Protecting U.S. Agriculture, Avoiding Protectionism
Bruce I. Knight, Under Secretary for
Marketing and Regulatory Programs
Global Attache Conference
Washington, DC
July 27, 2007
(25 minutes)
Good morning. When you think of regulations, do you picture reams and reams of paper piled up and tied together with yards and yards of red tape? Or do you think of an endless process of research, analysis, comments, reviews, evaluations and then maybe litigation? Or perhaps you just picture that last scene from Raiders of the Lost Ark—a huge government warehouse filled with wooden crates where valuable items disappear, never to be found again?
Well, if you’ve clung to any of these notions, I’m here to disabuse you of them this morning. I want to tell you how the regulatory process works, why it’s important and some steps we’re taking to streamline it. We’ll talk about regs for both livestock and plants.
Importance of Trade
First and foremost, I want you to know that this Administration and this Department are committed to trade. Trade is crucial for agriculture. It’s about one-quarter of total U.S. farm cash receipts.
Last year the U.S. exported more than $68 billion worth of food and agricultural products. This year, we’re projecting another record with sales of $78 billion. We are looking for 2007 to be our fourth record year in a row and our eighth straight year of growth in agricultural exports.
You’ve heard the statistics—70 percent of cotton, half the rice and a third of the soybeans grown in the U.S. are sold abroad. Higher value products—meats, fruits, vegetables, dairy products and processed foods—now account for about 60 percent of our exports. As productivity continues to increase in the U.S., our farmers and ranchers will need wider access to markets throughout the world. That’s one reason the Doha Round is so important—and you’ll be hearing more about that later today.
As we all know, trade is not just a one-way street. It goes both ways. If we want other countries to open their markets to us, we need to open our markets to them. We’re committed to fighting against flimsy and phony excuses to limit trade. But at the same time, we need to recognize legitimate science-based concerns that protect livestock and crops—both here and in other countries.
That’s where regulations come in. We must continually press our trading partners to drop unrealistic or impossible expectations while helping them identify real concerns and establish reasonable measures to safeguard animal and plant health. We want other nations to develop the capacity to establish science-based rules that set forth objective criteria for imports. Even better are science-based international standards that all countries can agree to and adopt as their own.
Let me speak first about what we’re doing with regulations governing livestock trade, particularly beef. Then we’ll talk about some recent developments on plant imports.
Animal Disease Risks
First, I want you to understand why regulations are important. Science-based regulations are our safeguards against importing pests and diseases.
I know we’re all aware of possible risks the U.S. faces from high profile animal diseases such as BSE and avian influenza. As you know, the discovery of BSE in one U.S. cow in December 2003 brought our export market to a crashing halt. We lost 80 percent of our beef trade in 2004. And that cost more than $2 billion—just in 2004.
Fortunately, the hard work APHIS did, the transparency we maintained and the science-based interlocking safeguards we had established enabled farmers and ranchers to maintain domestic markets. Otherwise, the losses could have decimated our beef industry.
We face similar concerns today with avian influenza. And the problems are even more difficult to control since the disease can travel not only through imports of poultry but through wild birds that circle the globe.
Let me tell you what happened with another serious poultry disease. In 2003, there was an outbreak of exotic Newcastle disease in California that began in two backyard poultry flocks. It took 7 months to eradicate END at a cost of nearly $130 million in federal funds alone.
There were 22 commercial premises affected along with 2,400 backyard flocks. Nearly 3.2 million birds had to be euthanized, and more than 1,600 federal and state personnel were involved in the disease-fighting task force. In addition, sanctions from other countries prohibiting imports of U.S. poultry cost up to $1 million per week during the outbreak.
These cases demonstrate why we fight so hard to keep flocks and herds healthy with appropriate vaccinations and check-ups. And why we need stringent restrictions to keep diseases and pests from crossing our borders and causing harm to U.S. livestock.
OIE Designation
I want to talk for a few minutes now about one specific threat—BSE. As you know, there’s been significant concern about BSE around the world. We’ve taken great pains to reassure our trading partners that we have the safeguards in place to ensure that the products we sell are safe and healthful to eat. And we want to know that they have followed similar steps.
