AQSIQ AND STAFFDEL DISCUSS IMPROVEMENTS TO CHINA'S

UNCLAS SECTION 01 OF 05 BEIJING 006018

SIPDIS

EAP/PD FOR NIDA EMMONS
HHS FOR OGHA/STEIGER AND PASS TO FDA/LUMPKIN
USDA FOR FSIS/RAYMOND
USDA FOR FAS OA/YOST, OCRA/ALEXANDER, OSTA/BRANT AND
SHNITZLER
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STATE PASS CONSUMER PRODUCTS SAFETY COMMISSION RICH
O'BRIEN/INTL PROGRAMS
STATE PASS USTR CHINA OFFICE/TIM WINELAND
STATE PASS OMB/INT'L AFFAIRS
STATE PASS HOMELAND SECURITY COUNCIL
STATE PASS IMPORT SAFETY WORKING GROUP

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: TBIO EAGR ECON HHS ETRD BEXP CH JA
SUBJECT: AQSIQ AND STAFFDEL DISCUSS IMPROVEMENTS TO CHINA'S
EXPORT CERTIFICATION SYSTEM

REF: A. Beijing 5273

B. Beijing 5899

C. Beijing 3210

D. Beijing 3174

E. Beijing 3252

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1. (SBU) This report is Sensitive But Unclassified, for
official United States Government use only and not for
release to the media.


2. (SBU) SUMMARY: A Congressional Committee on Commerce
and Energy Staff Delegation led by investigator David
Nelson met China's food safety ministerial and regulatory
authorities August 19-24 to evaluate China's export food
safety system and examine ways to enhance the safety of
food exports to the United States. AQSIQ officials
explained in detail the structure of their "system within a
system" for export certification and their comprehensive
electronic management system, even discussing with Staffdel
additional ways to strengthen China's export regime through
a dual positive list/blacklist, an "exporter fast-track"
system that would adjust testing frequency to past
performance, the possibility of increasing inspection
rates/audits, and having China-based U.S. inspectors.
Still, AQSIQ officials were hard-pressed to recap in detail
the cause of contaminated plant proteins and fishery
product shipments to the United States earlier this year.
In another meeting, American Chamber of Commerce member
firms suggested the United States could benefit from a
Japanese-style regime that restricted the number of
eligible exporters and provided for systems audits and
supplemental testing by both governments. Staffdel members
gave Chinese officials insight into the draft bill in
development by the Committee modifying the current Food and
Drug Act. END SUMMARY.

AQSIQ REPEATS TALKING POINTS -- AGAIN
--------------


3. (SBU) General Administration for Quality Supervision,
Inspection, and Quarantine (AQSIQ) Vice Minister Wei
Chuangzhong, Director General Wang Daning, and six other
high-level AQSIQ food safety policy and regulatory
officials met Congressional Committee on Commerce and
Energy Staff Delegation led by investigator David Nelson to
discuss the safety of food exports to the United States.
Reiterating official talking points, Vice Minister Wei
recited evidence of the effectiveness of China's export
certification system and its superior performance compared
to the U.S. system. He complained that international press
attention on this matter was disproportionate to the impact
of the issue and sometimes factually wrong. He further
suggested, as other Chinese officials have in private
meetings with emboffs and in public fora, that some are
using the press to promote a protectionist U.S. trade
agenda. Wei also complained about specific cases of
substandard or unsafe U.S. goods, noting that China has
worked on technical and scientific levels to resolve the
issues and keep them from the press. (Note: Contrary to
Vice Minister Wei's assertion, China has released
information about some of these cases to the press (Ref.
A),including the names of specific U.S. firms. End Note.)
Finally, Wei praised the AQSIQ food export certification
system, suggested that previous problems were due to the
lack of U.S. understanding of the system, and called on the
United States to back AQSIQ's existing program. (Note:

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Chinese ministries have now closely coordinated talking
points regarding the efficacy of AQSIQ's system and the
quality rate of Chinese exports versus U.S. exports, points
that are recited to media and U.S. government
representatives. (Ref. B) End Note.)

