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Release No. qa0465.04

## Questions and Answers Concerning U.S.-Japan Beef Trade Agreement

# October 24, 2004

1.  **When will actual shipments likely begin?**

-   It is not possible to say exactly. Before U.S. shipments begin, the
    Japanese authorities must complete their regulatory process for
    revising their domestic regulations (i.e., dropping 100% BSE testing
    to instead requiring testing only for animals 21 months and older).
    Regulations to permit importation of beef from animals 20 months and
    younger also must be promulgated. The special study of the
    correlation between chronological and physiological age, defined in
    the Agreement, must be completed within 45 days. This study will be
    conducted by USDA/AMS in close collaboration with Japanese experts
    to determine the details of the grading criteria to be used. Thus,
    all things taken together suggest that several weeks will be
    required for the resumption of sales.

2.  **What proportion of previous sales will this Agreement permit?**

    -   Previous annual sales (2003) of beef and beef products to Japan
        amounted to \$1.7 billion.

    -   This Agreement permits sales of beef and products from animals
        20 months old or younger. The U.S. beef production system is
        geared to producing younger animals. Estimates suggest that
        about 70% of the 35 million cattle slaughtered each year are
        steers and heifers 20 months or younger.

    -   Thus, the Agreement will permit a significant portion of
        previous sales to be recovered in the interim period.

3.  **How will cattle age be determined? What methods will be used in
    such a determination?**

-   Two methods will be used to determine that animals are 20 months of
    age or younger and thus meet the requirements for the Japanese
    market.

-   Production records that indicate birth dates will be used. These
    include records for individual animals; records from insemination;
    group age verification plans; and records from already existing
    USDA-certified special programs.

> -more-

-   The USDA physiological grading system also will be used. A special
    study is being conducted to examine the correlation between
    chronological age and physiological characteristics. This
    information then will be used to define the parameters of the USDA
    grading criteria that will be used in determining animal eligibility
    for export.

4.  **How long will this Agreement be in place? What is the longer-term
    outlook for U.S.-Japan beef trade?**

-   Our export sales to Japan were abruptly terminated 10 months ago.
    This agreement marks a start in the resumption of that trade -- a
    very significant restart, to be sure.

-   The operation of this approach -- a special marketing program with
    specific requirements -- will be reviewed jointly by the two
    Governments in July of 2005.

-   A group of international experts, including from the World
    Organization for Animal Health (OIE) and the World Health
    Organization (WHO), will be asked to review the BSE situation in
    both countries and to make recommendations as to how the program
    might be modified and consumers still be assured of safe beef
    supplies.

-   Thus, this Agreement marks a start in the resumption of trade. July
    2005 marks an important review. And, the longer-term view would be a
    return to normalcy in our trading relationship.

5.  **The Agreement includes resumption of Japan's beef sales to the
    United States market. What does this entail?**

-   Japan produces a very expensive, high quality specialty beef that it
    formerly exported to the United States. The export sales of Wagyu or
    Kobe beef were very limited, about a quarter million dollars in
    2001.

-   Japan has requested to resume its sales to our market. And, without
    prejudging the results of any evaluation, we have indicated that we
    will commence our rulemaking process. This will entail a risk
    assessment by APHIS and FSIS inspection of Japanese processing
    facilities, among other considerations.

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