SUMMARY: The Food Safety and Inspection Service (FSIS) is amending the

Federal poultry products inspection regulations to add the People's

Republic of China (PRC) as eligible to export to the United States

poultry products from birds slaughtered in the PRC. FSIS has reviewed

the PRC's poultry laws, regulations, and inspection system, as

implemented, and has determined that they are equivalent to the Poultry

Products Inspection Act (PPIA), the regulations implementing this

statute, and the United States' food safety system for poultry. Under

this final rule, slaughtered poultry, or parts or other products

thereof, processed in certified PRC establishments, are eligible for

export to the United States. All such products are subject to

reinspection at United States ports of entry by FSIS inspectors.

 

 

 

[Federal Register Volume 84, Number 217 (Friday, November 8, 2019)]

[Rules and Regulations]

[Pages 60318-60324]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2019-24234]

 

 

=======================================================================

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DEPARTMENT OF AGRICULTURE

 

Food Safety and Inspection Service

 

9 CFR Part 327

 

[Docket No. FSIS-2016-0002]

RIN [0583-AD64]

 

 

Eligibility of the People's Republic of China (PRC) To Export to

the United States Poultry Products From Birds Slaughtered in the PRC

 

AGENCY: Food Safety and Inspection Service, USDA.

 

ACTION: Final rule.

 

-----------------------------------------------------------------------

 

SUMMARY: The Food Safety and Inspection Service (FSIS) is amending the

Federal poultry products inspection regulations to add the People's

Republic of China (PRC) as eligible to export to the United States

poultry products from birds slaughtered in the PRC. FSIS has reviewed

the PRC's poultry laws, regulations, and inspection system, as

implemented, and has determined that they are equivalent to the Poultry

Products Inspection Act (PPIA), the regulations implementing this

statute, and the United States' food safety system for poultry. Under

this final rule, slaughtered poultry, or parts or other products

thereof, processed in certified PRC establishments, are eligible for

export to the United States. All such products are subject to

reinspection at United States ports of entry by FSIS inspectors.

 

DATES: Effective December 9, 2019.

 

FOR FURTHER INFORMATION CONTACT: Roberta Wagner, Assistant

Administrator, Office of Policy and Program Development, Food Safety

and Inspection Service, U.S. Department of Agriculture, 1400

Independence Avenue SW, Washington, DC 20250-3700; Telephone: (202)

205-0495.

 

SUPPLEMENTARY INFORMATION:

 

Background

 

    On June 16, 2017, FSIS published a proposed rule in the Federal

Register (82 FR 27625) to amend FSIS's poultry products inspection

regulations to list the PRC as eligible to export to the United States

poultry products from birds slaughtered in the PRC. FSIS proposed this

action after the Agency conducted a documentary review of the PRC's

laws, regulations, and poultry slaughter inspection system, as well as

an in-country audit of the system, and determined that it is equivalent

to the U.S. system established under the Poultry Products Inspection

Act (PPIA) and its implementing regulations. This final rule is

consistent with the provisions of the proposed rule.

    The PRC is already eligible to export processed poultry products to

the United States if the products are derived from poultry slaughtered

in the United States or in other countries with a poultry slaughter

inspection system equivalent to that of the United States. Under this

final rule, the PRC is eligible to export to the United States poultry

products derived from birds slaughtered in the PRC. The PRC may not

export raw poultry at this time because of restrictions owing to animal

disease risk put in place by the USDA Animal and

 

[[Page 60319]]

 

Plant Health Inspection Service (APHIS). Regarding processed poultry,

the PRC may only export Fully Cooked-Not Shelf Stable products, because

FSIS has only assessed information and audited the government controls

for the production of products under this processing category.\1\ The

PRC would need to submit additional information for FSIS to review, and

would likely need to undergo an additional audit before FSIS would

allow the PRC to export other processed poultry products to the United

States.

---------------------------------------------------------------------------

 

    \1\ See FSIS Product Categorization guide, available at: https://www.fsis.usda.gov/wps/wcm/connect/abbf595d-7fc7-4170-b7be-37f812882388/Product-Categorization.pdf?MOD=AJPERES.

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    As explained in the proposed rule, under the PPIA and implementing

regulations, poultry and poultry products imported into the United

States must be produced under standards for safety, wholesomeness, and

labeling that are equivalent to those of the U.S. system (21 U.S.C.

466). Section 381.196 of Title 9 of the Code of Federal Regulations

(CFR) sets out the procedures by which foreign countries may become

eligible to export poultry and poultry products to the United States.