FOOD EXPORT CERTIFICATION:
A SYSTEM WITHIN A SYSTEM
--------------


4. (SBU) AQSIQ provided details of their overall food
export certification system and its structure. Export
certification is a "system within a system" that isolates
exported food from the domestic food supply. The first
stage of export certification actually begins at the farm,
part of the "farm-to-fork" surveillance system, with the
registration of the farm or production facility. In the
case of farmed fish, the farmer or company that owns the
pond or pen is required to gain AQSIQ export accreditation.
This entity may only supply fish to a processor that is
also accredited with AQSIQ. With an export certification,
every step of the production and export process from
primary production to product acceptance by the final
exporting company must gain AQSIQ accreditation. Each part
of this chain is supposed to know and adhere to Chinese
standards or the importing country standards, whichever is
stricter. The accreditation is done either by AQSIQ or the
Certification and Accreditation Administration (CNCA),a
subsidiary of AQSIQ. CNCA is responsible for the sanitary
registration for those firms engaged in import and export
of foods. CNCA also engages in the inspection, auditing
and approval for food import and/or export firms,
maintaining the register of approved firms and assuring
that they meet foreign requirements as necessary.

CHINA HAS AN ADVANCED ELECTRONIC
SYSTEM -- AND ROOM FOR IMPROVEMENT
--------------


5. (SBU) Beijing's local Entry and Exit Inspection and
Quarantine Bureau (CIQ) officials explained in detail the
process and types documents that accompany shipments in the
final phase of AQSIQ certification. First, a local CIQ
staff member inspects and tests in a CIQ lab every export
shipment according to specific parameters of both China and
the importing country. Second, paper documents attesting
to the results are returned to the manufacturing or
processing company. Third, the exporter prepares the entire
export document portfolio for submission, in person, to the
local CIQ. The portfolio includes the firm's registration,
the lab results done on the product to be exported,
veterinary or phytosanitary certificates, special quality
certification, shipping documents, and customs forms. The
CIQ export officer crosschecks the paper documents with an
electronic database that contains the food exporter
registration number and the lab test results. The Staffdel
noted that AQSIQ's electronic certification and filing
system (incorporating electronic record keeping,
certificates, and export shipment traceability) is an
example of an advanced system. The potential exists,
staffdel leader Nelson said, for it to form the backbone of
an electronic certification system that would allow U.S.
inspectors easier, electronic validation, and verification
of official Chinese documents and possibly limit
opportunity to produce fraudulent or fake paper
certificates.

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6. (SBU) AQSIQ officials claimed that the system could be
used to prevent recurring food safety problems, noting that
the system could be altered to provide electronic
information to trading partners so they could independently
verify documents. Officials also touted AQSIQ's "positive
list," a selective list determined in cooperation with
importing nations to limit the number of exporters.
Japanese importers employ this type of list for chicken,
eels, and vegetables. The list includes only those
importers who can prove they meet the importing country's
standards. A separate "blacklist" identifies repeat
offenders that fail to meet these standards. AQSIQ and
staffdel discussed the possibility of operating a two-list
system, although the United States currently only accepts
a "blacklist," not a positive list. The two sides also
discussed the notion of an "exporter fast-track" system
that would adjust testing frequency to past performance,
the possibility of increasing inspection rates/audits, and
having China-based U.S. inspectors. These methods could
potentially help close loopholes in China's system.

LOOPHOLES ARE HARD TO PIN DOWN
--------------


7. (SBU) When discussing the weaknesses of the Chinese
export certification system, officials were hard-pressed to
answer basic questions about loopholes that were exposed
when melamine-contaminated plant proteins and farm-raised
fish with illegal chemical residues were exported to the
United States. (Note: FDA site investigations in the
melamine incident (Refs. C, D) and discussions with AQSIQ
revealed that manufacturers can classify their export
products as "industrial," exempting them from AQIQ food
quality export checks; in other words the plant proteins
in that case were not required to be certified by AQSIQ
because they were not initially classified as food
products. End Note.) With regard to fraud prevention,
officials did not describe AQSIQ's recent measures
requiring melamine-free certification and inspection in
addition to export certification for all plant proteins.
Officials were unable to explain effectively how fishery
products repeatedly passed quality tests and slipped into
the export market with levels of residual chemicals not
allowed by the United States, especially in light of
China's policy to apply the same level of scrutiny and
standards regardless of whether the importing country
accepts the Chinese certification. (Note: The United
States does not accept Chinese certification.)

