US BSE Case Highlights China’s Inconsistent Trade Policies

In May, the USDA reported an atypical case of bovine spongiform encephalopathy (BSE) found in a five year old beef cow that originated in Tennessee and sent for slaughter in South Carolina. A USDA press release on Friday stated that “we do not expect any trade impacts as a result of this finding.

What is important to note is the inconsistent trade policies by China under two different trade agreements, namely the US and Brazil agreements. The US upon a BSE detection and under the 2020 Phase One Agreement, given it is an atypical BSE case, the agreement states that China cannot stop US beef shipments and must keep receiving US product (as long as its atypical).

In contrast, Brazil is required under their 2015 agreement to stop shipping immediately, notify China of the BSE case and then wait until China is satisfied that all efforts have been made to remove the risk from China trade. It is not until China gives the green light that Brazil can start shipping again and remove the self imposed embargo. In March this year, a delegation from Brazil of 250 business leaders went to China seeking a change to this policy whereby they were wanting to introduce regionalisation, meaning that should a case occur that the Brazilian state in-which the case occurred would be banned but not the entire country. There has been no change to the China policy on this matter.

The question has been asked on what the situation would be for Australia? On assessment of Australia’s/China trade agreement (CHaFTA ) it seems that China has the right to stop shipments immediately if BSE should ever occur in Australia. Australia is required to notify China as soon as possible upon detection and that both parties would look to resolve the problem quickly for trade to resume.

There is ambiguous wording in CHaFTA that states – ” The Parties shall explore opportunities for further cooperation and collaboration on sanitary and phytosanitary matters at the bilateral, regional and multilateral levels consistent with the provisions of this Chapter, including through: (a) cooperating on work in relevant international bodies and regional organisations engaged in food safety and human, animal or plant life or health issues;”
Australia’s Department of Foreign Affairs and Trade (DFAT) is seeking clarification on this wording to see if regionalisation is part of the CHaFTA and if so, this is an important point of difference between Australia, US and Brazil with China, for not just handling BSE but all diseases with China. As to date no country has been successful in establishing regionalisation with China on beef. An update on this clarification will be made available to subscribers when received.

~Simon Quilty