GOJ BACKSLIDING ON BEEF DEAL?

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 001980 SIPDIS SIPDIS DEPT PASS USDA FOR U/S KEENAM, DU/S TERPSTRA, FAS YOST PLEASE PASS USTR CUTLER E.O. 12958: DECL: 05/02/2017 TAGS: ECON ETRD EAGR JA SUBJECT: GOJ BACKSLIDING ON BEEF DEAL? REF: DAWSON-SPENCER MAY 1 E-MAIL Classified By: Charge Joseph R. Donovan for reasons 1.4 (b/d). Summary -------------- ¶1. (C) Japan's HEALTH Ministry (MHLW) is balking at a deal to ease restrictions on U.S. beef exports that was apparently worked out between Agriculture Minister Matsuoka and Agriculture Secretary Johanns on the eve of the Bush-Abe Summit. The Charge underscored U.S. concern about the apparent backsliding with the Executive Secretary to the Chief Cabinet Secretary Hiroshi Suzuki during calls on May 2. FAS and ECON have underscored similar concerns with authorities at the Agriculture and Foreign Ministries. The problem arose late on May 1 when MHLW told FAS that it could not audit five facilities which do not currently export to Japan, in effect backing away from Matsuoka's promise to end 100-percent box inspections of all U.S. beef coming into Japan. MHLW denied any such quid pro quo was made and insisted that MAFF Vice Minister Murakami made this clear to USDA Under Secretary Keenum during an April 20 phone conversation. Suzuki told the Charge that he conveyed the U.S. concerns to Chief Cabinet Secretary Shiozaki and hoped to find a solution that would work for both sides. End summary. ¶2. (C) In a series of April phone calls between top USDA and MAFF officials an apparent deal was worked out to alleviate one aspect of Japan's restrictive beef import rules ) specifically that Japan's current requirement that every box of beef be opened and inspected following import would end if MAFF and MHLW officials were allowed to audit U.S. meat processing plants. On May 1, however, MHLW disagreed with the U.S. interpretation of this understanding and is refusing to audit five meat plants (out of 28) on the grounds that they have not yet shipped beef to Japan. We have met with MAFF and MHLW officials, and the Charge has called the Prime Minister's Office, in an attempt to clear up the problem, but no resolution is in sight even as preparations are underway for Japanese inspection teams to travel to the United States to begin the audits as early as May 10. ¶3. (C) Last week, based on instructions, the Embassy began going over an audit schedule with MAFF and MHLW officials. A list of proposed U.S. beef plants to audit was shared with MAFF and MHLW on April 25. In a subsequent April 27 meeting with MAFF and MHWL, no objections were raised to either the audit schedule or the number of plants to be included. In fact, we made solid progress in concluding logistical details for the visit. On May 1, however, MHLW reported that it was unwilling to visit U.S. beef slaughter plants that are eligible to export to Japan but that have not shipped because MHLW views having actually exported as key to an effective audit. (The plants are: Dennison 245, Greater Omaha 960/960A, Cargill 86E, Cargill 86H, and PMB 683.) According to MHLW, if and when these plants ship beef to Japan, their shipments would be subject to 100 percent box-by-box inspection until they too could be audited at a later date. MHLW is refusing to visit the plants, claiming there is therefore nothing to audit now (since they were already audited before trade resumed in July) and because it would create the expectation that Japan would end 100 percent box testing for these plants. ¶4. (C) On May 2 the Charge called the Executive Secretary to Chief Cabinet Secretary Hiroshi Suzuki (Chief Cabinet Secretary Shiozaki was not in the office due to Japan's SIPDIS Golden Week Holiday) to convey the U.S. understanding that all of the eligible U.S. meat plants should be audited and that our expectation was that 100-percent box inspections would end after the audits were successfully concluded. Suzuki said that the Japanese side did not exclude the possibility of visiting these plants (in apparent contradiction of MHLW's more hard line position). Suzuki noted that previous phone calls between USDA U/S Keenum and MAFF Vice Minister Murakami had covered the treatment of beef plants that have not yet shipped to Japan and that it was understood by Japan that they would not be included in this audit trip during the April 20 phone conversation. Suzuki told the Charge that he had briefed Chief Cabinet Secretary Shiozaki on this matter. ¶5. (C) Working-level MAFF officials are clearly not in full agreement with MHLW and may feel that MHLW is undermining the spirit of the understanding that MAFF Minister Matsuoka and TOKYO 00001980 002 OF 002 Secretary Johanns have on the audits. However, both MAFF and SIPDIS MHLW took exception to any suggestion that there was a change in tone after the Bush-Abe summit was complete. (Previously, the GOJ sought to keep the beef issue off of the summit agenda in exchange for progress on the 100 percent box testing issue.) Both ministries cited the April 20 Keenum-Murakami conversation as ONE basis for their interpretation. MAFF also quoted from Minister Matsuoka's press Q&A of April 24 (as reported in AgTokyo's BSE press) where the Minister referred to the deal covering plants that 'export' to Japan. Comment -------------- ¶6. (C) There are no clear ways forward at this point although MAFF would like to broker a solution. Working level representatives have suggested that the beef plants in question send 'sample' air shipments of beef to Japan as a way of establishing an export record prior to the audits. In the same meeting, MHLW commented that these shipments would have to be "commercial." Another option might be to propose a higher sampling rate (less than 100 percent but higher than normal) for plants that do not have a shipment history. Suzuki voiced his personal opinion that a mock up of beef processing for export to Japan could be done at the plants for Japanese inspectors to observe. DONOVAN