[Senate Hearing 109-040]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-040

EXAMINING THE EFFECTS OF BOVINE SPONGIFORM ENCEPHALOPATHY (BSE) ON U.S. 
                 IMPORTS AND EXPORTS OF CATTLE AND BEEF

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION


                               __________

                            FEBRUARY 3, 2005

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry


  Available via the World Wide Web: http://www.agriculture.senate.gov


                                 ______

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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                   SAXBY CHAMBLISS, Georgia, Chairman

RICHARD G. LUGAR, Indiana            TOM HARKIN, Iowa
THAD COCHRAN, Mississippi            PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky            KENT CONRAD, North Dakota
PAT ROBERTS, Kansas                  MAX BAUCUS, Montana
JAMES M. TALENT, Missouri            BLANCHE L. LINCOLN, Arkansas
CRAIG THOMAS, Wyoming                DEBBIE A. STABENOW, Michigan
RICK SANTORUM, Pennsylvania          E. BENJAMIN NELSON, Nebraska
NORM COLEMAN, Minnesota              MARK DAYTON, Minnesota
MICHEAL D. CRAPO, Idaho              KEN SALAZAR, Colorado
CHARLES E. GRASSLEY, Iowa

            Martha Scott Poindexter, Majority Staff Director

                David L. Johnson, Majority Chief Counsel

               Lance Kotschwar, Majority General Counsel

                      Robert E. Sturm, Chief Clerk

                Mark Halverson, Minority Staff Director

                                  (ii)

  
                            C O N T E N T S

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                                                                   Page

Hearing(s):

Examining the Effects of Bovine Spongiform Encephalopathy (BSE) 
  on U.S. Imports and Exports of Cattle and Beef.................    01

                              ----------                              

                       Thursday, February 3, 2005
                    STATEMENTS PRESENTED BY SENATORS

Chambliss, Hon. Saxby, a U.S. Senator from Georgia, Chairman, 
  Committee on Agriculture, Nutrition, and Forestry..............    01
Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Forestry..............    02
Coleman, Hon. Norm, a U.S. Senator from Minnesota................    08
Crapo, Hon. Mike, a U.S. Senator from Idaho......................    07
Dayton, Hon. Mark, a U.S. Senator from Minnesota.................    06
Lincoln, Hon. Blanche, a U.S. Senator from Arkansas..............    36
Lugar, Hon. Richard, a U.S. Senator from Indiana.................    04
Nelson, Hon. E. Benjamin, a U.S. Senator from Nebraska...........    05
Roberts, Hon. Pat, a U.S. Senator from Kansas....................    06
Salazar, Hon. Ken, a U.S. Senator from Colorado..................    32
Talent, Hon. James, a U.S. Senator from Missouri.................    29
Thomas, Hon. Craig, a U.S. Senator from Wyoming..................    06
                              ----------                              

                               WITNESSES

Johanns, Hon. Michael, Secretary, United States Department of 
  Agriculture, Washington, DC, accompanied by Keith Collins, USDA 
  Chief Economist; and Ron DeHaven, D.V.M., Administrator, USDA 
  Animal and Plant Health Inspection Service.....................    09
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................    42
    Allard, Hon. Wayne...........................................    72
    Burns, Hon. Conrad...........................................    75
    Cantwell, Hon. Maria.........................................    76
    Craig, Hon. Larry............................................    79
    Crapo, Hon. Mike.............................................    50
    Johanns, Hon. Michael........................................    57
    Lincoln, Hon. Blanche........................................    53
    Lugar, Hon. Richard..........................................    43
    Salazar, Hon. Ken............................................    55
    Thomas, Hon. Craig...........................................    51
Document(s) Submitted for the Record:
    Baucus, Hon. Max.............................................    88
    Cochran, Hon. Thad...........................................    90
    Donald, Bill.................................................    92
    Santorum, Hon. Rick..........................................    84
    Stabenow, Hon. Debbie........................................    86
Questions and Answers Submitted for the Record:
    Chambliss, Hon. Saxby........................................    96
    Harkin, Hon. Tom.............................................    97
    Baucus, Hon. Max.............................................   130
    Coleman, Hon. Norm...........................................   120
    Conrad, Hon. Kent............................................   132
    Crapo, Hon. Mike.............................................   116
    Lincoln, Hon. Blanche........................................   128
    Salazar, Hon. Ken............................................   124
    Santorum, Hon. Rick..........................................   141
    Stabenow, Hon. Debbie........................................   144
    Thomas, Hon. Craig...........................................   110

                              ----------                              


 
EXAMINING THE EFFECTS OF BOVINE SPONGIFORM ENCEPHALOPATHY (BSE) ON U.S. 
                 IMPORTS AND EXPORTS OF CATTLE AND BEEF

                              ----------                              


                      THURSDAY, FEBRUARY 3, 2005,

                                      U.S. Senate,,
        Committee on Agriculture, Nutrition, and Forestry,,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 11:02 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Saxby 
Chambliss, [Chairman of the Committee], presiding.
    Present or submitting a statement: Senators Chambliss, 
Lugar, Roberts, Talent, Thomas, Coleman, Crapo, Harkin, 
Lincoln, Nelson, Dayton, and Salazar.

  STATEMENT OF SAXBY CHAMBLISS, A U.S. SENATOR FROM GEORGIA, 
              CHAIRMAN, COMMITTEE ON AGRICULTURE, 
                    NUTRITION, AND FORESTRY

    The Chairman. The Committee will come to order.
    The purpose of the Senate Committee on Agriculture, 
Nutrition, and Forestry's hearing today is to hear testimony 
regarding the impacts of bovine spongiform encephalopathy, 
BSE--that is the last time you are going to hear anything other 
than ``BSE'' because I do not think we can pronounce it again; 
I know Senator Roberts cannot, so we do not want to give him a 
chance--on trade and cattle and beef products in North America 
as well as the rest of the world.
    We are honored to have the Honorable Mike Johanns, our new 
Secretary of Agriculture, here to testify today. It was less 
than a month ago that this committee held a hearing on the 
confirmation of this Secretary and favorably reported his 
nomination to the full Senate. Mr. Secretary, we welcome you 
back today. We are pleased to have the Secretary here and look 
forward to his testimony on this important matter.
    I cannot emphasize enough how important this complex issue 
is to our livestock industry. I would like to briefly mention 
three issues that I believe are involved with this situation.
    First is jobs. Having the border closed with Canada for the 
past year has already cost our country job losses in 
slaughtering facilities in Iowa, Nebraska, Ohio, Mississippi, 
and Idaho. If the border continues to remain closed for too 
much longer, we will be seeing many more permanent job losses 
in other States, including my State and probably at least a 
dozen more. Many of these jobs have moved to Canada. More will 
likely follow if a satisfactory resolution cannot be reached 
soon.
    Second is export demand. Having our export markets in Japan 
and elsewhere closed to U.S. beef will certainly have a 
negative impact on our market here in the U.S. Japan was 
importing over $1 billion worth of U.S. beef annually prior to 
our first domestic case of BSE. Having trade resume with Japan 
is critical to the long-term economic success of our beef 
producers and processors.
    Last is sound science. It has never been more important to 
use sound science to guide decision-making. As we have learned 
all too often, when countries stray from sound science as a 
basis for making decisions that affect trade, we end up with 
arbitrary, artificial barriers that are even harder to 
overcome. Many countries have used bogus claims to prevent U.S. 
poultry products from being imported. Usually it is done under 
the guise of protecting their domestic poultry supply or 
protecting consumer food safety. It ends up being an artificial 
barrier to trade, usually designed to protect a domestic 
producer group from our exports.
    We have to be very careful about having legitimate and 
sound science as the foundation for all the decisions in this 
area if we want to be credible regarding our commitment to 
sound science in the international trade world.
    Before I recognize my Ranking Member, my friend Senator 
Harkin, for his comments, I would like to add one other thing. 
While we hope today's hearing will be as comprehensive and as 
helpful as possible, I do not expect Secretary Johanns to be 
able to answer every question about every issue, because I know 
there are some issues that are not quite ripe enough for final 
answers today.
    For instance, the U.S. Government Accountability Office 
will soon be completing its follow-up review of the FDA's feed 
ban implementation. The FDA itself has a pending rule-making on 
to these matters. USDA's Office of Inspector General will be 
releasing a report later this month pertaining to some of 
USDA's administrative actions with respect to beef imports. 
Currently, two lawsuits are pending against USDA regarding this 
situation. I only mention these to show that I see a need for 
this committee to probably have a subsequent hearing or 
briefings on some of these matters as they become timely.
    At this time I will turn to my friend Senator Harkin for 
any comments he has to make, followed by any statements that 
other members wish to make at this time. Senator Harkin.

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA, RANKING 
   MEMBER, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

    Senator Harkin. Thank you very much, Mr. Chairman, for 
calling this hearing. I again welcome the new Secretary and 
congratulations again on your speedy confirmation here and your 
swearing-in by the President. We certainly are delighted that 
you are here today to talk about this very important issue.
    As you know--and I will get into this in the questions--Mr. 
Secretary, a number of us sent you a letter the other day about 
this because this is a big concern, of course, in my State and, 
as the chairman has said, all over the country. We need to 
review this final rule that is supposed to be effective March 
the 7th defining BSE minimal risk region and that would allow 
live cattle and expanded beef trade with Canada.
    This minimal risk rule raises questions not just about 
expanding beef and cattle trade with Canada. There are also 
questions about the effectiveness of anti-BSE measures in the 
U.S. and Canada, and also broader U.S. efforts on our two-way 
trade, as the chairman mentioned, especially with Japan and 
South Korea.
    I guess what bothers me is that the USDA--and you speak 
about it in your prepared statement, Mr. Secretary, about using 
sound science as the basis for making decisions. We all agree 
on that. USDA says it is relying on OIE guidelines for defining 
what is minimal risk. The rule ignores OIE standards in key 
respects.
    My question is: Is the Department saying that OIE is not 
science based? I would like to know what this Department is 
saying about that. If we are going to rely on science and if we 
want to be in a global trading environment, it seems to me that 
the O.I.E are the recognized world reference body. What I see 
is that we are backing down from their recommendations in this 
proposed final rule.
    We need to reconsider adopting the OIE guidelines fully 
unless you can show us that they are not science based; and 
that we ought to work with our major trading partners using 
these guidelines as a reference to have a comprehensive common 
framework for deciding whether a country has minimal risk 
standards.
    Some of us also believe that we should maintain the ban on 
beef from cattle over 30 months of age, and we are also calling 
to delay the March 7th effective date until these concerns are 
addressed. It just seems, finally, that USDA departures from 
the OIE guidelines seem very likely to complicate our goal--our 
goal of restoring trade with Canada. They are our friends, our 
neighbors, our allies. We love Canadians. They have just got to 
get their house in order. Second, it complicates our efforts to 
develop this common framework with other trading partners 
around the world to establish true minimal risk status.
    These are the areas that I will be covering with you, Mr. 
Secretary, in the question-and-answer period when we get to it. 
Again, I compliment you. Thank you for being here today. I know 
this is a tough issue, but it is one that concerns the health 
and safety of our people, and it concerns our international 
relations in terms of export markets, too.
    Thank you, Mr. Secretary. Thank you, Mr. Chairman.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 42.]
    The Chairman. Thank you, Senator Harkin.
    At this time I will open it up to any statements that any 
of our committee members wish to make, but before doing so, let 
me say that we have had a number of requests from other members 
of the Senate, not members of the committee, to testify today 
or submit testimony, and we are going to accept written 
testimony today from a number of other Senators. Senator Harkin 
and I will make a joint decision later on with respect to 
future hearings as to whether Senators will be allowed to come 
testify or whether we are just simply going to ask for written 
testimony from members.
    At this time I will turn to Senator Lugar for any comments 
he might want to make.

