United States General Accounting Office

GAO Report to Congressional Requesters

December 1997 AGRICULTURAL

EXPORTS

U.S. Needs a More

Integrated Approach to

Address Sanitary/

Phytosanitary Issues

GAO/NSIAD-98-32

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-277551 

December 11, 1997

The Honorable Thomas A. Daschle

Minority Leader

United States Senate

The Honorable Tom Harkin

Ranking Minority Member

Committee on Agriculture, Nutrition, and Forestry

United States Senate

The Honorable Patrick J. Leahy

Ranking Minority Member

Subcommittee on Research, Nutrition and

 General Legislation

Committee on Agriculture, Nutrition, and Forestry

United States Senate

The economic health of the U.S. agricultural sector depends increasingly

on its ability to export products to foreign markets. However, certain

foreign sanitary and phytosanitary (SPS) measures may prohibit U.S.

agricultural products from entering foreign markets and constrain the

growth of U.S. agricultural exports. SPS measures are designed to protect

human, animal, or plant life or health. For example, a government might

require imported plant products to be inspected or treated to prevent the

introduction of new pests into the country. Subject to certain conditions,

SPS measures are allowed under international trade rules, but the U.S.

Trade Representative (USTR) and the U.S. Department of Agriculture (USDA)

believe that some foreign SPS measures may in reality be disguised barriers

to trade. You expressed concern about U.S. government efforts to address

foreign SPS measures that may unfairly restrict U.S. agricultural exports.

New rules regarding the appropriate use of SPS measures in relation to

trade, established under the World Trade Organization (WTO)1

 in 1995 and

the North American Free Trade Agreement (NAFTA)2

 in 1994, present new

1

WTO was established on January 1, 1995, as a result of the Uruguay Round of the General Agreement

on Tariffs and Trade (GATT), which began in 1986 and ended in 1994. WTO facilitates the

implementation, administration, and operation of multiple agreements that govern trade among its

member countries. As of September 6, 1997, WTO had 132 member countries.

2

NAFTA is a multilateral trade agreement that contains obligations to govern trade among Canada,

Mexico, and the United States. Negotiations began in June 1991, and the agreement was signed in

December 1992. This agreement was supplemented in 1993 by negotiations of side agreements on

labor, the environment, and the use of temporary import controls for emergency purposes, called

“safeguards.” NAFTA entered into force on January 1, 1994.

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B-277551 

challenges to the U.S. government. First, determining whether foreign SPS

measures comply with WTO or NAFTA rules requires input from U.S. trade

agencies as well as U.S. regulatory agencies with technical and scientific

expertise on food-related issues. These regulatory agencies were set up to

achieve domestic objectives but now are increasingly expected to be

involved in addressing international trade issues. Moreover, U.S. efforts to

address foreign SPS measures must take into account U.S. regulatory

efforts to ensure the health and safety of domestically produced and

imported food and agricultural products. (See Related GAO Products for

reports dealing with agricultural trade and food safety issues.)

In response to your request, this report provides information and analysis

on (1) the extent to which foreign SPS measures may unfairly restrict U.S.

agricultural exports and (2) the federal structure and approach for

addressing such measures. As you requested, this report does not address

U.S. efforts to ensure domestic food safety or other countries’ concerns

about U.S. SPS measures.3

Background Sanitary and phytosanitary measures encompass many complex technical

and scientific issues.4

 Typically applied to both domestically produced and

imported goods, SPS measures may be designed to protect

• human or animal life or health from food-borne risks,

• humans from animal- and plant-carried diseases,

• plants and animals from pests or diseases, and

• the territory of a country from the spread of a pest or disease.

To minimize or avoid exposure to risk, SPS measures may address how

goods are produced, processed, stored, and/or transported. They may

require exporters to certify that their products meet importing-country

requirements and may require imported products to be inspected or

treated before entering the country. If a government believes that certain

products present a high risk that cannot be reduced through

risk-mitigation techniques, it may impose SPS measures to ban product

3

Several GAO reports address U.S. efforts to ensure domestic food safety, including Agricultural

Inspection: Improvements Needed to Minimize Threat of Foreign Pests and Diseases

(GAO/RCED-97-102, May 5, 1997) and Food Safety: New Initiatives Would Fundamentally Alter the

Existing System (GAO/RCED-96-81, Mar. 27, 1996).

4

Sanitary measures pertain to human and animal health and safety. Phytosanitary measures pertain to

protecting plants from pests and diseases.

Page 2 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

entry altogether.5 Although SPS measures may result in trade restrictions,

governments generally recognize that some of these restrictions are

necessary and appropriate in order to protect human, animal, and plant

life and health. However, governments may disagree about whether

certain SPS measures are necessary and appropriate.

SPS measures are not a new issue in global agricultural trade. The United

States has long-standing concerns that some SPS measures, such as

European Union (EU)6

 measures on meat imports, Chinese measures on

wheat imports, and Japanese measures on apple and tomato imports, are

unnecessary and have unfairly restricted U.S. agricultural exports. At the

same time, other countries have concerns about U.S. SPS measures that

restrict agricultural products entering the United States.

Because of its concerns, the United States played a lead role during

negotiations to establish the WTO and NAFTA; these negotiations developed

rules and principles to help minimize the adverse impact of SPS measures

on trade.7

 The WTO Agreement on the Application of Sanitary and

Phytosanitary Measures (SPS agreement) and NAFTA’s chapter 7 on

Agriculture and Sanitary and Phytosanitary Measures recognize that

countries have a right to maintain SPS measures that protect the health and

safety of their population and agricultural sector and to determine

acceptable levels of risk. However, these agreements stipulate that the

application of SPS measures and determination of risk levels should not be

arbitrary or constitute disguised restrictions to trade. Therefore, they

require SPS measures to be based on scientific principles, including an

assessment of relevant risks. (These two agreements are similar, but not

identical. App. I contains more information about the WTO SPS agreement.)

In addition to these rules and principles, the WTO and NAFTA also provided

dispute settlement procedures to help resolve disagreements between

countries about their SPS measures. These procedures include

consultations (discussions) and review by a dispute settlement panel.

5

Such techniques include inspection or treatment in the exporting country or at the point of entry to

the importing country, post-entry treatment or detention in quarantine facilities, or restrictions on the

use or distribution of a commodity.

6

EU member countries include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,

Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom.

7

The ministerial declaration that launched GATT’s Uruguay Round in 1986 stated that “negotiations

shall aim to achieve greater liberalization of trade in agriculture and bring all measures affecting

import access and export competition under strengthened and more operationally effective GATT

rules and disciplines by,” among other things, “minimizing the adverse effects that sanitary and

phytosanitary regulations and barriers can have on trade in agriculture.”

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B-277551 

Before invoking dispute settlement procedures, countries generally try to

resolve their disagreements through more informal means.

Although the SPS agreement and NAFTA have established certain standards

for the application of SPS measures, disagreements between countries

about these measures often involve complex issues not specifically

addressed by the texts of the agreements. First, the agreements require

measures to be based on scientific principles, but scientific research on

certain topics may not exist or existing research may be inconclusive. For

example, the lack of sufficient research on certain poultry diseases affects

U.S. exports of poultry meat to Australia.8

 Second, the SPS agreement and

NAFTA require measures to be based on an assessment of risk, but

governments may have different risk tolerances or may disagree about

how to ensure certain minimal levels of risk. Such a disagreement exists

between the United States and China concerning wheat imports.9

 Finally,

because of domestic pressures or larger outstanding trade or political

issues, governments may be unwilling or unable to change their SPS

measures. An EU ban in place since the mid-1980s that prohibits importing

meat treated with growth-promoting hormones10 appears to be linked, in

part, to such issues.11

Moreover, in attempting to resolve such concerns, the U.S. government

may not fully understand a foreign government’s reasons for establishing a

measure and therefore may have difficulty determining what strategy will

be most effective to resolve the issue or assessing whether its efforts are

having any impact. If additional research is required, such research can be

8

According to USDA officials, the United States needs to determine whether research exists or conduct

new research to attempt to refute Australian concerns that avian influenza, a disease that affects

poultry, can be transmitted through poultry meat. Because of these concerns, the United States has

been unable to export poultry meat to Australia.

9

China has a stated ban on U.S. wheat exports that contain the tilletia controversa kuhn (TCK) fungus,

arguing that for food security reasons it cannot be exposed to any risk that might reduce its wheat

production. The U.S. government has argued, based on research about the fungus, that China does not

have the right climatic conditions for the fungus to become established and, therefore, U.S. wheat

exports that are found to contain the fungus do not present a risk to China. China is not a WTO

member, but has applied to join. See page 11 and appendix III for more details.

10Until November 1, 1993, the EU was known as the European Community. The hormone ban was

established under the European Community by the European Commission, which was the executive

branch of the European Community and continues to exist under the EU. For ease of reference, we

refer to the hormone ban throughout this report as an EU measure.

11According to a January 1996 press report, even though scientific evidence demonstrated that the use

of growth-promoting hormones in livestock did not present a human health risk, EU agriculture

ministers were opposed to lifting the ban because of strong consumer opposition to hormone use. See

“U.S. Plans to Launch WTO Challenge of EU Hormone Ban Today,” Inside U.S. Trade (Jan. 26, 1996).

See page 11 and appendix III for more details.

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B-277551 

time consuming to complete. Finally, the government must work closely

with industry officials to determine whether they are willing to perform

any risk-mitigation techniques that the foreign government may request. In

some cases, although the government may not believe such techniques are

necessary, industry officials may be willing to perform risk mitigation in

order to gain access to a new market. Because of such issues, addressing

and seeking resolution to foreign SPS measures can be a long and complex

process that requires substantial negotiation between the United States

and foreign governments.

The United States has had long-standing concerns about several foreign

SPS measures that the new WTO rules on SPS measures have helped resolve.

For example, on June 30, 1997, a WTO dispute settlement panel requested

by the United States found that the EU hormone ban does not conform

with a number of provisions in the WTO SPS agreement. While this

represents a significant achievement for the United States, the matter is

not yet resolved because the EU has filed an appeal regarding the decision.

Examples of other key SPS issues that were resolved in 1997 include a

Japanese ban on U.S. tomato imports, EU acceptance of most U.S. meat

inspection procedures, long-standing Chinese bans on U.S. grape and

sweet cherry imports, Chilean measures on wheat and several types of

fruit, and Mexican measures on sweet cherry imports.12 Examples of

prominent measures that were resolved in 1996 and 1995, respectively,

include Russian measures on poultry imports and Korean shelf-life

standards. However, in spite of these successes, many other SPS measures

remain unresolved, and new problems involving SPS measures continually

surface.

Federal efforts to resolve issues related to foreign SPS measures coincide

with new expectations that the management of federal programs will

increasingly focus on results. Specifically, the Government Performance

and Results Act of 1993 (the Results Act) seeks to improve federal

program management by requiring federal agencies to set goals for

program performance and to measure the results of their efforts.13 The

Results Act envisions that when multiple federal agencies share

responsibility for addressing cross-cutting issues, as is true for SPS

measures, programs should be closely coordinated to ensure that goals are

consistent, and, as appropriate, mutually reinforcing.

12As discussed in footnote 9, China is not a WTO member but has applied to join and would be

expected to comply with WTO provisions on SPS measures upon being granted membership.

13P.L. 103-62 (Aug. 3, 1993).

Page 5 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

Results in Brief Despite growing concern that certain foreign sanitary or phytosanitary

measures may be inconsistent with World Trade Organization provisions

and may unfairly impede the flow of agricultural trade, the U.S.

government is not well positioned to address this issue. Agricultural trade

associations and key government officials have identified such measures

as an increasingly important issue in agricultural trade. However, the U.S.

Trade Representative and the U.S. Department of Agriculture have had

difficulty defining the nature and scope of the problem that foreign

sanitary and phytosanitary measures present for U.S. exports, partly

because of the complex nature of the issue but for other reasons as well.

For example, they lack complete information on the number of measures

that affect U.S. exports, they are unsure how many measures that have

been identified may be inconsistent with World Trade Organization

provisions, and they do not have reliable estimates of the impact such

measures have had on exports. The best available data indicated that, in

June 1996, U.S. agricultural exports faced several hundred measures in 

63 countries whose impact on the value of trade was potentially extensive.

These data, as well as the experiences of U.S. government and industry

officials and our review of six foreign measures, indicate that foreign

sanitary and phytosanitary measures affect the exports of a broad range of

commodities, result in a variety of trade effects, and may create additional

costs for the U.S. industry and government.

The U.S. government approach for addressing foreign sanitary and

phytosanitary measures has been evolving in the 2 years since World

Trade Organization provisions on such measures took effect. However, the

current approach exhibits certain weaknesses. The federal structure for

addressing foreign sanitary and phytosanitary measures is complex. At

least 12 federal trade, regulatory, and research entities have some

responsibility for addressing such measures, but no one entity is directing

and coordinating overall federal efforts. Some entities’ roles and

responsibilities regarding sanitary and phytosanitary measures are not

clearly defined, and these entities have had difficulty coordinating their

activities. Federal entities lack comprehensive data on which sanitary and

phytosanitary measures are being addressed or what progress has been

made to address them. They have not developed a process to jointly

evaluate measures and determine which ones the government should

address, and in what order. Once the government decides to challenge a

measure, multiple entities with conflicting viewpoints have made it

difficult to develop a unified approach to address measures and decide

which cases should be referred to the World Trade Organization (or, in

cases involving Canada or Mexico, possibly initiated under the North

Page 6 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

American Free Trade Agreement) for dispute resolution. Finally,

coordinated goals, objectives, and performance measurements related to

federal efforts to address sanitary and phytosanitary measures do not yet

exist.

Foreign SPS Measures

Are Regarded as an

Important Trade

Issue, but the Problem

Is Not Clearly Defined

Agricultural trade associations and government agencies responsible for

promoting agricultural trade regard foreign SPS measures as an important

trade issue. Private sector and government officials are concerned that

such measures may be used inappropriately to restrict the growth of U.S.

agricultural exports. While the government does not know the full scope

of the problem, available data indicate that foreign SPS measures affect a

broad range of U.S. processed product, meat, poultry, fruit, vegetable, and

grain exports. Such measures have disrupted ongoing trade or prevented

U.S. products from entering new markets.

Agricultural Industry and

U.S. Government Have

Identified Foreign SPS

Measures as a Prominent

Agricultural Trade Issue

Many agricultural trade association and U.S. government officials have

identified foreign SPS measures as a prominent trade issue. Some U.S. and

industry officials attributed this prominence to an increase in the number

of SPS measures that appear to affect U.S. exports, while others attributed

it to increased visibility of such measures following recent trade

agreements. The WTO and NAFTA addressed certain types of policies that

have traditionally restricted trade in agricultural products, such as high

tariffs and quotas.14 However, several industry and government officials

expressed concern that other countries may be increasing their use of SPS

measures as a way to compensate for these required reductions in tariffs

and quotas and to continue protecting their markets from imports.

We discussed SPS issues with representatives from 19 agricultural trade

associations that represent commodities such as meat, poultry, fruits,

vegetables, and wheat. Most of the associations regarded foreign SPS

measures as an important and growing issue for U.S. agricultural exports,

and several representatives told us they consider such measures to be

their association’s primary trade concern. These officials provided

examples of foreign SPS measures that they believe are inconsistent with

WTO provisions and have disrupted their exports to certain markets or

14The WTO Agreement on Agriculture required member countries to convert nontariff barriers (such as

quotas and import licenses) to tariffs, reduce the level of tariffs and subsidies, and offer new market

access opportunities. These requirements are discussed in The General Agreement on Tariffs and

Trade: Uruguay Round Final Act Should Produce Overall U.S. Economic Gains (GAO/GGD-94-83a and

83b, July 29, 1994). NAFTA required the gradual removal of tariffs on agricultural products. See North

American Free Trade Agreement: Assessment of Major Issues (GAO/GGD-93-137a and 137b, 

Sept. 9, 1993).

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B-277551 

caused them to decrease, created additional costs for their producers, or

prevented their exports from entering new markets.

Some U.S. government agencies have also become concerned about the

potentially negative impact of foreign SPS measures on U.S. exports. USTR

and the Secretary of Agriculture have both identified foreign SPS measures

that they believe are inconsistent with WTO rules as key barriers to exports

of U.S. agricultural products.15 Several USDA officials estimated that the

number of complaints and the percentage of time they or their staff spend

addressing them have increased substantially over the last few years. For

example, the Special Assistant for International Trade to the Secretary of

Agriculture told us that while he is supposed to handle all agricultural

trade issues, his agenda has been dominated by the proliferation of SPS

issues. USTR and the Secretary of Agriculture have established the removal

of such barriers as a primary objective of their trade agenda to increase

U.S. agricultural exports. Total agricultural exports were just over

$60 billion in 1996.

Defining the Problem Has

Been Difficult

Although USTR and USDA are concerned about foreign SPS measures, they

have been unable to precisely define the problem that such measures

present for U.S. exports, for several reasons. First, USTR and USDA do not

know the number of foreign measures that currently affect U.S. exports, in

part because the number changes frequently as new complaints surface

and old complaints are resolved. Nevertheless, USTR and USDA have both

developed information that indicates that foreign SPS measures that have

an actual or apparent adverse affect on U.S. exports exist in many

countries and apply to a broad range of U.S. agricultural commodities.

