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10 Years Later, BSE Still Frustrates U.S. Beef Industry

By Philip Seng
President and CEO, U.S. Meat Export Federation

December 23 will mark the 10th anniversary of the United States’ first BSE case, an event that closed nearly all international markets for U.S. beef and had a profound impact on our industry. After 10 years, USMEF projects the cumulative loss in U.S. beef trade to be about $16 billion.

Much of this estimated total was accumulated in the first few years after 2003, when many major markets were completely closed to U.S. exports. Some key destinations such as Mexico, Canada and Egypt reopened fairly quickly, providing critical momentum for the U.S. industry’s recovery. Asian markets returned more gradually, beginning in 2006 with Taiwan, Hong Kong and Japan. These were partial openings, with Japan limited to beef from cattle less than 21 months of age and Hong Kong open to boneless beef from cattle less than 30 months of age – restrictions that would remain in place until February of this year. Initial access to South Korea came in mid-2007, but it took about another full year to restore trade with Korea in a meaningful way. By 2008, Russia had also finally reopened.

The number of markets closed to U.S. beef for BSE-related reasons is now fairly small, but these closures still represent an enormous source of frustration for the U.S. industry. Squarely at the top of this list is China, the fastest-growing beef market in the world. China has imported more than $1 billion worth of beef this year from Australia, Uruguay, New Zealand and Canada, but the U.S. is on the outside looking in. Unlike previous situations in which the U.S. industry had to win back consumer confidence, buyer interest in U.S. beef is already very strong in China. Based on the current velocity of China’s beef imports, USMEF projects China to be a $500 million annual market for U.S. beef upon reopening, with potential to reach $1 billion within the first five years.

Saudi Arabia quickly reopened to U.S. beef in mid-2004, and became a $31 million market by 2011. But access was lost again due to the BSE case detected in California in April 2012, and this once-promising market remains closed today.

Other markets that never reopened after December 2003 include Australia, Argentina, Brazil, Ecuador, Israel, Morocco, South Africa and Uruguay. It is especially frustrating when major beef-exporting countries deny access for U.S. beef, with no scientific justification for their policies. Australia, for example, knows very well the importance of science-based beef trade and the U.S. is its second-largest export destination. While Australia may never be a major market for U.S. beef, we know there are niche opportunities for our products.

Many countries that are open to U.S. beef still maintain a 30-month cattle age limit and other BSE-related product restrictions. For example, Mexico’s 30-month cattle age limit is a lingering policy that adds verification costs, restricts U.S. exports and hampers our ability to grow this important market.

USDA recently published a comprehensive rule governing beef imports entering the United States. The new rule, which will take effect March 4, 2014, brings BSE-related beef import regulations in line with OIE standards. One of the rule’s likely impacts will be to allow imports from some member countries of the European Union, easing a ban that has been in place since 1998. Lifting these restrictions will not only create a more positive atmosphere for trade with the EU, it will also give the U.S. a stronger global negotiating position. As long as the U.S. harbored out-of-date trade restrictions related to BSE, it was difficult to expect our trading partners to eliminate them. Therefore, the new BSE rule represents an important step toward getting our own house in order and persuading the world that it’s time to put BSE behind us as a trade issue. Based on our experience over the past 10 years, that day simply cannot arrive soon enough.