    Paragraph 381.196(a) requires that the standards of a foreign

country's poultry inspection system, its legal authority for the

inspection system, and the regulations implementing the system must be

equivalent to those of the United States. These requirements include:

(1) Ante-mortem and post-mortem inspection performed or supervised by a

veterinarian; (2) national government controls over establishment

construction, facilities, and equipment; (3) verification of

slaughtering of poultry and processing of poultry products by

inspectors to ensure that product is not adulterated or misbranded; (4)

separation of establishments certified to export from those not

certified; (5) maintenance of a single standard of inspection and

sanitation throughout certified establishments; (6) requirements for

sanitation and for sanitary handling of product at certified

establishments; (7) controls over condemned product; (8) a Hazard

Analysis and Critical Control Point (HACCP) system; and (9) any other

requirements under the PPIA and its implementing regulations (9 CFR

381.196(a)(2)(ii)).

    The country's inspection program must also impose requirements

equivalent to those of the United States with respect to: (1)

Organizational structure and staffing in certified establishments to

ensure uniform enforcement of laws and regulations; (2) national

government control and supervision over the official activities of

employees or licensees; (3) qualified inspectors; (4) enforcement and

certification authority; (5) administrative and technical support; (6)

inspection, sanitation, quality, species verification, and residue

standards; and (7) any other inspection requirements (9 CFR

381.196(a)(2)(i)).

 

Evaluation of the PRC's Poultry Inspection System

 

    In 2004, at the request of the PRC, FSIS conducted a document

review of the PRC's poultry (slaughter and processing) inspection

system, concluding that the PRC's laws, regulations, control programs,

and procedures were equivalent to those of the United States. FSIS

proceeded with an on-site audit to verify that the PRC's General

Administration of Quality Supervision, Inspection, and Quarantine

(AQSIQ), which was the PRC's central competent authority (CCA) in

charge of food inspection, had effectively implemented a poultry

inspection system equivalent to that of the United States.\2\ However,

FSIS identified problems involving sanitation, slaughter, processing,

residue controls, supervision, and enforcement. In 2005, FSIS conducted

a follow-up on-site audit and concluded that the PRC had satisfactorily

addressed the previous audit findings for poultry processing only.

---------------------------------------------------------------------------

 

    \2\ Since FSIS completed its preliminary determination regarding

equivalence of the PRC's poultry inspection system, the PRC has

reorganized and renamed its CCA, now organized under the General

Administration of Customs of the People's Republic of China. This

reorganization has no substantive impact on FSIS' determination of

equivalence.

---------------------------------------------------------------------------

 

    In 2006, FSIS published a final rule in the Federal Register making

the PRC eligible to export poultry products to the United States, but

only from birds slaughtered under Federal inspection in the United

States or other countries eligible to export slaughtered poultry

products to the United States (71 FR 20867, April 24, 2006). Shortly

after the publication, Congress prohibited FSIS from allowing poultry

products to be imported from the PRC (see Sec. 733 of Pub. L. 110-161).

In 2009, Congress removed this prohibition.

    In June 2010, FSIS experts traveled to the PRC to collect

information related to legislation applicable to the country's poultry

inspection system, including the PRC's 2009 Food Safety Law. In

December 2010, FSIS conducted separate but concurrent on-site audits of

the PRC's poultry slaughter and processing inspection systems. FSIS

reviewed the effectiveness of the PRC's food safety program based on

whether the following equivalence components were addressed

satisfactorily with respect to standards, activities, resources, and

enforcement: (1) Government Oversight (e.g., Organization and

Administration); (2) Government Statutory Authority and Food Safety and

Other Consumer Protection Regulations (e.g., Inspection System

Operation, Product Standards and Labeling, and Humane Handling); (3)

Government Sanitation; (4) Government HACCP Systems; (5) Government

Chemical Residue Testing Programs; and (6) Government Microbiological

Testing Programs.

    The auditors concluded that the PRC was able to meet the principal

requirements for the equivalence components of Government Sanitation

and Government Chemical Residue Programs. However, FSIS identified

systemic inadequacies in both the slaughter and processed poultry

inspection systems regarding the other four equivalence components. For

example, FSIS found that the CCA lacked a standardized method to assign

inspection personnel to slaughter facilities and also utilized

establishment-paid inspectors to conduct official inspection duties.

The CCA responded by developing a comprehensive corrective action plan

addressing the findings.

    In March 2013, FSIS conducted follow-up on-site audits to verify

whether the PRC had implemented the corrective actions proffered in

response to the previous audit findings. Based on the audit findings,

FSIS concluded that the PRC's processed poultry inspection system was

equivalent to the U.S. system and announced that the PRC could export

processed poultry products to the United States. However, FSIS also

found that the CCA had not adequately addressed all of FSIS's concerns

about its poultry slaughter inspection system. Specially, the CCA still

lacked a standardized method to assign inspection personnel to

slaughter facilities on the basis of objective measurements. The CCA

responded to these concerns, stating that it would implement changes to

its poultry slaughter inspection system.

    In May 2015, FSIS conducted an on-site audit to verify whether the

CCA adopted the necessary corrective measures to its poultry slaughter

inspection system. Based on the audit, FSIS concluded that the PRC had

satisfactorily addressed all issues of concern that FSIS had raised in

its 2013 audit of the PRC poultry slaughter

 

[[Page 60320]]

 

inspection system and had met the FSIS equivalence criteria for all six

components.