In May, the OIE—the World Organization for Animal Health—awarded the U.S. a formal classification of “controlled risk” for BSE. As Secretary Johanns put it, “That classification confirms what we have always contended—that U.S. regulatory controls are effective and that U.S. fresh beef and beef products from cattle of all ages can be safely traded due to our interlocking safeguards.”
The controlled risk classification is essentially an international clean bill of health for our national cattle herd. It’s a determination based on a scientific assessment of risk using internationally agreed upon standards.
Any nation that recognizes the OIE standards now has no scientific reason to block imports of U.S. beef—of any age. Eventually, it should put an end to the need for export verification programs.
The key is for our trading partners to adopt the OIE standards as their own standards for safe trade. And we must do the same.
MRR2
We’ve taken the first steps to harmonize U.S. standards with OIE standards with our proposed minimal risk rule. We want to move quickly and expeditiously to get that in place. This rule will expand the list of allowable beef imports from countries with minimal risk of BSE—specifically Canada—which also received a controlled risk classification from OIE in May.
Right now we’re evaluating some 400 comments on this issue. The next step is to publish a final rule later this year.
This has been controversial. Opening markets for imports is not always easy. But we need to keep the focus where it belongs—on the science. We want our trading partners to establish a scientific basis for accepting imports. We need to lead by example on our own rules for imports—and move as fast as we can.
After this rule is finalized, we will move forward by amending all of our BSE-related import regulations to be consistent with international guidelines. We want to publish the proposed rule in 12 months. MORE????
All the while, we’ll be pushing our traditional trade partners who buy red meat to accept the OIE designation for the U.S. and restore or expand their markets.
Rulemaking Process
I want to take a few minutes at this point to describe the rulemaking process and then tell you a bit about what we are doing to move things along more quickly. As I go through the steps that have been mandated—by law or by requirements established by USDA or the Office of Management and Budget—I think it will be a little clearer why regulations can take so long.
First, a need is identified. Country A indicates it wants to export “fuzzy fruit” to the U.S. or an importer here notifies APHIS that it wants to import fuzzy fruit.
Second, APHIS conducts a risk assessment on fuzzy fruit. What are the risks that bringing fuzzy fruit here could introduce pests that could affect U.S. plants? If there is a risk, is there a way to mitigate it? Other analyses must also be prepared—environmental, economic impact, and paperwork burden and civil rights.
The third step is developing a work plan for the regulation permitting import of fuzzy fruit. The work plan must be cleared by four USDA offices and then sent to OMB. OMB makes a determination as to whether the proposed rule is nonsignificant, significant or economically significant ($1 million impact).
Once OMB has determined the significance level, APHIS’ develops a proposed rule, including the required analyses. The proposal on importing fuzzy fruit then must be cleared within USDA for legal sufficiency and policy. If the proposed rule is significant or economically significant, the proposal must be cleared by 10 offices in USDA and then go to the Office of Management and Budget for review. The schedule for USDA policy review can take up to 16 weeks. OMB has 90 calendar days.
When the proposal on fuzzy fruit comes back from OMB, any necessary changes are made, and the rule is published in the Federal Register for public comment. In most cases, the public comment period lasts 60 days, and it can be longer.
The public comments are then evaluated to determine whether changes should be made to the proposal. The time required to do this depends on the number and nature of the comments received. Once decisions are made, a worksheet describing what the agency plans to do in the final rule must be cleared by USDA and submitted to OMB for a determination as to whether the final rule is nonsignificant, significant or economically significant. The final rule, including responses to all of the issues raised in comments, must then be drafted and the analyses for the rule must be udpated. The final regulation on fuzzy fruit then goes through USDA review and, if significant or economically significant, OMB review. The time frames are similar to those at the proposed rule stage. The final rule is then published in the Federal Register. In most cases, final rules are effective 30 days after publication.
The bottom line is that the review and comment period alone for a significant rule can take 18 months. Risk assessment, writing and making changes add additional time. All too often the complete process takes two or three years.