USTR’s 1996 annual report on foreign trade barriers contained information

about SPS measures in 26 of the 46 countries or regions it reviewed.16 In

early 1996, USDA attempted to develop a more comprehensive definition of

the problem. It surveyed (1) Foreign Agricultural Service (FAS) attachés

posted overseas that collectively covered 132 countries that accounted for

98 percent of the 1996 U.S. export market for agricultural, forestry, and

fisheries products; and (2) representatives of agricultural producer groups.

It asked the FAS attachés and producer groups to identify foreign technical

barriers to trade that, among other things, appeared to violate one or more

15Statement by Dan Glickman, Secretary of Agriculture, before the House of Representatives,

Committee on Agriculture (Mar. 18, 1997). Statement of Ambassador Charlene Barshefsky, before the

Senate Finance Committee (Jan. 29, 1997).

161996 National Trade Estimate Report on Foreign Trade Barriers, USTR (Washington, D.C.: 1996).

Page 8 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

provisions of recent trade agreements.17 As of June 1996, USDA had

developed a list of 315 technical barriers to agricultural trade in 

63 countries, over 90 percent of which were SPS measures.18 One USDA

official observed that measures were frequently identified in countries that

were among the top importers of U.S. agricultural products in 1996.

While the USTR and USDA data provide some sense of the problem, they do

not accurately measure its size. The USDA survey is the best available

definition of the problem; it represents a “snapshot” of foreign SPS

measures that had been identified as of June 1996 and, therefore, does not

reflect information about measures that have been resolved or measures

that have emerged after that time. An FAS official told us that, in mid-1997,

responsible USDA agencies began to update the survey data on a quarterly

basis by adding newly identified measures and deleting resolved measures.

USDA officials said that, despite its limitations, the survey has helped them

better understand the nature and extent of foreign SPS measures.

The second reason that USTR and USDA have had difficulty defining the size

of the problem that foreign SPS measures present is because they do not

know, of the measures they have identified, how many may be

inconsistent with WTO provisions regarding SPS measures. For example,

USDA officials said some of the SPS measures identified in the 1996 survey

could be legitimate, appropriate measures that the United States should

not contest. USTR and USDA officials said that considerable scientific

research, testing, and exchange of information is often necessary before

the United States can make conclusive determinations about whether or

not a foreign measure complies with the WTO SPS agreement. These

officials said this process generally takes considerable time.

Third, USTR and USDA do not know how the SPS measures they have

identified impact the value of trade, in part because such estimates are

inherently difficult to develop. USDA unofficially estimated that the 

315 measures identified in the 1996 survey threatened, constrained, or

blocked almost $5 billion of U.S. agricultural exports at the time the

survey was conducted. However, some USDA officials told us they question

17The measures had to meet three criteria. First, they had to be recently proposed or currently

enforced by foreign government officials. Second, they had to decrease or potentially decrease U.S.

exports. Third, they had to appear to be in violation of one or more disciplines of the new trade

agreements (for example, the WTO and NAFTA), although the determination of actual violation of any

given measure would require substantial additional investigation.

18Several USDA agencies participated in developing the survey and analyzing its results. Therefore, we

refer to the survey as a USDA effort, although a published report that discusses the survey and its

results states that it does not reflect the official USDA position. See Overview of Foreign Technical

Barriers to U.S. Agricultural Exports, Economic Research Service Staff Paper, Commercial Agriculture

Division, Economic Research Service (Washington, D.C.: USDA, Mar. 1997).

Page 9 GAO/NSIAD-98-32 Agricultural Exports
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the accuracy of the estimate for several reasons. For example, USDA

officials said it is difficult to predict whether an SPS measure would affect

all exports of a given commodity or only selected exports of the

commodity. Also, in cases where a U.S. commodity does not yet have

access to a market, estimates of the market’s potential size were based on

U.S. exports to a similar market, which may not be accurate. USDA officials

also told us the estimates were not derived from empirical trade models

and therefore should be regarded only as an order-of-magnitude indication

of the significance of foreign SPS measures to U.S. exports.

Without better data, particularly regarding the number of measures that

affect U.S. exports and more reliable estimates of their impact on trade,

USTR and USDA are unable to determine the size of the problem or whether

the problem is growing. They are also unable to evaluate how their efforts

have affected the size of the problem and the value of trade.

Foreign SPS Measures

Appear to Have a Broad

and Diverse Effect on

Trade

Foreign SPS measures appear to affect a wide range of agricultural

products, involve various health and safety issues, and result in multiple

trade effects or additional costs. According to USDA and industry officials,

the foreign SPS measures they have identified affect numerous

commodities, including processed products, grains, oilseeds, animal

products, fruits, vegetables, cotton, seeds, nuts, fish, and forestry

products. A large portion of the foreign SPS measures identified involve

plant health issues, while others involve food safety or animal health

issues.

According to U.S. government and industry officials, the way in which

foreign SPS measures affect U.S. exports also varies. These measures have

threatened or constrained trade to existing markets or prevented U.S.

exports from entering new markets. Some measures constrain trade by

requiring products to be treated or inspected before entering markets,

which may damage the quality and marketability of certain perishable

products. Some commodities, such as fruits and vegetables, appear to face

a large number of measures while others, such as wheat, appear to face a

limited number of measures. USDA and industry officials have estimated

that some measures affect several hundred million dollars of trade, while

other measures affect $1 million or less.

We reviewed six foreign SPS measures that have affected or continue to

affect U.S. agricultural exports. These measures impacted various

commodities, involved various issues, and were estimated to have a range

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B-277551 

of impacts on the value of trade (additional information about these

measures and federal efforts to address them are contained in app. III). Of

these six measures, one was determined to be inconsistent with WTO

provisions regarding SPS measures by a WTO dispute settlement panel (the

EU ban on growth-promoting hormones). USDA officials told us that four

others may also be inconsistent with these provisions and stated their

belief that the measures lacked a scientific basis.19

• Since 1974, China has banned wheat shipped from U.S. states in the Pacific

Northwest, an area where the TCK fungus is known to occur.20 China has

continued to import wheat shipped from other U.S. ports, but if it detects

TCK in these shipments, China requires the price to be discounted and, on a

few occasions, has refused to accept such shipments. The impact of the

ban on U.S. wheat exports has not been quantified.

• In anticipation of the 1989 implementation of the EU ban on

growth-promoting hormones in livestock production, U.S. beef and veal

exports to the EU dropped about 93 percent in 1 year, from about

$117 million in 1988 to about $9 million in 1989, and have recovered little

since then (see fig. 1). In June 1997, a WTO dispute settlement panel found

the measure to be inconsistent with the SPS agreement. The EU has

appealed this decision.

19The four measures include those of China, Japan, Korea, and Russia that we reviewed. Although

China and Russia are not WTO members, both have applied to join WTO and would be required to

comply with its SPS provisions upon becoming members. Therefore the United States cites WTO

provisions in its negotiations on SPS issues with China and Russia.

20According to USDA’s Agricultural Research Service, the TCK fungus reduces plant height.

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Figure 1: U.S. Beef and Veal Exports to the EU, Calendar Years 1985-95

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

0

20

40

60

80

100

120

140

Dollars in millions

Fresh/chilled/frozen Prepared/preserved Edible organ meat

Note: Edible organ meat includes only products destined for human consumption.

Source: USDA.

• Since as early as 1983, Japan blocked U.S. tomato exports over concerns

that U.S. tomatoes might carry tobacco blue mold (TBM). After USDA

conducted 4 years of research to demonstrate that tomatoes were not a

host for TBM, Japan lifted the ban on 25 varieties of tomatoes in April 1997.

An industry association estimates U.S. tomato exports to Japan could

reach $50 million annually.

• In 1994, a sudden and unexpected change in Korean shelf-life standards

blocked the entry of more than $1 million worth of perishable U.S. sausage

products that had already arrived in Korean ports. According to USTR, had

these and other Korean shelf-life measures not been revised following WTO

Page 12 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

consultations, they could have affected as much as $1 billion in annual

U.S. exports by 1999.

• Since 1992, Mexico has required U.S. peach and nectarine exports to be

treated and inspected before entering Mexico to protect that country from

the Oriental fruit moth, a pest that is known to occur in the United States.

USDA officials said the quantity of U.S. peach and nectarine exports to

Mexico, measured in terms of metric tons, dropped by about 40 percent

from 1991 to 1996.

• In 1996, Russia imposed a brief ban on U.S. poultry exports because of

concerns about food safety and poultry disease issues. The ban was in

effect for about 1 week before the United States and Russia resolved the

issue. The ban did not actually cause U.S. exports to drop, but it appeared

to threaten the poultry industry’s largest export market, worth over

$900 million in 1996.

SPS measures can result in a variety of costs to the agricultural industry

and to the government. In addition to the costs associated with a partial or

complete loss of sales, industry officials told us that addressing apparently

unfair SPS measures or reaching agreement with foreign officials to enable

U.S. exports to begin or continue may result in other costs. In several of

the six cases we reviewed, industry groups or private companies incurred

additional costs for research, treatment, or inspection. For example, when

Russian officials said they wanted to inspect the nearly 300 U.S. poultry

processing facilities that export poultry to Russia, these processing

facilities paid for Russian officials’ travel expenses. Several of the six

cases also resulted in additional costs to the U.S. government for such

things as research, official travel, or translator services.

Evolving U.S.

Approach for

Addressing SPS

Measures Is Not

Integrated or

Systematic

WTO rules regarding SPS measures have been in place for less than 2 years,

and the U.S. approach for addressing SPS measures that restrict U.S.

exports is evolving. However, the current approach is not integrated or

systematic and exhibits several weaknesses. The approach is based on a

complex structure of multiple trade and regulatory entities, but no one

entity leads overall federal efforts. In addition, some entities’ roles and

responsibilities are unclear, and their efforts have not been adequately

coordinated. The process by which measures are addressed lacks

comprehensive data and guidance for making key decisions, including

what measures the United States should address and what steps it should

take to address them. Moreover, although federal agencies are increasingly

expected to set goals for program performance and coordinate efforts

related to cross-cutting programs, as envisioned by the Results Act, the

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federal government lacks coordinated goals, objectives, and performance

measurements for addressing foreign SPS measures.

Federal Structure Is

Complex and Lacks

Integration

The federal structure for addressing foreign SPS measures is complex. At

least 12 federal entities have some responsibility for identifying and

evaluating SPS measures and attempting to resolve bilateral disagreements

about measures that appear to be inconsistent with the WTO. No single

entity directs and coordinates the entire scope of federal efforts, and the

roles and responsibilities of some entities are not clearly defined. Entities’

work loads related to addressing SPS measures vary, as do the resources

each entity has allocated to this activity. Concerns exist about insufficient

resource allocations in some entities. Concerns also exist that the complex

structure contributes to a lack of integration and coordination among

responsible entities.

Multiple Federal Entities Are

Involved

Of the multiple entities involved in addressing foreign SPS measures, USTR

has the broadest responsibility. USTR has statutory responsibility for

developing and coordinating the implementation of U.S. international

trade policy, monitoring the implementation of trade agreements reached

with foreign governments, and enforcing U.S. rights under those

agreements.21 It is also responsible for issuing and coordinating policy

guidance to Departments and agencies on WTO-related matters.22

Eight USDA entities have collective responsibility for addressing issues

related to foreign SPS measures. In addition, the Special Assistant for

International Trade to the Secretary of Agriculture has been given a

prominent role in addressing SPS measures and coordinating USDA’s efforts

in this area. As USDA’s trade agency, FAS carries out USDA’s statutory

responsibility for identifying foreign SPS measures that adversely impact

U.S. exports and providing relevant information about them to USTR.

23 In

addition, FAS participates in negotiations to address such measures and is

expected to coordinate its efforts with other USDA agencies and work

closely with USTR. USDA has several regulatory24 entities, including the

Animal and Plant Health Inspection Service; Food Safety and Inspection

21Trade Act of 1974, as amended, 19 U.S.C. 2411-2420.

22Trade Act of 1974, as amended, 19 U.S.C. 2171(c)(1)(D).

23Agricultural Trade Act of 1978, as amended, 7 U.S.C. 5674(c).

24For ease of reference, we refer to USDA’s Agricultural Marketing Service; Animal and Plant Health

Inspection Service; Food Safety and Inspection Service; and Grain Inspection, Packers and Stockyards

Administration as regulatory entities, even though the scope of each entity’s regulatory authority

differs.

Page 14 GAO/NSIAD-98-32 Agricultural Exports
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Service; and Grain Inspection, Packers and Stockyards Administration,

that have domestic food-related responsibilities and, therefore, are

responsible for participating in negotiations to address the technical

aspects of foreign SPS measures and evaluating how U.S. trade positions

may affect U.S. SPS measures. In addition, USDA’s Agricultural Marketing

Service plays a limited technical role because it addresses certain product

quality issues which, while not considered SPS issues, are nonetheless

related.25 In addition, scientific and economic research is performed

primarily by USDA’s Agricultural Research Service and Economic Research

Service. Finally, legal counsel and assistance is provided by USDA’s Office

of the General Counsel.

In addition to USTR and USDA, other federal entities help address SPS

measures. Federal regulatory authorities with domestic food-related

responsibilities have the needed technical expertise for addressing foreign

SPS measures and evaluating how U.S. trade positions affect U.S. SPS

measures; these include the Department of Health and Human Service’s

Food and Drug Administration (FDA) and the Environmental Protection

Agency (EPA). The Department of State is responsible for facilitating

communication with foreign government officials; it also participates in

certain bilateral negotiations on SPS issues and contributes to the overall

U.S. government policy-making process on SPS issues. Industry groups also

play a major role in helping the U.S. government identify foreign SPS

measures that affect their actual or potential exports, supporting research

on technical issues and advising on strategies to address SPS measures.

Overlapping or closely related areas of responsibility among these federal

entities can make it difficult to determine which agency should lead

federal efforts to address certain SPS measures. For example, USTR and FAS

both perform SPS-related activities and have responsibility for monitoring

and addressing agricultural trade issues. Overlap also exists within FAS,

where some divisions address trade from a commodity perspective and

others address trade from a geographic perspective. Food-related

responsibilities among the regulatory entities are closely related (see 

table 1).

25For all products (including agricultural and industrial products), technical regulations and standards

imposed by a country, such as those related to product characteristics or related processes and

production methods, are subject to the provisions of the WTO Agreement on Technical Barriers to

Trade.

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Table 1: Primary Food-related

Responsibilities of Selected U.S.

Regulatory Entities U.S. entity

Primary food-related

responsibility Products covered

USDA

AMS Certifies the quality of a broad

range of products through grading

and inspection services.

Regulates the marketing of

products under federal marketing

orders.a

Wide range of products except

grains and seafood (primarily

quality)

APHIS Protects U.S. animal and plant

resources from pests and

diseases.

Live animals, some animal

products, and all plant products

FSIS Ensures that the U.S. supply of

meat, poultry, and some egg

products is safe and wholesome.

Meat, poultry, and some egg

products

GIPSA Grades the quality of grain

products.

Grains (quality and some diseases)

FDA Regulates food safety and labeling

(except meat, poultry, and some

egg products), use of animal

drugs including setting and

enforcing limits for animal drug

residues in food, and animal feed

and pet food.

All food (except meat, poultry, and

some egg products), animal feed,

pet food, animal drugs, food and

color additives, food labeling

EPA Regulates the use of pesticides in

the United States. Establishes

tolerance levels for pesticide

residues in or on food.

Any products affected by

pesticides (FDA and FSIS enforce

EPA pesticide tolerances)

Legend

AMS = Agricultural Marketing Service.

APHIS = Animal and Plant Health Inspection Service.

FSIS = Food Safety and Inspection Service.

GIPSA = Grain Inspection, Packers and Stockyards Administration.

aMarketing orders authorize the Secretary of Agriculture to regulate the marketing of fruits,

vegetables, specialty crops, and milk. Depending on the commodity, marketing orders may

address product size, grade, quality, maturity, quantity, distribution, packaging, or producer

prices. Industry members enter the programs voluntarily and choose to have federal oversight of

certain aspects of their operations.

Because of their areas of responsibility, several federal entities may be

involved in addressing a foreign SPS measure. For example, the EU ban on

growth-promoting hormones has been addressed by USTR, USDA (FAS and

the Food Safety and Inspection Service), and FDA. The ban involved

technical issues, some of which were under FDA’s jurisdiction (the use of

drugs in animals) and others of which were under the Food Safety and

Inspection Service’s jurisdiction (the sale of meat from animals). As

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discussed later, we found that in certain instances the involvement of

multiple entities has caused coordination and communication problems.

However, officials from the various trade and regulatory entities stated

that the participation of multiple entities is not inherently problematic

because each entity brings its own expertise to an issue.

No Entity Directs All Federal

Efforts

No single federal entity is currently directing and coordinating the entire

scope of federal efforts undertaken to address SPS measures. During our

review, several U.S. government and industry officials expressed concerns

that the federal structure for addressing SPS measures lacked clear

leadership and caused various undesirable effects, including independent

and separate agendas among responsible entities, difficulty making

decisions and tracking federal efforts, and uncoordinated activities. The

Secretary of Agriculture’s Special Assistant for International Trade was

particularly concerned about the difficulty overcoming organizational

boundaries among USDA agencies. Several industry representatives said the

federal structure made it difficult to know which federal entity should be

contacted to report a given problem, how the information the industry

provided would be shared among federal entities, or what actions federal

entities would take in response to the problem.