    On August 21, 2014, FSIS published the final rule Modernization of

Poultry Slaughter Inspection (79 FR 49566). The rule created regulatory

changes that apply to all poultry slaughter establishments and

established a new optional post-mortem inspection system, the New

Poultry Inspection System (NPIS). On August 11, 2016, the PRC sent a

letter to FSIS outlining the changes that were made to the PRC's

poultry inspection system to achieve equivalency with the new U.S.

regulations. These included requirements that establishments have

procedures to ensure that carcasses with visible fecal contamination do

not enter the chiller and prerequisite programs to prevent

contamination of carcasses and parts by enteric pathogens and visible

fecal material. The PRC also stated in the letter that it had adopted

the U.S. requirements for NPIS. On September 1, 2016, the PRC sent

copies of its updated inspection manuals to FSIS. The letter and the

relevant portions of the inspection manuals are available at:

www.fsis.usda.gov/wps/portal/fsis/topics/regulations/federal-register/proposed-rules. FSIS reviewed the submitted letter and updated manuals

and determined that the PRC's poultry slaughter inspection system is

equivalent to the U.S. system in regard to the Modernization of Poultry

Slaughter Inspection requirements.

    Consequently, on June 16, 2017, FSIS published a proposal to find

that the PRC's poultry slaughter inspection system is equivalent to the

United States' system and, therefore, to remove from the regulations

the limitation that the products must originate from birds slaughtered

under Federal inspection in the United States or in a country eligible

to export slaughtered poultry products to the United States. For more

detailed information on FSIS's evaluations of the PRC's poultry

inspection system see the proposed rule (82 FR 27625) and for the full

audit reports, go to: http://www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/importing-products/eligible-countries-products-foreign-establishments/foreign-audit-reports.

    In November 2018, FSIS conducted an audit of PRC's poultry

inspection system, reviewing the inspection and regulation by the PRC

of both poultry processing and slaughter. FSIS identified no

significant problems and the PRC poultry inspection system was again

found to be equivalent. FSIS will publish the findings from this audit

in the future.

 

Final Rule

 

    After considering the comments received on the proposed rule,

discussed below, FSIS concludes that the PRC's poultry inspection

system is equivalent to the United States' inspection system for

poultry and poultry products. Therefore, FSIS is amending its poultry

products inspection regulations to permit imports from the PRC of

poultry products, derived from birds slaughtered in the PRC (9 CFR

381.196(b)). Under FSIS's import regulations, the PRC must certify to

FSIS that those establishments that wish to export poultry product to

the United States are operating under requirements equivalent to those

of the United States (9 CFR 381.196(a)).

    Although a foreign country may be listed in FSIS regulations as

eligible to export poultry products to the United States, the exporting

country's products must also comply with all other applicable

requirements of the United States, including those of APHIS. These

requirements include restrictions under 9 CFR part 94 of APHIS's

regulations, which regulate the export of poultry products from foreign

countries to the United States to control the spread of specific animal

diseases.

    Also, under this final rule, all poultry and poultry products

exported to the United States from the PRC will be subject to

reinspection by FSIS at United States ports of entry for, but not

limited to, transportation damage, product and container defects,

labeling, proper certification, general condition, and accurate count.

FSIS also will conduct other types of reinspection activities, such as

sampling and testing product to detect any drug or chemical residues or

pathogens that may render the product unsafe or any species or product

composition violations that would render the product economically

adulterated. 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 refused entry and within 45

days will have to be returned to the country of origin, destroyed, or

converted to animal food (subject to approval of the Food and Drug

Administration (FDA)), depending on the violation. The import

reinspection activities can be found on the FSIS website at: http://www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/importing-products/port-of-entry-procedures.

    Under current congressional appropriations,\3\ poultry products

permitted for importation under this final rule may not be used in the

school lunch program under the Richard B. Russell National School Lunch

Act (42 U.S.C. 1751 et seq.), the Child and Adult Care Food Program

under section 17 of such Act (42 U.S.C. 1766), the Summer Food Service

Program for Children under section 13 of such Act (42 U.S.C. 1761), or

the school breakfast program under the Child Nutrition Act of 1966 (42

U.S.C. 1771 et seq.). In addition, poultry products from birds

slaughtered in the PRC will be eligible for importation into the United

States only if they are from animals slaughtered on or after the

effective date of this final rule.

---------------------------------------------------------------------------

 

    \3\ See Section 749, Consolidated Appropriations Act, 2019,

Public Law 116-6, enacted February 15, 2019.

---------------------------------------------------------------------------

 

    Finally, within one year of the effective date of this final rule,

FSIS will conduct an ongoing equivalence audit of the PRC's poultry

inspection system. During the audit, FSIS auditors will verify that the

PRC's CCA has implemented its food safety inspection system as

described in the Self-Reporting Tool and supporting documentation. FSIS

auditors will visit government offices, establishments, and

laboratories to verify that the CCA has implemented its inspection

system as documented and verify that the country's system of controls

remains equivalent to the U.S. inspection system. FSIS will be

conducting such audits for all newly equivalent countries within one

year of the effective date of the final rules granting equivalence.

