In a move likely to unsettle bilateral trade relations, Taiwan's legislature this week banned the importation of certain cuts of U.S. beef, prompting outrage from U.S. executive and legislative branch officials who had earlier backed a negotiated deal aimed at liberalizing Taiwan's imports of U.S. beef.
       
       
       
       Taiwan President Ma Ying-jeou apparently was unable or unwilling to stop approval of a Jan. 5 amendment to Taiwan's Food Sanitation Act banning U.S. ground beef and offal, sources said. The amendment, they noted, was forged after a consensus was reached between the majority and minority parties in the Legislative Yuan (LY).
       
       
       
       Its passage violates an October agreement between the U.S. and Taiwan that would liberalize Taiwanese beef regulations to bring them into compliance with a World Animal Health Organization (OIE) ruling that U.S. beef is safe. That deal also allowed an industry-to-industry deal that limited the cuts that were immediately eligible for market access.
       
       
       
       The U.S. industry and the Obama administration are "monitoring" the amendment's language and taking a wait-and-see approach, because recent gains to allow market access for bone-in beef have been substantial, one U.S. industry source explained.
       
       
       
       "If there were an additional step taken to limit us to boneless beef from cattle under 30 months of age, that would be more disruptive to our ability to grow the market," this source said. "First, we've been shipping bone-in for a couple of months and that would disrupt orders. Second, bone-in, especially short ribs, are a big market for us."
       
       
       
       This source said that while "all of the developments [in Taiwan] are troubling, that would be more troubling."
       
       
       
       The American Meat Institute denounced the passage of the amendment on January 5.
       
       
       
       "In taking this action, the government of Taiwan clearly is failing to live up to its obligations under the bilateral agreement between our governments to expand beef trade," said AMI President J. Patrick Boyle. "U.S. beef is among the safest anywhere and data show a record of sustained food safety progress. There is simply no scientific basis for Taiwan's action and at this point, we must question the seriousness of their commitment to being a true trade partner."
       
       
       
       According to Boyle, the U.S. has implemented a set of measures, regulations and practices that are science-based and consistent with the guidelines of the World Organization for Animal Health (OIE) for minimizing the risk posed by BSE.
       
       
       
       "In the United States, we take our trade agreements seriously. We have met our obligations," Boyle said. "It is time for the government of Taiwan to maintain trade policies that are based upon the facts surrounding U.S. beef safety and consistent with its WTO obligations."
       
       
       
       The Obama administration this week denounced the amendment, following up on an earlier statement from last week as it was moving toward passage in the legislature. In a Jan. 5 statement, Deputy U.S. Trade Representative Demetrios Marantis and Undersecretary for Farm and Foreign Agricultural Services Jim Miller said the U.S. is "deeply disappointed" with the decision by Taiwan's LY to amend the Food Sanitation Law.
       
       
       
       "[T]he FSA amendment's provisions do not have a basis in science and constitute a unilateral violation of a bilateral agreement concluded in good faith by the United States with Taiwan a little over two months ago," the officials said, adding that the decision "to place domestic politics over science raises serious concerns. This action will also undermine Taiwan's credibility as a responsible trading partner and will make it more challenging for us to conclude future agreements to expand and strengthen bilateral trade and economic ties."
       
       
       
       The two officials also said the action by the LY was "particularly disappointing" given the bilateral history of the trade relationship, and the fact that the U.S. was one of the strongest supporters of Taiwan's participation in international trade, including the WTO.
       
       
       
       "In light of the continuing importance of our bilateral economic relationship, we urge Taiwan to honor its commitments and to implement the beef protocol as negotiated," the officials conclude.
       
       
       
       Senate Finance Committee Chairman Max Baucus (D-MT), who represents one of the largest beef producing states, wrote a letter President Ma on Dec. 31 stating that the actions by the LY on beef call into questions Taiwan's credibility as a reliable trading partner.
       
