. The reduction in the LOD is also a possible indicator that progress towards a science-based policy regarding beta agonists will be put on hold at least until after the elections.
The United States has been the largest supplier of pork muscle cuts to Taiwan in recent years, supplying approximately 50 percent of the average 27.5 thousand tons imported during the 2002-2006 period. Last year, the United States accounted for just under 48 percent of the 13,918 tons of total pork imported by Taiwan. Imports in 2007 were the lowest since 2001 due to low domestic hog prices.
Ukraine
Ukraine Is Not Issuing Import Permits
The U.S. Department of Agriculture (USDA) has informed USMEF that Ukraine is not issuing import permits for beef and pork. USMEF has no other details but is working to find additional information.