UNCLAS SECTION 01 OF 04 SHANGHAI 000631

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/CM AND EB
STATE PASS USTR FOR STRATFORD/WINTER/ALTBACH/LOI/KATZ
DOC FOR ITA - DAS KASOFF, CMCQUEEN, LRIGOLI, ESZYMANSKI
DHS/ICE FOR IPR CENTER-DFAULCONER
DHS/CBP FOR IPR RIGHTS BRANCH - PPIZZECK
TREASURY FOR OASIA - DOHNER/HAARSAGER/CUSHMAN
NSC FOR KURT TONG, JONATHAN SHRIER
TREASURY FOR OASIA - CUSHMAN, WINSHIP

E.O. 12958: N/A
TAGS: ETRD TBIO PGOV ECON BEXP EAGR CH
SUBJECT: DISCUSSION OF FOOD SAFETY ISSUES WITH SHANGHAI'S CIQ
LEADERSHIP


(U) This cable is sensitive but unclassified and for official
use only. Not for distribution outside of USG channels.


1. (SBU) Summary: The Consul General and ATO Chief met
September 20 with China Inspection and Quarantine (CIQ) Shanghai
Director General Xu Jinji to discuss recent problems with U.S.
food products entering East China ports. Xu said the United
States and China must deepen the understanding of relevant
inspection standards and procedures to avoid problems on both
sides. He said that China has taken measures over the past four
months to ensure adequate product quality and safety for both
imports and export. For example, CIQ will be faster to revoke
export licenses for companies that export items that violate CIQ
standards. CIQ is also beefing up internal coordination and
cooperation with China Customs to reduce fraudulent and illegal
shipments. He welcomed further cooperation and information
exchange at all levels. End Summary.


2. (U) Xu was joined by Shanghai CIQ Vice Director Xu Chaozhe,
Division Director for Supervision on Animal and Plant Zhou Guo
Liang, Division Director for Supervision on Health Li Ping,
Deputy Director for Foreign Affairs Li Riming. Other Consulate
officials included Agriculture Trade Office (ATO) Chief Wayne
Batwin, ATO Officer and Econoff.

Background: Recent Problems At the Port

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3. (SBU) Post requested the meeting with CIQ officials as part
of our expanded outreach on food and product safety issues and
to hear from CIQ about their recent U.S. visit. In addition, we

have encountered a number of problems recently with
agricultural products imported from the United States. These
problems have complicated what has hitherto been a close and
cooperative relationship between the Consulate and Shanghai CIQ.
For example, in the past few months, U.S. food products
including pork, chicken, poultry, frozen entrees, drink mixes,
and dried fruit have had problems entering China. Many of these
cases involve goods that have been previously imported but
suddenly face restrictions, or enforcement of previously
un-enforced regulations.


4. (SBU) For example, U.S. pork producers have imported meat
with traces of ractopamine for years, although Chinese
regulations prohibit the importation of such products. Recently
authorities have destroyed container loads of U.S. pork products
at the port of Shanghai because they contained traces of
ractopamine. In addition, 618 California Wine Institute (CWI)
bottles of wine were detained because they did not include
Chinese labels for commercial purposes. However, these bottles
were intended for a seminar and tasting events hosted by CWI and
the company did not previously have problems bringing similarly
labeled bottles into China for such events. A container of
pre-fried frozen potatoes from ConAgra/Lamb Weston was recently
destroyed at Ningbo Port as a result of test results that
indicated they did not meet Chinese standards. Contrary to
normal procedures and regulations, CIQ did not give the company
the opportunity to re-export the goods or 15 days of
notification prior to the decision.

Predictability and Transparency

--------------


5. (SBU) The CG noted U.S. businesses' frustration over the
difficulty in understanding and following Chinese standards and
regulations, which seem to be inconsistently implemented.
Transparency and predictability are very important for U.S.

SHANGHAI 00000631 002 OF 004


exporters to China and that is why the two sides need clear
channels of communication. He raised the CWI's 618 exemplar
bottles of wine as a case in point. Batwin gave the example of
CIQ not providing inspection lab results to companies.
Companies want to know how to replicate these tests so they can
better understand how to meet Chinese standards. Xu Chaozhe
responded that what may seem like a simple case can actually be
very complicated. In addition, many U.S. exporters erroneously
believe that Chinese standards are higher than U.S. standards,
but in reality most U.S. standards are stricter. Director Xu
said Chinese products face similar problems in other countries.


CIQ's Current Priorities

--------------


6. (SBU) Director Xu noted that product safety is a common
concern for many countries, and stressed that China has
implemented serious measures during the past four months to
improve standards and the quality of exports. China wants to
ensure its products are accepted by other countries. The CG
inquired about the impact of Central Government decisions on
CIQ's work and noted that Shanghai recently established a new
leading group to implement the State Council's order on food
safety. (Note: The Shanghai group has met twice and came out
with the program called "3 Areas of Emphasis; 8 Aspects; and 28
Objectives.")