Certain mechanisms exist at USTR and USDA through which portions of the

federal response are directed and coordinated. However, none of the

mechanisms is comprehensive enough to include all responsible federal

entities and manage all federal efforts to address SPS measures. As a result,

substantial coordination among these mechanisms and responsible federal

entities is still necessary.

One coordination mechanism is led by USTR. USTR created the position of

Director for SPS Affairs within its Office of WTO and Multilateral Affairs in

the fall of 1996 to work closely with other federal entities responsible for

addressing SPS measures. At that time, the Director for SPS Affairs began to

more actively use the mechanism established for formal interagency trade

policy coordination—the Trade Policy Staff Committee (TPSC)—to

establish the U.S. position and approach for addressing certain foreign SPS

measures.26 However, TPSC discussions have focused primarily on

determining which individual SPS measures the U.S. government should

26The TPSC is one of two subcabinet interagency trade policy coordination groups that USTR leads

and administers. The TPSC is a staff level group, while the Trade Policy Review Group is comprised of

deputy or undersecretaries. Membership includes the Departments of Commerce, Agriculture, State,

the Treasury, Labor, Justice, Defense, the Interior, Transportation, Energy, and Health and Human

Services; EPA; the Office of Management and Budget; the Council of Economic Advisers; the

International Development Cooperation Agency; the National Economic Council; and the National

Security Council.

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raise for discussion in meetings of the WTO SPS committee. Neither USTR,

because of its limited resources, nor the TPSC addresses all SPS measures

that concern the U.S. government.

A second coordination mechanism was recently implemented at USDA.

Although the bulk of federal efforts to address foreign SPS measures occurs

at USDA, neither any of the eight USDA agencies nor the Secretary of

Agriculture’s Special Assistant for International Trade has responsibility

for directing and prioritizing overall USDA efforts to address SPS measures

or allocating resources. We discussed this situation several times with the

Special Assistant during the course of our review. In October 1997, the

Secretary of Agriculture announced the formation of a Working Group on

Agricultural Trade Policy to address SPS and other trade issues. The

working group, which will be led by the Special Assistant and comprised

of the heads of several USDA agencies, is to coordinate USDA efforts on

agricultural trade issues and provide direction regarding the allocation of

resources and establishment of priorities. However, because the group’s

primary purpose is to improve coordination within USDA on trade issues,

participation is to be limited to USDA agencies. The group is to serve as

USDA’s point of reference for coordination on trade policy issues with other

federal agencies.

A group of industry associations representing various commodities has

suggested that the federal structure and approach for addressing SPS

measures could be improved with the creation of a single office that would

be responsible for receiving complaints about SPS measures, coordinating

U.S. government activities to address the measure, and communicating

with the industry.

Some Roles and

Responsibilities Not Clearly

Defined

Absent overall leadership of federal efforts, some federal entities’ specific

roles in addressing individual measures as well as their overall

responsibility for addressing trade issues have not been clearly defined.

Although USTR is statutorily responsible for coordinating U.S. trade policy,

USTR and USDA officials told us that initial federal efforts to address SPS

measures are often handled by another federal entity, such as FAS or one of

the regulatory entities. However, it may be difficult to determine which of

these entities should lead initial federal efforts to address an individual SPS

measure because their areas of responsibility overlap or are closely

related. In discussing federal efforts to address individual SPS measures

with responsible officials, we sometimes found examples of a lack of

clarity about which entity was considered to be leading federal efforts or

disagreement about which entity should be leading federal efforts. For

Page 18 GAO/NSIAD-98-32 Agricultural Exports
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example, it was not clear whether USTR or USDA was leading federal efforts

to address the Chinese ban on U.S. wheat imports found to contain TCK,

and there were differences of opinion about whether the U.S. strategy

should focus on technical issues or trade policy.

USTR, FAS, the Animal and Plant Health Inspection Service, and the Food

Safety and Inspection Service have all had leadership roles in addressing

certain SPS measures and have all supported each other’s leadership in

addressing other measures. FDA and EPA officials told us they have

generally not led federal efforts to address individual SPS measures but

have instead supported such efforts by providing important technical

expertise. (As discussed in app. II, FDA has a lead role in other SPS-related

activities that were not the focus of this report.) The Agricultural Research

Service, the Economic Research Service, and State have also played

primarily support roles.

In addition to the lack of clarity about leadership roles to address

individual SPS measures, several U.S. and industry officials expressed

concern about various entities’ overall responsibility for, and commitment

to, addressing trade issues. For example, several industry officials

expressed concern that USTR has not taken a sufficiently active role in

addressing foreign SPS measures. While USTR is the only federal entity that

can initiate WTO dispute settlement cases, some industry officials said USTR

has appeared reluctant to do so regarding certain SPS measures. USTR

officials said they will pursue dispute settlement in all SPS cases that have

merit, but said that dispute settlement may not be the only way to resolve

a problem. They also said industry groups are sometimes uncomfortable

elevating their complaints to such a formal level. Some industry officials

also said USTR has appeared reluctant to play a role during bilateral

negotiations on certain SPS measures, prior to seeking dispute settlement

within the WTO or NAFTA. USTR officials said their role tends to become more

active on a bilateral basis when USDA agencies believe they have done all

they can to address a case. USTR officials noted they had been heavily

involved in several bilateral negotiations on SPS measures.

Several government and industry officials also expressed concern that

regulatory and research entities’ roles and responsibilities for addressing

foreign SPS measures have not been clearly defined. As discussed

previously, regulatory and research entities were created to achieve

domestic objectives related to ensuring food safety and protecting U.S.

agricultural resources but are increasingly expected to help facilitate

trade. However, officials from USTR and FAS and several industry officials

Page 19 GAO/NSIAD-98-32 Agricultural Exports
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expressed concern that some regulatory entities do not regard their role in

addressing foreign SPS measures as an agency priority. On the other hand,

several regulatory officials expressed concern that their role in the trade

area has expanded but their resources, which must still be allocated to

their primary food-related missions, have not changed. Therefore, they

said, increasing their trade facilitation activities would probably require

resources to be reprogrammed.

Many officials from trade, regulatory, and research agencies, and industry

representatives agreed that the participation of regulatory and research

entities in this area is necessary because these entities have technical and

scientific expertise that trade agencies lack. Beyond their technical

expertise, certain USDA entities have a mandated trade role because they

are responsible for certifying that exports of products they regulate are

healthy and safe.27

Workloads and Resources Vary Because the SPS-related roles and responsibilities of federal entities vary,

their workloads and the resources they have allocated to addressing SPS

measures also vary. Some entities have substantial responsibility regarding

SPS measures, while others’ responsibility is more limited. Some entities,

accordingly, have increased the staff allocated to this issue. However, the

resource allocations of certain entities remained a concern among

government and industry officials.

In USTR, SPS responsibilities are handled primarily by the Director for SPS

Affairs, staff from the Offices of Agricultural Affairs and General Counsel

and, as needed, various regional trade specialists. USTR officials

acknowledged that its responsibilities for addressing SPS measures are

broad, but its resources for doing so are limited. The Director for SPS

Affairs, who is currently detailed to USTR from State, estimated that USTR

allocates three to four full-time staff year equivalents to addressing SPS

issues; other staff are assigned as needed. As a result, USTR officials said

they rely on USDA agencies to help them identify SPS measures, perform

technical and scientific assessments of the measures, initiate discussions

with foreign government officials about measures, and keep USTR informed

of their progress. In addition, several USTR and USDA officials said USTR’s

small legal staff has been overwhelmed by the growing workload

27The Animal and Plant Health Inspection Service certifies that plant products are free of pests and

diseases and that live animals are free of disease. In 1995, it issued 274,000 export certificates for plant

products and an estimated 25,000 export certificates for live animals. The Food Safety and Inspection

Service certifies that meat, poultry, and egg product exports are safe and wholesome. It could not

provide data on the number of certificates issued, but responsible officials estimated the figure at over

200,000 each year.

Page 20 GAO/NSIAD-98-32 Agricultural Exports
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associated with initiating and following dispute settlement cases on behalf

of multiple trade sectors. USTR officials said the number of dispute

settlement cases involving agricultural products, in particular, has grown

since the WTO was created, and the litigation of such cases is extremely

resource intensive.28 (As discussed in app. I, a WTO official also expressed

concern about the growing number of dispute settlement cases.)

Within USDA, although the Secretary’s Special Assistant has a central role in

coordinating USDA efforts to address SPS measures, he does not control any

budget or staff resources. FAS, which has broad daily responsibility for

addressing SPS measures, has increased its staff resources over the last few

years to respond to this problem (see fig. 2). In 1990, it established the

Office of Food Safety and Technical Services to better address SPS issues

affecting U.S. exports. In 1997, the office was renamed the Food Safety

and Technical Services Division.

28From 1986 through 1992, the United States requested 12 GATT panels be formed to review issues

involving agricultural products (including fish and processed products). Most of these were requested

between 1986 and 1988. Between the WTO’s creation on January 1, 1995, and August 30, 1997, the

United States had engaged in WTO consultations or had dispute settlement panels be established 

12 times for issues involving agricultural products (including fish or processed products).

Page 21 GAO/NSIAD-98-32 Agricultural Exports
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Figure 2: FAS Full-time Staff Years for

Addressing Foreign SPS Measures,

Fiscal Years 1994-97

1994 1995 1996 1997

0

10

20

30

40

50

60

Number of full-time staff years

Note: Includes staff in FAS’ Food Safety and Technical Services Division, commodity divisions,

and overseas posts.

Source: USDA.

Among regulatory entities, workloads for addressing SPS measures vary

according to their food-related responsibilities and technical expertise.

USDA officials told us that technical assistance is required most often from

the Animal and Plant Health Inspection Service, the Food Safety and

Inspection Service, and FDA. Because of varying workloads, as well as the

continued lack of clarity about regulatory entities’ growing trade role,

these entities have allocated different levels of resources to address SPS

measures. For example, officials from the Animal and Plant Health

Inspection Service told us that their agency’s mission has been expanded

to include trade facilitation of both imports and exports and they have

allocated additional staff and budget resources to addressing foreign SPS

Page 22 GAO/NSIAD-98-32 Agricultural Exports
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measures.29 Officials from the Food Safety and Inspection Service told us

that while trade facilitation is important, it is not their primary mission,

and they have not allocated additional resources to this activity. Figure 3

shows the full-time staff years that the Animal and Plant Health Inspection

Service and the Food Safety and Inspection Service told us they devoted to

negotiating with foreign government officials about SPS measures from

1994 to 1997.

Figure 3: Selected USDA Regulatory

Entities’ Full-time Staff Years for

Addressing Foreign SPS Measures,

Fiscal Years 1994-97

1994 1995 1996 1997

0

10

20

30

40

50

36 37 38

42

3333

Number of full-time staff years

APHIS FSIS

Legend

APHIS = Animal and Plant Health Inspection Service

FSIS = Food Safety and Inspection Service

Source: USDA.

FDA and EPA officials told us they do not have a mandate or any resources

to assist agricultural exports, although they have made resources available

when USDA or USTR requested their assistance. FDA officials said the

29For example, in 1992, the Animal and Plant Health Inspection Service established a Trade Support

Team to ensure internal coordination on technical trade issues and facilitate the agency’s relationship

with other USDA and non-USDA entities. In 1995, it established a Phytosanitary Issues Management

Team to better manage the agency’s trade responsibilities for plant products.

Page 23 GAO/NSIAD-98-32 Agricultural Exports
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resources required for regulatory entities to address foreign SPS measures

and defend U.S. SPS measures have not been adequately evaluated and are

likely to be substantial.

Concerns Expressed About

Uncoordinated Activities

Several industry and government officials expressed concern that

insufficient coordination among federal entities hinders the effectiveness

of federal efforts to address SPS measures. Responsible federal officials

said inadequate coordination led to a lack of knowledge among

responsible entities about which measures each was working on, what

activities were planned or had been performed, or the status of each

other’s efforts. We found inadequate coordination could be attributed to

several factors, including lack of overall leadership, shifting and

sometimes unclear roles, and separate management structures. For

example, seven of the eight USDA entities report to their own

administrators and to one of four undersecretaries or assistant secretaries,

who make independent decisions about their agencies’ priorities and how

to allocate their agencies’ budget and staff resources.30

Inadequate coordination among multiple federal entities is not a new

problem. For example, in our past work on the U.S. system for ensuring

food safety, which is comprised of multiple federal entities, we concluded

that agency self-interest and differing regulatory approaches hindered

adequate coordination.31 Moreover, we noted that efforts to improve

coordination have traditionally fallen short because federal entities

continued to operate under different statutes and appropriation acts. Many

of the entities we examined in our past work also have responsibility for

addressing the technical aspects of foreign SPS measures.

In a March 1997 review of NAFTA implementation, USDA’s Office of the

Inspector General also concluded that departmental guidance is needed to

improve coordination among USDA trade and regulatory entities on trade

issues, particularly regarding the development of unified negotiating

strategies.32 The Inspector General also found that the lack of such

30FAS reports to the Undersecretary for Farm and Foreign Agricultural Services. The Agricultural

Marketing Service; the Animal and Plant Health Inspection Service; and the Grain Inspection, Packers

and Stockyards Administration report to the Assistant Secretary for Marketing and Regulatory

Programs. The Food Safety and Inspection Service reports to the Undersecretary for Food Safety. The

Agricultural Research Service and the Economic Research Service report to the Undersecretary for

Research, Education, and Economics.

31See Food Safety and Quality: Uniform, Risk-based Inspection System Needed to Ensure Safe Food

Supply (GAO/RCED-92-152, June 26, 1992) and GAO/RCED-96-81, Mar. 27, 1996.

32See Implementation of Agricultural Provisions of NAFTA, Office of the Inspector General, USDA

(Washington, D.C.: USDA, Mar. 1997).

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coordination had hampered USDA’s progress in negotiating with Mexico

about SPS measures and related issues that blocked access for certain U.S.

agricultural products.

To address coordination problems within USDA, two interagency groups

were created in 1995 at the staff and management levels. The staff level

group is headed by FAS’ Food Safety and Technical Services Division; it

includes staff from all responsible USDA entities and coordinates informally

with non-USDA entities. It meets weekly to discuss new developments and

the status of ongoing efforts. The management level group, called the “SPS

Action Team,” was headed by the Secretary of Agriculture’s Special

Assistant and included high-level staff from all responsible USDA entities.

The action team met intermittently to coordinate overall USDA efforts

regarding certain SPS measures based on information provided by the staff

level group. According to the Special Assistant, the action team is being

replaced by the Working Group on Agricultural Trade Policy. He said the

emphasis of the two groups differs—the action team focused on

coordinating USDA efforts to address certain measures, while the working

group is to have a broader management focus by addressing overall

coordination, resource allocation, and prioritization of efforts.

Federal Approach Is Not

Systematic and Lacks

Guidance to Make Key

Decisions

The federal approach for addressing SPS measures encompasses many

activities, including negotiating with trading partners about individual

measures; performing scientific research; working with international

bodies such as the WTO, NAFTA, and certain international standard-setting

organizations;33 and managing the overall federal work load. In this report,

we focus on federal efforts to systematically identify, evaluate, prioritize,

and address SPS measures that appear inconsistent with WTO provisions

and to manage the associated work load.

Federal entities seek to address foreign SPS measures through bilateral

discussions and within multilateral forums; both approaches may focus on

technical issues or international trade rules. Based on our review of

federal efforts to resolve six SPS measures, we found that the specific

33Key organizations include the Codex Alimentarius Commission, the International Office of

Epizootics, and the International Plant Protection Convention. The Codex Alimentarius Commission

was established in 1962 by the United Nations Food and Agriculture Organization and the World

Health Organization to facilitate fair trade in food, protect the health of consumers, and promote the

creation of international food standards. It has examined pesticides, food additives and contaminants,

and veterinary drugs related to a broad range of agricultural products. The International Office of

Epizootics was established in 1924 to facilitate international trade in animals and animal products by

addressing health issues to avoid the spread of animal diseases. The International Plant Protection

Convention was established in 1951 to facilitate the development of international phytosanitary

standards.

Page 25 GAO/NSIAD-98-32 Agricultural Exports
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federal efforts undertaken to address each measure differed from case to

case. We also found that entities with food-related technical expertise

typically lead bilateral discussions on technical issues, in which they

assess the necessity of foreign measures and provide data or conduct

research to demonstrate the health or safety of U.S. products or the

process by which they are produced. Trade entities typically lead bilateral

discussions that focus on international trade rules, in which they discuss a

foreign measure’s compliance with WTO rules regarding SPS measures. In a

few instances, the government has turned to the multilateral arenas of the

WTO or NAFTA and invoked dispute settlement procedures to resolve certain

issues. USTR is responsible for leading U.S. efforts in multilateral trade

arenas. (App. II contains more information about the federal approach for

addressing SPS measures and related activities.)

No Process to Develop

Centralized Information and

Evaluate Measures

The U.S. government lacks centralized, up-to-date information to track its

efforts to address foreign SPS measures, such as the number of foreign SPS

measures that affect U.S. exports, which of these measures federal entities

are addressing, what steps have been taken to address each measure,

which measures have been resolved, and how any resolved cases have

affected U.S. exports. The federal structure contributes to this problem

because information about SPS measures is collected and tracked

separately by trade and regulatory entities. For example, several USDA

entities have developed their own electronic data bases or management

systems for identifying SPS measures and tracking the status of their efforts

to address them. However, even though these systems may include some

of the same issues, they are not linked and cannot be accessed by other

USDA staff. Moreover, whether entities had such systems or not, most were

unable to tell us what measures they were working on at any given time.