OTHER AGENCIES BLAME AQSIQ
AND STEER CLEAR OF SUBSTANCE
--------------


8. (SBU) Discussions with Ministry of Agriculture (MOA),
Ministry of Health (MOH),and State Food and Drug
Administration (SFDA),left the delegation frustrated that
the Chinese side did not have any new ideas to present.
Chinese counterparts seemed to avoid any opportunity for
questions and exchange of ideas on how to improve their
food safety procedures. MOA Market and Information
Department Director Mr. Zhang Yanqiu led a round table
discussion with specialists from four MOA departments.
Zhang repeated many of AQSIQ's facts about export quality
and described provincial-municipal coordination of primary
food safety monitoring and supervision. He noted the

BEIJING 00006018 004.2 OF 005


important role played by regional and local authorities in
coordinating adherence to the four types of quality
standards pertinent to food/feed producers: national,
local, industry, and enterprise. When asked about reports
of wide-scale use of melamine as an additive to plant
proteins in China, Zhang said that extensive MOA tests have
only shown isolated cases. Each ministry representative
deflected thorny export quality questions by pointing a
finger at AQSIQ.

JAPAN'S IMPORT SYSTEM AS A MODEL?
--------------


9. (SBU) Staffdel met American Chamber of Commerce members
August 22 at Beijing's Committee on Food and Agriculture.
The AmCham group acknowledged a lack of regulatory
enforcement in the standard AQSIQ export certification
regime. Two members noted that their firms require
employees to duplicate surveillance and testing to ensure
that export product quality meets the demands of their
customers. Success in quality, another member said, is
something that requires constant attention. Member
companies also focused their comments on AQSIQ's changes to
suit strict Japanese import requirements. Some of these
measures include a restricted number of eligible exporters,
systems audits, and supplemental testing by both the
Japanese and Chinese government agencies responsible for
those food products. It was noted during the official
meetings that the additional measures that China currently
takes for exports to Japan could potentially be applied to
exports to the United States (e.g., limiting the number of
approved suppliers would make inspection and adherence to
quality standards easier to verify).

COMMENT: TRUST BUT VERIFY
--------------


10. (SBU) The Staffdel was reassured about the strengths of
many aspects of China's export inspection system, but left
wanting additional reassurances that loopholes allowing
repeated exports of contaminated fish can be eliminated.
An electronic export certification system has clear
benefits for AQSIQ's role in China's massive export market,
with a large decentralized system of 35 CIQs in addition to
31 mainland local/city Technical Supervision Bureaus (TSBs)
that provide additional quality monitoring. One staffel
member commented that, if Chinese regulatory officials do
everything they say they do, and one puts aside problems
like endemic corruption, then the Chinese system is
qualitatively better than the U.S. system. (This would also
assume that China's inspectors operate with the same degree
of integrity, that random or scientific sampling occurs
from every batch of exported food, and that samples are
tested in laboratories staffed by dispassionate public
servants and are appropriately trained and capable to
perform the required tests, so that their seal represents a
true certification.) The missing link is China's assurance
that their methods of analysis are verifiable and that
their certification systems can be checked electronically
to remove the fraudulent paper trails that seem to keep
appearing. Staffdel members commented further that China's
reaction to food safety problems has been "finger-in-the-
dike." The government's tough talk on food safety has yet
to catch up to all the exports landing in the United
States. Importers are going to "get what they inspect --
not what they expect." There are few absolutes in China's

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existing export system, but flexibility to new approaches
and verification of results could be the keys to
improvement.

RANDT