7. (SBU) According to Xu, CIQ has its own action plan and is
overseeing 6 working groups on the front inspection line to
improve quality and safety. Even if they find the smallest
problem, they are taking "corrective measures." For example,
export companies with the smallest infractions will have their
export licenses revoked. After the company takes corrective
measures and passes a follow-up inspection by CIQ, it can then
have its license reinstated. CIQ now requires that all food
exports have the CIQ mark, and this marking system will soon
expand to other products as well. Xu also emphasized that the
majority of substandard export products in the past were
"illegal" exports, and CIQ is trying to stamp out exports that
are sent without the proper approval.

Imported Food Safety in Important to China Too

-------------- -


8. (SBU) Regarding inconsistencies in import procedures, Xu
Chaozhe remarked that China also takes the safety of food and
other product imports very seriously. Sometimes it is difficult
to distinguish between goods brought for exhibition purposes and
those for commercial purposes, and some importers abuse this
system to avoid proper approval procedures. The front-line
inspectors must make a judgment call according to the number of
items involved and the specific circumstances. Xu added that
CIQ Shanghai will look at this problem, and China may adopt
special procedures to manage products that are brought for
exhibition purposes. To help avoid shipping delays, ATO Batwin
offered the services of the ATO office in helping CIQ determine
if U.S. agriculture products are for commercial use or other
purposes. He also said ATO is willing to continue assisting on
the verification of U.S. inspection certificates.

CIQ's Internal Interaction with China Customs

-------------- --


9. (SBU) According to Xu Chaozhe, CIQ Shanghai has good
cooperation with the ports and China Customs and has learned

SHANGHAI 00000631 003 OF 004


from the U.S. example on coordination. Customs can only release
products after getting a CIQ clearance. Customs also relies on
CIQ guidance to better understand the nature of certain products
and how to classify them under the Harmonized Tariff System. Xu
added that CIQ is moving from a paper to an electronic approval
system that will speed the approval process and provide more
integrity in the system. Regarding joining Customs e-platform
network that is being created in the Yangtze River Delta (YRD),
CIQ has partially implemented this system and is using it on a
trial basis. Once completed, CIQ offices throughout the YRD
will be able to base clearance on the approvals given by other
offices in network.

CIQ Internal Coordination

--------------


10. (SBU) Xu Chaozhe described CIQ's efforts to improve
internal coordination on issues, noting if one CIQ office
encounters a problematic shipment it notifies other CIQ offices.
CIQ offices only report serious problems and use a procedure of
first reporting to CIQ headquarters in Beijing, which in turn
sends out a general message to all CIQ offices. CIQ offices
then increase their vigilance and inspections of similar types
of shipments. CIQ in Shanghai is also increasing coordination
within its local offices that cover the various ports in the
city.

CIQ's Recent Trip to the U.S.

--------------


11. (SBU) Xu Chaozhe was part of a group of Shanghai and Ningbo
CIQ officials that recently visited the United States on an
ATO-sponsored food safety program. In addition to visiting
farms and ports, CIQ officials held in-depth discussions on
American regulations and inspection/quarantine operations with
their U.S. counterparts. Xu said the visit was useful in
deepening his understanding of U.S. procedures, noting there are
many similarities between the two systems. He said in some
areas the United States inspection system was better than
China's; however, both sides could "optimize their
organizational structures." Although he was pleased with the
trip, he said it would have been better to stay in one place and
gain a deeper understanding rather than try to cover so many
places and such a broad array of topics. Xu will file a report
with CIQ headquarters in Beijing about his findings from the
trip.

Strengthening Ties and Increasing Communication

-------------- --


12. (SBU) Director Xu noted that CIQ has excellent cooperation
with the U.S. Consulate and would like to see more exchange of
information at all levels. The upcoming program between ATO and
CIQ in October will be a great opportunity for the two sides to
exchange views on inspection standards and regulations and keep
goods smoothly flowing between the two countries. (Note: ATO
and CIQ Shanghai will co-host a Food Safety Seminar on Oct 10.
Speakers at the seminar will include professionals from USDA,
EPA and FDA.) Xu also welcomed the opportunity to set up a
study tour of CIQ port facilities and discussion of the new
Chinese food safety export controls. The U.S. Consulate could
forward requests and issues to his office, and he would be happy
to respond.

Bio Note


SHANGHAI 00000631 004 OF 004


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13. (SBU) Director Xu Jinji, a native of Jiangsu Province, has
been on the job for one month in Shanghai. He previously served
in the Ningbo CIQ office for 6 and a-half years and also at the
CIQ office in Nanjing. He attended the Shanghai International
Studies University from 1977-1980 as a graduate student, and has
visited the U.S. twice. His English comprehension skills were
stronger than his speaking ability, which was at a general
conversational level.
KJARRETT