STATEMENT OF HON. RICHARD G. LUGAR, A U.S. SENATOR FROM INDIANA

    Senator Lugar. Thank you very much, Mr. Chairman, and thank 
you for this hearing on BSE. Thanks to the Secretary for your 
appearance.
    The proposed opening of the Canadian border on March 7th 
has fueled much debate in the United States cattle industry 
and, likewise, concerns have been raised regarding our ongoing 
inability to export beef to Japan. I am interested in learning 
more today about how these situations may cause negative, long-
term changes in our agricultural infrastructure markets and the 
security of our food supply.
    Because the United States is the world's foremost economic 
power and the country with the most open markets, trade 
agreements that open other markets to our goods are very much 
to our advantage. That is why with respect to BSE it is both 
important to resume beef trade with partners we typically 
export to, like Japan, while also abiding by those same 
standards and resuming trade with the country that typically 
exports to us, Canada. For the United States economy to grow, 
we cannot passively depend on selling only to our domestic 
markets, which is essentially the precedent we will create by 
prohibiting trade through non-scientifically based protections.
    Ninety-seven percent of the world's population and 67 
percent of the world's purchasing power is located outside the 
United States. We must compete aggressively in the growing 
world economy, and we must not surrender our trade advantage in 
our own hemisphere by allowing industry to shift by employing 
protectionist measures. I am keenly aware that many cattle 
producers are fearful that a large number of Canadian cattle 
will flood domestic markets, severely diminishing returns on 
their own animals. I believe USDA originally predicted that 
nearly 2 million cattle may become available to our market 
should the ban be lifted. Others have suggested these numbers 
are incorrect and that the number is more likely to be in the 
range of 900,000 animals.
    Regardless, it is very important that this committee 
understand what may happen to our own markets when the Canadian 
border is open and work to mitigate any severe market 
fluctuations that could occur. However, I do not hold the 
belief that we should maintain a closed border based primarily 
on the interest of stimulating market prices, while as a Nation 
we are strongly advocating the acceptance of many of our 
agricultural products elsewhere based on scientific standards. 
To abandon that approach in this situation severely undermines 
our position across the board.
    I am also aware of the food safety concerns associated with 
resuming cattle and beef trade with Canada, and I am hopeful 
that the hearing today will address the issue and apprise the 
committee what the USDA will do to ensure the public safety. 
The security of our food supply is of the utmost importance, 
and our trade agreements must ensure that our food supply 
remains the safest in the world.
    In addition, I hope the committee is able to ascertain what 
is happening to our domestic cattle infrastructure as a result 
of our closed Canadian border and inability to export meat to 
Japan. I have great concern that by not resuming cattle trade 
with Canada we are shifting our processing capacity to that 
nation. I am concerned that while the U.S. beef industry is 
closed out of Japan, other nations will begin to supplant us as 
a high-quality beef provider.
    There are many challenges facing this committee concerning 
the issue of BSE. I look forward to working with all members of 
the committee to ensure a vibrant domestic cattle industry and 
a safe food supply for our citizens.
    I thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    [The prepared statement of Senator Lugar can be found in 
the appendix on page 43.]
    Senator Nelson.

   STATEMENT OF HON. E. BENJAMIN NELSON, A U.S. SENATOR FROM 
                            NEBRASKA

    Senator Nelson. Thank you, Mr. Chairman. Mr. Secretary, 
welcome to the committee once again. I appreciate very much 
your diving into the most difficult issues early on, and thank 
you for your commitment.
    You will learn, as you testify before this committee and 
other opportunities that will be there, that no matter how many 
times it has been said before, if I have not said it, it 
probably has not been said. A little bit of repetition will 
occur in spite of our efforts to be brief and original.
    You have already heard the nontariff trade barriers that 
are being suggested and how we need to deal with those. The 
chairman has alluded to chicken wars and other kinds of trade 
challenges that we face. What we need to do here is focus, as I 
know you are, on sound science, but we also must be mindful of 
the trade implications of reopening the market to live cattle 
from Canada.
    You are also aware of the inconsistency that is impacting 
the U.S. beef industry by permitting boxed beef or processed 
beef to come from Canada as imports. We have a terrible 
inconsistency there that has caused many producers and 
processors to say it is either open to both or how can you have 
it open to one and not the other if it is sound science that we 
are concerned about and legitimizing some of the questions that 
have been raised about the Canadian processing as it relates to 
feeding their live cattle.
    You are faced with dealing with exports, a trade issue. You 
are faced with food safety, sound science, and at the same time 
some consistency as it relates to the American market. Those 
are all challenges. I know that you are anxious to get to your 
statement, and we will not further delay that. Thank you for 
your commitment.
    The Chairman. Thank you, Senator Nelson.
    Senator Roberts, would you hit your button there, please?

   STATEMENT OF HON. PAT ROBERTS, A U.S. SENATOR FROM KANSAS

    Senator Roberts. Mr. Chairman, is it your desire that we go 
under the 5-minute rule? Then obviously go in the order of 
appearance. Would there be a second round? I have ten 
questions. I am not going to ask ten questions. I will submit 
six for the record. There will be four questions. Rather than 
making an opening statement, I would rather reserve my time for 
those questions. Could you provide that information as to a 
possible second round?
    The Chairman. Mr. Secretary, are you under a time 
constraint?
    Secretary Johanns. I am not, other than this afternoon, at 
3:30, I fly to San Antonio to be with the cattlemen tomorrow.
    Senator Roberts. I can assure the Secretary that my 
questions are not going to last to the degree that it would 
interfere with your plane, unless, of course, your answers 
would be that long. I do not anticipate that.
    The Chairman. My reason for the question is that since this 
is such a sensitive issue, I want to give every member of the 
committee a full opportunity to ask all their questions.
    Senator Roberts. We will be operating under the 5-minute 
rule, or 6 or 8 or what?
    The Chairman. The 5-minute rule with as many rounds as it 
takes to get all your questions in.
    Senator Roberts. The only other observation I would say is, 
Mr. Secretary, you have two excellent shotgun riders to your 
right and left, and Dr. Collins and Dr. DeHaven do an excellent 
job.
    The Chairman. Senator Dayton.

  STATEMENT OF HON. MARK DAYTON, A U.S. SENATOR FROM MINNESOTA

    Senator Dayton. Thank you, Mr. Chairman.
    Mr. Secretary, this, as the record should show, is not a 
policy of your creation, but you have inherited it. It 
continues the very unfortunate pattern in U.S. trade policies 
of harming American businesses and workers and shifting 
production and jobs to other countries. This policy that has 
been proposed creates a dream world for Canadian producers and 
processors and nightmares for American cattle producers, 
processors, and the workers in those industries. It is no 
wonder then that they are increasingly cynical toward and 
distrustful of their government. Today it is imperative, and we 
still have the opportunity, to put this Federal Government 
policy back on the side of Americans rather than foreigners.
    Thank you, Mr. Chairman.
    The Chairman. Senator Thomas.

  STATEMENT OF HON. CRAIG THOMAS, A U.S. SENATOR FROM WYOMING

    Senator Thomas. Thank you, Mr. Chairman. Obviously, I do 
not have much new to say, but I simply want to reinforce what 
has been said here, that the safety of our food, of course, is 
our biggest concern, and we are all concerned about that. We 
have some of the best and safest in the world, of course, and 
we want to keep it that way.
    We are very concerned about the rule and what will happen 
to it in the future. Senator Burns and I, and Senator Thune, 
are going to introduce a bill this afternoon that would have 
some impact on it, as a matter of fact, and would not allow the 
beef over 30 months of age to come over and so on. That will be 
something we will have to all work at together.
    I guess one of the real issues is to make a determination 
on the Canadian compliance with ruminant feed and the BSE 
safety measures and so on. This obviously in our industry is 
one of the most important things that we have to deal with. You 
understand that. I hope that, if nothing else, we can take a 
long look at the present regulation and hopefully to get some 
expansion of time or eliminate it, one or the other. Thank you 
for being here, and we will be talking with you about it.
    [The prepared statement of Senator Thomas can be found in 
the appendix on page 51.]
    The Chairman. Senator Crapo.

    STATEMENT OF HON. MIKE CRAPO, A U.S. SENATOR FROM IDAHO

    Senator Crapo. Thank you, Mr. Chairman, Senator Harkin, and 
thank you, Secretary Johanns, as well as Dr. Collins and Dr. 
DeHaven, for being here with us today.
    With the final rule to reopen the U.S. border to live 
cattle trade in Canada due to go into effect March 7th, this is 
an opportune time for us to discuss the effects of the BSE 
issue on cattle and beef trade. Secretary Johanns, I know you 
understand the importance of this issue to the cattle 
producers, processors, and the communities that we represent, 
and I look forward to the discussion today.
    There have been many challenges in dealing with the 
unfortunate discoveries of BSE, and one very critical challenge 
has been with regaining our foreign markets. I commend you for 
the efforts that you have already put forward during your short 
time as Secretary of Agriculture to regain our export markets, 
and I was pleased to see that you asked the Japanese Government 
to set a date for the resumption of U.S. beef trade. Frankly, 
the Japanese trade issue is directly related to the Canadian 
trade issue that we are dealing with here, and I would 
appreciate all of the strong effort and aggressive push you can 
make to make sure that we resume Japanese trade. We all hope 
that date comes swiftly, and ideally before March 7th.
    Due to Idaho's geographic location, Idahoans have benefited 
greatly from trade with the Pacific Rim countries, and 
prolonged closure of the Asian market hurts the Idaho producers 
and our economy. Many are looking to you to continue to push to 
get our markets open, and I look forward to the day when the 
U.S. can once again ship our beef products to these markets.
    Additionally, the continued absence of our key export 
markets has contributed to the suspension of domestic beef 
processing operations in the United States, including 
processing here in Idaho. I understand the chairman mentioned 
that. I am holding a press release right now from Tyson 
indicating that they are continuing the closure of their 
operations in our area.
    This is very concerning because it not only results in a 
loss of jobs and revenue for our economy, but it also decreases 
the processing options for cattle producers. This results in 
cattle producers being forced to ship greater distances, 
driving up production costs. Far too many American companies 
and cattle producers are suffering similar problems, and I have 
concerns and questions about an aspect of the rule that I feel 
could make this problem worse. Senator Thomas has just referred 
to it. Specifically, I am concerned with the portion of the 
rule that provides for the import of beef over 30 months of 
age, even though cattle over 30 months of age will not be 
allowed to be imported.
    It is inconsistent to ban cattle over 30 months of age 
while allowing in boxed beef over 30 months of age. When the 
U.S. border was open for the importation of beef products under 
30 months of age but not cattle to be processed at U.S. plants, 
a vast opportunity was created for Canada to increase their 
beef processing capacity for export of beef products to the 
United States. Canada seized this opportunity and reportedly 
increased their processing capacity by 20 to 30 percent. U.S. 
cattle producers and our economy are impacted as domestic 
processing capabilities are squeezed and shifted above the 
border. This problem is poised to be expanded upon through 
broadening the scope of products to be imported from cows that 
are banned from importation. I would note--I doubt that you 
have seen it yet, but the entire Idaho delegation has sent you 
a letter today expressing these concerns and expressing our 
hope to work with you on correcting this and some other aspects 
of this rule.
    I have further questions regarding this matter that I will 
raise during the questioning portion of the hearing. Again, I 
welcome you here today and look forward to the discussion.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Crapo can be found in 
the appendix on page 50.]
    The Chairman. Senator Coleman, we are departing from normal 
procedure and giving all members an opportunity for an opening 
statement, if you would like to make any comments, you may do 
so at this time.