Some centralized information has been developed, but it is of limited use.

In 1996, the Animal and Plant Health Inspection Service developed a

system to track the status of its efforts to address trade issues, many of

which are SPS measures. The system, in which the Animal and Plant Health

Inspection Service plans to store certain other entities’ trade issues, can be

accessed outside of the agency by authorized USDA staff. So far the system

only contains information about a limited number of issues tracked by the

Animal and Plant Health Inspection Service and the Agricultural Marketing

Service. Officials from the Food Safety and Inspection Service and the

Grain Inspection, Packers and Stockyards Administration told us they plan

to add their trade issues to the system, but FAS officials said they do not

plan to do so. According to several USDA officials, progress on developing

this system has been slowed by concern among the participating entities

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about storing what they view as internal agency information on a system

that can be accessed by other USDA agencies or the public. The other

centralized information is contained in the 1996 USDA survey. FAS has begun

to update the survey on a quarterly basis to add new issues and remove

resolved issues. It is not clear whether the Animal and Plant Health

Inspection Service system and FAS efforts related to the USDA survey are

duplicative.

In addition to lacking centralized information about SPS measures and their

efforts to address them, the U.S. government does not have a regular

process by which entities jointly evaluate complaints about foreign SPS

measures to determine which measures the U.S. government should

address. Trade entities evaluate foreign SPS measures for their compliance

with WTO provisions, while regulatory entities evaluate foreign SPS

measures for their technical or scientific basis. However, we found that

differences of opinion regarding the consistency of certain foreign SPS

measures to relevant WTO provisions or their technical legitimacy may

exist among federal entities or between federal entities and the affected

industry. The lack of a regular process that ensures that entities with both

trade and technical expertise collectively evaluate foreign SPS measures

creates the potential that limited government resources may be allocated

to addressing measures some federal entities do not regard as

problematic.

No Process to Determine

Priorities

Responsible federal entities receive more complaints about foreign SPS

measures than they are able to work on, but the U.S. government does not

have a systematic process to prioritize its efforts. We found that

responsible federal entities have had different views about which SPS

measures should be addressed and in what order. Some entities have

made their own decisions about which measures they would address,

which sometimes conflicted with the decisions of other entities. Officials

from both trade and regulatory entities provided examples of instances in

which they had requested help from another entity to address one of their

issues, but the other entity did not respond in a timely way or did not

appear to place as much importance on the issue. Some USDA officials

expressed concern that industry pressure has played a larger role in

determining what USDA addresses than has objective analysis of individual

measures and their impact on trade.

During most of our review, federal entities lacked objective criteria to help

them decide which foreign SPS measures should be addressed and

prioritize their efforts. In February 1997, USTR developed provisional

Page 27 GAO/NSIAD-98-32 Agricultural Exports
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criteria to help TPSC members determine which of a small subset of

measures should be raised for discussion in WTO SPS committee meetings.

The criteria included the following factors: (1) domestic producers

requested government assistance to address the measure; (2) the measure

appears to be inconsistent with the WTO SPS agreement or other WTO

provisions or involves the non-use or improper use of international

standards, guidelines, and recommendations; (3) bilateral technical

discussions or WTO consultations have taken place but have not achieved

progress toward resolution; and (4) agencies agree that addressing the

measure in the WTO SPS committee will promote resolution of the issue and

will not damage other U.S. bilateral interests. In an August 1997 meeting,

USTR officials identified other factors that are not among the list of

provisional criteria. For example, they told us the TPSC considers whether

sufficient scientific evidence exists to refute the measure and whether U.S.

efforts to address the measure will undermine U.S. regulatory interests.

USDA officials told us the Department does not have formal criteria for

determining which foreign SPS measures responsible agencies should

address or establishing priorities, but FAS officials identified unofficial

criteria they believe are useful. These included the estimated impact of the

measure on U.S. exports, an assessment of the industry’s interest in

resolving the measure, and the availability of conclusive scientific

evidence (or whether additional research must be conducted and, if so,

whether the research can be funded and the amount of time required for

its completion).

The Secretary’s Special Assistant told us the Working Group on

Agricultural Trade Policy will establish official criteria to help evaluate SPS

measures and determine USDA priorities and resource allocation. The

Special Assistant said it is possible USTR’s and USDA’s criteria will differ, but

said this is appropriate because USDA’s efforts are focused on evaluating

hundreds of measures to determine which ones USDA should address and

in what order while USTR’s efforts are focused on evaluating a smaller

subset of measures to determine which ones the United States should

raise to the more formal WTO level.

No Guidance to Determine

Unified Approach

No guidance exists to help federal entities overcome differences of

opinion and develop a unified approach for addressing individual SPS

measures. In determining how to deal with any individual SPS measure,

several key decisions must be made regarding the U.S. position about a

measure, the substance and timing of U.S. communication with the foreign

government, the data the U.S. government will supply or the research it

Page 28 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

will undertake, the agreements or solutions that are acceptable, and the

appropriateness of invoking dispute settlement procedures. Several U.S.

officials also said the U.S. position about a foreign measure must avoid

undermining U.S. regulatory interests.

As our review of federal efforts to address six foreign SPS measures shows,

various combinations of federal entities and actions may be employed to

address such measures. However, federal entities have had difficulty

agreeing about what specific actions should be taken in individual cases

and what resolutions are acceptable. Federal entities have also had

different opinions about whether the approach being followed is effective

or needs to be changed.

In its NAFTA implementation report, the USDA Inspector General found that

USDA entities did not always develop a strategy before meeting with

officials of other NAFTA governments to discuss trade issues.34 It reported

concerns that USDA’s objectives for such meetings were not clear. The

Inspector General found that differing perspectives among trade and

regulatory authorities about the correct approach may have hampered

strategy formulation. It also found that USDA trade and regulatory entities

differed in their viewpoint about whether bilateral issues should be

discussed at meetings of the NAFTA SPS committee—FAS considered this to

be a key function of the committee, whereas regulatory entities were

reluctant to discuss issues in the committee until they had thoroughly

pursued bilateral negotiations. The Inspector General concluded that

departmental guidance is needed to overcome these differences of opinion

about approach and ensure that coordinated strategies are developed.

Like the Inspector General, we found that trade and regulatory authorities,

as well as industry representatives, sometimes had different opinions

about the appropriateness of a foreign measure or the country’s reason for

establishing it. Therefore, they were likely to disagree about the best

negotiating approach to resolve the issue. In such instances, government

and industry officials often expressed concern that the lack of agreement

hampered effective decision-making and progress. We found differences of

opinion (such as among government entities, among industry officials, and

between the government and industry) throughout the six SPS measures

we reviewed. In these cases, and others that we discussed with federal and

industry officials, we found that trade authorities and industry officials

were more likely to characterize a foreign measure as an unfair trade

barrier and favor moving quickly to trade policy discussions with foreign

34See Implementation of Agricultural Provisions of NAFTA.

Page 29 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

trade authorities. Meanwhile, regulatory authorities were more likely to

emphasize the technical complexity of the issue and favor thorough

technical discussions with foreign regulatory authorities.

We found that conflicting perspectives between trade and regulatory

authorities were not unusual. For example, some trade authorities and

industry officials expressed frustration that regulatory authorities seemed

to lack a sense of urgency regarding trade matters and were willing to

engage in technical discussions for many months and years. They

expressed concerns that regulatory authorities lacked negotiating

expertise, which sometimes precluded them from obtaining the most

advantageous result for the U.S. industry. Some regulatory authorities

expressed frustration that trade authorities and industry officials did not

seem to understand that deliberate and lengthy technical and scientific

processes were often necessary to adequately and properly address

foreign regulatory authorities’ stated concerns about U.S. products. They

stated that, as regulatory authorities, they respected foreign authorities’

efforts to ensure adequate protection for human, animal, and plant life and

health.

Several U.S. government and industry officials observed that in certain

limited circumstances, such as when a foreign SPS measure has threatened

a large amount of U.S. exports, responsible federal entities have

responded quickly and cohesively. These officials suggested that such

cases were unique because high-level officials from a single entity

assumed responsibility for directing federal efforts and assigning roles to

trade and regulatory authorities.

In response to internal concerns about USDA’s efforts, several of the

responsible USDA agencies began to meet on a monthly basis in

October 1996 to discuss SPS issues affecting U.S. trade, facilitate the

exchange of information between the agencies, coordinate joint action to

resolve issues, identify medium- and long-term priorities, and improve

team building. However, we were unable to determine whether the

meetings have achieved their stated purposes because, although we

requested thorough documentation of the meetings and their results, USDA

could only provide a limited number of meeting minutes. Based on the

minutes we did review, the meetings appeared to be focused more on the

exchange of information about current efforts than on developing

priorities and strategies for addressing SPS measures.

Page 30 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

Need for Invoking Dispute

Settlement Is Debated

In addition to differences of opinion about the best approach to address a

foreign SPS measure, federal entities have debated whether and when WTO

or NAFTA dispute settlement procedures should be invoked to resolve

problems over certain SPS measures. This debate occurs at several levels.

Within USDA, responsible entities have had difficulty agreeing that they

have done all they can to resolve an SPS issue and that dispute settlement

is probably the appropriate next step. This may stem from underlying

disagreements about whether current efforts are working or different

opinions about whether scientific evidence against a particular measure is

strong. When USTR and USDA determine that a more formal process should

be considered to address a measure, such as the WTO SPS committee or WTO

consultations or dispute settlement, the debate expands to include

relevant members of the TPSC. USTR officials said the TPSC discusses the

issue according to the provisional criteria USTR established, but said

substantial debate among TPSC members still occurs.

The debate about whether to refer SPS cases to the WTO for dispute

settlement occurs not only among federal entities but between federal

entities and the private sector, as shown by several of the SPS cases we

reviewed. Dispute settlement procedures were invoked regarding Korean

shelf-life standards and the EU ban on hormones and were considered as a

possible approach regarding the Japanese ban on tomatoes. In several of

these cases, we found evidence of debate among federal entities about

whether dispute settlement was the appropriate course of action. In

several cases, industry officials told us they were disappointed that the

government was slow to decide about moving to dispute settlement. For

example, some industry officials told us they expected USTR to invoke

dispute settlement procedures in the EU hormone case immediately

following the WTO’s implementation in January 1995. Filing this case was

delayed until May 1996, however, in part because of indications during

1995 that the EU might revise the measure. Similarly, some industry

officials told us they intended to insist that USTR invoke dispute settlement

procedures in the Japanese case if it was not resolved by early 1996. While

dispute settlement was considered and the possibility may have been

mentioned to Japanese officials, it was not pursued. This case was

ultimately resolved over a year later, in April 1997. In the Korean shelf-life

case, USTR engaged in WTO consultations within 6 months of the WTO’s

implementation, and the case was resolved.

Coordinated Goals, Objectives,

and Performance

Measurements Lacking

Responsible federal entities have not developed coordinated goals,

objectives, and performance measurements for programs designed to

address SPS measures. In response to the Results Act, USTR and USDA

Page 31 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

prepared strategic plans to outline their agencies’ overall goals and

objectives as required by the act.35 These plans identified foreign SPS

measures as a key issue that the United States faces in its goal to expand

agricultural exports and contained broad goals for addressing SPS

measures.36 The plans also recognized the need to coordinate with other

responsible entities in addressing SPS measures. More specific and

better-coordinated goals, objectives, and performance measurements,

however, are critical to forming the integrated approach for addressing SPS

measures that our work has shown is needed.

The principles underlying the Results Act provide guidance that the

multiple responsible agencies can use to develop coordinated goals,

objectives, and performance measurements and to improve the

management of individual agency and overall federal efforts related to SPS

measures. For example, the act focuses on clarifying missions, setting

program goals, and measuring performance toward achieving those goals.

In addition, the act’s focus on results implies that federal programs

contributing to the same or similar results, often referred to as

“cross-cutting programs,” should be closely coordinated to ensure that

goals are consistent and, as appropriate, program efforts are mutually

reinforcing. This means that federal agencies are to look beyond their

organizational boundaries and coordinate with other agencies to ensure

their efforts are aligned.

In our work examining implementation of the Results Act, we identified

several critical issues that need to be addressed if the act is to succeed in

improving management of federal agencies. Among these is the need to

improve the management of cross-cutting program efforts by ensuring that

those programs are appropriately coordinated.37 The recognition in USTR’s

and USDA’s strategic plans of the need to coordinate with other agencies in

addressing SPS issues is an essential first step for developing a more

35The Results Act required agencies to submit strategic plans to Congress by September 30, 1997. The

plans, which were to cover a period of at least 5 years forward from the fiscal year in which they were

submitted, were to contain (1) mission statements, (2) long-term general goals and objectives,

(3) strategies that agencies would use to achieve their goals and objectives, and (4) any key external

factors that could affect the achievement of these goals. Agencies were to consult with Congress and

solicit the views of other stakeholders in the development of their plans. Additional guidance from the

Office of Management and Budget directed agencies to consult with each other about their plans’

treatment of cross-cutting functions (see “Office of Management and Budget Circular A-11,” part 2, 

sec. 200.15).

36For our overall analysis of a draft of USTR’s strategic plan, see The Results Act: Observations on

USTR’s September 1996 Draft Strategic Plan (GAO/NSIAD-97-199R, July 18, 1997). For our overall

analysis of several drafts of USDA’s strategic plan, see Results Act: Observations on USDA’s Draft

Strategic Plan (GAO/T-RCED-98-17, Oct. 1, 1997).

37Managing for Results: Building on Agencies’ Strategic Plans to Improve Federal Management

(GAO/T-GGD/AIMD-98-29, Oct. 30, 1997).

Page 32 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

integrated approach. The difficult challenge that lies ahead is for the

multiple agencies with responsibility for addressing SPS issues to

undertake substantive coordination to ensure that their responsibilities

are effectively managed and their agency goals and objectives are

complementary.

The next phase of implementation of the Results Act requires agencies to

develop annual performance plans that are linked to their strategic plans.

These plans are to contain annual performance goals, performance

measurements to gauge progress toward achieving the goals, and the

resources agencies will need to meet their goals. The development of

annual plans may provide the multiple federal agencies with SPS-related

responsibilities the next opportunity to develop coordinated goals,

objectives, and performance measurements for addressing SPS issues.

Conclusions Agricultural industry and U.S. government officials increasingly regard

foreign SPS measures that are or appear to be inconsistent with WTO

provisions as important issues that must be addressed in order to protect

U.S. trade interests. Although the WTO and NAFTA established rules to

govern the use of SPS measures in trade, the process of determining

whether measures comply with the agreements and developing strategies

to address potentially unfair measures is a complex undertaking. In light

of the U.S. process that involves multiple federal entities with varying

responsibilities for addressing foreign SPS measures, we believe a more

organized, integrated, strategic approach with unified and clearly defined

objectives would be beneficial.

The Results Act offers a useful framework to help federal entities with SPS

responsibilities not only to manage their own efforts but also to work

together to address foreign SPS measures. By clarifying their respective

SPS-related missions, USTR, USDA, and other responsible entities could begin

to overcome structural weaknesses that stem from the participation of

multiple agencies with unclear roles and overlapping or closely related

areas of responsibility. By following the act’s guidance to set program

goals and measure their performance toward these goals, USTR, USDA, and

the other federal entities could address problems related to inadequate

data about SPS measures and the lack of a process to evaluate measures,

prioritize federal efforts, and agree on unified approaches. Finally, by

undertaking more substantive coordination on this cross-cutting issue, the

various agencies could begin to ensure their individual efforts are

complementary and not unnecessarily duplicative.

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B-277551 

Recommendations We recommend that the U.S. Trade Representative and the Secretary of

Agriculture, in consultation with the Commissioner of Food and Drugs, the

Administrator of EPA, and the Secretary of State—or their

designees—should work together to develop coordinated goals,

objectives, and performance measurements for addressing foreign SPS

measures that appear to be inconsistent with the WTO SPS agreement. The

Government Performance and Results Act and implementing guidance

provide a framework for federal agencies to consult on such cross-cutting

programs.

Further, given USDA’s substantial role in identifying and addressing SPS

measures, the Secretary of Agriculture should (1) develop centralized,

aggregated data on the number of SPS measures that have been identified,

which ones are being addressed, and which ones have been resolved; and

(2) establish a more systematic process by which USDA entities evaluate

complaints they receive about SPS measures, determine which ones they

should address, prioritize their efforts, develop unified approaches, and

determine when to recommend consideration of dispute settlement

procedures to USTR. This process should be developed and implemented in

consultation with the U.S. Trade Representative, the Commissioner of

Food and Drugs, the Administrator of EPA, and the Secretary of State, or

their designees.

Agency Comments

and Our Evaluation

We received comments on a draft of this report from USTR, USDA, FDA, and

State (see apps. V-VIII); EPA indicated it did not have any comments on the

report. The agencies provided a range of views and identified several key

issues that the report should address. For example, USDA and State said the

report provided an accurate, comprehensive review of the federal process

to address foreign SPS measures. However, USTR and USDA said the report

should reflect recent initiatives they have adopted regarding these issues.

To address this concern, we updated the report to include information

about the TPSC process USTR leads and the formation of a USDA Working

Group on Agricultural Trade Policy, among other things.