       
       
       The letter, released on Jan. 4 by the American Institute in Taipei, which handles consular duties for U.S. interests in Taiwan, expresses "strong disappointment with Taiwan's failure to implement the beef import protocol" and argues that the amendment enacted by the LY "would unjustifiably bar certain U.S. beef products and would abrogate the import protocol."
       
       
       
       Baucus, who described him in the letter as a "long-time friend and supporter of Taiwan," said he was "frustrated that Taiwan has unilaterally adopted 'administrative border measures' that appear to run counter to Taiwan's commitments under the import protocol, and are, in some cases, disrupting shipments of deboned U.S. beef that Taiwan has been accepting since 2006."
       
       
       
       "Taiwan's own risk assessment, the World Animal Health Organization (OIE), and numerous other studies have concluded that all U.S. beef is safe including ground beef, offals, and processed products," Baucus wrote. "It is simply unacceptable that Taiwanese authorities continue to take actions that imply otherwise." The Senate Finance chairman said he expects Taiwan to implement the recently negotiated import protocol "in full."
       
       
       
       Senate Finance Committee Ranking Member Chuck Grassley (R-IA) and Senate Agriculture Committee Ranking Member Saxby Chambliss both condemned the move. Chambliss argued that USTR should move beyond bilateral consultations, an apparent reference to WTO action against Taiwan, in a Jan. 5 letter to President Ma.
       
       
       
       "Taiwan's actions may precipitate an alternative course of action by the United States Trade Representative to resolve this dispute," Chambliss wrote. The joint USTR and USDA statement did not include any mention of elevating the dispute to the WTO, however. Business sources speculated that the administration would be unlikely to take such action when beef is less than 1 percent of bilateral U.S.-Taiwan trade by value.
       
       
       
       Meanwhile, U.S.-Taiwan Business Council President Rupert Hammond-Chambers predicted that the re-emergence of the beef-access issue would once again prevent the scheduling of talks under the bilateral Trade and Investment Framework Agreement (TIFA).
       
       
       
       "I think it's an issue that just ran away from everybody, and the legislature feels compelled to take action," he said on Jan. 4. "I would suspect [the LY] see it as an issue of standing with the Taiwan people."
       
       
       
       Hammond-Chambers also lamented the fact that no voices in Taiwan have forcefully argued that U.S. beef has been declared safe by the OIE.
       
       
       
       "Most of this discussion is taking place in the absence of good information," he said. "No one has undertaken any effort to get that information out, and now it's unlikely that a robust effort would be effective. The parties used this issue in the run-up to Dec. 5 elections, and after Dec. 5, it became a credibility issue, [so] they had to act."
       
       
       
       Various officials from Taiwan have been quoted as saying the amendment was necessary to protect Taiwan against "unsafe" types of beef because the U.S. has had a case of bovine spongiform encephalopathy within the last 10 years.
       
       
       
       The October 2009 access deal was modeled on a similar market-opening arrangement the U.S. struck with South Korea. It is "science-based, consistent with the OIE guidelines, the domestic legal obligations of both sides, as well as the findings of Taiwan's own risk assessment," the U.S. officials argued on Dec. 29. "The Protocol thus provides further assurances that U.S. beef and beef products to be exported to Taiwan - which are the same products that are consumed by Americans at home - are safe."
       
       
       
       According to reports in the Taiwan press, President Ma Ying-jeou instructed the executive and legislative branches Dec. 30 to send representatives to Washington to communicate the government's position on the legislative move to ban certain U.S. beef products.
       
       
       
       "Given that the latest legislative decision appears to be irreversible, the executive and the legislative sectors need to shoulder responsibility for this matter," Ma said during a meeting on the issue. "The team should leave as soon as possible on its damage-control mission to mitigate the impact on Taiwan-U.S. relations."
       
       
       
       Ma announced the delegation after the Legislative Yuan took its first step on Dec. 29 to consider re-imposing the ban on imports of certain beef products. Dan Neumann
       
       
       Source: World Trade Online’s News Stand, January 12, 2010.