 STATEMENT OF HON. NORM COLEMAN, A U.S. SENATOR FROM MINNESOTA

    Senator Coleman. Thank you, Mr. Chairman, just briefly.
    First, it is a great pleasure to have the Secretary before 
us, and I know he is working hard already.
    I am going to start by associating myself with the comments 
of my colleague from Idaho, Senator Crapo, both in regard to 
the concerns about Japanese trade and simply getting the market 
open and saying that I--and I share his belief that this issue 
of opening the market to Canada is in a way tied to what we 
have to do with the Japanese. Each and every day that the 
market is closed to a place like Japan and South Korea, what 
happens is we have a huge competitor like Australia, and they 
are not sitting back, and they are the main beneficiary, and 
they are grabbing an even larger share of the world market. It 
is going to fight to keep that.
    Even if we get this done--and every day that we lose is a 
day that hurts our producers--we are going to have a battle. We 
are going to have to work like heck to regain what we lost, and 
it is going to be tough.
    I associate myself with the comments of my colleague from 
Idaho. This may be when we have just got to get it done. Maybe 
the President personally has to get involved. We have to get 
this done.
    I also associate myself with the concerns raised about 
importations of beef over 30 months old while banning cattle. I 
would hope--and I will follow this up during my question 
period. You know, have we analyzed this? Have we looked at the 
economic impact that this has? What is your assessment, Mr. 
Secretary? We need to understand that.
    There are a number of concerns. I am someone who believes 
in trade. I am someone who believes that we have to in the end 
rely on sound science. That is what this is about, sound 
science. I want the folks who are part of our export 
opportunities to operate that way and we have to operate that 
way. That is critical. We have to get these markets open, and 
we have to get them open soon.
    I look forward to your testimony. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Secretary, again, we welcome you, and as with Senator 
Roberts, we recognize you have two of our long-time experts in 
their respective areas with you. Dr. Collins and Dr. DeHaven, 
we appreciate you being here in support of the Secretary.
    Mr. Secretary, we will turn it over to you, and we look 
forward to your comments.

  STATEMENT OF HON. MICHAEL JOHANNS, SECRETARY, UNITED STATES 
                  DEPARTMENT OF AGRICULTURE, 
 ACCOMPANIED BY KEITH COLLINS, CHIEF ECONOMIST, UNITED STATES 
  DEPARTMENT OF AGRICULTURE; AND RON DeHAVEN, ADMINISTRATOR, 
                     ANIMAL & PLANT HEALTH 
  INSPECTION SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE

