E8-6800. Importation of Uncooked Pork and Pork Products

AGENCY:

Animal and Plant Health Inspection Service, USDA.

ACTION:

Final rule.

SUMMARY:

We are amending the regulations for importing animal products to allow the importation of uncooked pork and pork products from regions where classical swine fever (CSF) is considered to exist if the uncooked pork and pork products originate in a region free of CSF and meet certain other conditions with respect to processing and shipping. This action removes some restrictions on the importation of uncooked pork and pork products while continuing to protect against an incursion of CSF into the United States.

DATES:

Effective Date: May 2, 2008.

FOR FURTHER INFORMATION CONTACT:

Dr. Masoud A. Malik, Senior Staff Veterinarian, Technical Trade Services, National Center for Import and Export, VS, APHIS, 4700 River Road Unit 40, Riverdale, MD 20737-1231; [phone].

SUPPLEMENTARY INFORMATION:

Background

The regulations in 9 CFR part 94 prohibit or restrict the importation of certain animals and animal and poultry products into the United States to prevent the introduction of dangerous and destructive diseases of livestock and poultry. Section 94.9 contains requirements that apply to the importation of pork and pork products from regions where classical swine fever (CSF) exists.

On January 5, 2007, we published in the Federal Register (72 FR 471-475, Docket No. APHIS-2006-0186) a proposal ^[1] to allow the importation of uncooked pork and pork products from regions where CSF is considered to exist if the uncooked pork and pork products originate in a region free of CSF and meet certain other conditions with respect to processing and shipping.

We solicited comments concerning our proposal for 60 days ending March 6, 2007. We received 11 comments by that date, from private citizens, a State animal industry board, a State animal health commission, an animal welfare advocacy group, a pork industry association, a veterinary medical association, and representatives of the Mexican Government.

Several commenters expressed concern that the proposed rule would increase the risk of a CSF introduction into the United States. Some of these commenters were also concerned about the economic impact of the proposed rule on the pork industry in the United States, especially as a result of a loss of consumer confidence in U.S.-origin pork both with domestic consumers and foreign trading partners in the event of a CSF introduction to the United States.

While we agree that an animal disease outbreak could have negative impacts on markets for U.S. meat, we are confident that, for the reasons explained in the proposed rule, the protections afforded by the safeguards contained in this final rule will reduce to an acceptable level the risks associated with any importation of pork or pork products that originate in regions designated as free of CSF but that have been processed in regions that are not designated as free of CSF.

One commenter expressed concern that the Animal and Plant Health Inspection Service (APHIS) and the Food Safety and Inspection Service (FSIS) will not be able to monitor foreign processing establishments effectively and take appropriate remedial action in a timely manner.

We disagree. Both APHIS and FSIS have strong inspection and enforcement processes in place to ensure that foreign processing establishments meet the requirements of the Federal Meat Inspection Act and the regulations issued thereunder, as well as APHIS regulations.

One commenter stated that APHIS's conclusion that the proposed rule would have a minimal economic impact on the U.S. pork industry is premature.

We have prepared a revised economic analysis with the most recent available economic data. Our analysis shows that even in the case of pork imports from Mexico increasing by twice the amount imported in 2006, the effect on cash receipts of U.S. pork producers would be less than one-tenth of 1 percent.

One commenter expressed concern that under the rule, retail stores could obtain processing inspection status in the United States and allow fresh meat from CSF regions to go directly from foreign plants to U.S. stores.

Retailers would not be able to import fresh pork directly to their stores. In addition to the requirements APHIS imposes on imported meat and meat products, all meat imported into the United States for commercial purposes must be inspected by FSIS to ensure it meets the requirements of the Federal Meat Inspection Act and FSIS regulations. Imported meat must be moved from the port of arrival to the nearest defrost facility or an inspection house supervised by FSIS for review, inspection, and, if necessary, laboratory testing before the meat is distributed to the market or retail stores.

One commenter was concerned that shipping swine to foreign establishments for slaughter would result in inhumane treatment of the swine.

