[Federal Register Volume 62, Number 229 (Friday, November 28, 1997)]
[Proposed Rules]
[Pages 63284-63286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31177]


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DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Part 381

[Docket No. 97-006P]
RIN 0583-AC33


Addition of Mexico to the List of Countries Eligible to Export 
Poultry Products Into the United States

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing to 
add Mexico to the list of countries eligible to export poultry products 
into the United States. Reviews of Mexico's laws, regulations, and 
other materials show that its poultry processing system meets 
requirements equivalent to all provisions in the Poultry Products 
Inspection Act (PPIA) and its implementing regulations.
    Only poultry products that have been slaughtered in federally 
inspected establishments in the United States or in establishments in 
other countries eligible to export poultry to the United States and 
have then been processed in certified Mexican establishments would be 
permitted to be imported into the United States. All poultry products 
exported from Mexico to the United States must be reinspected at the 
U.S. ports-of-entry by FSIS inspectors.
    This action would enable certified poultry processing 
establishments in Mexico to export processed poultry products into the 
United States.

DATES: Comments must be received on or before January 27, 1998.

ADDRESSES: Send an original and two copies of comments to: FSIS Docket 
Clerk, Docket #97-006P, Room 102, Cotton Annex, 300 C Street, SW, 
Washington, DC 20250-3700. Reference materials cited in this document 
and any comments received will be available for public inspection in 
the FSIS Docket Room from 8:30 a.m. to 1:00 p.m. and from 2:00 p.m. to 
4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Mr. Mark Manis, Director, 
International Policy Development Division, Office of Policy, Program 
Development and Evaluation; (202) 720-6400.

SUPPLEMENTARY INFORMATION:

Background

    FSIS is proposing to amend the poultry products inspection 
regulations to add Mexico to the list of countries eligible to export 
poultry products to the United States. Section 17 of the PPIA (21 
U.S.C. 466) prohibits the importation into the United States of 
slaughtered poultry or poultry products unless they are healthful, 
wholesome, fit for human food, not adulterated, and contain no dye, 
chemical, preservative, or ingredient which renders them unhealthful, 
unwholesome, adulterated, or unfit for human food. Imported poultry 
products must be in compliance with the poultry products inspection 
regulations to ensure that they meet the standards provided in the 
PPIA. 9 CFR 381.196 establishes the procedures by which foreign 
countries wanting to export poultry or poultry products to the United 
States may become eligible to do so.
    Section 381.196(a) requires authorities in a foreign country's 
poultry inspection system to certify that (1) the system provides 
standards equivalent to those of the United States and (2) the legal 
authority for the system and its implementing regulations are 
equivalent to those of the United States. Specifically, a country's 
regulations must impose requirements equivalent to those of the United 
States in the following areas: (1) Ante-mortem and post-mortem 
inspection; (2) official controls by the national government over plant 
construction, facilities, and equipment; (3) direct and continuous 
supervision of slaughter activities and product preparation by official 
inspection personnel; (4) separation of establishments certified to 
export from those not certified; (5) maintenance of a single standard 
of inspection and sanitation throughout certified establishments; and 
(6) official controls over condemned product.
    Section 381.196 also requires a poultry inspection system 
maintained by a foreign country, with respect to establishments 
preparing products in that country for export to the United States, to 
ensure that those establishments and their poultry products comply with 
requirements equivalent to the provisions of the PPIA and the poultry 
products inspection regulations. Foreign country authorities must be 
able to ensure that all certifications required under Subpart T of the 
poultry product inspection regulations (Imported Poultry Products) can 
be relied upon before approval to export poultry and poultry products 
to the United States may be granted. Here, the government of Mexico 
would be responsible for establishing a system of controls to ensure 
that only poultry from eligible countries and establishments is used in 
poultry products processed in Mexico and destined for the United 
States. Besides relying on its initial determination of a country's 
eligibility, coupled with ongoing reviews to ensure that products 
shipped to the United States are safe, wholesome and properly labeled 
and packaged, FSIS randomly samples imported meat and poultry products 
for reinspection as they enter the United States.
    In addition to meeting the certification requirements, a foreign 
country's inspection system must be evaluated by FSIS before 
eligibility to export poultry and poultry products can be granted. This 
evaluation consists of two processes: a document review and an on-site 
review. The document review is an evaluation of the laws, regulations, 
and other written materials used by the country to operate its 
inspection program. To help the country in organizing its material, 
FSIS gives the country questionnaires asking for detailed information 
about the country's inspection practices and procedures in

[[Page 63285]]

five risk areas. These five risk areas, which are the focus of the 
evaluation, are contamination, disease, processing, residues, and 
compliance/economic fraud. FSIS evaluates the information to verify 
that the critical points in the five risk areas are addressed 
satisfactorily with respect to standards, activities, resources, and 
enforcement. If the document review is satisfactory, on-site reviews 
are scheduled using a multi-disciplinary team to evaluate all aspects 
of the country's delivery of its inspection program, including 
laboratories and individual establishments within the country.