    Secretary Johanns. Chairman Chambliss, Senator Harkin, 
members of the committee, thank you for holding this very 
important hearing today, and thank you for giving me the 
opportunity to testify. As has been noted, accompanying me 
today are Dr. Keith Collins, USDA's Chief Economist; Dr. Ron 
DeHaven, the Administrator of USDA's Animal & Plant Health 
Inspection Service. I will be calling on them for help in 
working through your questions. I do ask that my full statement 
be included in the record.
    Before I begin, if I might, I would like to take this 
opportunity to say thank you to all of you for your 
professionalism, your courtesy extended to Stephanie and me 
during my recent confirmation process. I appreciate the close, 
positive working relationships that we have begun forging, and 
thanks to the diligence of this committee, it was an honor and 
a privilege for me to be the first Cabinet member that was 
confirmed during President Bush's second term. It is therefore 
a pleasure to return today for my first hearing as Secretary.
    I have said frequently that addressing BSE issues, 
especially as they relate to trade disruptions, would be my top 
priority as Secretary. I have also heard from this committee 
quite clearly on this topic, and I believe very strongly, that 
we are all on the side of American agriculture. The committee 
and your constituents have also posed some very useful, valid 
questions that deserve thorough examination, which I hope this 
hearing will provide.
    The actions that the U.S. Department of Agriculture and the 
Federal Government are taking in regard to BSE are potentially 
precedent-setting and could affect international trade patterns 
for years to come with important economic implications for our 
cattle producers in the entire beef industry. Therefore our 
actions must be taken with the utmost deliberation, using 
science as the basis. In the absence of that science, sanitary 
and phytosanitary or SPS restrictions will be used arbitrarily 
by many nations without any basis of protecting human or animal 
health. Accordingly, this hearing could not be more timely.
    I want to be very clear that while protecting human and 
animal health must remain our top priorities, I am confident 
that we can seek to return to normal patterns of international 
commerce by continuing to use science as the basis for 
decision-making by U.S. regulatory authorities and our trading 
partners.
    Almost exactly a year ago, Secretary Veneman appeared 
before this committee to discuss BSE. In the time since then 
much has transpired. A scientific international review team was 
convened to review our response to BSE. A greatly enhanced 
surveillance program was designed and established. Our 
laboratory infrastructure was greatly expanded. A minimal risk 
rule aligning the U.S. with international standards was 
proposed and finalized.
    Let me briefly discuss USDA's enhanced surveillance 
program, which began June 1, 2004. Our goal is to test as many 
high-risk cattle as possible in 12 to 18 months. The plan was 
reviewed by an international scientific review team which 
characterized it, and I am quoting here, ``comprehensive, 
scientifically based and address[ing] the most important points 
regarding BSE surveillance in animals.''
    If we test 268,500 animals we will be able to detect the 
presence of as few as five targeted, high-risk cattle with BSE 
at a 99 percent confidence level. To date, some 8 months later, 
more than 200,000 animals have been tested, all of which have 
been negative.
    The role of producers, renderers and others in helping 
obtain samples of high-risk animals has been indispensable to 
the success of the surveillance program. I might mention the 
cooperation we have received has been outstanding. Although 
additional positive may be found, the results so far are 
promising.
    On December 29, 2004, USDA announced the final minimal-risk 
rule, which designated Canada as the first minimal-risk region 
for BSE, and which will become effective, as you have noted, on 
March 7, 2005. This rule is an important step in aligning U.S. 
policy with international standards.
    On January 2, 2005, Canada confirmed its second domestic 
case of BSE in a cow that was born in October 1996, the first 
since May 20th of 2003. It was followed 9 days later by a third 
case, an 81-month-old cow.
    On January 24, 2005, USDA dispatched a technical team to 
Canada. We sent the team to investigate the efficacy of 
Canada's ruminant to ruminant feed ban because the animal was 
born shortly after the implementation of the ban, and to 
determine if there are any potential links among the positive 
animals. We have appreciated Canada's cooperation and their 
willingness to assist in these efforts.
    The team is composed of experts from several USDA agencies, 
APHIS, the Agricultural Marketing Services, the Foreign 
Agricultural Service, and advisers from the FDA. We have been 
receiving regular updates from the team. We expect an analysis 
on the feed ban issues in mid February, and results from the 
epidemiological investigation by the end of March. This 
information will be critical as we consider whether any 
adjustments to current policies are warranted.
    As you are aware, USDA's minimal-risk rule has come under 
legal challenge. We will continue to strongly defend the 
promulgation of the rule, which was transparent, deliberative 
and science-based.
    The final rule establishes criteria for geographic regions 
to be recognized as presenting minimal risk of introducing BSE 
into the United States. It places Canada in the minimal-risk 
category and defines the requirements that must be met for the 
import of certain ruminants and ruminant products from Canada. 
A minimal-risk region can include a region in which BSE-
infected animals have been diagnosed, but where there is 
sufficient risk mitigation measures put in place to make the 
introduction of BSE in the United States unlikely.
    Because the rule permits the import of live cattle under 30 
months of age and ruminant products from older animals, it is 
useful to note the risk mitigation measures. They include: 
proper animal identification; accompanying animal health 
certification that includes information on individual animal 
identification, age, origin, destination and responsible 
parties; the movement of the cattle to feedlots or slaughter 
facilities in sealed containers; the prohibition on cattle 
moving to more than one feedlot in the United States; and the 
removal of specified risk materials from cattle slaughtered in 
the United States.
    We remain confident that the combination of all of these 
requirements, in addition to the animal and public health 
measures that Canada has in place to prevent the spread of BSE, 
along with the extensive U.S. regulatory food safety and animal 
health systems, provides the utmost protection to U.S. 
consumers and to livestock.
    USDA continues to monitor Canada's compliance with its BSE 
regulations. In addition to the investigation that I have 
already discussed, USDA's Food Safety and Inspection Service is 
continuing to work to ensure Canada's compliance with the BSE 
requirements in the United States.
    I am aware of concerns with the portion of USDA's minimal-
risk rule that would allow meat from animals over 30-months of 
age to be imported from Canada, but continue the prohibition on 
the importation of live animals of the same age for processing 
in the United States. Some have suggested that going forward 
with this new rule will change the historical beef-trading 
patterns in North America to the detriment of U.S. packers.
    As Secretary of Agriculture, I believe that the marketplace 
should determine cross-border trading patterns. We must make 
every effort to avoid policies that favor one group of packers 
over another. Decisions, however, related to sanitary and 
phytosanitary measures must be based in science.
    I can assure you that I will be reviewing this issue very 
carefully in the days ahead as we move closer to the March 7 
implementation date.
    I simply cannot emphasize strongly enough the central role 
of science in the entire process, particularly with regard to 
the rigorous evaluation of risk. Since the discovery of the 
first case of BSE in Great Britain in 1986, we have learned a 
tremendous amount about this disease. That knowledge has 
greatly informed our regulatory systems and our response 
efforts.
    We have learned that the single most important thing we can 
do to protect human health regarding BSE is the removal of SRMs 
from the food supply. Likewise, the most significant step we 
can take to prevent the spread of BSE and bring about its 
eradication is a ruminant to ruminant feed ban. It is because 
of the strong systems the United States has put in place, 
especially these two essential firewalls, that we can be 
confident of the safety of our beef supply, in that the spread 
of BSE has been prevented in this Nation.
    After Canada reported its first case of BSE in May 2003, 
USDA conducted a comprehensive risk analysis to review the 
potential threat that was posed. The initial analysis followed 
the recommended structure of the World Organization for Animal 
Health, or OIE, an drew on findings from the Harvard-Tuskegee 
BSE risk assessment; findings from the epidemiological 
investigation of BSE in Canada; and information on Canadian BSE 
surveillance and feed ban, and history of imports of cattle and 
meat and bone meal from countries known to have BSE.
    The results of that analysis, available, I might add, on 
the USDA website, confirmed that Canada had the necessary 
safeguards in place to protect U.S. consumers and livestock 
against BSE. These mitigation measures include the removal of 
SRMs from the food chain supply, a ruminant to ruminant feed 
ban, a national surveillance program and import restrictions. 
The extensive risk assessment conducted as part of USDA's rule-
making process also took into careful consideration the 
possibility that Canada could experience additional cases of 
BSE.
    In the risk analysis update for the final rule, USDA also 
considered the additional risk protection from new slaughter 
procedures, such as the prohibition on the use of downer 
animals for food.
    The OIE recommends the use of risk assessment to manage 
human and animal health risks of BSE. OIE guidelines, based on 
current scientific understanding, recognize that there are 
different levels of risk in countries or regions, and suggest 
how trade might safely occur according to the levels of risk. 
USDA used OIE as a basis in developing our regulations defining 
Canada as a minimal-risk country.
    While SPS regulations protecting human and animal health 
are the foremost concern, USDA also has examined the potential 
economic impacts of the minimal-risk rule and related BSE trade 
issues as required by Executive Order 12866.
    The cost benefit analysis conducted as a part of the final 
rule indicates that U.S. beef imports from Canada are projected 
to actually decrease slightly in 2005, as Canada shifts its 
slaughter capacity to lower-yielding older cattle not eligible 
for export to the United States. At the same time, imports of 
fed and feeder cattle under 30 months are expected to increase 
in 2005, which is expected to drive up U.S. beef production, 
reduce beef prices slightly, and consequently, reduce cattle 
prices.
    The precise economic effects will depend on the timing and 
the volume of cattle and beef imports from Canada. In addition, 
to the extent that we can continue to open markets that are 
currently closed to our beef, U.S. cattle price prospects will 
strengthen.
    U.S. market maintenance activities have been critical in 
helping restore our beef export markets. In 2003 the total 
export value of U.S. beef and ruminant products was $7.5 
billion. After December 23rd, 2003, 64 percent of that market 
was immediately closed. Today we have recovered well over a 
third of that, so that 41 percent of that market or 3.1 billion 
remains closed. Two countries, Japan with 1.5 billion and Korea 
with 800 million, account for three-quarters of the existing 
closures.
    As a leader in the critical Asian market, Japan is a vital 
market to reopen to U.S. beef exports. We are aware that the 
decision to resume trade in this market will set an important 
precedent for trade resumption in many other markets. 
Therefore, we have endeavored to use science in our ongoing 
efforts. Efforts to reopen this market have drawn on resources 
across the Federal Government, and I might add, at the highest 
political levels. As I had previously said, this issue has 
occupied much of my first few days as Secretary. Just last week 
I met with Ambassador Kato, and also wrote to my counterpart, 
Minister Shimamura, on the importance of this issue. At the 
same time, Ambassador Baker continues to press this issue with 
Government of Japan officials in Tokyo and other U.S. 
Government officials continue to contact their counterparts.
    These efforts are just the latest in many policy 
discussions and technical exchanges over the past 13 months. 
Indeed, the issue has been a major focus of direct discussions 
between President Bush and Japanese Prime Minister Koizumi.
    While we are focusing on Japan because of our important 
trading relationship and its leadership role in the region, we 
are also pursuing efforts to reopen all markets that are closed 
to us. We are actively engaged with Korea, Hong Kong, Taiwan, 
China, Egypt and Russia, and have specific actions under way in 
each market to get trade resumed. I would be pleased to provide 
members upon request additional detail on these and other 
secondary markets. While the progress that has been made has 
taken far longer than we had hoped, progress is indeed being 
made. I have stated that USDA, and indeed the entire U.S. 
Government, will exert every effort to resolve the matter at 
the earliest possible time.
    As traditional trade barriers such as tariffs are lowered, 
our focus to eliminate unjustified non-tariff barriers such as 
non-science-based SPS regulatory measures become all the more 
important to maintain the flow of mutually beneficial trade. 
For USDA a common touchstone across these issues is the need to 
maintain consistency and predictability, to base our domestic 
regulations on science, and to encourage the use of science-
based solutions within the international community. The United 
States has long been a leader in this regard, including 
negotiating the World Trade Organization agreement on the 
application of sanitary and phytosanitary measures during the 
Uruguay Round.
    Even before the discovery of a single case of BSE in the 
United States, USDA had begun talking with other countries 
about the need for international trade standards to keep pace 
with the science, and we will redouble our efforts in this 
regard.
    It is also critical that domestic trade rules reflect the 
current state of knowledge regarding BSE, and here the United 
States is leading as well. We are confident that trade can be 
resumed with countries where BSE has been discovered, 
contingent upon strong protections within those countries, as 
well as the robust and effective regulatory system those 
imports are subject to when they enter the United States. These 
facts are reflected in the minimal-risk rule.
    At the same time we will continue to work with our trading 
partners to ensure the ongoing strength of their own BSE 
protection systems, especially the removal of SRMs and the 
