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MEMO/97/37

Brussels, 3 April 1997

EU/US DISCUSSIONS ON VETERINARY  EQUIVALENCE AGREEMENT

Following the conclusion of the 1993 WTO Agreements in the agriculture sector, the European Union (EU) launched an initiative to negotiate broad veterinary agreements with its major trading partners.

So far, EU veterinary negotiations with third countries have generally been successful. Last year, the EU signed the first agreement with New Zealand. Technical agreements have been reached with a number of other countries including Canada and the Czech Republic. The EU is currently in negotiations with Australia.

The EU regrets that it has not been possible to reach a similar agreement with the US by the April 1 deadline. The United States is the only country with which the EU is in disagreement on the issue of public health. The European Union still hopes to continue negotiations and to come to an agreement soon with the United States.

From the EU's perspective, the difficulties standing in the way of an overall agreement are not many, and relate to the issues of decontamination, the chilling of poultry, and some red meat matters.

The EU maintains that the veterinary discussions are about public health and its protection. While veterinary measures have trade implications, this should not be the main concern. Putting the discussion in an exclusive trade context is therefore misplaced, and trade retaliation will only make the negotiations more difficult.

Questions/Answers:

What are the objectives of a veterinary agreement?

The objective of the EU-US veterinary agreement is to agree on the equivalence of our respective systems in order to facilitate trade in animal products while maintaining an appropriate level of public and animal health protection.

In particular, the veterinary agreements aim to provide a clear mechanism:

· for the recognition of equivalence concerning sanitary measures;

· for the application of the principle of regionalization (to control outbreaks of animal disease by isolating the affected local area rather than the entire member state/states where the disease has occurred);

· and for improving information exchange and cooperation on sanitary measures.

A fundamental element of these agreements is the recognition that the EU's level of protection can be achieved by equivalent, not identical, measures.

Which products would be covered under the veterinary agreement?

An EU-US veterinary agreement would cover all animal products for human consumption (including all meat, poultry, eggs and egg products, milk and dairy products, fish, seafood, etc.), live animals, embryos and animal semen, pet food, as well as all rendered products (fat etc.) and other animal by-products (hides, manure, etc.).

Does a veterinary agreement mean that the US exporting industry has to comply with all the details of EU legislation?

No. Under a veterinary agreement, the EU can also accept equivalent measures as long as they meet the level of public and animal health protection required of the EU industry. In order to be able to assess whether an exporting country's measures provide that level of protection overall, the sanitary measures must be compared step-by-step.

For the EU, equivalence is not simply a process of comparing end-product specifications. Rather, it is an assessment of the overall production hygiene and an evaluation of the exporter's ability to deliver an effective inspection system. In this respect, the EU and US sides are not at issue over the color of walls or the shape of molding as long as hygienic sanitary standards can be achieved.

It is worth noting that many of the EU's sanitary standards today originated in the United States. They were applied in Europe at the request of US inspectors some 20 years ago.

Without a veterinary agreement, what rules apply for exporting live animals and animal products to the EU?

Without a veterinary agreement, the EU's harmonized import conditions will apply to a number of products (including poultrymeat, egg products, dairy products and petfood) from April 1, 1997. These conditions correspond to the standards that have been in force within the EU for several years. In fact, the external application of the harmonized import conditions was due to take effect on January 1, 1997, but was delayed until April 1 for EU administrative reasons.

The EU's harmonized import conditions require that exporters can be certified as complying with the requirements of EU legislation. Without a veterinary equivalency agreement, the US has stated that it cannot sign export health certificates for the EU for certain products.

The consequences of failing to conclude an agreement would affect the main product areas as follows:

· Poultrymeat and Egg Products

For the EU, there are two areas of concern:

Decontamination of poultry carcasses. This practice is not allowed under EU legislation. If contamination occurs, EU legislation requires that the part must be removed by the meat inspector. In addition to trimming off parts of the carcass using a knife, only clean water - which in no way adulterates the product or leaves any residue - can be used in the form of a carcass shower after trimming. The use of hot steam would be permitted also.

Chilling Practices. Certain chilling practices used in the US do not line up with European standards. There is a risk of cross contamination if insufficient amounts of clean water are used in the chilling process. In fact, the European poultry industry has stopped using water in favor of air-flow chilling systems which totally avoid the risk of cross contamination.