Under this final rule, only pork or pork products—not live swine—originating in CSF-free regions may be processed in regions that are not CSF-free and then imported into the United States. As we explained in the proposed rule, we would not allow processing establishments that process pork or pork products for export to the United States to receive live swine, because CSF spreads quickly in environments where swine are held or slaughtered.

Some commenters asked why no risk analysis was performed for this rulemaking. These commenters stated that a risk analysis addressing issues of contamination at plants in CSF regions, review of biosecurity practices at plants, review of plants' compliance history, and need for sampling of products should be prepared.

This rule includes requirements to ensure that pork and pork products from CSF-free regions are shipped to the processing facility in a manner that will prevent contamination. Records documenting shipment under seal must be kept at the facility for 2 years. The rule also contains measures to ensure contamination does not occur at the facility. These include a prohibition on the facility receiving or handling any pork or pork products from regions which are not free of CSF, a requirement that the processing be supervised by a full-time salaried meat inspection official of the national government of the region in which the facility is located, and provisions for APHIS monitoring. In addition, the facility must be approved by FSIS. We note that under the provisions of § 94.6, poultry carcasses and parts and products of poultry carcasses from regions free of exotic Newcastle disease (END) may be processed in regions where END exists under conditions similar to those we proposed for pork and pork products. Those measures have proven successful in mitigating the risk of introducing END into the United States through poultry carcasses or parts and products of poultry carcasses. Under these circumstances, we decided that a risk analysis was not necessary.

One commenter asked if the references to “regions” are consistent with the definition in the Terrestrial Animal Health Code, and if the United States Department of Agriculture has defined the science-based criteria to evaluate whether or not a region should be considered to be free of CSF.

The term “region” is defined in § 94.1 as “Any defined geographical land area identifiable by geological, political, or surveyed boundaries. A region may consist of any of the following: (1) A national entity (country); (2) Part of a national entity (zone, county, department, municipality, parish, Province, State, etc.); (3) Parts of several national entities combined into an area; or (4) A group of national entities (countries) combined into a single area.” We believe this definition to be consistent with World Organization for Animal Health definitions.

APHIS evaluates foreign regions for disease-free status in accordance with the criteria set forth in our regulations in 9 CFR part 92. Additional information on determining animal disease status and risk assessment can be found online at the Veterinary Services Regionalization Evaluation Services Staff Web site, http://www.aphis.usda.gov/​vs/​ncie/​reg-request.html. The informational document “Process for Foreign Animal Disease Status Evaluations, Regionalization, Risk Analysis, and Rulemaking,” which describes the process APHIS follows when conducting foreign animal disease status evaluation, regionalization, risk analysis, and related rulemaking, is available to the public through that Web site by clicking on the document title at the bottom of the page.

This final rule does not make any changes to the definition of a region, nor does it add or remove any regions from the list of regions recognized as CSF-free.

We have made a minor, nonsubstantive change in § 94.9 in this final rule by adding the word “representative” after the second “APHIS” in the second sentence of paragraph (e)(4). This word was inadvertently left out in the proposed rule.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, with the changes discussed in this document.

Executive Order 12866 and Regulatory Flexibility Act

This rule has been reviewed under Executive Order 12866. The rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

The U.S. swine industry plays an important role in the U.S. economy. Cash receipts from marketing meat animals were about $15 billion in 2005 (2001-2005 average, $12.4 billion). Sales totaled 27.2 billion pounds in 2005.^[2] Table 1 presents a time series of production, consumption, and export and import data. As the table shows, U.S. pork production increased from 7,764,000 metric tons in 1996 to 9,392,000 metric tons in 2005, an annual growth rate of about 2.1 percent. Similarly, consumption increased from 7,619,000 metric tons to 8,671,000 metric tons. During the same period, U.S. exports increased from 440,000 metric tons to 1,207,000 metric tons, by far outpacing imports. Net exports increased from 159,000 metric tons to 743,000 metric tons.