This policy results from an Agency response to a September 2017 audit

of FSIS equivalence processes by the USDA Office of Inspector General

(Evaluation of Food Safety and Inspection Service's Equivalency

Assessments of Exporting Countries: Audit Report 24601-0002-21).

 

Summary of Comments and Responses

 

    FSIS received 96 comments from trade associations representing meat

and poultry processors, consumer interest groups, a foodborne illness

research center, a large food-processing corporation, and individual

consumers. Comments from the meat and poultry industry and two

individual consumers supported the proposed rule. Comments from the

consumer interest groups and most individual consumers opposed the

proposal. The following is a brief summary of the relevant issues

raised in the comments and FSIS's responses.

 

[[Page 60321]]

 

    Comment: Two consumer interest groups and many individual consumers

opposed the rule because of reported outbreaks of avian influenza in

the PRC. A consumer interest group stated that even if cooking killed

the avian influenza virus, consumers should not have to consume poultry

from birds that were sick.

    Response: To export poultry products to the United States,

countries need to meet APHIS requirements for animal disease prevention

and control. APHIS uses several methods to ensure that harmful animal

diseases do not enter the United States. These include actively

monitoring the animal disease status of foreign countries and

maintaining lists of countries and regions considered to be free (or

not free) of certain diseases. If an animal disease is found to exist

in a country (or a region within a country) that exports meat, poultry,

or egg products to the United States, APHIS requires specific

processing steps to ensure that any product from that country or region

will not cause the disease to be transmitted to the United States (see

9 CFR part 94).

    In addition to these monitoring and processing provisions, APHIS

requires imported meat, poultry, and egg products to have accompanying

documentation regarding their origin, animal disease status, degree of

processing, and intended use. At the U.S. border, Customs and Border

Protection (CBP) officials verify that such documentation is accurate

and that the products do not pose an animal disease transmission risk.

These steps take place before FSIS reinspects imported product for food

safety and other regulatory compliance. All meat and poultry products

that APHIS restricts from entering the United States because of animal

disease concerns will be refused entry by CBP.

    As FSIS explained in the proposed rule, APHIS has classified China

as a region where highly pathogenic avian influenza (HPAI) exists.

APHIS also does not currently list the PRC as a region free of Exotic

Newcastle Disease. Therefore, before a shipment of poultry products may

be presented for FSIS reinspection at the port of entry, it must have

been processed in a manner sufficient to inactivate these viruses if

they were present in the meat, in accordance with APHIS requirements at

9 CFR 94.6. FSIS reinspection of this imported poultry, in addition to

the equivalent PRC inspection system, ensures that the product is

otherwise safe, wholesome, and unadulterated.

    Any poultry intended for export to the United States from certified

establishments in the PRC will be subject to ante-mortem and post-

mortem inspection (see 9 CFR part 381, subparts J and K), and will be

subject to reinspection at United States ports of entry for any

conditions which may render the product adulterated or misbranded.

    Comment: Individuals and consumer interest groups opposed to the

rule questioned whether FSIS can ensure that poultry slaughtered in the

PRC will be safe for consumption in the United States. Many individual

commenters, three consumer interest groups, and a foodborne illness

research center argued that the PRC cannot ensure that their poultry

products are safe, because the PRC has produced and exported unsafe

products in the past. These commenters were concerned that

establishments in the PRC would use antibiotics and chemicals that are

banned in the United States; poultry products would contain antibiotic

resistant pathogens and harmful residues; similar standards of

sanitation would not be maintained; or the products would not be

properly labeled. Two consumer interest groups and a few individuals

stated that on-site audits would not ensure that exporting

establishments meet U.S. requirements. A consumer interest group

questioned how the PRC will ensure that each province consistently

enforces food safety requirements since the PRC is such a large

country. Another such group was concerned that the PRC would certify

establishments that do not meet U.S. requirements. One individual

expressed concern that residues of a certain type of antibiotic would

remain in products.

    Response: FSIS has determined that this rule will not adversely

affect human health. FSIS explained in a 2006 proposed rule, and again

in 2013, its determination that the poultry processing system in the

PRC is equivalent to the United States' system. Under FSIS's

regulations, initial eligibility to export poultry products to the

United States depends on the results of FSIS's documentary reviews and

on-site audits of a foreign poultry inspection system. Once the country

becomes eligible to ship product to the United States, it is required

to continue to submit such documents and other information related to

the foreign inspection system as FSIS may find necessary to determine a

foreign country's eligibility (9 CFR 381.196(a)(2)(iii)).

