Wednesday, July 04, 2007

Wow, it's pretty crazy. Without much warning, we have the first shot of a trade war on our hands. However, I suspect that Premier Wen is secretly cheering the U.S. on, since he would like to see stricter standards as well, but has been hampered by regional lobbies. This will give an incentive to regional government to enforce standards.

The New York Times

July 3, 2007
A Slippery, Writhing Trade Dispute

TAISHAN, China, June 30 — At the Xulong eel factory here, a team of workers
slice eels, lop off their heads and push them through a huge assembly line
that will cook and package them for millions of customers around the world.

The precision round-the-clock operation, aided by a roasting oven that
spans the length of a football field, is one reason China now dominates the
world's seafood trade, and supplies 80 percent of America's imported eel
and 70 percent of its tilapia.

But the Food and Drug Administration says Xulong and other Chinese
companies will be restricted from selling certain types of seafood in the
United States because regulators keep finding Chinese imports contaminated
with carcinogens and excessive antibiotic residues.

Here in the Pearl River Delta area, near Hong Kong, it is not hard to see
why. Rivers, lakes and coastal waterways are so fouled with industrial
chemicals or farm effluents that many seafood exporters are forced to rely
on antibiotic drugs to keep their fish alive.

China's coastal regions, after all, are also home to its biggest factories,
which are famous for churning out electronics, processing chemicals and
dumping mountains of toxic waste.

At the Xulong factory here, officials offered a tour of what they said was
an up-to-date plant that forces workers to disinfect themselves by going
through multiple washing stations. The officials showed off on-site testing
labs and boasted that pure water from a local reservoir made their eel the
best in China.

Even so, the company's eel has been refused entry into the United States on
multiple occasions. Last April, the F.D.A. refused four shipments of
roasted eel from a nearby Xulong factory because they contained residues of
banned antibiotics that could prove harmful to consumers.

In an interview here on Saturday, Xu Liming, vice chairman of the Xulong
Group, defended the quality and safety of his products.

"There are a lot of poor places in China that don't care about food
safety," said Mr. Xu, who help found the company with two brothers in 1983.
"But we're a big company and we've invested a lot in food safety. We're the
only eel producer certified to ship to Europe."

But if Xulong — which is the world's biggest eel producer and claims to
have some of the cleanest operations in China — at times cannot pass muster
with American regulators, how many Chinese seafood companies can?

The question has huge implications for the global seafood trade, and for
the United States, which imports 80 percent of the seafood Americans

The heightened concern has also set the stage for a nasty trade dispute.
After a series of high-profile recalls of Chinese-made goods — from tainted
toothpaste and pet food to toxic toys and defective tires — some members of
Congress are pushing for stronger measures against Chinese imports. And
European Union officials say they are considering their own restrictions.

Experts say a broader crackdown could be a severe blow to China's $35
billion fish- and seafood-farming, or aquaculture, industry, which is
helping meet soaring demand for seafood at a time when supplies of wild
fish stocks are being depleted.

"This is certainly bad for Chinese aquaculture," said Rohana P. Subasinghe,
a fish-farming expert at the United Nations Food and Agriculture
Organization. "A ban on any product to any major region or country has
tremendous repercussions for the country and the industry."

The new F.D.A. restrictions, announced Thursday, effectively ban some of
China's biggest seafood imports, including shrimp, catfish, eel and a type
of carp. The move drew a quick rebuke from China, which on Friday warned
the United States about acting "indiscriminately."

China is already the leading supplier of seafood, garlic and apple juice
concentrate to the United States, and it is gaining market share in
processed vegetables, frozen foods and food ingredients. That is worrying
food-safety experts, who say American regulators are ill equipped to deal
with China's rise as a major food supplier.

"China has gone from literally nowhere to No. 3 in food imports behind
Canada and Mexico," said Michael Doyle, director of the Center for Food
Safety at the University of Georgia. "And if we're going to continue to
import more and more of our food, we're going to have to have a better
inspection program."

In the United States alone, Chinese seafood imports jumped from about $550
million in 2001 to about $1.9 billion last year, about 22 percent of total
seafood imports. But 60 percent of the seafood shipments that were refused
entry by American regulators came from China.

And those figures may not tell the full story. Robert Schubert, director of
research at Food and Water Watch, a nonprofit group, says the F.D.A. is
sampling only a tiny fraction of the food shipments entering American
ports, which means much of the tainted seafood may be making it to stores.

"The F.D.A. needs its budget massively increased, and it needs to respond
with more testing," said Mr. Schubert, co-author of a study on the growth
of American seafood imports.

What has been stopped by inspectors is alarming. In May alone, regulators
tagged "filthy frozen scallops"; catfish, eel and shrimp laced with banned
chemicals; unsafe additives; pesticides; and cancer-causing agents.

European Union officials say they have also noticed a rise this year in the
number of Chinese seafood shipments turning up with banned chemicals,
despite strict procedures, including food-safety test certificates
presented by the Chinese government.

["We are reviewing our measures in light of a number of factors," Philip
Tod, a spokesman for the European Commission said Monday, noting that
European Union member countries have issued nine Chinese seafood alerts so
far this year, up from three in all of 2006. "That is a cause of concern.
We are aware there appears to be a problem with veterinary medicine

This is not the first time Chinese seafood has run into problems. In recent
years, the European Union and Japan have both placed restrictions on
imports of Chinese seafood after detecting banned antibiotics, like
malachite green. And this year, several Southern states in the United
States banned or blocked imports of Chinese catfish after detecting illegal

Part of the problem, experts say, is that breeding ponds in China are
overcrowded to bolster production in the gigantic factory-style fish farms.
And fish excrement and bacteria in the water can devastate large schools of

"When you're raising thousands and thousands of fish together, you have
disease spreading," Mr. Schubert said. "And the operators try to control
that by using drugs and antibiotics."

In addition, a recent study by scientists from the Chinese Academy of
Sciences found that seafood products in 11 coastal cities in the Pearl
River Delta area were heavily contaminated with pesticides, including DDT,
which was banned in China in 1983.

"The only region that reports higher levels of DDTs is Egypt," the report
said. "This indicates that the coastal region of southern China is probably
one of the most DDT-polluted areas in the world."

Another study released in May by local scientists was just as damning,
finding that the coastal waters around Guangdong are being devastated by
large deposits of oil, lead, arsenic, mercury and copper.

So when heavy rains hit the area earlier in June, government scientists
issued a seafood alert because of a huge toxic "red tide," an algal bloom
that was carrying industrial waste to some of the region's biggest
seafood-producing areas.

Consumers were warned not to go swimming and not to eat local seafood.

Given the problems found with Chinese seafood, American regulators say they
had no choice but to impose new restrictions. "There's been a continued
pattern of violation with no sign of abatement," said Dr. David Acheson,
the F.D.A.'s assistant commissioner for food protection.

Many Chinese seafood exporters say they get their supplies from local fish
farmers, who sometimes overuse antibiotics. But the exporters also say the
F.D.A. restrictions are overly harsh and smack of politics.

"This is all about trade protectionism," said Gao Hua, director of quality
at the Meihua Aquatic Processing Factory in Fujian Province. "Some U.S.
states suddenly raised their standards on the content of antibiotics in
seafood in April. Maybe they saw too many imports from China."

Copyright 2007 The New York Times Company

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