Evaluation of the Mexican Inspection System

    In 1988, following an in-depth evaluation of its meat inspection 
system, Mexico was granted eligibility to export fresh and further 
processed meat products subject to the Federal Meat Inspection Act to 
the United States. The government agency in Mexico responsible for 
inspecting meat for export to the United States also has authority over 
poultry inspection. Thus, the authorities operating the Mexican 
inspection system have for several years demonstrated their knowledge 
of the U.S. inspection system, and successfully provided inspection 
equivalence for fresh and processed meat.
    In response to a request from the Mexican government for approval 
to export poultry to the United States, FSIS conducted a review of the 
Mexican poultry inspection system to determine if it was equivalent to 
the U.S. poultry inspection system. First, FSIS compared Mexico's 
poultry inspection laws and regulations with U.S. requirements. The 
study concluded that the requirements contained in Mexico's poultry 
inspection laws and regulations are equivalent to those mandated by the 
PPIA and implementing regulations. FSIS then conducted an on-site 
review of the Mexican poultry inspection system in operation. This 
review was conducted between May 28 and June 5, 1996. The FSIS review 
team concluded that Mexico's implementation of poultry processing 
standards and procedures was equivalent to that of the United States 
and that Mexico's official residue control laboratory was fully capable 
of testing poultry products. The parties have agreed to postpone final 
decision making regarding Mexico's implementation of slaughter 
processing standards and procedures until a later date. As a result, 
poultry processed in Mexican establishments approved to export to the 
United States must be slaughtered in the United States under USDA 
inspection or in establishments in other countries that are certified 
as eligible to export to the United States. The Mexican government has 
agreed to conduct its program in a way that ensures that only poultry 
from eligible countries and establishments is used in poultry products 
processed in Mexico destined for the United States.
    All lots of poultry products exported to the United States from 
Mexico will be reinspected at the ports-of-entry for transportation 
damage, labeling, proper certification, general condition and accurate 
count. Other types of inspection will also be conducted, including 
examining the product for defects and performing laboratory analyses 
that will detect chemical residues on the product or determine whether 
the product is microbiologically contaminated.
    Products that pass reinspection will be stamped with the official 
mark of inspection and allowed to enter U.S. commerce. If they do not 
meet U.S. requirements, they will be stamped ``U.S. Refused Entry'' and 
must be reexported, destroyed or converted to animal food.
    Accordingly, FSIS is proposing to amend Sec. 381.196 of the poultry 
products inspection regulations to add Mexico as a country from which 
poultry products may be eligible for import into the United States. As 
a country eligible to export poultry products into the United States, 
the government of Mexico would certify to FSIS those establishments 
wishing to export such products to the United States and operating 
according to U.S. requirements. FSIS would retain the right to verify 
that establishments certified by the Mexican government are meeting the 
U.S. requirements. This would be done through on-site reviews of the 
establishments while they are in operation.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. If this proposed rule is adopted: (1) all state 
and local laws and regulations that are inconsistent with this rule 
will be preempted; (2) no retroactive effect will be given to this 
rule; and (3) administrative proceedings will not be required before 
parties may file suit in court challenging this rule.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been determined to be significant and has 
been reviewed by OMB under Executive Order 12866.
    In accordance with 5 U.S.C. 603, FSIS has also conducted an initial 
regulatory flexibility analysis regarding the impact of the rule on 
small entities. However, FSIS does not currently have all the data 
necessary for a comprehensive analysis of the effects of this rule on 
small entities. Therefore, FSIS is inviting comments concerning 
potential effects. In particular, FSIS is interested in determining the 
number and type of small entities that may incur benefits or costs from 
implementation of this proposed rule.
    This proposed rule would add Mexico to the list of countries 
eligible to export poultry products into the United States. However, 
through use of required certificates, poultry imports from Mexico would 
be limited to only products derived from carcasses slaughtered under 
federal inspection in the United States or slaughtered under the 
inspection systems of other countries that are now eligible to export 
poultry to the United States. Currently, only Canada, Great Britain, 
France, Israel and Hong Kong are on the list of countries eligible to 
export poultry products into the United States. Any exports from Hong 
Kong are restricted to products slaughtered under federal inspection in 
the United States or slaughtered in the inspection systems of Canada, 
Great Britain, France or Israel.
    With implementation of the proposed rule, FSIS expects to see some 
domestic poultry establishments shipping whole carcasses or parts of 
carcasses to certified Mexican establishments. These carcasses or parts 
of carcasses would then be cut-up, deboned or further processed in 
these Mexican establishments. Some processed poultry products, 
particularly higher valued products such as boneless breast meat, would 
then be shipped to markets in the United States. Products shipped to 
the United States could also include poultry sausage and other cooked 
products.
    As this process unfolds, total pounds of poultry exports would go 
up. Because some further processed products would be shipped back to 
the United States, imports of poultry products would also increase. A 
corresponding decrease in domestic jobs associated with cutting and 
deboning operations would occur.
    With implementation, poultry firms could lower overall processing 
costs by having labor-intensive cut-up and deboning operations 
performed in certified Mexican establishments where wages can be 
expected to be lower. However, FSIS believes the potential for any 
significant changes in overall production costs would be limited. 
First, cut-up and boning operations are currently conducted by 
relatively lower wage employees. The value added by these operations is 
relatively small. In 1996, wholesale prices of whole broilers