    During these reviews and audits, FSIS verifies that foreign

inspection systems: Have in place a chemical residue control program

that is organized by the national government; include random sampling

of chemical residues, including veterinary drugs, identified by the

exporting country or by FSIS as potential contaminants; and employ

methods to deter recurrence of chemical residue violations. FSIS

reviewed the PRC's chemical residue program and found that it met

FSIS's equivalence criteria. In addition, once the country begins

shipping product, the product is subject to reinspection, which

includes periodic testing for residues.

    Under the regulations, only those establishments that an official

of the PRC's poultry inspection system certifies as fully complying

with requirements equivalent to the provisions of the PPIA and the

regulations issued thereunder will be eligible to export to the United

States. As with other countries that FSIS has found equivalent, the PRC

may certify any poultry establishment within its territory. The PRC

will be required to renew these certifications annually (9 CFR

381.196(a)(3)). The PRC is required to ensure that certified

establishments separate, by time or space, product destined for export

to the United States from product intended for distribution

domestically. All establishments certified by the PRC are subject to

review by FSIS, which may terminate the eligibility of an

establishment, if it does not comply with FSIS equivalence regulations

or if current information about the establishment cannot be obtained (9

CFR 381.196(a)(3)). All certified establishments and records relevant

to their certification and operation will be available for on-site and

documentary audits by U.S. officials.

    The regulations also require that a foreign inspection system, such

as that of the PRC, maintain a program to ensure that the requirements

equivalent to those in the United States are met. Specifically, the

regulations require that a representative of the foreign inspection

system periodically visit each establishment certified as complying

with requirements equivalent to those of the PPIA and implementing

regulations. The regulations also require that this representative

prepare written reports documenting findings concerning compliance with

requirements equivalent to those of the poultry inspection system in

the United States (9 CFR 381.196(a)(2)(iv)). FSIS will evaluate these

reports during audits.

    Furthermore, each consignment of poultry products exported to the

United States from a foreign country must be accompanied by a foreign

inspection certificate that certifies that the products: Are sound,

healthful, wholesome, clean and otherwise fit for

 

[[Page 60322]]

 

human food; are not adulterated and have not been treated with and do

not contain any dye, chemical, preservative, or ingredient not

permitted by FSIS's regulations; have been handled only in a sanitary

manner in the foreign country; and are otherwise in compliance with

requirements at least equal to those in the PPIA and FSIS's regulations

(9 CFR 381.197). Thus, a representative of the Chinese government must

certify that the product is not adulterated, does not contain harmful

ingredients, and has undergone adequate cooking and processing, as

necessary.

    In addition to evaluating the PRC's eligibility and performing

ongoing audits to ensure that products shipped to the United States are

safe, wholesome, and properly labeled and packaged, every shipment of

poultry products exported to the United States from the PRC will be

subject to reinspection at points of entry for transportation damage,

labeling, proper certification, general condition, and accurate count.

Other types of inspection will be conducted regularly, including

testing for pathogens, residues, and species.

    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 refused entry and must be re-

exported, destroyed, or converted to animal food. Imported poultry

products are to be treated as domestic product upon entry into the

United States.

    Comment: Many individual commenters stated that they preferred to

purchase only domestically produced poultry products. Other individuals

and two consumer interest groups expressed concern that poultry

products from the PRC would not be subject to labeling requirements

indicating the country of origin.

    Response: All poultry product imports are required to bear on the

container in which they are shipped and their immediate container the

name of their country of origin, as well as the number assigned by the

foreign meat inspection system to the establishment in which they were

prepared (9 CFR 381.205-.206). When an imported product is further

prepared or processed, the labeling requirements for the resultant

product are the same as for domestic product. The addition of a

country-of-origin labeling statement is not required by FSIS on

further-processed product, although the Agency would approve product

labels with the original country-of-origin statement if they are

truthful and not misleading and meet all of FSIS's labeling

requirements.

    Comment: Several individuals expressed a general concern about on-

farm practices in China regarding animal raising and feed. Other

individuals believed that poultry from the PRC would not be treated

humanely.

    Response: FSIS is not authorized to mandate production practices on

farms, either domestically or as a condition of permitting imports from

foreign countries. FSIS regulates the safety of poultry products

through its regulatory requirements that apply to slaughter and

processing facilities, as well as products in commerce. These include

HACCP, sanitation controls, ante- and post-mortem inspection by

government inspectors, residue sampling, and Salmonella and

Campylobacter performance standards, all of which are included in the

evaluation process for foreign country equivalence.

    Poultry are not subject to the Humane Methods of Slaughter Act

(HMSA) of 1978 (7 U.S.C. 1901, et seq.), which requires that humane

methods be used for handling and slaughtering livestock. FSIS requires,

however, that poultry be handled in a manner that is consistent with

good commercial practices, which means they should be treated humanely

(see 70 FR 56624, September 28, 2005, Treatment of Live Poultry Before

Slaughter). FSIS verified that the PRC implements good commercial

practices equivalent to those required in domestic establishments.

    Comment: A few individuals and a consumer interest group opposed to

the rule questioned the timing of the publication of the proposed rule.

