2007 George Bush China-U.S. Relations Conference: Development, Energy, and Security

Thank you, Dr. Herman [Associate Dean for International Affairs, George Bush School], for that introduction.

You all know that import safety has received a lot of attention from the American public, the press, and the U.S. Government in recent months. You also know that much of that attention has focused on China.

There is no doubt that ensuring the safety of imports presents some real challenges for both our countries. But working through those challenges presents us with an opportunity to strengthen our relationship as trade partners

I’d like to talk briefly about the challenges I see. I’d also like to outline the work we have underway domestically. Then I’ll talk about how China is working with the U.S. on import safety.

First, let me say that I believe Americans have one of the safest food supplies in the world. Our standards for consumer protection are among the highest in the world. And our import system does many things right.

But recent events have raised the question of whether we are keeping up with the global economy.

This year, more than $2 trillion worth of products will be imported into the United States. Two trillion dollars is nearly twice the size of the economy of Brazil.

These products come from 825,000 importers. They come through 300 ports and land border crossings, postal facilities and other points of entry. Experts today project that these imports will triple by 2015.

As our overall imports grow, we expect our relationship with China will grow.  

China’s emergence as an important exporter is beyond dispute. Last year, 40 percent of all goods imported into the U.S. came from China. As Secretary Gutierrez mentioned here on Tuesday, it is likely that this year China will become our largest import partner.

As you know, China is one of the world’s largest producers and consumers of agricultural products. Its food crops include rice, corn, wheat, soybeans, vegetables, tea, and pork. Its major non-food crops include cotton, other fibers, and oilseeds. Roughly half of China’s labor force is currently engaged in agriculture. China hopes to increase agricultural production through improved plant stocks, fertilizers, and technology.

China is also a major supplier of seafood, canned vegetables, fruit juices, honey and many processed foods, and China is increasingly becoming a major exporter of pharmaceuticals. In the past several years, the number of FDA-registered drug manufacturers in China has nearly tripled. They went from 440 in 2004 to almost 1,300 in 2007. 

This growth is an indication of much that China has done well. But China will face some serious challenges on the path ahead as it continues to grow:

• One is the problem of securing production and distribution chains. The sheer size and number of people involved will make this challenging. But China must find ways to manage and regulate them.
• A related challenge is the need for the Chinese regulatory system to increase its rigor, sophistication, and effectiveness.
• The third challenge for the Government of China will be coming to terms with the scrutiny of the media. We have all seen the headlines. Whether it’s toothpaste, pet food, seafood, or toys, there is an increasing concern about products coming from China to the U.S.

China must deal with these concerns in a head-on and transparent way to preserve the “Made in China” brand. I have made this very clear in my conversations with Chinese officials. To have access to American markets, suppliers must meet American standards of safety and quality. Suppliers that don’t meet our standards will be disadvantaged in the world market.

It’s not all up to China, however. We face challenges of our own keeping up with the rapidly growing and changing global economy. I’d like to mention briefly what steps we are taking to adapt domestically, and also how we are working with China to address these issues.

First, domestically.

This July, President Bush asked me to chair an Interagency Working Group on Import Safety. The group was tasked to conduct an across-the-board review of products that are imported into this country from around the world. Its members include officials from 12 relevant federal agencies.

Over the past three months, we have been crisscrossing the country on fact-finding missions. I personally visited more than two dozen cities. I've been to ports and post offices, railroads, airports. I've seen freight hubs and border crossings and wholesale retailers and fruit stands. I've observed the processing of fish. I've seen vegetables being processed, and drugs. I've inspected everything from imported tire irons to gingerbread houses.

One thing became clear on our trips as we witnessed the sheer magnitude of the import-export enterprise. We cannot simply inspect our way out of the problem of import safety. Doing so would bring the international trade of this country to a standstill. It would also divert limited resources from the imported goods posing the greatest threats.

Instead, we found that we need policies that treat imports much like we treat patients in health care: First, we focus on preventing harm in the first place, then intervening when risks are identified, and lastly, responding rapidly when things go wrong. Prevention, intervention, and response — all three are needed.

This is the approach of the strategic framework that we presented to the President last month. It included six cross-cutting strategies to build safety into products every step of the way. They are:

1. To advance common vision to continuously improve the safety of imported products.
2. To increase accountability, enforceability, enforcement and deterrence.
3. To focus on risks over the life cycle of imported products.
4. To build interoperable systems.
5. To foster a culture of collaboration.
6. To promote technologic innovation and new science that help us do a better job. This last strategy was well expressed by an FDA inspector who said, “Mr. Secretary, our job is to find the needle in the haystack, and we have to start first with technology to shrink the size of the haystack.”

On a parallel track, the Food and Drug Administration very soon will be issuing a new food safety strategy that will coincide with the recommendations of the Working Group.  The food safety strategy will integrate food safety and food defense for both imported and domestically produced foods regulated by FDA. 

In November, the Working Group will submit its action plan to the President. This plan will lay out a roadmap and short- and long-term recommendations for improving import safety. These will include steps the United States is taking to modernize our approach as we face the challenges of a shrinking world.

We are also working with officials in the Chinese government to address challenges they face with respect to product safety.

Earlier this year, I had conversations with two Chinese officials, Minister Li and Commissioner Shao. Li heads China’s General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ). Shao heads China’s State Food and Drug Administration (SFDA).

We agreed to work together on two binding Agreements on product safety between the United States and China. Our goal is to sign these agreements at the 3^rd Session of the U.S.-China Strategic Economic Dialogue in Beijing this December.

One Agreement, with Shao’s agency, focuses on the safety of drugs and medical devices. The other, with Li’s agency, addresses the safety of food and feed. We have learned a lot in these negotiations about both agencies and about their different roles in the Chinese regulatory system.

The goal of both Agreements is to create a framework to assure the safety, quality, and effectiveness of products exported from China to the United States. They also aim to strengthen China’s regulatory process and increase cooperation and information-sharing between the regulatory bodies of both nations.

I have asked my Chief of Staff, Rich McKeown, to head negotiations on this effort. He has made two trips to China since August. Other HHS officials have made visits as well, including FDA policy and technical experts.

This week, Rich is hosting officials from Commissioner Shao who have come to Washington to continue talks. Officials from Minister Li will follow next week.

Rich reports that progress on these agreements continues to build, and I remain hopeful that we can achieve two strong, action-oriented documents by December.

Both of our countries have a lot to gain by working together. As important trade partners, we will need to continue our efforts to foster mutual trust in our products and trade practices. 

In my experience, that is best done with the kind of open dialogue that’s going on right here.

Of course, a “dialogue” means more than one person talking. So now I’d like to open the floor to hear your comments and answer a few questions if I can.

Last revised: March 13, 2008