While USTR did not offer any comments concerning our recommendations,

USDA, FDA, and State did. All three agreed with the thrust of the

recommendations. However, FDA and State suggested that the first

recommendation should ensure that USTR and USDA consult with other

agencies in setting goals, objectives, and performance measurements for

addressing SPS measures. In response, we revised the first

recommendation to emphasize the need for these agencies to work

Page 34 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

together to develop coordinated goals, objectives, and performance

measurements for addressing SPS measures.

USTR and FDA also suggested that the report should address the need for

balance between export interests and domestic health and food safety

interests and the important role regulatory agencies play in ensuring that

U.S. trade positions do not undermine U.S. regulation. We agree with their

comments and added information in the report to recognize the

importance of domestic concerns for federal efforts to address foreign SPS

measures.

The following individual comments were also made:

USTR said our report exaggerated the usefulness of tracking lists in drawing

definitive conclusions about the WTO-legality of SPS measures and their

impact on trade. It said that considerable resources have been devoted to

such a project, but the results have been of limited use in assessing or

managing these issues. We disagree. As we note in the report, USDA

officials said that in spite of certain weaknesses, the data they developed

on foreign SPS measures improved their understanding of the problem.

Thus, we continue to believe that the U.S. government’s data collection

and tracking efforts related to foreign SPS measures could be improved.

Without better data, executive branch agencies do not know the size of the

problem and therefore cannot reasonably assure that they have properly

prioritized their efforts or determined the level of resources needed.

Moreover, they cannot assess the effectiveness of their efforts to address

the problem.

FDA said that it sees the roles of the various regulatory agencies involved in

resolving SPS disputes as complementary rather than overlapping. In

response, we changed our description of regulatory agencies’

responsibilities from “overlapping” to “closely related.” However, we

noted that we had found evidence of coordination problems among the

regulatory agencies in our past work on the U.S. system for ensuring

domestic food safety. FDA also said that the report should recognize that

the process outlined in the WTO SPS agreement for determining that other

countries’ SPS-related systems are equivalent can be done on a unilateral as

well as a mutual basis. We modified our description of this process to

reflect FDA’s input.

USTR, USDA, and FDA also suggested a number of technical revisions to our

draft. In addition, we received technical comments from the WTO

Page 35 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

Secretariat. We have incorporated these suggestions in the report where

appropriate.

Scope and

Methodology

To address the extent of foreign SPS measures and their impact on U.S.

exports, we reviewed USDA, private sector, and academic analyses of the

history and impact of technical barriers to trade, including SPS measures.

We discussed these issues with knowledgeable government, private sector,

and academic officials. We also examined the impact of six foreign SPS

measures that we reviewed in detail.

To address the federal structure and approach for addressing foreign SPS

measures, we developed information on the U.S. trade and regulatory

structures for agricultural products, including entities’ missions, staff

levels, and budgetary resources related to SPS issues. We developed

information on U.S. government actions taken to address six foreign SPS

measures that have blocked or continue to block U.S. exports. We also

discussed U.S. government efforts with trade and regulatory officials that

have been active in addressing questionable foreign SPS measures and

reviewed internal USDA assessments of U.S. efforts to address questionable

foreign SPS measures. Finally, we discussed the U.S. government’s

effectiveness with agricultural trade associations.

More information about our scope and methodology is contained in

appendix IV. We conducted our work at USDA, USTR, FDA, EPA, and State.

Our work at USDA covered the Office of the Secretary; the Agricultural

Marketing Service; the Animal and Plant Health Inspection Service; the

Agricultural Research Service; the Economic Research Service; FAS; the

Food Safety and Inspection Service; the Grain Inspection, Packers and

Stockyards Administration; and the Office of the General Counsel.

We performed our review from January 1996 to October 1997 in

accordance with generally accepted government auditing standards.

As agreed with you, we plan no further distribution of this report until 

30 days after its issue date, unless you publicly announce its contents

earlier. At that time, we will send copies to appropriate congressional

Committees, the U.S. Trade Representative, the Secretary of Agriculture,

the Commissioner of Food and Drugs, the Administrator of EPA, and the

Secretary of State. Copies will be made available to others upon request.

Page 36 GAO/NSIAD-98-32 Agricultural Exports
B-277551 

This review was done under the direction of JayEtta Z. Hecker, Associate

Director. If you or your staff have any questions concerning this report,

please contact Ms. Hecker at (202) 512-8984. Major contributors to this

report are listed in appendix IX.

Benjamin F. Nelson

Director, International Relations

 and Trade Issues

Page 37 GAO/NSIAD-98-32 Agricultural Exports
Contents

Letter 1

Appendix I 

Trade Agreement Is in

Force, but Impact of

Provisions Varies

42

Relevant Provisions of the Agreement 42

Dispute Settlement 44

Administrative Aspects 45

Initial Impact and Need for Further Interpretation 46

Appendix II 

U.S. Approach,

Related Activities, and

Resources for

Addressing Foreign

SPS Measures

47

U.S. Approach for Addressing SPS Measures 47

Other SPS-related Activities 49

USDA Staff and Budget Resources 50

Appendix III 

Federal Efforts to

Address Six Foreign

SPS Measures

53

Wheat to China 54

Tomatoes to Japan 57

Beef to the EU 58

Peaches and Nectarines to Mexico 60

Certain Meat Products to Korea 62

Poultry to Russia 64

Appendix IV 

Objectives, Scope,

and Methodology

67

Appendix V 

Comments From the

U.S. Trade

Representative

70

Page 38 GAO/NSIAD-98-32 Agricultural Exports
Contents

Appendix VI 

Comments From the

Department of

Agriculture

74

Appendix VII 

Comments From the

Food and Drug

Administration

78

Appendix VIII 

Comments From the

Department of State

83

Appendix IX 

Major Contributors to

This Report

86

Related GAO Products 88

Tables Table 1: Primary Food-related Responsibilities of Selected U.S.

Regulatory Entities

16

Table II.1: USDA Entities’ SPS Functions and Full-time Staff

Years Allocated to All Export-related SPS Issues, Fiscal Years

1994-97

51

Table II.2: APHIS, FAS, and FSIS Full-time Staff Years Allocated

to Technical or Trade Negotiations, Fiscal Years 1994-97

51

Table II.3: USDA Entities’ Budget Resources for Export-related

SPS Issues, Fiscal Years 1994-97

52

Figures Figure 1: U.S. Beef and Veal Exports to the EU, Calendar Years

1985-95

12

Figure 2: FAS Full-time Staff Years for Addressing Foreign SPS

Measures, Fiscal Years 1994-97

22

Page 39 GAO/NSIAD-98-32 Agricultural Exports
Contents

Figure 3: Selected USDA Regulatory Entities’ Full-time Staff

Years for Addressing Foreign SPS Measures, Fiscal Years 1994-97

23

Figure I.1: Summary of Selected Provisions of SPS Agreement 44

Figure II.1: Three Phases of Federal Efforts to Address Individual

SPS Measures

48

Figure III.1: China Wheat Imports, Calendar Years 1982-92 55

Figure III.2: U.S. Poultry and Poultry Product Exports to Russia,

Calendar Years 1993-96

64

Abbreviations

AMS Agricultural Marketing Service

APAC Agricultural Policy Advisory Committee

APHIS Animal and Plant Health Inspection Service

ARS Agricultural Research Service

ATAC Agricultural Technical Advisory Committee

EPA Environmental Protection Agency

ERS Economic Research Service

EU European Union

FAS Foreign Agricultural Service

FDA Food and Drug Administration

FSIS Food Safety and Inspection Service

GATT General Agreement on Tariffs and Trade

GIPSA Grain Inspection, Packers and Stockyards Administration

NAFTA North American Free Trade Agreement

MAFF Ministry of Agriculture, Forestry and Fisheries (Japan)

OFM Oriental fruit moth

TBM tobacco blue mold

TCK tilletia controversa kuhn

TPSC Trade Policy Staff Committee

SPS sanitary and phytosanitary

USDA U.S. Department of Agriculture

USTR U.S. Trade Representative

WTO World Trade Organization

Page 40 GAO/NSIAD-98-32 Agricultural Exports
Page 41 GAO/NSIAD-98-32 Agricultural Exports
Appendix I 

Trade Agreement Is in Force, but Impact of

Provisions Varies

The World Trade Organization (WTO) Agreement on the Application of

Sanitary and Phytosanitary Measures (SPS agreement) represents the first

time that comprehensive multilateral rules were enacted specifically to

cover the use of sanitary and phytosanitary (SPS) measures in agricultural

trade.1

 The agreement became effective on January 1, 1995. U.S. and WTO

officials said some of the provisions have had an immediate impact on

trade, such as those that enable members to challenge SPS measures in

dispute settlement. These officials said other provisions, such as those

encouraging broader harmonization of SPS measures, require work to be

done by WTO members before they are likely to have a substantial impact

on trade.

Relevant Provisions of

the Agreement

The WTO agreement established members’ rights and obligations regarding

SPS measures in relation to trade. WTO member countries have the right to

maintain SPS measures that protect the health and safety of their

population and agricultural sector and to determine acceptable levels of

risk. However, members should not apply SPS measures or determine risk

levels in a way that is arbitrary or constitutes a disguised restriction to

trade. Therefore, the agreement requires SPS measures to be based on

scientific principles, including an assessment of relevant risks.2

In addition to these criteria, the agreement encourages progress toward

achieving three objectives: (1) broad harmonization of SPS measures

through greater use of international standards, (2) recognition among

members that their SPS measures may differ but still be considered

“equivalent” provided they achieve the same level of protection, and

1

Under the General Agreement on Tariffs and Trade (GATT), which governed international trade from

1947 to 1995, members were permitted to adopt measures necessary to protect human, animal, or plant

life or health, provided that such measures were not applied in an arbitrary or unjustifiably

discriminatory manner and did not constitute disguised restrictions on international trade. In GATT’s

Tokyo Round (1973-79), at least 36 GATT members agreed to additional rules to govern the use of

standards, including most SPS standards (the Agreement on Technical Barriers to Trade). However,

members were given great discretion to deviate from international standards when applying SPS

measures and were not required to cite scientific evidence or judgment in the dispute settlement

process. Chapter 7 of the North American Free Trade Agreement (NAFTA) also contains provisions

regarding the use of SPS measures in agricultural trade among its members.

2

In assessing risks, members are directed to take various factors into account, including available

scientific evidence; relevant processes and production methods; relevant inspection, sampling, and

testing methods; prevalence of specific diseases or pests; existence of pest- or disease-free areas;

relevant ecological and environmental conditions; and quarantine or other treatment. In addition, in

assessing the risks to animal and plant life or health, members shall take into account as relevant

economic factors the potential damage in terms of loss of production or sales in the event of the entry,

establishment, or spread of a pest or disease; the costs of control or eradication in the territory of the

importing country; and the relative cost-effectiveness of alternative approaches to limiting risk.

Page 42 GAO/NSIAD-98-32 Agricultural Exports
Appendix I 

Trade Agreement Is in Force, but Impact of

Provisions Varies

(3) adaptation of SPS measures to recognize pest- and disease-free regions.3

 Provisions that address harmonization encourage members to participate

in international organizations that establish SPS standards, particularly the

Codex Alimentarius Commission, the International Office of Epizootics,

and the International Plant Protection Convention. Figure I.1 summarizes

selected provisions of the agreement.

3

Annex A(6) of the SPS agreement defines a pest- or disease-free area as “an area, whether all of a

country, part of a country, or all or parts of several countries, as identified by the competent

authorities, in which a specific pest or disease does not occur.” According to U.S. Department of

Agriculture (USDA) officials, SPS measures typically do not recognize that imports from part of a

country may be safe even if imports from the entire country are not.

Page 43 GAO/NSIAD-98-32 Agricultural Exports
Appendix I 

Trade Agreement Is in Force, but Impact of

Provisions Varies

Figure I.1: Summary of Selected Provisions of SPS Agreement

Measures shall be based on scientific principles, not maintained without sufficient scientific

 evidence, and applied only to the extent necessary to protect human, animal, or plant life 

 or health. (Article 2.2)

In cases where scientific evidence is insufficient, provisional measures may be 

 adopted on the basis of available information from relevant international

 organizations and other members. (Article 5.7)

Measures shall not arbitrarily or unjustifiably discriminate between countries where identical 

 or similar conditions prevail, including between a member country's own territory and that 

 of other countries, and shall not constitute a disguised restriction on trade. (Article 2.3)

Measures shall be based on assessment of risk, taking into account relevant

 scientific, technical, ecological, environmental, and, with regard to animal or plant life,

 economic factors. (Article 5)

Measures shall be based on existing international standards, guidelines, and

 recommendations, except that measures that achieve a higher level of protection than

 international standards may be maintained if there is scientific justification or if a country

 otherwise determines the measure to be appropriate in accordance with the agreement's

 risk assessment provisions. (Article 3)

Members shall recognize the equivalency of measures that differ from their own but are

 demonstrated to offer the same level of protection. (Article 4.1)

Measures shall recognize the concept that regions within one or several countries may be

 free of, or have a low prevalence of, pets and diseases. (Article 6)

a

aTechnical factors include relevant processes and production methods and relevant inspection,

sampling, and testing methods.

Dispute Settlement Disputes arising under the SPS agreement are subject to the WTO dispute

settlement mechanism, which provides for consultations and review by a

Page 44 GAO/NSIAD-98-32 Agricultural Exports
Appendix I 

Trade Agreement Is in Force, but Impact of

Provisions Varies

WTO dispute settlement panel. The agreement authorizes such panels to

seek expert advice on scientific or technical issues. As anticipated,

member countries have begun to use these mechanisms to resolve

disputes about SPS measures. For example, on behalf of the United States,

the U.S. Trade Representative (USTR) has invoked WTO dispute settlement

procedures regarding five SPS measures or groups of measures since the

agreement became effective.4

 Two of these cases have had positive

outcomes for the United States, while the other cases have not been

resolved yet.5

 A WTO official said that, while increased use of the dispute

settlement process was anticipated, the growing number of cases has

strained the WTO Secretariat’s limited resources. USDA and USTR officials

said that countries generally prefer to resolve issues informally, but the

dispute settlement mechanism is an important tool for cases where

informal resolution cannot be achieved.

Administrative

Aspects

For administrative purposes, the SPS agreement established an SPS

committee, comprised of member countries, that is responsible for

overseeing implementation of the agreement and facilitating consultations

among members on specific SPS measures.6

 For example, as part of its

responsibility, the WTO committee is expected to develop guidelines on risk

management and monitor progress toward harmonization of SPS standards.

USDA officials said they are particularly interested in using the committee

as a way to raise their concerns about specific SPS measures and have done

so in several WTO committee meetings.7

Another administrative provision requires member countries to publish

information about their SPS measures and notify other members before

implementing any new measures or modifications that are not based on

international standards. The purpose of advance notification is to allow

4

The SPS measures the United States has challenged in the WTO include the European Union (EU)

measures affecting meat and meat products, Korean shelf-life requirements for meat and bottled water,

Korean testing and inspection requirements for agricultural imports, Japanese measures on fruit and

vegetable imports, and an Australian ban on salmon imports. The United States also initiated technical

consultations once under NAFTA, requesting a review of Mexican measures banning U.S. sweet

cherries.

5

On July 20, 1995, the United States and Korea notified the WTO that they had reached agreement

about modifications to Korea’s shelf-life requirements. On June 30, 1997, a WTO dispute settlement

panel found the EU hormone ban was inconsistent with WTO provisions; the EU filed an appeal

regarding this decision on September 24, 1997. Following the NAFTA consultations, USDA announced

on February 20, 1997, that Mexico would begin importing U.S. sweet cherries in accordance with a

work plan agreed to by both sides.

6

NAFTA also established an SPS committee for the members to discuss their responsibilities under the

agreement and to consult on implementation issues.

7

The United States has also discussed specific SPS measures in NAFTA SPS committee meetings.

Page 45 GAO/NSIAD-98-32 Agricultural Exports
Appendix I 

Trade Agreement Is in Force, but Impact of

Provisions Varies

member countries time to adapt their products or processes to the new

requirement and to comment on the measure.8

Initial Impact and

Need for Further

Interpretation

According to U.S. and WTO officials, some of the SPS agreement’s provisions

have had an immediate impact, while the impact of other provisions

remains to be seen. These officials said members currently appear to be

more focused on provisions that enable them to resolve disputes over SPS

measures, such as the requirements that SPS measures be based on

scientific evidence and risk assessment, than on provisions that encourage

harmonization and the recognition of equivalent systems and pest- or

disease-free regions. USDA and WTO officials said that while the latter

provisions could help minimize trade disputes, the practices they

encourage are not currently widespread. Moreover, many years of bilateral

or multilateral discussion may be needed before SPS measures are broadly

harmonized or equivalent systems and pest- or disease-free regions are

broadly recognized, therefore progress in these areas is likely to be slow.

One example supports that viewpoint—the United States and the EU

negotiated for 3 years before reaching a partial agreement about the

equivalence of their respective inspection systems for animal products.9

U.S. and WTO officials also said that the interpretation of certain provisions

will be clarified through the dispute settlement process. For example, a

USDA official said members may have different interpretations regarding

whether a country’s right to determine an acceptable level of risk is

stronger than its obligation to base risk assessment on scientific evidence.

