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Background Since mid-1980, Thailand, Denmark and the United States have made a
number of requests to export both cooked and uncooked chicken meat to
Australia. The Australian Quarantine and Inspection Service (AQIS) began
considering the proposal to import chicken meat in 1990. However, the
Australian Veterinary Association and domestic poultry producers voiced
concern over the introduction of Newcastle Disease and Infectious Bursal
Disease Virus (IBDV) through the imported meat. Either could pose a
great threat to Australia’s poultry industry and native bird
populations. In response to these concerns, AQIS began an assessment of
the risk of importing cooked chicken meat. It deferred assessment of
uncooked meat pending completion of the cooked meat assessment. In mid-1995, the Australian government decided
"in-principle" to allow imports of cooked chicken that had
been processed under specified temperature/time parameters proven to
inactivate the disease viruses. To determine these specific parameters,
AQIS considered a range of studies and then adopted a 1988 study of IBDV
conducted by Dr. Dennis Alexander of the Central Veterinary Laboratory
in the UK. This study, commissioned by General Foods poultry, New
Zealand, recommended 70°C for 90 minutes and 80°C for 14.4 minutes for
the inactivation of IBDV. In 1996, AQIS published a draft protocol that set out core
temperature/time levels for processing chicken meat:
In reaction to AQIS’s draft protocol, the Australian Chicken
Growers Council argued that AQIS’s risk assessment underestimated the
risks associated with commercial cooking processes. For their part, Thai
chicken exporters complained that the cooking regime proposed by the
Australian government was commercially impracticable. The specified
temperature/time parameters would not only unnecessarily raise
production costs, but also would affect the quality of the cooked meat,
thereby reducing the competitiveness of their products in the Australian
market. The issue was brought up for discussion in the Thai-Australian
Joint Commission. Subsequently, in early 1997, the Australian government
commissioned its own test by the Central Veterinary Laboratory. In April 1997, a delegation from AQIS and the Australian poultry
industry was sent to inspect four Thai processing facilities that had
applied for the sanitary certification required for exporting to
Australia. None of the facilities met the Australian sanitary
requirements; all were told that they needed to improve their slaughter
and processing facilities. In July 1997, amid mounting protest from domestic poultry
producers, the Australian government delayed a decision to open its
poultry market to foreign imports until the Central Veterinary
Laboratory completed its second trial and submitted the results to AQIS.
In September 1997, Thailand threatened to boycott US$ 1.2 billion
dairy and meat exports from Australia in retaliation for a continued ban
on cooked chicken meat imports. The Australian Dairy Industry Council
called on the Australian government to abide by the WTO's rules on
non-tariff barriers and to lift quarantine barriers on imports of cooked
chicken meat to escape the boycott. National Party leader Tim Fischer
suggested the Australian government place a tariff on imported cooked
chicken meat as a transitional arrangement, which WTO provisions allow. On 7 November 1997, the Australian government announced a decision
to allow imports of cooked chicken meat from Denmark, the United States
and Thailand processed under the following core temperature/time
parameters:
The parameters were based on the Central Veterinary Laboratory’s
new test results, which confirmed that the existing temperature/time
parameters readily inactivated Newcastle Disease Virus but would not
totally inactivate the strain of IBDV used in the tests. But protests continued from both Thai chicken exporters and the
Australian chicken industry, and AQIS asked
the Central Veterinary Laboratory to carry out yet another round of
tests. The test results, submitted to AQIS in mid 1998, indicated that
IBDV was unexpectedly resistant to heat inactivation at temperatures
lower than 74°C. These test results differed from the previous study
because it used different virus strains and a different medium for
suspending the virus. Based on these new test results, Australia
announced in June 1998 a revision of the minimum core temperatures/time
parameters as follows:
At a meeting in September 1998, the Thai National Sanitary and
Phytosanitary Committee instructed the Livestock Department of the
Ministry of Agriculture and Cooperatives to conduct its own risk
assessment of possible IBDV-contamination in the production of cooked
chicken. The assessment is now underway and is expected to be completed
in April 1999. It is designed to account for IBDV prevention programs at
the farm level; incidence of IBDV infection in Thailand; risk management
for transporting chickens from poultry farms to slaughter houses; and
quality assurance programs used by Thai chicken processing plants,
including heat treatment, packaging, and shipment methods for cooked
products. Analysis
of Commercial and Substantive Policy Issues and International Legal
Aspects of the Issue Commercial
Issues Australia’s very stringent requirements for the heat treatment of