These commenters argued that FSIS only determined that the PRC was

equivalent to re-open U.S. trade of beef products with the PRC. A

consumer interest group questioned whether a particular foreign

establishment would be certified because it sponsored trips for foreign

officials. Several commenters who supported the rule argued that FSIS

conducted a rigorous and lengthy assessment of the PRC's poultry

inspection system. These commenters also argued that the proposed rule

was consistent with U.S. international trade obligations.

    Response: FSIS made its equivalence determination based on sound

science, and in accordance with international obligations of the United

States. The PPIA and the World Trade Organization's Sanitary and

Phytosanitary Measures Agreement provide that countries with equivalent

inspection systems may export poultry products to the United States. As

FSIS explained in the proposed rule, the Agency reviewed the PRC's

laws, regulations, and poultry slaughter inspection system as

implemented before determining that the PRC's poultry slaughter

inspection system is equivalent to the United States' system.

    Comment: Many individuals and a consumer interest group expressed

support for U.S. domestic poultry production, with an emphasis on

local, free-range, poultry. A few commenters were concerned that the

PRC would export a large amount of poultry products, resulting in

negative effects on domestic poultry producers. One individual asked

which domestic industry segments were unlikely to be competitive due to

lower labor costs in the PRC. However, comments from the poultry

industry argued that the proposed rule would not have a significant

impact on their business because the United States is the largest and

most efficient poultry producer in the world and has a comparative

advantage due to access to cheap, high-quality feed and birds.

According to these comments, the United States is also a technological

leader in poultry genetics and breeding, feed-compounding, and animal

health practices.

    Response: As explained in more detail in the economic impact

analysis below, FSIS believes the domestic poultry industry will be

competitive with poultry from the PRC. Recently, labor costs in the PRC

have been rising, which together with high feed costs have pushed the

wholesale price of chicken in the PRC to be higher than in the United

States. FSIS also does not believe that this rule will adversely affect

the U.S. poultry industry, because the volume of trade that results

from this rule will likely be small and have little effect on supply

and prices.

    Comment: One consumer interest group questioned whether FSIS was

interacting with the correct PRC government agency. Another such group

asserted that FSIS should not find the PRC equivalent because it

operated parallel systems for domestic poultry products and products

intended for export.

    Response: FSIS's equivalence regulations require that before

permitting poultry product imports from a foreign country, it find that

the country's poultry inspection system complies with requirements

equivalent to the PPIA and its implementing regulations, with respect

to establishments preparing products for export to the United States (9

CFR 381.196(a)). While FSIS was evaluating the PRC's food safety system

for poultry exports, that system was administered

 

[[Page 60323]]

 

by AQSIQ, the PRC's CCA at that time, in charge of food inspection and

implementing a poultry inspection system equivalent to that of the

United States. As noted above, the PRC's General Administration of

Customs has taken over the functions of the prior CCA, but the

reorganization did not result in substantive changes to the PRC's

inspection system. The China Food and Drug Administration is

responsible for food safety for domestically produced poultry products.

As described above, FSIS has conducted a rigorous, comprehensive review

of the Chinese food safety system and will continue to verify that the

PRC maintains an equivalent inspection system through document review,

systems audits, and reinspection of each shipment of poultry from the

PRC.

    Comment: Two consumer interest groups stated that an establishment

in the PRC audited by FSIS was reported in the media as running at

higher line speeds than those permitted under FSIS's poultry inspection

system. One of these groups asserted that FSIS had only audited the way

in which the PRC planned to run its inspection system, instead of

observing the system in operation.

    Response: As stated in the 2015 audit report, FSIS observed the

audited establishments in operation, including the establishment

referred to by these commenters. The audit included verification of

adequate line speeds, as documented in FSIS's audit report. The PRC's

system, as documented and observed, includes line speeds that comply

with FSIS's requirements. After the final rule publishes, if the

establishment mentioned in these comments is certified by the PRC, it

must operate at line speeds in conformance with the inspection system

FSIS reviewed and determined equivalent when producing product intended

for export to the United States.

    Comment: A consumer interest group questioned why a document on

FSIS's website was not fully translated.

    Response: The document the commenter referred was posted as

supporting document to the proposed rule and is available here: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulations/federal-register/proposed-rules. It relates to the PRC's compliance with FSIS's final

rule, Modernization of Poultry Slaughter Inspection (79 FR 49565,

August 21, 2014). It is completely translated by AQSIQ, except for a

short introductory letter, which does not affect the content.

    Comment: Commenters also raised concerns regarding Chinese labor

practices and working conditions, the use of a certain pesticide in the

United States, greenhouse gasses produced by agricultural activities,

and FSIS's previous determination that the PRC is eligible to export

processed poultry to the United States if the products are derived from

poultry slaughtered in the United States or in other countries eligible

to slaughter and export poultry to the United States.

    Response: These comments are either beyond the scope of this

rulemaking or outside FSIS's authority. This rule is based on FSIS's

determination that the PRC's poultry slaughter system is able to

provide a level of protection equivalent to the United States'

inspection system.