A WTO official characterized the SPS agreement as a framework agreement

that articulates certain rules and objectives but does not specify how they

should be achieved. In such cases, it is up to the members to decide how

the provisions should be interpreted.

8

According to USDA, between January 1, 1995, and April 30, 1997, information on 530 SPS measures in

46 of 131 members had been reported to the WTO. A USDA official said no SPS measures are actually

reported in accordance with NAFTA because Canada, Mexico, and the United States provide

information to the WTO instead.

9

The U.S.-EU discussions covered meat, poultry, seafood, dairy, egg, and pet food products, among

others. The two countries were unable to reach agreement about the equivalence of their poultry

production and inspection systems.

Page 46 GAO/NSIAD-98-32 Agricultural Exports
Appendix II 

U.S. Approach, Related Activities, and

Resources for Addressing Foreign SPS

Measures

U.S. efforts to address individual SPS measures are an important

component of overall activities related to SPS issues. The U.S. government

addresses individual measures through technical- and trade-based

approaches. In addition, federal entities perform other activities that are

related to SPS issues, such as certifying that U.S. exports are healthy and

safe and participating in international organizations that set SPS-related

standards. Within USDA, the staff and budget resources allocated to all SPS

activities have generally increased since 1994. Approximately one-quarter

of USDA’s SPS-related staff resources have been allocated to addressing

foreign SPS measures in technical or trade negotiations, the main focus of

this report, while about three-quarters of its SPS-related staff resources

have been allocated to other activities.

U.S. Approach for

Addressing SPS

Measures

USDA officials told us the U.S. approach for addressing foreign SPS

measures varies depending on the measure, because each case has unique

aspects. Based on our review of federal efforts to address six SPS measures

and our discussions with responsible U.S. officials, we found that

individual approaches have similar elements. We developed a framework

comprised of three phases to help explain how federal entities have

addressed SPS measures (see fig. II.1).

Page 47 GAO/NSIAD-98-32 Agricultural Exports
Appendix II 

U.S. Approach, Related Activities, and

Resources for Addressing Foreign SPS

Measures

Figure II.1: Three Phases of Federal Efforts to Address Individual SPS Measures

Phase 1: Identification

The U.S. government or industry

identifies a foreign SPS measure

that blocks U.S. exports.

Phase 2: Technical Information

Exchange and Research

U.S. regulatory authorities lead 

bilateral discussions with the 

foreign government to exchange

technical information and determine

whether changes to the U.S. product 

or the foreign measure will enable

trade to occur.

U.S. government may provide

technical data or conduct research

to demonstrate the health or safety

of the U.S. product.

U.S. producers and exporters may

be required to conform to foreign

standards or to perform risk-mitigation

techniques.

Phase 3: Trade Policy Negotiations

and Dispute Settlement

U.S. trade authorities lead bilateral

discussions with the foreign

government to argue that the

foreign measure is inconsistent 

with the WTO SPS agreement 

or NAFTA.

U.S. government may request 

formal WTO or NAFTA consultation

or review by a dispute settlement 

panel.

a

aThe SPS agreement and NAFTA are only binding on WTO and NAFTA members, respectively.

However, several U.S. trading partners that are not WTO members, including China and Russia,

have applied to join the WTO and would be expected to comply with the SPS agreement if they

become members.

During the first phase (identification), the U.S. government attempts to

learn more about an identified SPS measure and determine whether the

measure is a minor problem that can be fixed quickly or a more serious

problem that will take some time to resolve.1

 During the second phase

(technical exchange), regulatory entities usually lead U.S. government

efforts, but trade entities may play a supporting role. This phase can last

several months or years, depending on how often the two sides meet and

what actions they agree to take.

During the third phase (trade negotiations), trade entities usually lead U.S.

government efforts, but regulatory entities may play a supporting role.

Trade negotiations are often viewed as “elevating” the U.S. approach to a

higher political level and sometimes become necessary when the U.S.

government concludes the foreign government is not responding to

technical arguments. In a few cases where neither technical exchange nor

1

According to USDA officials, minor problems can occur if the export certificates accompanying U.S.

exports are incorrect. These types of problems usually affect certain shipments of a product rather

than all exports of a product and can generally be fixed quickly by providing corrected paperwork.

Page 48 GAO/NSIAD-98-32 Agricultural Exports
Appendix II 

U.S. Approach, Related Activities, and

Resources for Addressing Foreign SPS

Measures

trade negotiations have achieved resolution, the U.S. government has

decided to request formal WTO or NAFTA consultations or review by a

dispute settlement panel.

Based on our review of six measures and our discussions with responsible

federal officials, federal efforts to address individual SPS measures may

include primarily technical exchanges, primarily trade negotiations, or a

combination of the two. In addition, it appears that SPS measures may be

resolved at any point during the three phases we identify and some

disagreements are resolved more quickly than others depending on the

circumstances.

Other SPS-related

Activities

Our review focused on U.S. government efforts to address foreign SPS

measures, but federal entities perform other activities related to SPS issues

that are designed to facilitate existing trade or generally enhance global

dialogue about SPS measures and their relation to trade. For example, the

overall U.S. system for ensuring food safety and protecting animals and

plants from pests or diseases facilitates exports by providing safe, healthy

products. U.S. regulatory entities, such as the Food and Drug

Administration (FDA) and USDA’s Food Safety and Inspection Service (FSIS)

and Animal and Plant Health Inspection Service (APHIS) are the lead

agencies in this process. In addition, APHIS and FSIS routinely certify the

health and safety of U.S. exports to facilitate their entry into foreign

markets. Sometimes, as a result of technical exchanges or trade

negotiations, these agencies certify that U.S. products conform to specific

requirements agreed to by the United States and the foreign government.

U.S. trade and regulatory officials participate in several international trade

organizations or agreements that have developed or continue to develop

trade rules regarding SPS measures. These include the WTO, NAFTA, and a

preparatory working group on SPS measures for negotiations on a Free

Trade Area of the Americas. U.S. regulatory officials represent the United

States in several international and regional organizations, including the

Codex Alimentarius Commission, the International Office of Epizootics,

and the International Plant Protection Convention, that facilitate

discussion of technical issues with a view toward developing international

SPS standards. Finally, under the auspices of the WTO, U.S. government

officials have participated in training seminars to help developing country

officials understand their WTO SPS obligations.

Page 49 GAO/NSIAD-98-32 Agricultural Exports
Appendix II 

U.S. Approach, Related Activities, and

Resources for Addressing Foreign SPS

Measures

USDA Staff and

Budget Resources

Because most federal efforts related to SPS issues are initiated or managed

by USDA, we asked the Secretary of Agriculture’s Special Assistant for

International Trade to provide information about USDA entities’ staff and

budget resources devoted to export-related SPS issues from 1994 to 1997.

In some cases, the entities were able to provide full-time staff years that

are devoted to these issues; in other cases, entities had to estimate the

full-time equivalent because their staff work on other issues as well. We

also identified four functional categories that summarize the various USDA

activities and asked the entities to indicate which functional categories

cover most of their activities. These categories are (1) negotiations,

(2) export certification, (3) technical work, and (4) participation in

international organizations.

In responding to our request, the Secretary’s Special Assistant observed

that the majority of USDA’s export-related SPS staff years are allocated to

activities that facilitate exports such as the issuance and review of export

certificates. These activities take place solely within regulatory entities.

Table II.1 shows the actual or estimated full-time staff years that USDA

entities allocated to all SPS activities from fiscal years 1994 to 1997 and the

functional categories each entity covers. The Special Assistant also

observed that staff years devoted to the topic of this report, technical or

trade negotiations with other countries, and the establishment of related

policies accounted for less than one-fourth of the export-related SPS staff

years allocated in 1997. Table II.2 shows the staff years that APHIS, the

Foreign Agricultural Service (FAS), and FSIS reported they allocated to

technical or trade negotiations from fiscal years 1994 to 1997. Table II.3

shows the estimated budget resources these entities allocated to all

SPS-related activities during the same period.

Page 50 GAO/NSIAD-98-32 Agricultural Exports
Appendix II 

U.S. Approach, Related Activities, and

Resources for Addressing Foreign SPS

Measures

Table II.1: USDA Entities’ SPS Functions and Full-time Staff Years Allocated to All Export-related SPS Issues, Fiscal Years

1994-97

Entity Functions

FY ’94

staff years

FY ’95

staff years

FY ’96

staff years

FY ’97

staff years

% change

FY ’94 to FY ’97

APHIS EC, IO, N, T 175.0 190.0 200.0 209.0 + 19%

FAS IO, N 23.0 44.0 49.0 49.0 + 113

FSIS EC, IO, N, T 55.0 60.0 70.0 82.0 + 49

GIPSA EC, N, T 5.0 5.0 5.1 5.1 + 2

ARS N, T 32.0 32.0 32.0 32.0 0

OSEC Guidance 0 0 0.5 0.5 n/a

Total 290 331 356.6 377.6 + 30%

Legend

ARS = Agricultural Research Service

OSEC = Office of the Secretary (of Agriculture)

EC = Issuance and review of export certificates

GIPSA = Grain Inspection, Packers and Stockyards Administration

IO = Participation in international trade and SPS standard-setting organizations, including

establishing related USDA or agency export policies

N = Bilateral negotiation with trading partners about SPS measures with the goal of export

facilitation. Can include establishing related USDA or agency export policies

N/A = not applicable

T = Performance of technical work, including risk assessments, research, and other technical

support

Source: USDA.

Table II.2: APHIS, FAS, and FSIS

Full-time Staff Years Allocated to

Technical or Trade Negotiations, Fiscal

Years 1994-97

Entity

FY ’94

staff years

FY ’95

staff years

FY ’96

staff years

FY ’97

staff years

% change

FY ’94 to FY ’97

APHIS 36 37 38 42 + 17%

FAS 23 44 49 49 + 113

FSIS 3 3 3 3 0

Note: We attribute all FAS staff years to trade negotiations because this is FAS’ primary

SPS-related function.

Source: USDA.

Page 51 GAO/NSIAD-98-32 Agricultural Exports
Appendix II 

U.S. Approach, Related Activities, and

Resources for Addressing Foreign SPS

Measures

Table II.3: USDA Entities’ Budget Resources for Export-related SPS Issues, Fiscal Years 1994-97

Dollars in thousands

Entity

FY ’94

budget resources

FY ’95

budget resources

FY ’96

budget resources

FY ’97

budget resources

% change

FY ’94 to FY ’97

APHIS $11,068 $12,450 $13,182 $15,741 + 42%

FAS 1,449 2,860 3,283 3,381 + 133

FSIS 3,507 3,561 4,036 4,274 + 22

GIPSA 168 174 187 192 + 14

ARS 9,962 10,062 10,164 10,266 + 3

OSEC 0 0 61 62 n/a

Total $26,154 $29,107 $30,913 $33,916 + 30%

Source: USDA.

Page 52 GAO/NSIAD-98-32 Agricultural Exports
Appendix III 

Federal Efforts to Address Six Foreign SPS

Measures

To enhance our understanding of the U.S. government structure and

approach for addressing foreign SPS measures, we developed information

on six cases where another country’s SPS measure(s) have blocked or

continue to block U.S. agricultural exports to that country. The six cases

involved various commodities and countries, including U.S. wheat exports

to China, potential U.S. tomato exports to Japan, U.S. beef and veal

exports to the EU, U.S. peach and necterine exports to Mexico, certain U.S.

meat product exports to Korea, and U.S. poultry exports to Russia.

Information about how we selected these cases and developed

information about them is contained in appendix IV.

Of the six measures we examined, three have been long-standing, two of

which have been resolved (although in one of these cases renewed U.S.

exports are not assured). The oldest measure is the Chinese “zero

tolerance” for wheat imports found to contain tilletia controversa kuhn

(TCK), a common smut fungus. The Chinese ban was established in 1973

and began to affect U.S. wheat exports from the Pacific Northwest in 1974.

The second measure is the Japanese ban on the importation of U.S.

tomatoes because of concern that such tomatoes could be a host for

tobacco blue mold (TBM). That ban was lifted for 25 varieties of tomatoes

on April 25, 1997. The third measure is the EU ban on the use of

growth-promoting hormones in livestock, which was implemented in 1989.

On June 30, 1997, a WTO dispute settlement panel found the ban to be

inconsistent with the SPS agreement. However, the EU filed an appeal

regarding this decision on September 24, 1997.

The three other SPS measures we examined are more recent, and all three

have been resolved. The first measure is Mexican preshipment

requirements, dating back to 1991, for U.S. peaches and nectarines. The

second measure is a 1994 Korean requirement limiting the shelf-life on

certain frozen meat products to 30 days. The third measure is the Russian

ban on U.S. poultry in 1996 due to concerns about food safety and poultry

disease issues.

Five of these six measures resulted in disruption of an ongoing U.S. export

market. In one case, there was a brief but total ban on U.S. exports

(poultry to Russia); while in two cases, there was a partial ban on U.S.

exports (beef to the EU and wheat to China). In the other two cases,

foreign requirements caused U.S. exports to drop significantly (certain

meat products to Korea and peaches and nectarines to Mexico). The sixth

measure did not disrupt an ongoing market but, rather, resulted in the

exclusion of U.S. exports from a market (tomatoes to Japan).

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Appendix III 

Federal Efforts to Address Six Foreign SPS

Measures

Wheat to China The Chinese “zero tolerance” for TCK was established in 1973, just 1 year

following the resumption of diplomatic relations between the United

States and China. According to the Agricultural Research Service (ARS), the

disease caused by TCK reduces plant height by up to 50 percent, replaces

kernels of grain with useless spores in the seed head, and gives wheat a

fishy odor. Since 1974, China has banned wheat shipped from the states of

the Pacific Northwest, an area where TCK is known to occur, but has

continued to import wheat shipped from other U.S. ports. However, in the

summer of 1996, China rejected several shipments of U.S. wheat, shipped

from Gulf ports, that Chinese officials said were found to contain TCK.

The impact of the Chinese ban on U.S. wheat exports is difficult to

determine. U.S. exports of wheat to China have fluctuated significantly

during the more than 20 years that the United States has exported wheat

to China. Figure III.1 shows China’s wheat imports from 1982 to 1992.

According to a USDA official, it is not clear that overall U.S. wheat exports

to China have decreased as a result of the Chinese ban. Even if the ban

were not in place, it is not clear that China would have bought more wheat

from the United States and less wheat from other wheat exporters, such as

Canada. USDA’s Economic Research Service (ERS) concluded in

December 1993 that CEROILS, the Chinese state trading agency that

purchases all China’s wheat imports, relies on pricing more than on other

factors when making wheat purchase decisions.

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Appendix III 

Federal Efforts to Address Six Foreign SPS

Measures

Figure III.1: China Wheat Imports, Calendar Years 1982-92

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

0

2

4

6

8

10

12

14

16

In millions of tons

United States All other countries

Source: USDA.

The Chinese ban on wheat with TCK is the longest-standing SPS measure

that we examined. There have been intermittent discussions between the

United States and China during the last 24 years, including joint research

efforts, but the positions of the two countries have remained substantially

unchanged.

The Chinese government states that it is very concerned with food security

and cannot risk having TCK become established in China. For this reason,

China maintains its official “zero” tolerance of TCK. In practice, however,

China has accepted some level of risk. For example, during 1988, China

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Appendix III 

Federal Efforts to Address Six Foreign SPS

Measures

accepted wheat from the Pacific Northwest on an experimental basis but

stopped this practice because it continued to detect TCK in these

shipments. China also reported finding TCK in U.S. wheat shipped from a

Gulf port in 1989; USDA retested this shipment but did not find TCK. In the

late 1980s, China established a schedule in its contracts with U.S.

exporters to discount the price of wheat when TCK is found. (One wheat

exporter told us that in 1995, it had shipped 2 million tons of wheat to

China on over 40 vessels and had only one $3 claim on one vessel.)

The U.S. government has stated that there is minimal risk of TCK becoming

established in China from imported wheat because climatic conditions in

China are not conducive to allowing TCK spores to germinate. According to

a Grain Inspection, Packers and Stockyards Administration (GIPSA) official,

although data indicate that China has been importing wheat with some low

levels of TCK for years, China continues to state that TCK does not exist in

that country. Furthermore, U.S. officials said that one or two other

countries have voiced some concern about TCK, but China is the only

country that prohibits the import of wheat with TCK. In short, the U.S.

position is that China’s zero-tolerance for TCK is not based on sound

science. The U.S. position is that China can safely accept some minimal

level of exposure to TCK and not risk damage to its wheat production.

Several USDA agencies have been involved in attempts to resolve the TCK

issue with China over the last 20 years. Agencies that have had major roles

at various times have included APHIS, FAS, the Federal Grain Inspection

Service (which later was combined with another agency to become GIPSA),

ARS, and the Agricultural Marketing Service (AMS). The Office of the

Secretary of Agriculture has also been involved, and special task forces

have been established over the years.

Discussions between U.S. and Chinese officials remained at a technical

level for many years. A prominent issue the two sides discussed during the

early 1990s was how to correctly distinguish TCK spores from those of

other diseases that did not concern China so that U.S. wheat shipments

were not detained or rejected inappropriately. ARS and AMS played

important roles in conducting joint research with Chinese scientists to

develop a common spore-identification methodology. The two sides have

also discussed options that would allow U.S. wheat to enter China freely at

southern ports that are physically distant from China’s main

wheat-production regions. In 1993, the Chinese offered to allow U.S. wheat

to enter at Hainan Island, but the United States considered this option

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Federal Efforts to Address Six Foreign SPS

Measures

unacceptable because grain processing facilities on the island were

inadequate.