implementation of the feed ban. While trade opportunities are 
multiplying in an increasingly global marketplace, we must 
remain mindful of our paramount responsibility to protect the 
public health and animal health.
    In summary, I am confident that we are continuing to keep 
the protection of public and animal health foremost in our 
concerns. It is critical that we continue to use science as a 
basis for our decisions and regulations, and that the United 
States maintain its leadership role in advancing our scientific 
understanding of these kinds of SPS-related issues and 
appropriate science-based responses.
    Mr. Chairman, thank you once again for holding this 
important hearing. I would now be pleased to take any questions 
you or other members would have. Thank you.
    The Chairman. Thank you very much, Mr. Secretary.
    In May of 2003, when the first BSE case in Canada was 
discovered, a decision was made by the Department to close the 
border. I assume that decision was made on the basis of sound 
science. Would you explain what the position of the Department 
was that led to that decision and what has changed since that 
time which now compels the Department to change its mind and to 
reopen the border?
    Secretary Johanns. Mr. Chairman, as you know, this process 
has evolved now over an extended period of time. You referenced 
back to May of 2003. We might even reference back to the 
situation in Europe.
    During that period of time since May of 2003 we have 
learned so much more in this country in terms of what this 
disease is all about. Think about where we have come in that 
period of time. We put in place an aggressive surveillance 
system. Quite honestly, once the system was designed, I am not 
entirely certain we knew exactly what we were going to find. We 
knew we had a goal in terms of the number of cattle. We wanted 
to test at least 268,500, but we would test more within that 
12- to 18-month period of time. As of today we have tested 
about 200,000, and we have not found a case of BSE.
    The other thing that I would mention is that we have also 
understood a lot more about managing the risk involved. If you 
look at the two points I emphasized over and over in my 
comments, the removal of SRMs, the feed ban, ruminant to 
ruminant feed ban, we have come to realize that they are far 
and away the most effective things we can do in terms of 
dealing with this risk.
    I will also share something with you. If you read the 
international standards, if there is one overriding message 
that comes out of that, it is the whole idea of doing the risk 
assessment and then managing that risk, and that has been a 
part of this process, so it would be based upon science.
    Now, there are others here with me. Dr. DeHaven was here 
during that process when I was not, and I would invite him to 
offer a comment to your question, but I would just summarize by 
saying the Department has paid attention, they have learned a 
lot. They have also referenced the standards. They have worked 
through the risk assessment process. A tremendous amount of 
information is available today that was not available back 
then.
    Dr. DeHaven. Mr. Secretary, thank you, and you have 
captured very effectively the actions and the basis for our 
actions since May of 2003.
    I would only emphasize that at the time that the Canadians 
discovered their first case on May 20th, 2003, indeed, our 
trade policy was based on really two categories of countries, 
those affected by BSE and those not affected. If a country was 
affected as Canada then became on May 20th, we in essence shut 
off all trade. That trade policy was not consistent with the 
OIE guidelines and not consistent with the science that we know 
about, so our activities since then have been toward bringing 
our trade policies more in line with the science, and 
obviously, more in line with the international guidelines. 
Indeed, the fundamental of the changes that we've made is based 
on that risk assessment that is done consistent with the OIE 
chapter.
    The Chairman. Thank you. The only thing I am not clear on 
relative to that, has there been any change in the practice or 
procedure on the other side of the border between May of 2003 
and today?
    Secretary Johanns. There has. As you know, we have a team 
up there which I referenced, and a lot of publicity about the 
team that is there, but over that period of time, we have 
continued to work with Canada on issues, the feed ban, SRM 
removal. It is fair to say really in lock-step they have 
attempted to follow within the same time frame the very things 
that we were doing on this side of the border. Keep in mind 
that the ruminant to ruminant feed ban was put in effect in 
both countries on the same day. The SRM removals that are now 
occurring are the same really on both sides of the border, and 
they have been very, very willing to work with us in terms of 
making sure that what we are doing here is mirrored there on 
the Canadian side.
    The Chairman. I understand that some folks, both in the 
U.S. and elsewhere, are advocating that the United States test 
every head of cattle slaughtered for BSE as a way to resume 
trade with Japan. I also understand that even though Japan 
tests all animals destined for the human food chain, many 
people think that the U.S. surveillance system is more 
effective at finding BSE. Can you discuss the differences 
between our system and testing every head of cattle 
slaughtered, and please give us what your thoughts are on a 100 
percent testing scheme?
    Secretary Johanns. I will just jump in in terms of where 
your question leaves off. I do not believe that science would 
justify 100 percent testing scheme. Again, if you look at what 
the international standards call for, they call for risk 
management, and I do not see any basis whatsoever in science 
for 100 percent testing of animals. It is just not justified 
under any standard I have read, any science I have read. It 
just simply should not be a part of the requirement to do 
business in the international marketplace with beef.
    The Chairman. Thank you.
    Senator Harkin.
    Senator Harkin. Thank you, Mr. Chairman.
    Mr. Secretary, you today and the USDA prior to your coming, 
has often cited the OIE standards as the authority on BSE. With 
all of the measures recommended by OIE, whether it be the feed 
ban, surveillance or mandatory reporting of cattle with 
clinical signs of BSE, there are two crucial factors that make 
them effective safety measures. One, the amount of time the 
measures have been in place, and second, how well those 
measures have been complied with and enforced.
    OIE standards recommends that a feed ban needs to be in 
place, and effectively enforced for 8 years to confidently 
ensure minimal risk. Canada does not meet that standard. Why 
have we departed from the OIE standards if, in fact, the OIE 
standards are science-based? That is why I said in my opening 
statement, are you here today to tell us that the OIE standards 
are not science-based?
    Secretary Johanns. No.
    Senator Harkin. Then if they are science-based why have we 
departed from them?
    Secretary Johanns. You are right. There are two items, the 
time, there is compliance. We definitely want to pay attention 
to those. We can agree, you and I, Senator Harkin, that they 
are science-based. They are not prescriptive. The standards are 
such that it is not a ``thou shalt'' sort of approach by the 
standards. The essence of what the standards are saying is look 
at it from a risk-based standpoint, and do a very thorough risk 
analysis, and make sure you are doing everything you can to 
deal with the risk that is presented. If you have one case of 
BSE in a country, the approach may be vastly different than if 
you have hundreds of cases of BSE in a country. How you 
approach that is you are given guidance in these standards.
    Your observation is correct in terms of the feed ban. We 
are a few months short. It would be 8 years in August if I am 
not mistaken.
    Senator Harkin. That is true, but however, it has to be 
effective. We checked, at least my staff did, with the 
Canadians, and quite frankly, they have had their ban in place 
for about 7 years, it will be 8 years coming up here shortly. 
The fact is we do not know how effective it has been and 
whether it has been in full compliance. For example, I am told 
that Canada has been in 95 percent compliance for the last 3 
years. What was it for the last 4 years, 5 years, 6 years? Was 
it 80 percent, 70 percent, 50 percent? What standard do you, 
does the USDA use? The OIE, I thought, was pretty clear. It has 
to be effective. What, in your mind, is effective in terms of 
percent compliance?
    Secretary Johanns. It truly does depend on the risk 
analysis, and that is what the OIE calls for. The steps you 
take to deal with BSE in a country are interlocking steps. It 
would not be fair to pull one step out without looking at all 
of the other steps. The risk protection design depends upon the 
risk analysis. In this case, we have SRM removal, we have the 
ruminant-to-ruminant feed ban, which you are questioning about. 
We have the national surveillance programs in the two countries 
which are very similar, the import restrictions. Again, all of 
these things interlock together to put a plan together in terms 
of how you deal with the risk presented in that country.
    The essence of the international standards is that a 
country can have a BSE situation and a program is designed 
based upon what the risk analysis shows, and that is what the 
USDA did here, just a very careful, thoughtful risk analysis.
    Senator Harkin. I understand that, and there are two other 
areas that I just want to get into briefly. The one is this 
feed ban, that we have departed from the OIE standards.
    Second, you talk about surveillance. Well, again, the OIE 
standard is that an effective surveillance plan must be in 
place for 7 years. The final rule does not say that. The final 
rule just says a surveillance plan has to be in place. Do we 
really know how effective the Canadian system has been? Why 
does the final rule not specify the same 7 years that the OIE 
standard has set?
    Secretary Johanns. I am going to ask Dr. DeHaven to jump in 
here because he was part of this at a time when I was not. I 
see from his body language that he is anxious to add something 
to this discussion.
    Doctor.
    Dr. DeHaven. Thank you, Mr. Secretary.
    Indeed, we would not grant minimum risk categorization to a 
country unless we felt that their feed ban was effective, that 
their surveillance program was effective for an appropriate 
period of time.
    As the Secretary has mentioned, it is a comprehensive look 
at the entire system based on a number of redundancies, the 
fact that we start with import restrictions in Canada going 
back to the early 1990's, the feed ban that has been in place, 
as the Secretary mentioned, since August 1997. They have, in 
fact, had very effective surveillance in place in Canada since 
1992 and have exceeded the OIE requirements, in terms of 
surveillance, for at least the last 7 years.
    In fact, in calendar year 2004, the Canadians tested over 
23,550 of the same high-risk or target animals that we are 
testing. When you consider that in proportion to their adult 
cattle population versus the larger adult cattle population in 
the United States, in fact, their surveillance system would be 
at least comparable to the system that we have enacted since 
June 1st in this country, in terms of proportion of the adult 
cattle population.
    Again, it is a holistic look. The OIE guidelines are called 
guidelines for that very purpose. They are not intended to be 
prescriptive, but rather guidelines to help a country go 
through a comprehensive risk analysis, which of course was the 
basis for our final rule.
    Senator Harkin. Thank you, Dr. DeHaven.
    Last, the third part of my question on departing from OIE 
standards has to do with the reporting and investigation of all 
cattle demonstrating signs of BSE. The OIE standard is 
compulsory. The final rule, basically, does not even address 
this at all on the reporting of cattle demonstrating signs of 
BSE.
    You take all three of those together, I understand what you 
say, Dr. DeHaven, that Canada has had a surveillance system, 
but I would turn the argument back around on you that one of 
these elements they may have done well, but the other two they 
did not do well. I am not certain they did all of them well. 
While their surveillance may have been done well, some of the 
other measures, we do not know about the feed ban and such, we 
do not know how effective they have been over the last 7 years.
    That is why I say--I would sum up, Mr. Chairman, I know my 
time is out--that it just seems, that if you add up all of the 
OIE recommendations, that if we were to adhere to them, that 
Canada might not be minimal risk. It would be more like a 
moderate-risk entity rather than minimal risk. I will come back 
to that later. My time is up.
    The Chairman. Senator Lugar.
    Senator Lugar. Mr. Chairman, I would like to ask the 
Secretary just to think aloud in these areas.
    Clearly, the first bias of each Senator has to be food 
safety for the American people. Likewise, we are deeply 
concerned about food safety in our products for people around 
the world. You have been discussing that with the distinguished 
chairman and ranking member, and I am satisfied that USDA has 
given extraordinary thought to this and has provided a safe 
situation.
    Now, I would not say it is a bias, but my own personal 
enthusiasm would be to maximize trade with Canada, likewise 
with Japan, and likewise with every country around the world. I 
just think this is critical to American agriculture. Therefore, 
I am heartened by the fact that we may be regaining some trade 
with Canada, under the order of March the 7th of this year.
    We have already queried you about it, but I want to ask 
further about the opening up of the market to Japan, and I do 
so as a practical matter of the debate that is ensuing, if not 
with this committee, at least in the Senate, in which many 
Senators, having heard that as many as two million animals 
might come from Canada to the United States March 7th and the 
border is open again or the modification that some think 
900,000. I would say hang on here. Safety aside, if 2 million 
or 900,000 animals are suddenly coming in, and we are not 
exporting to Japan or we are even having problems with South 
Korea, which you have identified as a large part, a fourth or a 
third maybe, of our export market. This is bad news. Simply 
sort of hold the horses for a while or the cattle, as the case 
may be, and sort of wait this one out.
    Now, I am wondering to what extent you have coordinated in 
USDA with the State Department, with our Trade Representative, 
with the other agencies of our Government who have a national 
interest in this, in addition to an agricultural interest and, 
likewise, your own advocacy with regard to enhancement of 
trade, the movement of our agricultural products. Can you give 
us some idea of how you perceive your leadership in these areas 
and your coordination with others.
    Secretary Johanns. As I indicated in my confirmation 
hearing, I believe I have a key role, and I have every 
expectation that I will be at the table. We have already had a 
number of meetings and briefings at the USDA following my 
confirmation on trade issues, and we are already strategizing 