Table 1.—U.S. Pork Production, Consumption, Price, Exports and Imports, 1996-2005

Year	Production in 1,000 metric tons	Consumption in 1,000 metric tons	Price per metric ton	Exports in 1,000 metric tons	Imports in 1,000 metric tons	Net exports in 1,000 metric tons
1996	7,764	7,619	$1,596	440	281	159
1997	7,835	7,631	1,562	473	288	185
1998	8,623	8,305	1,170	558	320	238
1999	8,758	8,594	1,178	582	375	207
2000	8,596	8,455	1,413	584	438	146
2001	8,691	8,389	1,473	707	431	276
2002	8,929	8,685	1,179	731	486	245
2003	9,056	8,816	1,298	779	538	241
2004	9,312	8,817	1,621	989	499	490
2005	9,392	8,671	1,562	1,207	464	743
5-year average (2001-2005)	9,076	8,676	1,427	883	484	399
Sources: USDA/FAS, PS&D Online, 1996-2005, www.fas.usda.gov/​psdonline/​psdquery.aspx; prices, reported as $/100 pounds for yearly pork carcass cut-out values, are converted to dollars per metric ton, and are taken from Red Meat Yearbook (94006), http://usda.manlib.cornell.edu/​usda/​94006/​wholesaleprices.xls; net exports are calculated as the difference between exports and imports for each year.

The United States exported a total of about 907,000 metric tons of fresh or frozen pork valued at $2.2 billion in 2006. Although exports are widely distributed, a few regions represent major markets. The major destinations include Japan (45.3 percent), Mexico (11.2 percent), Canada (12.2 percent), South Korea (13.1 percent), Russia (4 percent), Australia (3.4 percent), China (1.9 percent), and Taiwan (0.8 percent). These regions accounted for nearly 92 percent of U.S. fresh or frozen pork exports in 2006. The most recent data (January-February 2007) show a similar pattern.^[3]

Under our current regulations, all U.S. fresh and frozen pork imports are from regions that are free from CSF. As shown in table 2, the United States imported about 342,000 metric tons of fresh or frozen pork valued at $863 million in 2006. Most of the imports were from Canada (84.3 percent) and Denmark (10.3 percent). Other regions that supplied pork include the Netherlands (0.7 percent), Ireland (0.5 percent), the United Kingdom (0.4 percent), Finland (0.4 percent), and Mexico (0.4 percent), with a total of less than 0.7 percent of imports coming from six other countries. In January and February of 2007, a similar import pattern was observed, with imports of about 52,600 metric tons of fresh or frozen pork valued at about $131 million for this 2-month period.

Table 2.—U.S. Global Imports of Fresh or Frozen Pork, 2003-2007

Source	2003	2004	2005	2006	2007 (Jan-Feb)		$Million	Metric tons	$Million	Metric tons
	$Million	Metric tons	$Million	Metric tons	$Million	Metric tons
Canada	$644.806	349422.6	$760.886	320339.3	$745.496	315136.5	$681.313	288624.2	$103.11	46102.2
Denmark	156.324	45735.7	182.794	46697.8	154.933	34477.9	141.731	35208.8	22.65	5248.1
Ireland	9.998	2905.7	128.38	2889.4	12.192	2590.5	8.657	1750.9	1.627	335.2
Finland	2115	822.4	6.792	2186.3	4.797	1356.5	5.235	1292.7	0.513	95.3
Netherlands	0	0	8.511	1923.3	9.373	2249.8	10.508	2490.2	0	0
United Kingdom	4.281	1488.7	4.184	1020.6	10.787	2186.3	7.305	1410.7	1.608	323.9
Mexico1	0.949	391.9	2.498	725.8	4.212	1038.7	5.102	1496.6	1.201	306.6
Sweden	0.098	40.8	2.95	730.3	2.4	557.9	1.807	386	0.068	23.6
Germany1	9.353	137.4	0	0	0.319	117.9	0.381	91.2	0	0
Australia	0.038	12.3	0.05	9.1	0.056	24	0	0	0	0
New Zealand	0.037	14.5	0	0	0	0	0	0	0	0
Chile	0	0	0	0	0	0	0.723	320.2	0.468	126.1
Iceland	0	0	0	0	0	0	0.161	24	0	0
Belgium1	0	0	0	0	0	0	0.058	23.1	0	0
China	0	0	0	0	0	0	0.042	18.1	0	0
World total	819	400972.1	928.504	373514.5	944.565	359738.7	863.024	342257.1	131.46	52562.8
1 Mexico contains regions where CSF exists, but also contains regions recognized as CSF-free. Belgium and Germany are part of the APHIS-defined CSF region, a single region of low risk for CSF. Pork, pork products, and swine from this region may be imported into the United States in accordance with the provisions of § 94.24.