More recently, the issue has been discussed primarily at a trade level.

Since 1986, China has been seeking to join the WTO and, at various times,

some U.S. officials have stated that the TCK issue will have to be resolved

before the United States can support China’s bid for membership. The

United States and China signed a memorandum of understanding in 1992,

according to which China promised that all SPS standards and testing

requirements would be based on sound science and administered in a

manner that does not impede trade or create barriers to imported

products. The U.S. position is that China must honor that agreement in

order to gain access to the WTO. Although Chinese officials have

continuously identified the TCK issue as a technical problem, a GIPSA

official said that U.S. efforts to resolve the issue through technical

exchanges have not produced results and expressed the opinion that the

issue can only be resolved through a political solution.

Tomatoes to Japan For at least 14 years, Japan has blocked the import of U.S. tomatoes

because of concerns that such products were a host for TBM. According to

U.S. officials, Japan based this concern on citations in scientific literature

published in 1933 and 1989 that identified tomatoes as a possible host for

TBM. On April 25, 1997, USDA announced that Japan had lifted its ban and

would allow the importation of 25 varieties of U.S. tomatoes. According to

the announcement, U.S. industry estimated that the size of the Japanese

market for U.S. tomatoes could reach approximately $50 million annually.

The U.S. position was that TBM does not infest tomatoes. According to

APHIS officials, although TBM is present in the United States, there have

been no incidents of TBM reported in California, where tomato growers

were interested in exporting to Japan.1

 Negotiations between the two

countries since 1983 were primarily technical in nature, with APHIS taking

the lead for the United States. FAS’ role was more limited and involved

prompting movement on the case with Japanese officials. In addition, ARS

co-sponsored a study with industry groups to test whether tomatoes could

be inoculated with TBM. USTR was consulted regarding the prospects for

taking the case to the WTO. The U.S. Ambassador to Japan brought the case

up to the Japanese agriculture minister.

1

Tomato growers in Florida and other states subsequently expressed an interest in exporting to Japan.

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Federal Efforts to Address Six Foreign SPS

Measures

APHIS began discussing the TBM issue as early as 1983 during annual

bilateral meetings with Japan’s Ministry of Agriculture, Forestry and

Fisheries (MAFF). Although APHIS presented available research that

suggested tomatoes were not a host for TBM, Japanese officials remained

unconvinced. During 1991, Japan suggested the United States should

conduct additional research to demonstrate that tomato plants could not

be infected with TBM, even when inoculated with the fungus.

In response, APHIS submitted a research proposal that MAFF accepted. ARS

conducted the research funded jointly by APHIS and the tomato industry.

The results of this research, which conclusively supported the U.S.

position, were provided to MAFF in 1995. However, through 1996, Japanese

authorities repeatedly asked the U.S. government for additional data and

scientific research. The Japanese also asked the U.S. side to correct the

USDA Agricultural Handbook (an American Phytopathological Society

publication), which made a reference to TBM on tomatoes.

In June 1996, APHIS asked the FAS Administrator to meet with Japanese

officials and explain that the United States was prepared to bring the case

before the WTO if there were further delays by the Japanese. Later that

year, MAFF indicated its intention to remove the ban. However, according

to Japanese regulations, Japanese authorities had first to obtain comments

from and hold public hearings involving Japanese producer groups before

making a final decision on whether to lift the ban. Japan initially delayed

implementation because of resistance among Japanese tomato growers

but finally lifted the ban for 25 varieties of tomatoes in April 1997.

Both U.S. industry and government sources have complained about the

slow pace of progress in the negotiations. One industry spokesman said

that while the Japanese appeared to stall and drag out the negotiations,

APHIS’ practice of waiting for formal annual bilateral meetings to raise

outstanding concerns did not facilitate rapid progress either.

Beef to the EU On January 1, 1989, implementation of an EU ban on the use of

growth-promoting hormones in livestock and on imports of meat from

animals so treated caused U.S. beef and veal exports to drop from about

$120 million in 1988 to less than $10 million in 1989. The ban applied to all

meat but primarily affected U.S. exports of edible organ meats, the export

value of which dropped from $85 million in 1988 to $0.5 million in 1989.

U.S. sales of edible organ meat to the EU remain limited, at only $1 million

in 1995.

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Measures

The U.S. position on the hormone ban is that the measure is inconsistent

with the WTO SPS agreement because, among other things, it is not

supported with scientific evidence or risk assessment, it is not necessary

for the protection of human health, and it ignores relevant international

standards.2

 Further, the United States argued that the measure is designed

to protect domestic producers from competition. The U.S. complaint

about the EU ban was an important test of the SPS agreement on

strengthened rules and procedures for dealing with food safety and health

measures that restrain trade and of the WTO’s dispute settlement process.

Concerns in Europe about hormone use and its impact on human health

began in 1980 when a health scandal in Italy had raised suspicions about

school lunches containing veal that may have contained hormone

residues. An EU Council Directive of July 1981 prohibited the use of

hormones, except for therapeutic purposes. The EU set up a scientific

working group (the Lamming Committee) to determine whether the use of

five specific hormones (three natural and two synthetic) as growth

promotants posed any health risk.3

 The Lamming Committee concluded

that the three natural hormones would not present any harmful effects to

the health of the consumer. In June 1984, the EU proposed allowing the use

of the three natural hormones.

In October 1985, however, the European Parliament adopted a resolution

claiming that scientific information about the five hormonal substances

was “far from complete.” It endorsed a ban on the two synthetic hormones

and rejected the proposed authorization of the three natural hormones,

with a continued exception for therapeutic purposes. In December 1985,

an EU Council Directive banned the use of natural hormones except for

therapeutic purposes, the use of synthetic hormones, and the importation

of meat from animals to which any hormones had been administered. The

directive was to take effect on January 1, 1988, but was delayed 1 year.

Much of the negotiations between the United States and the EU concerning

the hormone ban have been conducted by trade officials and have been

very formal. In September 1986, the United States challenged the EU

hormone ban under the GATT Agreement on Technical Barriers to Trade

2

In 1995, the Codex Alimentarius Commission adopted standards on five of the hormones banned by

the EU. Codex determined that three natural hormones (estradiol, progesterone, and testosterone) are

unlikely to pose a human health hazard. Codex also established usage standards for two synthetic

hormones (trenbolone and zeranol) that would protect human health. The EU’s measure is stricter

than Codex standards.

3

The three natural hormones the Lamming Committee studied were estradiol, progesterone, and

testosterone. The two synthetic hormones studied were trenbolone and zeranol.

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Federal Efforts to Address Six Foreign SPS

Measures

and in 1987 requested that the matter be referred to a group of technical

experts. The EU blocked formation of the technical group, and the dispute

went unresolved. USTR subsequently developed a retaliation list of EU

commodities on which there would be sanctions but suspended

application of the list for a year until the scheduled implementation of the

EU ban. In January 1989, however, the EU directive went into effect, and the

United States reacted by applying the retaliation list that had been

suspended.

During the 1990s, both sides looked to the Uruguay Round negotiations on

SPS measures to provide some new basis for deciding the issue. After the

SPS agreement was implemented in 1995, USTR and USDA again tried to

resolve this issue. During 1995, USDA officials met several times with EU

officials but were unable to obtain resolution. In late 1995, the EU held its

Scientific Conference on Growth Promotion in Meat Production. The

conference concluded there was no evidence of health risk from the five

hormones approved for use in the United States. However, following the

conference, the EU reaffirmed its commitment to maintaining the ban.

In January 1996, the United States requested WTO consultations with the

EU. Consultations were on held March 27, 1996, but failed to resolve the

dispute. The United States requested that the WTO Dispute Settlement Body

establish a panel to review the case, which was done on May 20, 1996. The

U.S. complaint addressed the three natural hormones, the two synthetic

hormones, and a sixth hormone.4 FDA had a major role in developing the

technical aspects of the U.S. complaint. On June 30, 1997, the panel found

the EU ban to be inconsistent with the SPS agreement. The EU filed an

appeal regarding this decision on September 24, 1997.

Peaches and

Nectarines to Mexico

In 1991, the Mexican government established a ban on imports of several

types of fresh fruit, including U.S. peaches and nectarines, because of their

susceptibility to being attacked by the Oriental fruit moth (OFM). At the

same time, Mexico identified several other pests of concern related to U.S.

peach and nectarine imports. Before 1991, U.S. peach and nectarine

exports to Mexico were not subject to any restrictions. Since 1992, U.S.

peaches and nectarines have been exported to Mexico in accordance with

the requirements of a work plan agreed to by U.S. and Mexican

government officials. For example, the work plan requires U.S. peaches

and nectarines to be treated and inspected before shipment. USDA officials

4

The hormones addressed by the U.S. complaint were estradiol, progesterone, testosterone,

trenbolone, zeranol, and melengestrol acetate.

Page 60 GAO/NSIAD-98-32 Agricultural Exports
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Federal Efforts to Address Six Foreign SPS

Measures

said the quantity of U.S. peaches and necatrines exported to Mexico,

measured in metric tons, dropped by almost 40 percent between 1991 and

1996. In addition, industry officials told us that the cost associated with

treating the fruit for OFM is high.

In 1991, the plant health agency of Mexico’s department of agriculture told

APHIS officials that the agency believed phytosanitary requirements needed

to be established for fresh fruit imports from the United States in order to

protect Mexico from exposure to certain pest risks, including OFM.

Mexican officials asserted that OFM is not found in Mexico.

APHIS officials told us they consider the Mexican concern about OFM and

the associated treatment requirements to be legitimate. FAS officials said

they agreed with APHIS’ position. However, industry officials said they

question a basic premise of the Mexican phytosanitary measure, namely,

that OFM does not exist in Mexico.5

 Furthermore, the officials said they

believe that the treatment and inspection measures that are required to

allow peaches and nectarines to enter Mexico are excessive.

APHIS was the primary U.S. agency involved in the Mexican case, and it

assumed the lead in technical negotiations with its Mexican counterpart.

ARS provided substantial technical support to APHIS. FAS officials also had a

supporting role in the resolution of the case. In addition to U.S.

government entities, the California Department of Food and Agriculture

played a fairly large role in developing the annual work plans.

Technical negotiations between APHIS and Mexican plant health authorities

began in late 1991. First APHIS convinced the Mexicans to reduce the

number of pests that concerned them from eight to three. Between 1992

and 1995, the two sides developed annual work plans that would allow

U.S. peaches and nectarines to be exported to Mexico. (Such work plans

exist for certain Mexican products being exported to the United States.)

The work plan requires the fruit to be fumigated with methyl bromide

before shipment. In 1993, the work plan was modified at the request of the

Mexican government to require that the U.S. industry pay for Mexican

inspectors to be stationed in the United States to monitor the fumigation

process. (APHIS inspectors are similarly stationed in Mexico.) Shipments

are to be accompanied by an APHIS-issued phytosanitary certificate

attesting that all requirements have been met. In 1995, a permanent work

plan was adopted, although there have been slight modifications to the

5

Industry officials cited a British report that showed OFM was found in Mexico. However, APHIS

officials told us they had examined the report and its supporting material and found the conclusion

about OFM’s existence in Mexico to be erroneous.

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Federal Efforts to Address Six Foreign SPS

Measures

work plan since then. For example, in 1997, APHIS persuaded Mexico to

accept an alternative treatment method to methyl bromide for 10 percent

of the peaches and nectarines being exported to Mexico.6

Although U.S. industry was pleased with the U.S. government response to

the Mexican requirements when they first went into effect, the Mexican

case is perhaps the best example of one where there has been strong

disagreement between U.S. government and industry officials about the

legitimacy of a foreign SPS measure.

Certain Meat Products

to Korea

In February 1994, Korea began to enforce a 30-day shelf-life requirement

on cooked frozen meat products, specifically sausages exported to Korea.

The permitted shelf life had been 90 days for the 4 years before 1994.

According to U.S. officials, by limiting the shelf life of these products to 

30 days, Korean authorities effectively denied U.S. products access to the

Korean market, since it took at least 35 days for shipments to reach Korea

and roughly 30 days for the sausages to clear port. Following WTO

consultations in 1995, Korea agreed to accept the

manufacturer-determined shelf life by July 1, 1996. Imports of sausages

from the United States to Korea in 1993 totaled $7.4 million. In 1994, such

imports had dropped to $4 million, a decrease of 45 percent.

According to U.S. officials we interviewed and documents we reviewed,

there were two major elements in the Korean position regarding the need

to establish the 30-day shelf-life requirement. First, Korean experts

maintained that cooked sausages were susceptible to infection by

microorganisms when the condition of the sausages fluctuated between

frozen and unfrozen states, as was often the case for frozen food

distributed in Korea. Second, since there was no international standard on

the shelf life of cooked frozen sausages, Korean authorities surveyed the

practices of major advanced countries. Korean authorities argued that

while a number of those countries allowed manufacturers to determine

the shelf life of their products, it would be premature for Korea to do the

same, given the level of development of its food manufacturing industry.

The U.S. government position was that Korea’s 30-day shelf-life

requirement was unscientific. U.S. authorities argued that scientific and

6

Methyl bromide is a highly effective fumigant that is widely used in agricultural production to control

a broad spectrum of pests. It has been identified by scientists as an ozone-depleting substance. In 1993,

EPA issued regulations to phase out the production and importation of methyl bromide in the United

States. See Pesticides: The Phaseout of Methyl Bromide in the United States (GAO/RCED-96-16,

Dec. 15, 1995).

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Federal Efforts to Address Six Foreign SPS

Measures

regulatory data supported a shelf life of about 1 year for cooked frozen

sausages. U.S. officials also argued that allowing manufacturers to set

their own shelf life is a well-established practice around the world.

USTR and FAS had major roles in resolving this case. FSIS and FDA provided

technical support to USTR and FAS. The U.S. Ambassador to Korea and FAS

and USTR officials met with Korean health authorities soon after the case

came to the attention of the U.S. government in March 1994. Over the next

few months, USTR, USDA, and embassy officials communicated their

disappointment about Korea’s decision to Korean health and foreign

affairs authorities.

In November 1994, a U.S. industry group filed a petition about the Korean

measure with USTR under section 301 of the Trade Act of 1974 

(19 U.S.C. 2411). In January 1995, following discussions about the section

301 case, the Korean government reversed itself on shelf-life requirements

for certain meat products. However, Korea’s proposal was unsatisfactory

to the United States because a system for manufacturer-determined shelf

life for these products would not take effect until 1998.

Under the auspices of the WTO, in May 1995, USTR requested consultations

with Korea on the shelf-life requirements. The consultations addressed

shelf-life requirements not only for chilled and frozen meat products but

also for a number of other products. According to USTR, damage estimates

due to multiple Korean shelf-life requirements ranged from $240 million in

1994 to as much as $1 billion annually by 1999.

The consultations led to an agreement, on July 20, 1995, whereby Korean

authorities agreed to phase out their government-mandated shelf-life

system and accept the manufacturer-determined shelf-life for imported

products. The new system became effective for all dried, packaged,

canned, or bottled products on October 1, 1995, and for chilled,

vacuum-packed pork and beef and all frozen food on July 1, 1996.

According to a WTO official, the system for other products was to be

phased in over time. After the agreement was announced, USTR and FAS

officials said they monitored Korea’s implementation to ensure it adhered

to the agreement. These officials said Korea’s initial notification to the WTO

of its new measures in July 1995 did not appear to be consistent with the

agreement reached, but a subsequent notification in September 1996

seemed to comply with the agreement.

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Federal Efforts to Address Six Foreign SPS

Measures

Poultry to Russia In 1996, the Russian poultry ban threatened a U.S. market that had been

growing dramatically since the collapse of the Soviet Union, from about

$84 million in 1993 to about $608 million in 1995 (see fig. III.2). Russia has

become the largest single market for U.S. poultry exports—U.S. poultry

exports to Russia represented about 26 percent of total U.S. poultry

exports in 1995. Poultry exports have also become the largest single U.S.

export to Russia. Because the ban was in effect for only about a week

before the United States and Russia reached an agreement, and because

U.S. poultry exports to Russia had increased somewhat during January

and February of 1996 in anticipation of the ban’s taking effect, total U.S.

poultry exports to Russia actually increased during 1996. Nonetheless, the

potential loss from a long-term ban was quite substantial.

Figure III.2: U.S. Poultry and Poultry

Product Exports to Russia, Calendar

Years 1993-96

1993 1994 1995 1996

0

200

400

600

800

1,000

In millions of dollars

Source: USDA, Foreign Agricultural Trade Statistics of the United States, various issues.

The case had its origins in a shipment of “off-condition” chicken received

by a Russian importer in June 1995. In November 1995, Russian veterinary

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Federal Efforts to Address Six Foreign SPS

Measures

health officials stated they had concerns about the U.S. system for

ensuring the safety of U.S. poultry exports and demanded that all U.S.

processing and cold storage facilities involved in the export of chicken to

Russia be inspected by Russian veterinarians.

After consulting with industry officials, USDA officials agreed to the

Russian inspection of U.S. facilities, even though an inspection of such

magnitude was unusual. Shortly before the arrival of the Russian

veterinarians in January 1996, Russia provided standards by which the U.S.

facilities were to be judged. USDA and industry officials said the standards

were very strict and were not similar to the existing U.S. poultry

processing system. After inspecting about 50 of the more than 300 plants

that were to be reviewed, a top Russian health official announced in

February 1996 that none of the U.S. facilities had met Russian standards.