on how I can fit into these negotiations as quickly as I 
possibly can. If that literally requires my attendance in 
another part of the world to be at the table to advocate for 
agriculture, I will not hesitate to leave Washington and do 
exactly that.
    As you have probably seen from the articles, I walked out 
of the committee hearing. It did not matter who was asking the 
question, everybody was saying, at that time, Governor, what do 
you intend to do in terms of reopening Japan? I took that very, 
very seriously. As soon as I was sworn in, I asked for an 
immediate meeting with their Ambassador. We had a meeting. I 
talked about it publicly. I have talked to our Ambassador in 
Japan, a fine man, Ambassador Baker, and we talked at length 
about where they are at. I have indicated our willingness to do 
everything we can.
    The important point is this. Those of us who have been 
involved in trade policy, and many of you have been involved 
many more years than I have, know that, as the tariff issue has 
been resolved, in negotiation after negotiation or it is in the 
process of being resolved, we continue to bump into these 
issues relating to GMOs, and animal disease, and it just goes 
on and on. I just think this is such an important area that, 
without absolutely dogged determination, in terms of our focus 
on science and being ready to lead by example, this thing has 
just got the potential to bog trade down, whether it is beef or 
chickens or whatever it is. Every member could talk about 
issues in their area.
    The last thing I wanted to mention, and I hope there is a 
question on the economic analysis that was done, Dr. Collins 
did a very thorough economic analysis, he and his people, about 
what we might anticipate. There has been a lot of discussion in 
the last few days about that. He could offer some insight on 
that much more thoughtfully than I could.
    I see the lights flashing. That probably means I need to be 
quiet, but I hope we deal with that issue. It is an important 
issue, and our producers want to hear about that.
    Senator Lugar. I agree. Thank you very much.
    Secretary Johanns. Thank you, Senator.
    The Chairman. Dr. Collins, is there anything you want to 
add to that at this point?
    Mr. Collins. Mr. Chairman, I will go ahead and take my cue 
and comment on this question of the impending backlog of cattle 
poised to come across the border. USDA was probably first out 
of the box to characterize what might happen because we are the 
ones that issued the rule. Of course, with any rule we issue of 
this magnitude, we have to do an economic analysis, and we did 
that with this rule.
    We indicated in our analysis that we thought in the 12 
months subsequent to March 7th that we might have 1.5 to 2 
million head of Canadian cattle come across the border. 
Unfortunately, from that characterization, it led people to 
believe that diesel trucks would be lined up eight deep on 
March 6th waiting to come across the border. We do not think 
that is the case. In addition to our assessment, as I said, 
which was the first out of the box, we have others, which you 
have mentioned, others from credible organizations that have 
suggested between 800,000 and a million might be a more 
appropriate number. That is a number for the calendar year 
2005. Ours was for the 12-month period beginning March 7th. The 
numbers come a little bit closer together when you adjust for 
those differences.
    Even so, our estimate was that Fed cattle prices in the 
United States would decline from $85 a hundred weight in 2005 
to $82 a hundred weight. You could argue whether that is a 
large effect or a moderate effect. If the analyses that were 
done subsequent to ours that suggest 900,000 head are to come 
across the border, then that effect would even be smaller, that 
is encouraging for American cattle producers.
    Of course, since the time we did our analysis, we have 
learned more about the slaughter capacity expansion in Canada, 
we have learned more about the transportation constraints. 
There is reason to believe that the numbers might be smaller 
than what we had initially anticipated. Our analysis was done 
based on data that we had through the first 6 months of 2004, 
and here we are sitting now in the beginning of 2005, and we 
have learned a lot more. That is not to say there will not be 
an impact, but it could be characterized as a moderate impact.
    The Chairman. Thank you.
    Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman.
    Dr. Collins, I know it seems like it is a risk that is out 
there that might be an acceptable risk, but there are probably 
some producers and processors here who are not necessarily 
ready to take your risk, and we have to be very cautious and 
careful on that date. If you are right, perhaps the adjustment 
can be made. If you are slightly off, there are some folks in 
this room who are going to lose some money. The American market 
is going to be flooded at a time that we do not have an opening 
in the Asian markets at the same time.
    Let me say, Mr. Secretary, once again, you have inherited a 
Hobbesian Choice here. If you move one direction, you have 
created a certain situation; if you move the other direction to 
be correct, you have created another situation. I know you are 
aware of that.
    I know that we believe it is about sound science because we 
talk about it, but in 47 countries that have shut down American 
beef exports, I am not so certain it is about sound science, 
certainly not entirely about sound science. Sound science or 
the threat of BSE is, at times, good reason not to accept the 
market, but at other times it is just a very good excuse. That 
is why I am pleased, Mr. Secretary, you are going to work on 
these nontariff trade barriers because we are experiencing more 
than a slight amount of that.
    What I am concerned, though, is that until the Canadian 
feed issue is resolved satisfactorily, to the satisfaction of 
virtually every one of those markets, the cloud remains. The 
irony is Canada started the problem. We compounded it by 
inconsistent reaction, by shutting off live cattle, but 
permitting meat, Canadian meat to continue to come into the 
market. The result is that we are moving jobs to Canada, 
creating all kinds of processing and producer problems here in 
the U.S., and now correcting it threatens to flood the market, 
as Senator Lugar has said, but we continue to give pause to the 
Asian markets who capitalize on the food safety cloud caused by 
Canada in the first place.
    Now, it is too easy to blame Canada, so I am not going to 
do that, and I am not going to blame the Australians for being 
opportunistic to try to move into the markets they were losing. 
We need to accept the fact that we seem to have shot ourselves 
in the foot while aiming, by not stopping the Canadian meat 
from coming in at the same time, given the constraints we have 
had about BSE coming from Canada.
    What alarms me more is that we are about to do it again. I 
am not suggesting that it is not in our policy to try to 
consolidate the cattle industry, but if we wanted to do that, 
there probably would not be a better way to do that, to 
consolidate processing, to consolidate production. I know it is 
going to be very difficult to try to resolve this, but there is 
a lot on the line, and I am getting flooded, as I am certain 
you are, by people who are concerned that we even this out.
    My question is, and I have still got a minute-and-a-half 
here if we allow over 30-month cattle imports through rule-
making, would it not make more sense to bring all this back 
together and do the rule-making for OTM cattle at the same time 
that we concern ourselves with continuing to permit OTM meat 
imports and resolve this all at once with one rule rather than 
having this totally inconsistent, creating dislocation for 
certain processors, threatening now to bring things in so that 
we would now create a flood in the market, dropping U.S. beef 
prices at a time when cattle producers and some people are 
making some money at it.
    Have you thought about putting it all under one rule-making 
effort?
    Secretary Johanns. Boy, you have touched on all of the 
issues.
    Senator Nelson. Well, I have all of these people touching 
on me, as you know. We are reaching out.
    Secretary Johanns. You have some excellent people there 
with you because you literally have hit on key issues. I would 
offer this thought. As you know, I was Governor back when we 
discovered BSE, in the one animal, the ``cow that stole 
Christmas,'' and we did everything----
    Senator Nelson. He keeps on stealing.
    Secretary Johanns. Yes. We did everything we could to make 
sure that the right information was before the American 
consumer, and decisions were made by the USDA at that time, and 
I supported those decisions. We all did. I held a press 
conference on the 24th. We found out about it the evening of 
the 23rd, and we were literally before the media on the 24th in 
encouraging consumers to hang in there, and they have. Gees, 
they have just been champions, and they are confident in what 
we are doing.
    The very issues that you touch upon are some of the reasons 
why pulling back the whole shebang, the whole rule, would cause 
me a great deal of concern. The industry will restructure. It 
just is the nature of the beast. It is the nature of the 
economy. The industry is restructuring. There is not any doubt 
about it. To what level? Gosh, we could have a whole separate 
hearing and probably debate that. What do I mean by that? You 
are seeing more processing in Canada. It is the jobs that you 
refer to.
    Your colleagues have also already referenced the fact that 
that is having an impact in their States, in their communities, 
and there is not any doubt about that. We can see that by the 
announcements from beef packers. I would just be very, very 
worried that this thing gets so far down the road, the industry 
so restructures, that by the time we get in, we have put our 
producers at a disadvantage.
    Then there is the other issue. If we believe that what we 
are doing is based upon good science, and when I look at the 
risk assessment, when I look at SRM removal, the ruminant-to-
ruminant feed ban, the work that we have done in Canada, with 
their cooperation, and on and on, the very, very, very 
worrisome thing is that we just sent a signal to the 
international marketplace that we are playing by different 
rules than what we are articulating, and, Senator, that is just 
about as candid and bold as I can be about your question. It 
raises a whole bunch of concerns.
    Now, I have studied this up one side and down another, and 
I will welcome any advice I can get. I will listen to it and 
consider it, but that would be how I would just respond as 
directly as I can to your question.
    Senator Nelson. I agree with you that we ought to try to do 
things on an intellectually honest basis. I just wish others 
would join. I will play by their rules. I just wish they would 
play by ours. We have to look at this in a holistic fashion as 
to what the current imports are doing, but by expanding those 
imports what that could do to our export market. I know you are 
aware of that, and we will continue to work together. This is 
not a hostile environment.
    Secretary Johanns. No.
    Senator Nelson. We are all in the same boat. We are just 
trying to row in the same direction.
    Secretary Johanns. Yes.
    Senator Nelson. I thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Senator Roberts.
    Senator Roberts. Mr. Chairman, the distinguished Senator 
from Wyoming has important business on the floor. I am going to 
yield my time to him, with the understanding that I would be in 
the batting circle the next time the Republican opportunity 
comes up.
    The Chairman. Without objection.
    Senator Thomas.
    Senator Thomas. Thank you very much.
    I guess, Mr. Secretary, and I know this is a complicated 
issue and a tough issue, but just to make it clear, what do you 
expect to have happen now on the 7th of March? What is the 
situation? What will be done?
    Secretary Johanns. Well, the rule is proceeding to that 
date. We do have a team in Canada that is looking at some very 
important issues in terms of the ruminant-to-ruminant feed ban 
and whether it is being honored. I will cue Dr. DeHaven up 
here. I asked for a briefing just before I walked in here, and 
he gave me a briefing, and I will ask him to give the same 
briefing to you. I will emphasize it is very preliminary.
    I am going to look at that information very closely. The 
other thing I have promised is that we will be absolutely 
transparent with that information. We will put it out there. We 
will get it over to this committee and----
    Senator Thomas. You do not know what the situation is going 
to be. You do not know whether this regulation will be put into 
place as it is or whether it will be changed or whether it will 
not and put into place.
    Secretary Johanns. It is on the road to implementation. I 
will say this, I will absolutely consider everything right up 
to that date because I believe that is my responsibility. You 
cannot, on one hand, send a group up there and say, ``Take a 
look at this,'' and then say, ``By the way, I will not being 
paying attention to them.'' I am going to be paying attention 
to them.
    Senator Thomas. Oh, I understand. We have had quite a 
little time to take a look at it and know what is going on. You 
have all talked about what is happening and what you know, but 
you do not know enough yet to be able to know what you are 
going to do; is that correct?
    Secretary Johanns. Senator, I would not go so far as to say 
that because the USDA has done a ton of work in Canada.
    Senator Thomas. I know, but you still do not where we are 
going or not sharing with us.
    Secretary Johanns. No, Senator. The data is out there, and 
the rule is moving forward and each day you can cross off the 
calendar. I do have a team, and I am going to consider their 
findings. I do not think you would expect anything less of me 
in terms of making sure that that is something I take a look 
at, and I intend to do that.
    Senator Thomas. What do we know about Japan and Korea, 
assuming, as I assume now, that this regulation is going to go 
into place, what is their reaction to that?
    Secretary Johanns. In no discussion that I have had either 
with our Ambassador, their Ambassador or anyone associated with 
Japan has the topic of Canada or a quid pro quo been raised in 
those discussions. My discussions have been purely on where are 
we at with Japan, how quickly can we set a date and start 
moving beef into that marketplace again.
    Senator Thomas. Or does not the decision with Canada make a 
difference to them?
    Secretary Johanns. I can offer my thought on that. Again, 
they have not raised the issue, but----
    Senator Thomas. That is what has caused us to be in the 
position we are in with them, is it not?
    Secretary Johanns. Here is what I would offer, Senator. I 
believe we have to be consistent in our presentation. If we are 
truly about basing our decisions upon the science that is 
available, the OIE standards, the risk analysis, the factors 
that we build into the system based upon a risk analysis, then 
I just think I feel very strongly you have to be consistent in 
your dealings with each other country, otherwise trade 
discussions become constantly entangled.
    Senator Thomas. Yes, I understand, and I am not suggesting 
that that would make a difference, that you would tell them 