Q-56
There has to be a better way. A way that makes sure we’ve considered the risks, given everyone a chance to have their say, but slashes the time needed to put a regulation in place and get fuzzy fruit—or whatever—moving out of Country A and into the USA.
The good news is, we’ve found a better way, and we’ve revamped the process for importing fruits and vegetables. It’s simpler and more streamlined. How many of you have heard of Q-56?
Just last week, we announced revised fruits and vegetables import regulations—called Quarantine 56 or Q-56— that will expedite the rulemaking process for importing fruits and vegetables. The updated requirements still call for the pest-risk analysis to protect U.S. agriculture and include opportunity for public comments. But instead of starting with a proposal, the revised approach uses a notice-based system.
This streamlined approval process will be used when the risk analysis shows that a commodity can safely come into the U.S. subject to one or more of five designated phytosanitary measures. These include:
- Port of entry inspection
- Use of approved post-harvest treatment
- A phytosanitary certificate accompanying the commodity, attesting that it originated from a pest-free area
- A phytosanitary certificate accompanying the commodity, attesting that it has been inspected and is free from a specified pest or pests OR
- The fruits or vegetables are imported as commercial consignments only.
If a specific commodity doesn’t meet these criteria, then it must go through the full rulemaking process.
For commodities that meet the criteria, USDA will announce in the Federal Register that a pest-risk analysis is available and give the public 60 days to comment on it. If none of the comments received disprove the findings of the pest-risk analysis, then USDA will publish a notice in the Federal Register that we will begin issuing import permits for the commodity.
This streamlined process continues the focus on sound science, but uses an approach that will open the U.S. markets more quickly. We hope other countries will recognize that we are serious about encouraging trade. And we hope they will also consider streamlined approval processes for U.S. goods.
The new rule also establishes a notice-based process for approving pest-free areas in exporting countries. In addition, the rules reorganizes and simplifies the fruits and vegetables regulations. The rule is scheduled to take effect August 16.
We’re working now on a website that will enable customers to search, by country or commodity, for eligible fruits and vegetables and the requirements covering their importation. We hope to launch the website this winter.
Meanwhile, we are moving forward with the first commodities under the new notice-based process. We have pest-risk analyses on six commodities—peeled baby carrots and baby corn from Kenya; eggplant, pepper and okra from Ghana; and Ribes from South Africa. Last week, we published notice requesting comments on these analyses by September 17.
Streamlining Rulemaking
The fruits and vegetables streamlining initiative is a positive step in the right direction. But we also need to tackle the overall rulemaking process that I described earlier. When full rulemaking is needed, we need to complete it more quickly, by streamlining, combining or omitting some steps.
We’ve begun exploring options for that. Should we consider concurrent rather than sequential clearance? Can we drop any steps? Can we shorten time frames? Can we get automatic approval for some approaches? What other strategies can we use to move regs through the pipeline more quickly—while still ensuring a thorough risk analysis and sufficient time for public comment?
As we’re going through this process, we welcome your thoughts and suggestions. You are on the frontlines in countries that want to send agricultural products to the U.S. We know you’d like to help us speed things along, and we’d appreciate any ideas you have.
Reg 101
This morning I’ve given you a brief overview of the regulatory process. But if you’d like to examine it in more detail, we’d be happy to arrange training through FAS—either on regulation writing or the regulatory process.
It’s important for FAS and APHIS to work together. That’s one reason staff from Marketing and Regulatory Programs sit down with folks from FAS and FSIS every two weeks. We need to stay abreast of what our sister agencies are doing and cooperate for the benefit of farmers and ranchers here and abroad.
Conclusion
In summary, U.S. farmers need open markets to sell their livestock, grain and other agricultural products. We need to maintain a two-way street to preserve access to foreign markets and to benefit consumers here. This can—and should be—a win-win opportunity.
At the same time, we need to safeguard our plants, animals and environment from pests and diseases that could take a free ride on agricultural products from beyond our borders. Science-based regulations help us do that—protecting our agriculture from legitimate concerns without resorting to protectionism. Where we can, whenever we can, we will work to streamline the regulatory process to move trade forward as quickly as possible.