Overall Impacts of Potential Pork Imports From Mexico

As indicated above, the rule will allow uncooked pork and pork products that originate in the United States to be shipped for processing to Mexico, which contains areas where CSF is considered to exist, and then be returned to the United States. As the Mexican Government and U.S. pork producers have requested this rule, this trade may increase under the rule, but we are unable to predict the size of the increase. Pork imports from Mexico accounted for only 0.6 percent in terms of value and only 0.4 percent in terms of volume in 2006.

We estimate here the impact of pork imports from Mexico on U.S. production, consumption, and prices using a net trade welfare model. The data used are obtained from the Foreign Agricultural Service (FAS) Production, Supply and Distribution (PS&D) database;^[4] the USDA Economic Research Service (ERS) Red Meat Yearbook (94006);^[5] the Global Trade Atlas;^[6] and United Nations/Food and Agriculture Organization FAOSTAT data.^[7] The baseline data used are as shown in the last row of table 1. The demand and supply elasticities used are −0.086 and 1, respectively.^[8]

We model three potential levels of pork imports from Mexico: Average imports from Mexico between 2003 and 2006; imports in 2006; and twice the imports in 2006. Amounts of pork shipped to the United States under the three scenarios are 906.45 metric tons, 1,470 metric tons, and 2,940 metric tons. Table 3 presents the changes resulting from the assumed U.S. pork imports from Mexico. These include annual changes in U.S. consumption, production, wholesale price, consumer welfare, producer welfare, and net welfare.

Our medium level of assumed pork imports of 1.470 metric tons (2006 actual imports) results in a decline of $0.13 per metric ton in the wholesale price of pork and a fall in U.S. production of about 770 metric tons. Consumption increases by about 700 metric tons. Producer welfare declines by about $1.10 million and consumer welfare increases by about $1.16 million, yielding an annual net benefit of about $65,000.

Table 3.—Estimated Impact for the U.S. Economy of Pork Imports From Mexico Under Three Scenarios

	Average imports (2003-2006)	2006 imports	Twice the 2006 imports
Assumed pork imports, metric tons	906.45	1470	2940
Change in U.S. consumption, metric tons	432.04	700.45	1401.3
Change in U.S. production, metric tons	−474.41	−769.35	−1538.7
Change in wholesale price of pork, dollars per metric ton	−$0.08	−$0.13	−$0.27
Change in consumer welfare	$716,910	$1,162,630	$2,325,360
Change in producer welfare	−$676,960	−$1,097,810	−$2,195,520
Annual net welfare gain	$39,950	$64,820	$129,840
Note: The baseline data used are 5-year annual averages for production, consumption, price, exports, and imports (2001-2005), as reported in the last row of table 1. The demand and supply elasticities used are −0.086 and 1, respectively.

The first column presents impacts assuming imports from Mexico equivalent to the 2003-2006 average. In this case, the price decreases by $0.08 per metric ton, production declines by about 474 metric tons, and consumption increases by about 432 metric tons. Consumer welfare increases by about $717,000, and producer welfare declines by $677,000. The annual net benefit is about $40,000.

Finally, the last column presents a case of expanded trade, with pork imports by the United States assumed to equal twice the 2006 imports from Mexico. The wholesale price of pork declines by $0.27 per metric ton, production declines by about 1,540 metric tons, and consumption increases by about 1,400 metric tons. Consumer welfare increases by about $2.3 million, while production welfare declines by about $2.2 million. The annual net benefit is about $130,000.