something different, but they can probably tell you now, at 
this point, if this rule goes into place, what will they do?
    Secretary Johanns. Canada has not been raised in any 
discussion, and you have people that have worked on this a----
    Senator Thomas. No discussion with Japan?
    Secretary Johanns [continuing]. With Japan. We have people 
that have worked on this. I will ask Dr. Collins to offer----
    Senator Thomas. Well, that is why they closed our trade.
    Mr. Collins. Senator, they closed the trade because they 
have not done the kind of work we have done. They have not done 
the risk assessment----
    Senator Thomas. They closed it because of the mad cow in 
Canada, correct?
    Mr. Collins. They closed it because they wanted 100-percent 
testing of the animals that we are going to turn into beef----
    Senator Thomas. I am sorry, guys, but all of this science 
stuff gets a little confusing, and we need to be a little more 
broad. That is the reason we are not dealing with Japan on the 
same basis we were.
    Mr. Collins. The finding of BSE is the reason.
    Senator Thomas. Sure. That is what I am saying.
    Mr. Collins. OK. I got that.
    Secretary Johanns. Senator, if I could just add a 
clarification, just so our record is clear, my understanding is 
that the Japanese took the action not because of the first 
finding of BSE in Canada, it was the finding of BSE in the 
United States, which was many months after----
    Senator Thomas. Which was, also, Canadian.
    Secretary Johanns. It was. Just, again, so we are clear, 
they did not act on the finding of BSE the first animal in 
Canada, they acted on the situation December 23rd.
    Senator Thomas. I understand the difficulty, but at some 
point, rather than talking about how many studies we are going 
to do, we have to have some--we are getting fairly close to the 
time when there is a decision is going to have to be made. It 
affects people, and people ought to have some idea of where you 
are, and where you expect to be, and where you hope to be.
    Thank you very much.
    Secretary Johanns. Thank you, Senator.
    The Chairman. Senator Dayton.
    Senator Dayton. Thank you, Mr. Chairman.
    Mr. Secretary, you talk about using science in your 
decisions. There is health science, and there is economic 
science, and both are essential to a good policy. I am 
certainly glad that the Department has applied the best health 
science to this proposed policy, but your economic science is 
out of Mad magazine. You are going to allow Canadian operators 
to slaughter Canadian cattle over 30 months of age and export 
that beef into the U.S. market, but you are not going to allow 
American meat packers to slaughter Canadian animals that are 
over 30 months of age. The price of a Canadian animal I am told 
is now less than one-third that of a U.S. animal. Obviously, 
the large meat packers are going to shift their processing 
plants to Canada where they can literally make a killing and, 
in fact, that is what is already happening.
    Senator Crapo cited Tyson closing in Idaho. Tyson is 
reportedly also preparing to open an expanded 5,000-head 
slaughter operation in Alberta, Canada. Excel is, also, 
reportedly starting up a 5,000-head slaughter operation in 
Canada, which will slaughter the smaller U.S. meat packers who 
will not be allowed to buy those much cheaper Canadian OTM 
animals, and they will go out of business in the United States, 
and those American jobs will be lost.
    Those American workers, our taxpayers, our citizens and 
constituents, and their families are going to be devastated by 
those closings and loss of jobs, and you call that a moderate 
impact. I find that ignorant and offensive to sit here in 
suits, your job is protected, your salary is secure, and call 
those people who are going to lose their jobs a moderate 
impact. It is wrong, and it is ignorant, and it is offensive to 
this committee and to the American people.
    This rule should be exposed as having been crafted by 
somebody as perfectly as could conceivably have been done to 
benefit the Canadian industry and to harm the American 
industry. The only American operators that are going to benefit 
are the large U.S. companies, like Tyson and Excel, who are 
being rewarded by our Government policy for shifting their 
plants and jobs from the United States and Canada. I do not 
blame them for following the economic logic, but it is 
nonsensical that our Government would adopt a policy that would 
reward them for taking jobs from Americans and passing them up 
to Canada, as your own analysis predicts in the regulation.
    I quote from the Federal Register final rule, ``Allowing 
the United States to import Canadian beef from cattle 
slaughtered at more than 30 months of age would enable Canada 
to produce and sell much larger quantities of processing beef 
without fearing the significant price collapse that would 
likely occur if the entire additional product were only for the 
Canadian market.''
    The summary, your economic summary in your own analysis, 
says, ``This final rule will cost U.S. cattle producers up to 
$2.9 billion over a period of several years.'' You call that a 
moderate impact. This is huge for Minnesota. It is huge for 
other States. You know that. You are a Governor. I say, again, 
you walked into this. You inherited this. This is a disaster, 
and it is a disaster of the creation of this department.
    I am so tired of people who campaign for office or 
appointed to office with the ideology that Government does 
everything badly, and then when they are in office, they go out 
to prove themselves correct. They adopt policies that sever, 
that do damage to Americans and sever the trust that should 
exist between Government and its people, and then they point to 
their failures and say, ``See, that proves Government does 
everything badly.''
    No wonder people, no wonder these producers, and workers, 
and business owners are just fed up to here with Government, 
and you are going to make it worse. You are going to cost them 
their jobs, and then we are going to talk about process and 
progress with the Japanese or the Koreans, which will go on, 
and on, and on, while all of this damage takes effect that you 
are forecasting in your own analysis. You say here today the 
industry will restructure. The industry is restructuring. Well, 
there is no doubt about that. Well, let us throw up our hands. 
There is nothing we can do about that.
    Well, here is something we can do about that. We can not 
adopt a policy that is going to reward that restructuring for 
taking jobs from Americans and giving them to the Americans. 
That is about as simple and basic as it gets. If the U.S. 
Government cannot figure out how not to do that, then we all 
ought to go home and save the taxpayers the money.
    This is crazy. It is crazy, and it is wrong, it is 
destructive, and I cannot conceive that you are going to adopt 
a policy that is this one-sidedly rewarding of Canadian 
operations, and businesses and their people at the expense of 
Americans and walk off into anywhere else in the world and talk 
about fair trade policy. Countries make trade policy in their 
own economic self-interest. This one, I do not know whose 
economic self-interest this is, as it relates to Americans, but 
it is not the folks that I hear from, and it is not many, 
except for the large operators. Again, I do not fault them for 
taking advantage of what you are doing for them, but I wonder 
why you are doing something that is so harmful to everybody 
else.
    Secretary Johanns. I am going to invite Dr. Collins to say 
a word, because the essence of your concern relates to the 
economic analysis, and I would like him to offer a few thoughts 
about it.
    Senator let me emphasize there is so much at stake here in 
terms of the international marketplace that our agriculture 
enjoys----
    The Chairman. Excuse me. Mr. Secretary, let us let him 
quickly respond, if you will, and we need to move on.
    Secretary Johanns. That I could not agree with you more, 
that it is enormously important that we get this right and 
think about the long-term impact on the industry and the 
availability of marketplaces for the future.
    You are right, there is a lot at stake here, and I do not 
want anything that the USDA has said prior to my arrival or 
after to minimize those issues.
    Senator Dayton. My time is up. This regulation is not 
right, Mr. Secretary, it is not right.
    The Chairman. Thank you.
    Senator Roberts.
    Senator Roberts. Thank you, Mr. Chairman.
    Welcome to the Agriculture Committee, Mr. Secretary. The 
USDA's Office of Inspector General, in a recent briefing to 
staff reported three main concerns with APHIS and FSIS handling 
of the Canadian cattle and the beef product imported in the 
United States during the period of August 2003 through August 
2004. The OIG's three main findings in their audit were as 
follows.
    APHIS expanded the list of products approved for 
importation without public notice. Some of the products, 
tongues, are considered moderate-risk products, not the low-
risk products mentioned in the Secretary's announcement. APHIS 
and FSIS's definition of certain beef products were not 
consistent. Further, the two agencies did not really 
communicate with each other regarding their efforts to monitor 
the Canadian beef imports; and finally, APHIS did not have 
sufficient internal controls to issue and monitor import 
permits. I am not pointing any figures. I would point out that 
Mr. DeHaven has been on board about 6 months.
    Mr. Secretary, in light of these disturbing findings by the 
Office of Inspector General, what steps will APHIS and FSIS and 
USDA take or have taken to assure the American consumer that 
the USDA has the ability to enforce and monitor the 
restrictions and the conditions in regards to regulating beef 
and imports when the trade with Canada finally does resumes? In 
addition, can you assure us that the USDA and the relevant 
agencies will not change the list of approved items without 
public notice and the notification of Congress?
    Secretary Johanns. Let me ask Dr. DeHaven to respond to the 
first part of your question in terms of those findings.
    Dr. DeHaven. Thank you, Mr. Secretary.
    Senator Roberts, the OIG report is still pending. We have 
reviewed a draft and will be submitting our final comments to 
that report in the very near future. Let me just address some 
of the concerns.
    As to the expanded list of products, we had a list 
initially of products that we considered to be of low risk that 
we would by permit allow into the United States from Canada, 
which we did so. That list at the time that we created it was 
not intended to be a complete list that we would never change, 
but rather that was the requests that we were getting, and 
comparing the requests for products that our importers wanted 
to bring in and that we also considered to be safe to bring in 
from a BSE risk standpoint.
    After that initial list was in place, in fact it included 
products like meat trimmings. We did then subsequently allow 
some of those products to be processed, recognizing that the 
processing in no way altered the risk relative to BSE. For 
example, meat trimmings that are subsequently ground is still 
the same meat trimmings, it has just been processed. We ensured 
that we had procedures in place that would make certain that 
that processed product in no way commingled or could be 
contaminated by other products that would not already be 
enterable prior to the processing. Tongues, while there may 
have been some discussion about it being moderate risk, are 
considered actually to be low risk. I would point out that we 
would allow tongues in under this minimal risk rule that we 
have simply published.
    Having said all of that, we would clearly acknowledge that 
while we do not feel that any of the products that we have 
allowed into the United States from Canada represented any kind 
of food safety or animal health risk. Clearly, the processes 
and the transparency that we went about in allowing those 
additional products was not what it should have been, and we--
--
    Senator Roberts. The Secretary's announcement was different 
from what was actually happening, which leads to public 
perception that is not in the best interest of the USDA.
    Mr. Secretary, we just had a meeting in Kansas where the 
head of the Animal Health Division of our State Government was 
asked a question about a national ID system. Where are we with 
a national ID system? He said it would take another year, and 
then made the remarkable statement that it would take 10 years 
by the time we could really fully implement this and have a 
national ID system where we would be able to trace every 
animal, given the industry, given all of the movement of all of 
these critters. Where are we with a national ID system?
    Secretary Johanns. The national ID system, I have actually 
pulled the team the already at the USDA, because again, as I 
said previously, I am a believer that the system is necessary. 
The premises ID will be ready sometime mid summer, and then in 
terms of animal ID, my hope is that we can move that along 
right behind that. Whether it will be 10 years, I cannot 
imagine it would be that long, Senator. From my standpoint I 
would find that unacceptable. We need to move that as quickly 
as we can within the finances that I have available to make it 
happen, but believe me, I see it as a very, very key component 
for the future of this industry.
    Senator Roberts. What is the top remaining hurdle to 
reopening the Japanese market?
    Secretary Johanns. I would say we have answered their 
technical questions. That has been going on for 13 months, and 
things arise, and we respond immediately. I just really think 
it is time now for the Japanese Government, at whatever level, 
to make the decision that this is going to be the date, and it 
literally is that decisionmaking that I believe has to occur 
for it to happen. That is where I see this process. There is 
nothing more, Senator, that we could possibly provide. We have 
been going through that now for many months before I arrived on 
the scene, and answered their questions and met their concerns, 
and I just really think it is a point now where somebody needs 
to make a decision that we are ready to set a date and get it 
done.
    Senator Roberts. Before any American or any person in 
Government says,
    [Japanese phrases] say American beef?
    [Japanese phrase], is that correct?
    [Laughter.]
    Secretary Johanns. Somewhere in all of that you lost me.
    Senator Roberts. Where is the beef?
    Secretary Johanns. Where is the beef?
    [Laughter.]
    Senator Roberts. Thank you very much, sir.
    The Chairman. You want to run through that one more time?
    [Laughter.]
    The Chairman. Can you say BSE in Japanese for us, please?
    Senator Harkin has a comment.
    Senator Harkin. Mr. Chairman, thank you. I have to go to 
another meeting, but I just wanted to mention that Senator 
Baucus wanted to be here this morning, but is in Montana with 
the President. Also, Senator Conrad also is in North Dakota, 
same reason, with the President. I just ask permission, Mr. 
Chairman, to submit questions in writing to the Secretary to be 
answered?
    The Chairman. Certainly.
    Secretary Johanns. We will answer those very expeditiously.
    The Chairman. Without objection. I would say the same for 
Senator Burns, who also wanted to be here, but is with the 
President.
    Senator Talent.