[[Page 63286]]

averaged $.61 per pound, whereas wholesale prices of cut-up broilers 
averaged $.66 per pound. Second, the potential for lowering production 
costs using lower wage employees would be offset by export fees, import 
fees and increased shipping/transportation costs.
    Considering these factors, FSIS does not anticipate any measurable 
change in market prices for processed poultry products. Because of 
shipping and transportation costs, FSIS expects most of the change to 
be limited to firms located relatively close to the Mexican border. For 
the same reasons, FSIS does not expect to see increases in poultry 
imports from Mexico processed from birds slaughtered in other countries 
such as Canada and Great Britain. Currently, Mexico imports very little 
poultry from other countries. In 1996, Mexico imported approximately 
396 million pounds of poultry and poultry products. More than 97 
percent was imported from the United States.
    FSIS does not believe this rule would offset enough product to 
affect domestic poultry prices. In 1996, U.S. poultry production was 
approximately 32.3 billion pounds on a ready-to-cook carcass weight 
basis. The United States exported approximately 386 million pounds to 
Mexico. With this rule, exports would likely increase more than imports 
on a pound basis. However, considering that imports would consist of 
value-added products, it is possible that the dollar value of imports 
will increase more than the value of exports.
    As noted above, FSIS is requesting comments on the potential effect 
of this proposal on small entities. While most poultry is cut-up and 
boned in large firms, there are many small businesses involved in cut-
up, boning and further poultry processing operations. Although changes 
in prices would affect these small businesses, FSIS does not expect 
measurable price changes for the reasons already discussed.

Paperwork Requirements

    No new paperwork requirements are associated with this proposed 
rule. Foreign countries wanting to export poultry or poultry products 
to the United States are required to provide information to FSIS 
certifying that its inspection system provides standards equivalent to 
those of the United States and that the legal authority for the system 
and its implementing regulations are equivalent to those of the United 
States's before they may start exporting such product to the United 
States. FSIS collects this information one time only. FSIS gave Mexico 
questionnaires asking for detailed information about the country's 
inspection practices and procedures to assist the country in organizing 
its materials. This information collection was approved under OMB 
number 0583-0094. The proposed rule contains no other paperwork 
requirements.

List of Subjects 9 CFR Part 381

    Imports, Poultry and poultry products.

    For the reasons set out in the preamble, 9 CFR part 381 would be 
amended as follows:

PART 381--POULTRY PRODUCTS INSPECTION REGULATIONS

    1. The authority citation for part 381 would continue to read as 
follows:

    Authority: 7 U.S.C. 138f; 7 U.S.C. 450; 21 U.S.C. 451-470; 7 CFR 
2.18, 2.53.


Sec. 381.196  [Amended]

    2. Section 381.196 would be amended by adding ``Mexico'' in 
alphabetical order to the list of countries in paragraph (b).

    Done at Washington, DC, on: November 18, 1997.
Thomas J. Billy,
Administrator.
[FR Doc. 97-31177 Filed 11-24-97; 10:10 am]
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