In all cases, consumer welfare gains outweigh production welfare losses. The decline in producer welfare, even in the last scenario, represents less than one-tenth of 1 percent of cash receipts received from the sale of domestic hogs and pork products.^[9] Thus, our analysis indicates that U.S. entities are unlikely to be significantly affected by this rule.

Expected Impacts of the Rule for Small Entities

The Regulatory Flexibility Act requires that agencies consider the economic impacts of their rules on small entities. We expect the impact of this rule for businesses large and small to be insignificant, but note here that the main industries that could be affected—meat processing (NAICS 311612) and meat and meat product merchant wholesalers (NAICS 424470)—are primarily composed of small entities. Under Small Business Administration (SBA) standards, meat processing establishments with no more than 500 employees, and meat and meat products wholesalers with no more than 100 employees are considered small. In 2002, there were 1,335 companies in the United States that processed and sold meat. More than 97 percent of these establishments are considered to be small entities and had average sales of $15.4 million, while large meat processors had average sales of $188 million. In 2002, there were 2,535 meat and meat product wholesalers in the United States. Of these establishments, 2,456 (97 percent) employed not more than 100 employees and are thus considered small by SBA standards. Small wholesalers had average sales of $9.3 million, while large entities had average sales of $131 million.^[10] Additionally, entities that produce hogs and pigs (NAICS 11210) could be affected.^[11] There were 82,028 farms with sales of hogs, about 94 percent of which are considered to be small. The impact of the rule is expected to be small for all entities, regardless of their size.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

Executive Order 12988

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the information collection or recordkeeping requirements included in this rule have been approved by the Office of Management and Budget (OMB) under OMB control number 0579-0333.

E-Government Act Compliance

The Animal and Plant Health Inspection Service is committed to compliance with the E-Government Act to promote the use of the Internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this rule, please contact Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at [phone].

List of Subjects in 9 CFR Part 94

• Animal diseases
• Imports
• Livestock
• Meat and meat products
• Milk
• Poultry and poultry products
• Reporting and recordkeeping requirements

Accordingly, we are amending 9 CFR part 94 as follows:

PART 94—RINDERPEST, FOOT-AND-MOUTH DISEASE, FOWL PEST (FOWL PLAGUE), EXOTIC NEWCASTLE DISEASE, AFRICAN SWINE FEVER, CLASSICAL SWINE FEVER, AND BOVINE SPONGIFORM ENCEPHALOPATHY: PROHIBITED AND RESTRICTED IMPORTATIONS

1. The authority citation for part 94 continues to read as follows:

Authority: 7 U.S.C. 450, 7701-7772, 7781-7786, and 8301-8317; 21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.

§ 94.12, 94.16, 94.17, 94.18

[Amended]

2. Sections 94.12, 94.16, 94.17, and 94.18 are amended by redesignating footnotes 12 through 18 as footnotes 13 through 19, respectively.

3. In § 94.9, a new paragraph (e) and a new footnote 12 are added and the OMB citation at the end of the section is revised to read as follows:

§ 94.9

Pork and pork products from regions where classical swine fever exists.

* * * * *

(e) Uncooked pork or pork products that originated in a region considered to be free of classical swine fever (CSF) and are processed in a region where CSF exists may be imported into the United States under the following conditions:

(1) Shipment to approved establishments. (i) The uncooked pork or pork products must be shipped from the CSF-free region of origin in closed containers sealed with serially numbered seals applied by an official of the national government of that region. They must be accompanied by a certificate that is signed by an official of that region's national government and that specifies the product's region of origin, the name and number of the establishment of origin, and the processing establishment to which the uncooked pork or pork products are consigned, and the numbers of the seals applied to the shipping containers.

(ii) The uncooked pork or pork products may be removed from containers at the processing establishment in the region where CSF is considered to exist only after an official of that region's national government has determined that the seals are intact and free of any evidence of tampering.