Following this announcement, U.S. (APHIS, FSIS, and FAS) and Russian

officials engaged in technical negotiations to attempt to resolve the

problem. The negotiations addressed food safety and animal disease issues

and lasted for several weeks. The U.S. position was that the U.S. system

produces a safe and wholesome product and the Russian import

requirements were unreasonable. U.S. officials argued that processing and

inspection systems could differ but still offer the same degree of

protection. On February 16, 1996, Russian officials announced that a ban

on U.S. poultry imports would go into effect within 30 days unless Russian

concerns were addressed. U.S. officials who participated in the talks said

it became clear to them that technical negotiations were not going to

resolve the problem.

Following indications by Russian officials that they would ban U.S. poultry

imports, the Office of the Vice President became involved, and USTR took

the lead in the negotiations. The Russian ban was announced on March 16,

1996. Negotiations between the United States and Russia followed, and a

resolution was announced about 1 week later, on March 25, 1996. The two

sides reached agreement, among other things, on an updated export

certificate and a framework for periodic inspections of U.S. poultry

processing and cold storage facilities. According to U.S. officials, in this

case, the Office of the Vice President had a unique channel to work

through—a committee set up between the Vice President and the Russian

Prime Minister that held semiannual meetings to discuss bilateral issues.

U.S. industry, which was willing to make certain concessions to protect its

market, was heavily involved in developing the U.S. negotiating position.

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Federal Efforts to Address Six Foreign SPS

Measures

U.S. industry has noted, however, that the ban could perhaps have been

avoided had higher level and/or appropriate U.S. officials been involved

earlier in the negotiations. Some U.S. officials also expressed concern that

allowing Russian veterinarians to come to the United States with the

purpose of inspecting all the processing plants that exported poultry to

Russia may have set an expensive precedent for both the federal

government and the agricultural industry.

Page 66 GAO/NSIAD-98-32 Agricultural Exports
Appendix IV 

Objectives, Scope, and Methodology

The objectives of our work were to provide Congress with information and

analysis on (1) the extent to which foreign SPS measures may unfairly

restrict U.S. agricultural exports and (2) the federal structure and

approach for addressing such measures. Our work does not address other

countries’ concerns about U.S. SPS measures or federal efforts to ensure

the safety of domestically produced and imported food.

To address the extent of foreign SPS measures and their impact on U.S.

agricultural exports, we

• reviewed USDA and academic literature that addressed (1) the history of

technical barriers to agricultural trade, including SPS measures; and (2) the

impact of certain SPS measures on trade;

• discussed the extent and impact of SPS measures with (1) appropriate

trade and regulatory officials at USDA, USTR, FDA, the Environmental

Protection Agency (EPA), and the Department of State; (2) representatives

of agricultural trade associations for beef, fruits, pork, poultry, seeds,

vegetables, wheat, and other commodities; (3) officials from the National

Association of State Departments of Agriculture and selected state

departments of agriculture; and (4) academic experts at the University of

California;

• reviewed USDA and private sector analyses of how other countries’ SPS

measures impact U.S. exports;

• attended the 1996 and 1997 USDA Agricultural Outlook Conferences, as well

as the National Association of State Departments of Agriculture’s 1996

Legislative Conference, where the primary issues facing U.S. agricultural

exports were discussed; and

• reviewed selected official records of meetings from 1991 to 1996 of USDA’s

Agricultural Policy Advisory Committee (APAC) and multiple Agricultural

Technical Advisory Committees (ATAC) for various commodity groupings

to track changes in the level of concern expressed about the impact of

foreign SPS measures.

To describe and analyze the federal structure and approach for addressing

foreign SPS measures, we

• reviewed studies of the U.S. trade structure for agricultural products and

the U.S. regulatory structure for food safety and animal and plant health to

determine which entities were responsible for this issue;

• reviewed responsible entities’ relevant statutory authorities, mission

statements, organizational charts, budgets, and staff levels, particularly

related to addressing foreign SPS measures;

Page 67 GAO/NSIAD-98-32 Agricultural Exports
Appendix IV 

Objectives, Scope, and Methodology

• interviewed relevant officials in USDA’s Office of the Secretary; at eight

USDA agencies; USTR; FDA; EPA; and State to discuss their Department’s or

agency’s role in addressing foreign SPS measures, activities their

Department or agency has undertaken to address specific foreign

measures, their working relationships with other responsible entities, the

extent to which responsible entities have coordinated their efforts, and

how key decisions were made in individual cases;

• attended or reviewed documentation of USDA interagency meetings held to

coordinate and share information about the status of efforts to address

foreign SPS measures;

• reviewed structural and procedural limitations of the current approach as

well as possible changes that could address certain problems with

high-level USDA officials and agency staff, including the Special Assistant

for International Trade to the Secretary of Agriculture and the FAS

Administrator;

• reviewed nonpublic agency documents that identified specific problems

and suggested possible solutions, including a report by the USDA Office of

Inspector General that examined USDA’s response to NAFTA implementation;

• reviewed documentation of several USDA agencies’ computer data bases

that are used to track and manage SPS-related activities;

• attended APAC and ATAC meetings where concerns about the U.S.

government approach to address SPS measures were discussed with USDA

and USTR officials;

• interviewed and obtained documentation from representatives of

agricultural trade associations that have requested U.S. government

assistance to address SPS measures to assess their experiences, what

problems they encountered, and how satisfied they were with U.S.

government efforts; and

• reviewed agricultural trade association documents that identified specific

problems in the current structure and approach and suggested possible

solutions.

To further support this objective, we developed information on U.S.

government actions to address six foreign SPS measure(s) that have

threatened, constrained, or blocked or continue to block U.S. agricultural

exports. To select the six measures, we examined a variety of factors and

attempted to develop a group of measures that would allow us to address

a range of issues, including (1) commodities affected, (2) countries

establishing the measures, (3) duration of the measures (from a few

months to many years), (4) impact of the measures on trade (from

relatively small to relatively large), (5) status of U.S. efforts to resolve the

case (from resolved to unresolved), (6) coverage by multilateral rules

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Appendix IV 

Objectives, Scope, and Methodology

(involving WTO members, NAFTA members, and nonmembers of either

agreement), and (7) the extent of participation of responsible U.S.

government entities in addressing the measure.

The measures we examined included

• a Chinese stated “zero tolerance” on wheat infected with the TCK fungus, a

measure in effect since 1973 that has primarily affected certain

northwestern U.S. states where the fungus is known to occur;

• a Japanese ban (encountered as early as 1983) on imports of U.S. tomatoes

because of Japanese government concerns that tomatoes carried TBM;

• a 1989 EU ban on imports of hormone-treated meat that blocks U.S. beef

and veal exports;

• 1991 measures adopted in Mexico to establish multiple preshipment

requirements for imports of fresh U.S. peaches and nectarines;

• a 1994 change to a Republic of Korea shelf-life standard that adversely

affected U.S. meat product exports; and

• a brief 1996 Russian ban on U.S. poultry exports due to Russian

dissatisfaction with U.S. inspection processes and disease certifications.

For each measure, we developed a chronology of U.S. government and

industry actions taken to address the measure, from the time the U.S.

government first learned about the measure until the measure was

resolved, or if unresolved, to the present time. To do so, we conducted

interviews with agency officials who had been involved in addressing the

measure; obtained any documents these officials could provide to

demonstrate their or their entity’s actions, including chronologies, trip

reports, memos, meeting minutes, press releases, and the text of any

agreements reached with the foreign government; and reviewed reporting

cables between State (headquarters) and embassy officials located abroad

during 1994-96 that discussed these cases, including information about

meetings with foreign officials and their results. We also met with

agricultural trade association officials who had been involved in these

cases to discuss what actions they had taken and ascertain their opinions

of U.S. efforts.

Page 69 GAO/NSIAD-98-32 Agricultural Exports
Appendix V 

Comments From the U.S. Trade

Representative

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

Page 70 GAO/NSIAD-98-32 Agricultural Exports
Appendix V 

Comments From the U.S. Trade

Representative

See comment 2.

Page 71 GAO/NSIAD-98-32 Agricultural Exports
Appendix V 

Comments From the U.S. Trade

Representative

See comment 3.

Page 72 GAO/NSIAD-98-32 Agricultural Exports
Appendix V 

Comments From the U.S. Trade

Representative

The following are GAO’s comments on the U.S. Trade Representative ’s

memorandum dated September 9, 1997.

GAO Comments 1. We updated our discussion of USTR’s Government Performance and

Results Act (Results Act) strategic plan based on the final version that had

not been completed when the draft report was sent to USTR for comment.

We also added information about organizational developments at USTR and

the interagency Trade Policy Staff Committee (TPSC) that USTR leads.

Information throughout the report is based on discussions held with USTR

and USDA officials continuously through October 1997 and documents

gathered from both agencies. However, we continue to believe that our

assessment of the overall U.S. approach and the need for coordinated

goals, objectives, and performance measurements is accurate. First, the

TPSC process is not a substitute for coordinated management of overall

federal efforts. While this process is an important component of the

federal approach, it is focused on obtaining interagency consensus on a

limited number of SPS issues that the United States may raise for

discussion in the WTO SPS committee and possibly refer to dispute

settlement. According to USTR and USDA officials, the number of issues

addressed in the TPSC process is a small subset of the hundreds that USDA

entities address, which accounts for the report’s focus on USDA’s

SPS-related activities. Second, we found only broad goals related to SPS

measures in USTR’s Results Act plan, rather than the “specific negotiating

goals” that USTR said it contained. In our view, these broad goals are not

sufficient to ensure the more integrated approach for addressing SPS

measures that we believe is necessary.

2. We added information about the important role the regulatory agencies

play not only in addressing foreign SPS measures but also in ensuring that

U.S. trade policy does not undermine U.S. regulatory interests. However,

the focus of this report is, as requested, on the facilitation of U.S.

agricultural exports.

3. We discussed our response to this issue in the section of the letter

entitled “Agency Comments and Our Evaluation.” See page 35.

Page 73 GAO/NSIAD-98-32 Agricultural Exports
Appendix VI 

Comments From the Department of

Agriculture

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 74 GAO/NSIAD-98-32 Agricultural Exports
Appendix VI 

Comments From the Department of

Agriculture

See comment 1.

Page 75 GAO/NSIAD-98-32 Agricultural Exports
Appendix VI 

Comments From the Department of

Agriculture

See comment 2.

See comment 3.

See comment 4.

Page 76 GAO/NSIAD-98-32 Agricultural Exports
Appendix VI 

Comments From the Department of

Agriculture

The following are GAO’s comments on the Department of Agriculture’s

letter dated September 11, 1997.

GAO Comments 1. The report identifies several SPS measures that have been resolved or

regarding which the U.S. government has made progress, including five of

our six case studies, and discusses how federal entities have used the

provisions of the WTO SPS agreement in their negotiations to address SPS

measures. However, we continue to believe that federal entities cannot

measure the degree of their success because they lack adequate data on

the size and potential impact of the problem, the status of their efforts to

address the problem, and the effect of their efforts on U.S. exports.

Moreover, we believe that federal efforts to address SPS measures are

hampered by the structural and procedural weaknesses we identify.

2. We clarified that our assessment of the U.S. approach applied to the

entire scope of federal efforts, not just to measures that might be referred

to the WTO. As noted in our response to USTR’s comments (app. V, 

comment 1), we updated our discussion of recent organizational initiatives

but continue to believe our overall assessment of the federal approach is

accurate.

3. We understand that informal mechanisms may be a valuable and integral

part of any system. However, our review demonstrates that, in the absence

of high-level, unified management, the ad hoc and informal nature of

USDA’s efforts to address SPS measures has caused coordination,

communication, and prioritization problems. USDA notes in its comment

letter that increased written guidance is needed to document its informal

processes. We encourage USDA to focus this guidance on how federal

entities can best use such processes.

4. We added information about monthly strategy meetings held to discuss

SPS issues and the planned formation of the Working Group on Agricultural

Trade Policy. Based on information USDA officials provided, the working

group appears to be an appropriate step toward improving USDA’s

management of Departmentwide efforts to address SPS measures, provided

the plan is implemented and maintained and the working group’s

effectiveness is periodically evaluated.

Page 77 GAO/NSIAD-98-32 Agricultural Exports
Appendix VII 

Comments From the Food and Drug

Administration

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 78 GAO/NSIAD-98-32 Agricultural Exports
Appendix VII 

Comments From the Food and Drug

Administration

See comment 1.

Page 79 GAO/NSIAD-98-32 Agricultural Exports
Appendix VII 

Comments From the Food and Drug

Administration

See comment 2.

See comment 3.

Page 80 GAO/NSIAD-98-32 Agricultural Exports
Appendix VII 

Comments From the Food and Drug

Administration

See comment 4.

Page 81 GAO/NSIAD-98-32 Agricultural Exports
Appendix VII 

Comments From the Food and Drug

Administration

The following are GAO’s comments on the FDA’s letter dated August 22,

1997.

GAO Comments 1. We added information to the report to more completely reflect the role

that regulatory agencies play, not only in providing technical expertise to

help evaluate foreign SPS measures, but also in developing and evaluating

U.S. trade positions to ensure they do not undermine U.S. regulatory

interests. We also added information to indicate that the potential impact

on U.S. regulatory interests is one of several factors that are considered

when determining which foreign SPS measures the United States will raise

for discussion in the WTO SPS committee.

2. We discussed our response to this issue in the section of the letter

entitled “Agency Comments and Our Evaluation.” See page 35.

3. We discussed our response to this issue in the section of the letter

entitled “Agency Comments and Our Evaluation.” See page 35.

4. We modified the recommendation to suggest that USTR and USDA consult

with FDA, EPA, and State in the development of coordinated goals,

objectives, and performance measurements for addressing SPS measures.

Page 82 GAO/NSIAD-98-32 Agricultural Exports
Appendix VIII 

Comments From the Department of State

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

Page 83 GAO/NSIAD-98-32 Agricultural Exports
Appendix VIII 

Comments From the Department of State

Page 84 GAO/NSIAD-98-32 Agricultural Exports
Appendix VIII 

Comments From the Department of State

The following is GAO’s comment on the Department of State’s letter dated

August 20, 1997.

GAO’s Comment 1. We modified the recommendation to suggest that USTR and USDA consult

with FDA, EPA, and State in the development of coordinated goals,

objectives, and performance measurements for addressing SPS measures.

Although we recognize that State has played an important role in

addressing foreign SPS measures, it does not have the same degree of

responsibility for identifying, evaluating, and conducting negotiations on

these issues that USTR and USDA have.

Page 85 GAO/NSIAD-98-32 Agricultural Exports
Appendix IX 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Phillip J. Thomas

Shirley A. Brothwell

Kimberly M. Gianopoulos

Stanton J. Rothouse

Michael J. Avenick

Rona Mendelsohn

Office of the Chief

Economist,

Washington, D.C.

Daniel E. Coates

Office of the General

Counsel, Washington,

D.C.

Herbert I. Dunn

Los Angeles Regional

Office

Juan Gobel

Patricia Cázares

Page 86 GAO/NSIAD-98-32 Agricultural Exports
Appendix IX 

Major Contributors to This Report

Page 87 GAO/NSIAD-98-32 Agricultural Exports
Related GAO Products

U.S. Agricultural Exports: Strong Growth Likely But U.S. Export

Assistance Programs’ Contribution Uncertain (GAO/NSIAD-97-260, Sept. 30.

1997).

Agricultural Inspection: Improvements Needed to Minimize Threat of

Foreign Pests and Diseases (GAO/RCED-97-102, May 5, 1997).

Food-Related Services: Opportunities Exist to Recover Costs by Charging

Beneficiaries (GAO/RCED-97-57, Mar. 20, 1997).

World Trade Organization: Status of Issues to Be Considered at Singapore

Ministerial Meeting (GAO/T-NSIAD-96-243, Sept. 27, 1996).

Agricultural Research: Information on Research System and USDA’s Priority

Setting (GAO/RCED-96-92, Mar. 28, 1996).

Food Safety: New Initiatives Would Fundamentally Alter the Existing

System (GAO/RCED-96-81, Mar. 27, 1996).

International Trade: Implementation Issues Concerning the World Trade

Organization (GAO/T-NSIAD-96-122, Mar. 13, 1996).

Pesticides: The Phaseout of Methyl Bromide in the United States

(GAO/RCED-96-16, Dec. 15, 1995).

International Trade: Canada’s Restrictions on Certain Salmon Imports

(GAO/GGD-95-117, Apr. 20, 1995).

U.S.-Canadian Food Safety: Opportunities for Sharing Information and

Coordinating Inspections (GAO/RCED-95-45, Nov. 22, 1994).

U.S.-Chilean Trade: Pesticide Standards and Concerns Regarding Chilean

Sanitary Rules (GAO/GGD-94-198, Sept. 28, 1994).

The General Agreement on Tariffs and Trade: Uruguay Round Final Act

Should Produce Overall U.S. Economic Gains (GAO/GGD-94-83a and b,

July 29, 1994).

North American Free Trade Agreement: Assessment of Major Issues

(GAO/GGD-93-137a and b, Sept. 9, 1993).

(711176) Page 88 GAO/NSIAD-98-32 Agricultural Exports
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