cooked chicken meat put Thai cooked chicken producers at a unfair
disadvantage in the Australian market. Although Australia is not now a
principal market for Thai chicken products, Thai suppliers could
potentially capture 10 percent of the Australian cooked chicken market,
worth about 920 million baht (A$ 40 million), during just the first few
years of exports. The Australian poultry market is estimated at 46
billion baht (A$ 2 billion) annually. Annual consumption of chicken meat
is now 27 kg per person compared with the consumption of beef and veal
(40.0 kg per person), sheep meat (16.8 kg per person) and pork meat
(18.4 kg per person). Based on the present trend, poultry meat could
overtake beef and veal as the Australians' most preferred meat within
the next ten years. Cooked chicken meat accounts for 20 percent of the
market and sales are growing 10 to 20 percent per year. Substantive
Policy Issues Infectious Bursal Disease is important from an economic viewpoint
because it could cause huge losses for chicken producers. IBDV is highly
contagious and remains infectious for several months in the poultry
house environment. To eradicate the virus, a poultry house requires
effective cleansing and disinfecting. Nonetheless,
Australia’s imposition of stringent quarantine standards is
protectionist in nature. The proposed cooking
regime does not apply to domestically processed chicken products on the
grounds that the country is free from IBDV. Although IBDV is most
prevalent in Southeast Asia, Europe and North America, the Office
International des Epizooties (OIE) 1997 yearbook reported cases of the
disease in Australia. Thus, there is no scientific basis for granting
preferential treatment to Australian producers. Moreover,
to achieve the level of protection it considers appropriate, AQIS has
not adequately explored safety measures that are less trade restricting
than heat inactivation measures. According to Professor Daral Jackwood,
an Ohio State University expert on IBDV, the disease control used most
often is vaccination of breeder flocks. Using this method, maternal
antibodies are transferred to chicks and thereby protect the chicks for
the first two critical weeks of life, a time when infection by IBDV
causes the most immune suppression. Another study conducted by the
University of Florida’s Institute of Food and Agricultural Science
also confirms that protection of chickens from IBDV can be achieved
through a breeder vaccination program, supplemented by effective
biosecurity measures (control of people, equipment and vehicles on the
farm) and an effective broiler vaccination program. Moreover, regular
ante-mortem and post-mortem inspection at the farm level can ensure that
each batch of source birds is in good health before being transported to
slaughterhouses. At the processing stage, a one week quarantine is sufficient to
ensure that the birds are IBDV-free because chickens infected with IBDV
will normally die within 4-5 days. Cooked chicken meat destined for
Australia may even be separately processed and stored. Quality assurance
programs such as HACCP introduced by Thai processing plants should also
prevent exposure of cooked products to possible recontamination. International
Legal Aspects of the Issue Australia’s quarantine policy regarding imports of cooked chicken
violates the WTO Agreement on the Application of Sanitary and
Phytosanitary measures in many respects. First,
it is inconsistent with Article 2.2 of the Agreement, which requires SPS
measures to be based on scientific principles. The risk assessment
undertaken by AQIS was not based on a sound scientific approach. Even
though the time and heat levels recommended for the inactivation of IBDV
were derived from a scientific trial, the use of IBDV strain CS 88 in
the test was not justified by objective evidence. AQIS and the Central
Veterinary Laboratory arbitrarily assumed that this very virulent strain
of IBDV is prevalent in Thailand. So
far, no research has been done to identify which IBDV strains exist in
Thailand. Second,
Article 2.3 requires that SPS measures do not arbitrarily or
unjustifiably discriminate between products from WTO member countries
where identical or similar conditions prevail. Despite the fact that
IBDV cases have been reported in Australia, Australian domestic
producers are not subject to the same temperature/time parameters as
Thai producers. Third,
Australia’s quarantine policy is inconsistent with the provisions of
Article 6 because AQIS’s risk assessment failed to assess the possible
existence of disease-free areas and areas of low-disease prevalence in
Thailand. IBDV or some strains of the disease may be limited only to one
or more specific geographical areas in Thailand. Therefore, chicken
products coming from IBDV-free areas within Thailand should be
considered on the basis of their disease status, not that of the rest of
the country. Analysis
of Key Players and Potential Allies In
Thailand The Ministry of Foreign Affairs, in coordination with the Ministry
of Commerce and the Ministry of Agriculture and Cooperatives’
Department of Livestock, has led the Thai government's effort to
confront Australia’s unfair standards on chicken imports. Since
Australia is a relatively small market in comparison to other major
markets such as Japan and the EU, this issue may not be placed high on
either Thai or Australian government agendas. The Ministry of Foreign