 

Executive Orders 12866 and 13563, and the Regulatory Flexibility Act

 

    Executive Orders 12866 and 13563 direct agencies to assess all

costs and benefits of available regulatory alternatives and, if

regulation is necessary, to select regulatory approaches that maximize

net benefits (including potential economic, environmental, public

health and safety effects, distributive impacts, and equity). Executive

Order (E.O.) 13563 emphasizes the importance of quantifying both costs

and benefits, of reducing costs, of harmonizing rules, and of promoting

flexibility. This final rule has been designated a ``non-significant''

regulatory action under section 3(f) of E.O. 12866. Accordingly, the

rule has not been reviewed by the Office of Management and Budget under

E.O. 12866.

 

Expected Costs of the Final Rule

 

    The costs of the final rule will accrue primarily to domestic

poultry producers in the form of greater competition from the PRC. In

the short run, the volume of trade stimulated by this final rule is

likely to be small because the PRC only intends to certify five

slaughter establishments to provide poultry to certified processing

establishments to export fully-cooked poultry products to the United

States. Data from the PRC show that these five slaughter establishments

will supply poultry to five processing establishments that the PRC will

certify as eligible to ship product to the U.S. (three of them intend

to export cooked chicken quarter-legs and chicken breasts, one to

export cooked duck legs and duck breasts, and one to export roasted

boneless duck to the United States).\4\ According to the data, the

projected volume of exports to the United States will be about 324

million pounds per year for the next five years.\5\ Given that the

United States domestic annual production volume of ready-to-eat, fully-

cooked poultry is about 12,325 million pounds,\6\ the projected cooked

poultry products from the PRC would only be about 2.6 percent of total

United States production in the next five years.\7\ The immediate

impact on U.S. consumers and domestic processors is likely to be minor,

as the low volume of trade is likely to have little effect on supply

and prices.

---------------------------------------------------------------------------

 

    \4\ Data is from the General Administration of Quality

Supervision, Inspection and Quarantine of the People's Republic of

China, November 2015. The projected annual production of these

chicken and duck products at these five processing establishments

will be about 838 million pounds per year, which could be sold in

the PRC or to other foreign countries.

    \5\ Data is from the General Administration of Quality

Supervision, Inspection and Quarantine of the People's Republic of

China, November 2015.

    \6\ Calculated from PHIS data in November 2015. This number

cannot be divided by species. If we adjusted it by the proportions

of chicken and ducks in total domestic slaughtered poultry, which is

88.3 percent, the volume would be about 10,833 million pounds per

year.

    \7\ If we use 10,833 million pounds (see previous footnote) as

the denominator, the projected PRC export would be about 3 percent

of United States domestic production of fully-cooked chicken and

duck.

---------------------------------------------------------------------------

 

    In the long run, domestic producers will probably start to feel

competitive pressure of competition if more PRC establishments become

certified to export to the United States. However, FSIS believes the

domestic poultry industry will be competitive with poultry from the

PRC. Recently, labor costs in the PRC have been rising,\8\ and the

rising labor costs together with high feed costs have pushed the

wholesale price of chicken in the PRC to be higher than the United

States.\9\ Comments from three poultry trade associations on the

proposed rule also asserted that the United States is the largest and

most efficient poultry producer in the world. According to the poultry

trade associations, the United States has a comparative advantage in

poultry production and marketing.

---------------------------------------------------------------------------

 

    \8\ Gale, F. and C. Arnade. (2015). Effects of Rising Feed and

Labor Costs on China's Chicken Price. International Food and

Agribusiness Management Review, Vol 18, Special Issue A. 137-150.

    \9\ Ibid. In addition, the unit price of exported poultry meat

and products from China is much higher than that from the U.S. in

2016 and 2017, according to Global Trade Atlas data. We downloaded

the data from https://www.gtis.com, and it will be available upon

request.

---------------------------------------------------------------------------

 

Expected Benefits of the Final Rule

 

    The PRC is the second largest poultry producing country in the

world, trailing closely behind the United States.\10\ If the

 

[[Page 60324]]

 

PRC begins to export other poultry products (for example, if APHIS

allows the PRC to export raw chicken products) \11\ to the United

States and more PRC establishments become certified to be eligible,

consumers will likely benefit from more choices and more competitive

prices in the marketplace; producers will likely benefit from

efficiency gains as they have to become more efficient to be

competitive.\12\ The Agency did not quantify the value of these

benefits because of the lack of predictability associated with the many

factors that heavily influence trade patterns and volume. These factors

include results of Sanitary and Phytosanitary Standards issues (e.g.

the avian influenza), exchange rates,\13\ and domestic political and

economic conditions.

---------------------------------------------------------------------------

 

    \10\ See Food Outlook, Food and Agricultural Organization (FAO)

of the United Nations, October 2015, p. 49, at http://www.fao.org/3/a-i5003e.pdf, accessed 1/11/2016. Also see the same publication of

June 2017, p.122, at http://www.fao.org/3/a-i7343e.pdf, accessed 1/

8/2018.