The EU's Scientific Veterinary Committee recently looked at different decontamination methods (December 1996). The Committee's overall concern was that hygiene could be compromised, or risks being substituted, if decontamination were permitted. The Committee in particular expressed concerns about the use of hyperchlorinated water, but considered other decontamination products like lactic acid or TSP (trisodium phosphate) as not being harmful to human health, without recommending in any way the practice of decontamination.

In view of the immediate difficulties which the EU's import conditions pose for US poultry industry, the EU has therefore suggested a temporary solution specifically for the poultry sector. The spirit of this offer is to overcome trade problems until the veterinary equivalency agreement is reached. The offer would temporarily allow the use of TSP or lactic acid for decontamination.

· Pet Food:

Not very much will change for pet food exports. The EU has made every effort to ensure that the majority of the pet food trade can continue.

For non-mammalian protein (poultry and fish), the US can sign export certificates on April 1 because those products do not contain material that could come from animals affected by BSE. These will allow the US to produce and export these products according to their own standards. This covers about 70 percent of US pet food trade.

For mammalian protein in pet food, which makes up the remaining 30 percent, trade can take place if the producer uses 'low risk material', i.e. material from animals passed as 'fit for human consumption', and not from fallen or diseased animals.

· Red Meat Trade:

EU-US trade in red meat (e.g. beef, pork and horsemeat) is governed by the Red Meat Agreement which was concluded between the EU and the US in 1992 on the basis of the EU's Third Country Meat Directive. Among other things, the Red Meat Agreement reinforced on-the-spot dialogue between EU and US veterinarians and aimed at finding immediate solutions to public health questions while safeguarding beef and pork trade. This agreement is unlimited in time and will remain the basis for trade even if we fail to conclude the veterinary agreement. However, the list of of EU approved US meat export plants is to expire on July 31, 1997. A renewal is pending and requires a decision by the EU's Standing Veterinary Committee at the latest in July.

Concerning the conclusion of a veterinary agreement, one of the main outstanding issues in the red meat area relates to post-mortem inspection of pig hearts. The US has questioned the usefulness of this practice, which the EU conducts to assess the general health of the animal before slaughter. In recognition of the US side's research findings on this matter, the EU has proposed reducing inspections from 100 percent to 10 percent of market hogs destined for the EU market.

What trade actions does the United States intend to take?

According to the USDA News #0097/97 of April 1, EU meat exports to the US exceed $300 million annually, and will have to comply with US inspection requirements, or be stopped. If this figure covers the products affected by the non-completion of the veterinary agreement (i.e. poultrymeat, eggs and dairy), it is out of proportion to any comparable trade effect on US products. According to 1996 US trade data, the value of the affected US exports to the EU is $75 million for poultry and eggs. Consequently, the value of the affected trade is about $75 million. Furthermore, any retaliation by the US against the EU would be illegal under international trading rules.

Why does the EU not rely on end-product specifications?

We need hygienic standards 'from the stable to the table.' On this the EU and US agree. It is impossible to check every steak or chicken to ensure it is safe. Good hygienic practice must be followed throughout the production process, just as a chef works in a hygienic way from the beginning to the end and does not only rely on cooking to make the food safe.

If the burden of control is placed on a single preventive measure - such as treating a contaminated product with chlorine to remove bacteria - a significant risk remains that the treatment will be ineffective and the consumer will be exposed to a dangerous product.

The EU approach is to take the necessary preventive measures at all the appropriate stages during production and processing in order to avoid contamination, instead of trying to remove it once it has happened.

Should US consumers be concerned because of the safety of their food compared to the EU consumers?

There is no system in the world that can protect the consumer one hundred percent from consuming a contaminated product. The development of intensive agricultural production on both sides of the Atlantic has brought into focus the need to ensure that the safety of the food supply at all stages from the farm to the consumer; is very important. Therefore, it is not sufficient merely to rely on a single measure taken at one stage in the food chain. This is why the EU pays attention to the whole process of food production, from animal nutrition to veterinary drugs and slaughter and further product processing.

We note that the US authorities are beginning to consider following this approach themselves in their new proposals for food safety. For this reason, it is all the more disappointing that they have been unable to take a positive approach to the EU position in these negotiations.


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