(2) Handling of uncooked pork and pork products. Establishments ^[12] in regions where CSF is considered to exist that process uncooked pork or pork products for export to the United States:

(i) May not receive or handle any live swine;

(ii) May not receive, handle, or process uncooked pork or pork products that originate in regions affected with CSF;

(iii) Must keep the certificate required by paragraph (e)(1)(i) of this section on file at the facility for a period of at least 2 years after export of processed products to the United States, and must make those records available to USDA inspectors during inspections; and

(iv) Must be evaluated and approved by APHIS through a site inspection.

(3) Compliance agreement. The operators of the processing establishment must sign a compliance agreement with APHIS, stating that:

(i) All meat processed for importation to the United States will be processed in accordance with the requirements of this part; and

(ii) A full-time, salaried meat inspection official of the national government of the region in which the processing facility is located will supervise the processing and examination of the product, and certify that it has been processed in accordance with this section; and

(iii) APHIS personnel or other persons authorized by the Administrator may enter the establishment, unannounced, to inspect the establishment and its records.

(4) Cooperative service agreement. The processing establishment, or a party on its behalf, must enter into a cooperative service agreement with APHIS to pay all expenses incurred by APHIS for the initial evaluation of the processing establishment and periodically thereafter, including travel, salary, subsistence, administrative overhead, and other incidental expenses, including excess baggage up to 150 pounds. In accordance with the terms of the cooperative service agreement, before the APHIS representative's site inspection, the operator of the processing establishment or the party acting on their behalf must deposit with the Administrator an amount equal to the approximate cost of one inspection by an APHIS representative, including travel, salary, subsistence, administrative overhead, and other incidental expenses, including excess baggage up to 150 pounds. As funds from that amount are obligated, a bill for costs incurred based on official accounting records will be issued to restore the deposit to the original level, revised as necessary to allow for inflation or other changes in estimated costs. To be current, bills must be paid within 14 days of receipt.

(5) Shipment to the United States. Uncooked pork or pork products to be imported into the United States must be shipped from the region where they were processed in closed containers sealed with serially numbered seals applied by an official of the national government of that region. The shipments must be accompanied by a certificate signed by an official of the national government of the region where the pork or pork products were processed that lists the numbers of the seals applied and states that all of the conditions of this paragraph (e) have been met. The certificate shall also state that the container seals specified in paragraph (e)(1)(i) and (ii) of this section were found by an official of the region's national government to be intact and free of any evidence of tampering on arrival at the processing establishment in the CSF-affected region. A copy of this certificate must be kept on file at the processing establishment for at least 2 years.

(Approved by the Office of Management and Budget under control numbers 0579-0015 and 0579-0333)

§ 94.17

[Amended]

4. In § 94.17, newly redesignated footnote 17 is amended by removing the words “footnote 15” and adding the words “footnote 16” in their place and by removing the words “§ 94.17(e) of this part” and adding the words “paragraph (e) of this section” in their place.

Done in Washington, DC, this 27th day of March 2008.

Kevin Shea,

Acting Administrator, Animal and Plant Health Inspection Service.

Footnotes

1.  To view the proposed rule and the comments we received, go to http://www.regulations.gov/​fdmspublic/​component/​main?​main=​DocketDetail&​d=​APHIS-2006-0186.

2.  NASS/USDA, Meat Animals Production, Disposition, and Income: 2005 Summary, April 2006.

3.  The World Trade Atlas: Global Trade Information Services, Inc., U.S. edition, February 2007.

4.  http://www.fas.usda.gov/​psdonline/​psdquery.aspx.

5.  http://usda.mannlib.cornell.edu/​usda/​ers/​94006/​wholesaleprices.xls.

6.  Global Trade Information Services, Inc., country edition, March 2007.

7.  http://faostat.fao.org.

8.  John Sullivan, John Wainio, and Vernon Roningen, A Database for Trade Liberalization Studies, #AGES89-12, March 1989.

9.  $9.7 million divided by $12.4 billion equals 0.08 percent.

10.  U.S. Census Bureau, 2002 Economic Census: Manufacturing—Industries Series and Wholesale Trade-Subject, August 2006.

11.  SBA, Small Business Size Standards matched to North American Industry Classification System. Effective July 31, 2006.

12.  See footnote 9 in § 94.8.