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OIE Upgrades Japan's BSE Status to 'Controlled Risk'; Gov't Mulls Import Policy Change

00:00AM May 27, 2009

via a special arrangement with Informa Economics, Inc.

Obama administration seen having more flexible stance than Bush trade officials

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

The world animal health body OIE said on Tuesday it eased Japan's status on BSE to "controlled risk,” a move many observers predict will eventually boost US beef trade with the Asian country, provided upcoming Lower House elections do not change the timing of the decision, or alter the current outlook.

The OIE decision, which was expected, came during the group's general assembly in Paris. It meets a Japanese request to obtain a status that some other countries already have, hoping it will pave the way for major markets to relax import restrictions on Japanese cattle.

Background: Under OIE regulations, there are three BSE risk categories -- negligible, controlled and undetermined risk. Controlled risk status is granted to countries where adequate measures are taken, including the removal of certain risk materials such as brains, eyes and spinal cords, even though some cases of mad cow disease are still found. More than 30 countries, including the US, Britain and France, are in the controlled risk category while 10 countries are classified as negligible risk.

Many observers think the OIE decision should and will add pressure on Japan to allow more U.S. beef imports from animals 30 months or under. Japan currently bans any US beef from cattle over 20 months of age.

Comments: My sources see a two-stage process shaping up: one internally and one regarding an eventual change in import policy. Internally, Japan will soon limit its BSE tests to animals over thirty months of age. The timing of a change in Japan's beef import policy relative to the US is still murky. Some contacts think it could come fairly quickly following the OIE announcement, while others feel it could come after late-August, early September Lower House elections (elections must be held by Sept. 10). If there is no import policy change prior to the elections, however, some observers speculate that if the opposition Democratic Party of Japan (DPJ) wins, that could derail what appears to be an effort to modify beef import rules and regulations.

Some key background: In December 2007, reports surfaced that the Japanese government proposed to the US government that Japan ease the age restriction from the current 20 months or younger to 30 months or younger. But US government trade officials called for a complete removal of the age restriction (the so-called “all-or-nothing” approach), and discussions halted without agreement on a change. Japanese government officials now expect the Obama administration to be more flexible in dealing with the issue compared with trade officials from the Bush administration. If so, and if Japan repeats its proposal for an age restriction of 30 months or younger, then the Obama administration would very likely accept the offer. A top USDA official last week signaled “flexibility” on this topic.

The financial impact of any change would eventually be quite significant to the U.S. beef industry, which some say is leaving $100 million per week on the table because of the current restrictions.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.