Affairs, which is charged with promoting Thailand's relations with
foreign countries, certainly does not want to see bilateral
relationships between Thailand and Australia soured by this single
issue. The Ministry of Commerce currently is exploring market
opportunities in Australia for other agricultural products, and the
Ministry of Agriculture and Cooperatives is now implementing a
Thai-Australian MOU on agricultural cooperation (signed during the
Australian Prime Minister's official visit last April). Moreover,
Australia extended A$160 million in aid to Thailand during the financial
crisis. For all these reasons, the Thai government may be reluctant to
retaliate by boycotting Australia's dairy and meat imports. Nonetheless,
the Broiler Processing Exporters Association might be successful in
persuading the Thai government to impose a selective boycott on some of
these products or delay importation of lupin seeds and skim milk. It
might even persuade the government to apply very strict quarantine
standards on Australian beef imports on grounds of reported cases of
Blue Tongue disease in Australia, an animal disease that is exotic to
Thailand. In
Australia With the supported of the Australian Veterinary Association (AVA),
the Australian Chicken Growers Council (ACGC) has actively lobbied
against proposals to import foreign chicken meat on the grounds that
there is a high risk of importing Newcastle Disease and IBDV into the
country. The process of import risk analysis carried out by AQIS,
although based on scientific procedures, also allowed participation by
stakeholders, including the industry concerned. The scientific process
has been susceptible to pressure particularly from ACGC. The Australian Chicken Meat Federation, which represents major
chicken meat processors, has not been active in the lobby against
chicken meat imports. Some of the Federation’s members have been
increasing their capacity and may even be looking to export
opportunities. Imports of chicken meat will help assure a good,
inexpensive supply of meat crucial to producing an internationally
competitive product. Although the final decision on quarantine will be made by AQIS, the
Department of Foreign Affairs and Trade (DFAT) can influence the
decision-making process to some extent, considering that DFAT is in
charge of ensuring that Australia’s trade policy is in line with its
WTO commitments. Deputy Prime Minister and Minister for Trade Tim
Fischer, leader of the National Party, was fully aware that Australia
could not resist the global liberalization trend when he suggested that
his country introduce appropriate safeguard actions such as a tariff or
quota restriction on foreign chicken imports on a temporary and reducing
basis. It is unclear whether he can gain support from other party
members for this cause because his party has a constituency in rural
Australia. The Australian government may need to provide adjustment assistance
to help the domestic chicken industry to adjust to the change in market
conditions that chicken meat imports will bring. It may also look at
export opportunities as an alternative way to help the industry. In
either case, the government has to work hard and closely with the
industry to help domestic producers become more competitive. According
to an international benchmarking study in 1997, Australia lags behind
other major chicken producers both in terms of price competitiveness and
efficiency. Potential allies Besides the key players in Thailand and Australia already
mentioned, other potential allies include the following: In
Thailand.
Thai chicken growers will be our principal
allies. An expanded overseas market means an increase in demand for
chickens to be processed for exports. Likewise, animal feed companies
will benefit indirectly from increased exports; they can expect their
sales to increase as a result of growing demand for feed grains from
chicken growers. Support from the Board of Trade of Thailand will also
be important. The Board is represented on several governmental
committees. It acts as the voice of business, pointing out concerns and
offering opinions and recommendations on behalf of the private sector to
the government. In addition to these three potential allies, the
Australian-Thai Chamber of Commerce will not want to see commercial
relations between Bangkok and Canberra strained as a result of any
failure of the Thai and Australian governments to settle this problem. In Australia. Fast food chains such as KFC and McDonald’s and big
supermarket chains such as Coles, Woolworth and Safeway are potential
allies in Australia. The fast food chains may be interested in sourcing
cheap precooked chicken meat from Thailand, while supermarkets may be
interested in importing Thai chicken products to satisfy their
lower-income customers. In Denmark and the United States. Australia's quarantine policy
also affects U.S. and Danish exporters. The USA Poultry and Egg Export
Council and the Danish Poultry Exporters Association are likely to
support our position. The U.S. government may be willing to support our
position because the Australian import standard for cooked chicken meat
is just one of a number of standards that prevent Australian market
access for U.S. agricultural products. As a major chicken exporter in
Europe and a strong free-trade supporter, Denmark is likely to share the
same interests. |