    \11\ As mentioned above, APHIS has classified the PRC as a

region affected by certain animal diseases, so the PRC will only be

allowed to export cooked poultry products to the United States.

    \12\ It is well-established that international trade benefits

trade partners because it allows countries to specialize in

producing products at which they have a comparative advantage.

    \13\ The exchange rate affects the relative prices of exports

and imports.

---------------------------------------------------------------------------

 

    This rule will likely increase trade between the United States and

the PRC in poultry products. In the short run, however, the impact is

likely to be small as the expected volume of trade stimulated by this

rule is likely to be small (see Expected Costs section above).

 

Regulatory Flexibility Act Assessment

 

    The FSIS Administrator certifies that, for the purposes of the

Regulatory Flexibility Act (5 U.S.C. 601 et seq.), this final rule will

not have a significant impact on a substantial number of small entities

in the United States. The expected trade volume will be small, with

little or no effect on all U.S. establishments, regardless of size.

 

Executive Order 13771

 

    Consistent with E.O. 13771 (82 FR 9339, February 3, 2017), this

final rule facilitates regulatory cooperation with foreign governments.

Therefore, this rule is an E.O. 13771 deregulatory action.

 

Paperwork Reduction Act

 

    No new paperwork requirements are associated with this proposed

rule. Foreign countries wanting to export poultry and poultry products

to the United States are required to provide information to FSIS

certifying that their inspection system provides standards equivalent

to those of the United States, and that the legal authority for the

system and their implementing regulations are equivalent to those of

the United States. This information collection was approved under OMB

number 0583-0153. The rule contains no other paperwork requirements.

 

E-Government Act

 

    FSIS and USDA are committed to achieving the purpose of the E-

Government Act (44 U.S.C. 3601, et seq.) by, among other things,

promoting the use of the internet and other information technologies

and providing increased opportunities for citizens access to Government

information and services, and for other purposes.

 

Additional Public Notification

 

    FSIS will officially notify the World Trade Organization's

Committee on Sanitary and Phytosanitary Measures (WTO/SPS Committee) in

Geneva, Switzerland, of this rule and will announce it online through

the FSIS web page located at: http://www.fsis.usda.gov/wps/portal/fsis/topics/regulations/federal-register/interim-and-final-rules.

    Public awareness of all segments of rulemaking and policy

development is important. Consequently, FSIS will announce this Federal

Register publication online through the FSIS web page located at:

http://www.fsis.usda.gov/federal-register.

    FSIS will also announce and provide a link to it through the FSIS

Constituent Update, which is used to provide information regarding FSIS

policies, procedures, regulations, Federal Register notices, FSIS

public meetings, and other types of information that could affect or

would be of interest to our constituents and stakeholders. The

Constituent Update is available on the FSIS web page. Through the web

page, FSIS is able to provide information to a much broader, more

diverse audience. In addition, FSIS offers an email subscription

service which provides automatic and customized access to selected food

safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export

information, regulations, directives, and notices. Customers can add or

delete subscriptions themselves, and have the option to password

protect their accounts.

 

USDA Non-discrimination Statement

 

    No agency, officer, or employee of the USDA shall, on the grounds

of race, color, national origin, religion, sex, gender identity, sexual

orientation, disability, age, marital status, family/parental status,

income derived from a public assistance program, or political beliefs,

exclude from participation in, deny the benefits of, or subject to

discrimination any person in the United States under any program or

activity conducted by the USDA.

 

How To File a Complaint of Discrimination

 

    To file a complaint of discrimination, complete the USDA Program

Discrimination Complaint Form, which may be accessed online at http://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your

authorized representative.

    Send your completed complaint form or letter to USDA by mail, fax,

or email:

    Mail: U.S. Department of Agriculture, Director, Office of

Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410.

    Fax: (202) 690-7442.

    Email: program.intake@usda.gov.

    Persons with disabilities who require alternative means for

communication (Braille, large print, audiotape, etc.), should contact

USDA's TARGET Center at (202) 720-2600 (voice and TDD).

 

List of Subjects in 9 CFR Part 381

 

    Imported products.

 

    For the reasons set out in the preamble, FSIS is amending 9 CFR

part 381 as follows:

 

PART 381--POULTRY PRODUCTS INSPECTION REGULATIONS

 

0

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

 

    Authority: 7 U.S.C. 138f, 450; 21 U.S.C. 451-470; 7 CFR 2.7,

2.18, 2.53.

 

 

Sec.  381.196   [Amended]

 

0

2. In Sec.  381.196, amend paragraph (b) by removing the footnote 2

designation following ``People's Republic of China.''

 

Done at Washington, DC.

Carmen M. Rottenberg,

Administrator.

[FR Doc. 2019-24234 Filed 11-7-19; 8:45 am]

 BILLING CODE 3410-DM-P

 

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