  STATEMENT OF HON. JAMES TALENT, A U.S. SENATOR FORM MISSOURI

    Senator Talent. Thank you, Mr. Chairman.
    Mr. Secretary, you have seen the frustration that we feel, 
and you know we are just reflecting what our producers are 
saying. It just seems like we are always the good guy. I do 
feel sometimes like we are in the middle of that Peanuts strip 
where Charlie Brown always trusts Lucy and Lucy always pulls 
the football away.
    [Laughter.]
    Senator Talent. We are all waiting for everybody to do what 
we have been doing a long time in terms of sound science. Yet I 
understand your position, and I have to say that certainly in 
principle, I agree with it. When you are the biggest exporter 
in the world you have an interest other countries do not have 
in following sound science so that exports can go across the 
border.
    Now let me ask you to comment on a couple of things because 
so much of what I wanted to ask has been asked, which is a good 
thing. First of all, the comment has been made--Senator Thomas 
went into this, and I really sympathize with what he was 
saying. Is there any sign that sticking to sound science and 
moving toward a resolution where we allow the Canadian beef in 
is sending any signals to the Japanese where they might do the 
same thing with our beef? You said it has not come up, it does 
not look to us like doing what we are doing is helping us with 
them.
    Let me take the flip side of that. This is my gut instinct, 
that if we did not do it, would it hurt us with them? If I am 
Ambassador Zoellick and I am sitting across the table from them 
and it gets to the point where we are really demonstrably 
dragging our heels here with the Canadians, it does give them 
another excuse to delay yet again. I can just see that being 
tossed back at our people under those circumstances. It is 
incredibly frustrating, but my gut instinct is in that 
direction. Maybe you want to comment on that.
    Then let me switch to another point, another market. When I 
had a meeting in Kansas City with various people interested in 
agricultural trade and one of the representatives from the 
Chinese Council was there, and it was a very constructive 
meeting. He talked about his desire, their country's desire to 
develop relationships and markets with us, and we talked about 
beef. I realized the potential of that market in particular for 
prices in the United States, because I believe once they really 
start tasting American beef, we are going to be in good 
position, and that is a great market. Are you looking at that?
    That is what I am looking at, beyond the current pricing 
situation for beef in the United States, beyond the 
restructuring here, do you have any sense that they are 
watching this, and that what we are doing here may have an 
impact on our ability to develop that market in particular long 
term, because that market is the prize for agriculture. We have 
seen what their imports of our beans have done to prices of 
soybeans in the United States, and really when we are just 
beginning to penetrate. The potential there is enormous.
    Comment on that if you would, or maybe Dr. Collins wants 
to. The potential for enhancing obstruction if we are seen as 
dragging our heels, the bad that may happen if we are seen that 
way. Then second, where the Chinese are on all this, if you 
would.
    Thank you, Mr. Chairman.
    Secretary Johanns. I will offer a couple of thoughts and 
then I will invite Dr. Collins to offer his observations.
    The first thing, I would be very worried about the very 
thing your question is directed at, and that is just handing in 
a bright package all tied in a bow, another excuse to delay 
discussions, to go back to square one in terms of opening the 
Japanese market. We keep pushing that the science justifies our 
beef going back into Japan, and I just would be very worried 
that if we send a contrary signal with our discussions and 
negotiations with any control, we are going to jeopardize those 
discussions.
    I will also again point out when BSE was found in Canada, 
Japan did not close our border. Our whole goal here is to deal 
with these issues in a way that recognizes risk and develops a 
plan to deal with that risk.
    China, I have been there a number of times as Governor, 
because I believe that that market has great potential, and 
whether that is beef or soybeans or any other product, there 
are a lot of people there, and I believe that we can provide 
the needs of those people relative to agricultural products, 
and again, in our discussions with them, I will guarantee part 
of what we deal with is the whole issue of science and making 
decisions based upon good science.
    Mr. Collins. The only thing I would add to that is it is 
fundamental that we follow the principles and recommendations 
of OIE and have a science-based return to normalcy in trade 
with Canada. That is a fundamental signal that we can send to 
other countries of the world, and that includes China.
    With respect to China, before suspension of trade, we were 
exporting about $550 million a year worth of ruminant and 
ruminant products. Today that market is about 88 percent open. 
They take things like hides and skins. They do not take very 
much fresh, frozen and chilled beef from us. It is a very small 
portion of their imports. They have not opened that part of the 
market yet.
    In negotiations with China, which Dr. Penn and others have 
led, China has raised many issues, technical issues, they have 
even raised non-meat trade issues as you might expect. There is 
a lot of pressure that still has to be put on China to move 
them forward. The potential there down the road, as you 
suggest, is immense.
    Senator Talent. Doctor, thank you.
    Mr. Chairman, I want us to keep our eye on that ball 
because the practical potential for our producers, if they 
begin importing, as they progress economically, is huge.
    Look, Mr. Secretary, one of the consistent messages here is 
look at whether these discoveries in January are a basis for 
perhaps some modification or some delay in view of the fact 
that we may have been borderline in terms of the OIE guidelines 
anyway. Senator Harkin was sending that message, and it is a 
reasonable one.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Crapo.
    Senator Crapo. Thank you very much, Mr. Chairman.
    Mr. Secretary, I want to come back to two issues, and that 
would be the opening of the trade with Japan, as well as the 
question on the beef, live cattle over 30-months-old.
    With regard to the trade issue with Japan, the issue that I 
want to raise has been well covered, so I just want to make a 
quick statement. Understanding that you have said that we have 
basically done everything we need to do, and that is really not 
much more we can provide in terms of justification of opening 
the trade with Japan, it seems to me that we must apparently 
face a political issue as opposed to a science issue in getting 
this done. If I am correct about that, then I would simply 
suggest that we develop a strategy and a rather prompt course 
of action or action plan to elevate this to whatever level it 
needs to be elevated to even if that means that the President 
of United States has to deal with the top leadership in Japan 
or whatever it takes. It seems to me that we cannot let this 
languish.
    If you would like to comment on that, I would welcome. 
Otherwise, I will just make that as a statement and move on to 
the next issue.
    Secretary Johanns. Well, I agree with you. I absolutely 
believe that all of us have to be a part of this. I really felt 
the confirmation hearing sent an enormous signal, obviously. It 
certainly got everybody's attention and that is what was talked 
about. When I met with the Ambassador from Japan I emphasized: 
Mr. Ambassador, it did not matter who is asking the question. 
This is of paramount importance.
    The other thing I would mention, we should not discount the 
fact that we have had an excellent working relationship with 
Japan for a long, long time, enormous amount of trade between 
the two countries. We need to make sure that we are laying the 
groundwork for that to continue. We just cannot get in the 
business, each of us, of trying to figure out how to negatively 
impact that. That will not serve anybody. It will not serve 
their people and it will not serve our people.
    The President has talked to the Prime Minister, as you 
know, very directly about this issue. I have enlisted the 
Ambassadors on both sides. I will enlist my Cabinet colleagues 
to do everything they can, and as I have said, if it would be 
helpful for me to catch the next flight to Tokyo, I am there. I 
am ready to go. I understand its importance.
    Senator Crapo. I appreciate that, and you will know from 
the comments that you are getting here that you will have very 
strong support from this committee.
    Let us move quickly in the time remaining to the question 
of the portion of the rule that will allow live cattle over age 
30 to be brought into the United States from Canada. You know 
the issue. It has been discussed with you at length here. It 
seems to me that your answer implies that notwithstanding the 
economic circumstances that have been pointed out, that there 
is some kind of sound science that justifies allowing live 
cattle over the age of--excuse me--allowing boxed processed 
cattle over the age of 30 months into the United States, but 
not live cattle.
    I would like you to clarify that for me. If there is some 
science that is prohibiting us from correcting this very 
difficult problem, what is it?
    Secretary Johanns. The rule is based upon good science, and 
let me just reaffirm that. Let me specifically address the 
issue that you have raised, because as I started drilling down 
into this issue in asking for more information, the very issue 
that you are talking to me about popped up on my radar screen, 
and I said, ``Gosh, is there consistency in what we are doing 
here?'' I looked at the economic analysis that was done, and I 
even went so far as to ask for the Federal regulations in this 
whole area of economic analysis and how much leeway I have.
    As I indicated in my statement, it is an area I am taking a 
look at because some of the very things that you are raising 
are things that occurred to me as I have been working through 
this. Again, today I do not want to announce a conclusion 
because I do not have a conclusion. We do have some information 
that is headed my way, and I just think I owe it to the process 
to look carefully at that information, make sure I have 
everything before me.
    Senator, I encourage a continued dialog between you and I 
and other members of the committee that are concerned about 
this area of the rule because it is something I am taking a 
look at.
    Senator Crapo. Thank you, Mr. Secretary. Actually, I am 
glad that you did not answer the question by saying, ``Here is 
the science that justifies this distinction.'' As I understand 
it, you are raising those same questions yourself and you are 
asking those questions, and you are going to pursue it. The 
answer is going to be that there is not a basis of sound 
science that would justify the rule the way it is currently 
written, and I hope to work with you in that regard.
    Secretary Johanns. I welcome that, Senator, thank you.
    Senator Crapo. Mr. Chairman, I am going to leave as well, 
but I have a number of other questions. Are you going to allow 
us to submit written questions to be answered later?
    The Chairman. Yes. We are going to leave the record open 
for 5 days. You will be able to submit written questions.
    Senator Crapo. Thank you, Mr. Chairman.
    The Chairman. Senator Salazar.

  STATEMENT OF HON. KEN SALAZAR, A U.S. SENATOR FROM COLORADO

    Senator Salazar. Thank you very much, Senator.
    Let me first say, Governor Johanns, thank you for coming 
before the committee to address this very important issue, and 
congratulations to you also on your unanimous confirmation in 
the U.S. Senate. It shows the kind of bipartisan support that 
this committee and this Senate does have, and the support that 
we have for agriculture. I wish you the very best I your years 
ahead leading this very important department.
    Let me second say I was disappointed in the President's 
State of the Union in that he did not address agricultural or 
rural issue. From my point of view, that is a part of the 
forgotten America that needs to be addressed, and I know that 
you as former Governor of Nebraska know how important that part 
of our country, and we need to have more focus on agricultural 
and rural communities.
    Third, let me say with respect to this hearing and the 
issue that is before us today, what we are hearing from 
everyone is that we have a problem with this rule. It seems to 
me that what we ought to be doing is fixing the rule before we 
actually open the borders. I had a meeting with most of the 
agricultural leaders in my State, in Colorado this last 
Saturday, and that is their sense. There is a sense that there 
is a whole host of issues that are unanswered, many of which 
have been raised here with you today. Without going through all 
of those questions, the simple question as to how are you going 
to verify at the border which one of these 900,000 animals plus 
are either 30-months or less, and on and on and on and on. I 
know that there are several organizations that are looking at 
also instituting litigation against the promulgation of the 
rule in March.
    I guess I would say this. Given the contentiousness of this 
issues, given the numerous questions that have been raised, 
given the advent of this new position for you as Secretary of 
Agriculture, it seems to me that it would be most prudent to go 
ahead and to delay the opening up of the border until such time 
as you can take the rule and give it a comprehensive review and 
address all the questions that have been asked, including the 
issue of the animal identification system and all the rest of 
the issues that we have talked about before.
    I do not understand why it is that we are at this point 
stuck on this date on the opening of the Canadian border, given 
the fact that we have so many questions that have been raised.
    [The prepared statement of Senator Salazar can be found in 
the appendix on page 55.]
    Secretary Johanns. A couple of observations, Senator. The 
rule has been making its way through the process for now many 
months. There was a comment period and then another comment 
period, and there were 3,300 comments, questions, concerns 
raised, and those were responded to. We will do everything we 
can to respond to the questions that are raised here, and 
hopefully do our very best to address those very, very promptly 
so you can get information to your constituencies.
    There really is a big picture here for this industry and 
for agriculture in general in our country. We are just an 
enormous exporter of agriculture products. In the State I came 
from, we were the fourth largest. Without good, sensible 
agricultural export policy, this agriculture industry is in 
very difficult shape.
    Because of what has happened here, this industry is 
restructuring in Canada. Like it or not, that is the way the 
economy works, that is the way industry works. Boneless beef is 
coming into this country by permit. It has for many, many, many 
months. It is about equal to where it was before all of this 
took place. Rather remarkably this industry is adjusting to 
that.
    What is happening? Well, to the extent that I can observe, 
it appears to me that the processing, the packing industry is 
growing in Canada, and that has an impact on a lot of people 
here in this country. I just worry, Senator, that if I make a 
decision here that we look back at 6 months from now or 
whatever, and say, ``My goodness, the industry took off like a 
rocket, readjusted, and now it is forever changed to the 
detriment of the American producer,'' then there is a lot of 
risk in terms of just simply saying, ``Gosh, this is so hot to 
touch, I should not be touching it.''
    I look at all the factors. I look at the risk analysis. I 
look at our discussions with other countries. I look at our 
constant discussion with other countries, that we have to be 
science-based. I look at the economic analysis, and as I said 
to Senator Dayton, none of this do I take lightly.
    Senator Salazar. If I may, Governor, because my time is 
already up, Mr. Secretary Governor, I guess, because you have a 
dual title.
    Secretary Johanns. I am proud of either title.
    Senator Salazar. I do not think that the issue is going to 
go away at all when you implement the new rule in March and you 
open up the Canadian border. It seems to me that many of these 
issues are going to continue for a long time, and they are 
going to continue including in litigation. It would be best for 
the American producer and for the industry at large if you were 
able to take time, now that you are in your position as 
Secretary of Agriculture, and say all of these issues have been 
raised. This is a comprehensive way in which I am going to 
approach the lifting of the Canadian ban, the science that is 
going to go with it, the animal identification issues and all 
the rest of the issues that have been raised.
    Secretary Johanns. Thank you, sir.
    The Chairman. Senator Coleman.
    Senator Coleman. Thank you, Mr. Chairman. Mr. Chairman, I 
have some questions that I would like to be included for the 
record and have some responses. I apologize. I had to make a 
statement on the floor of the Senate.
    I would just raise, and I am not sure if the question has 
been asked, but I have some concerns about the disparity of 
treatment of beef over 30-months versus cattle. I am not sure 
whether the economic analysis has been conducted on that on the 
impact of that portion of the rule. I would raise that issue. I 
do have those concerns, but I have some other questions, Mr. 
Chairman, that I would submit for the record and like to have 
answered before we finish this matter.
    The Chairman. Certainly.
    Senator Coleman. Have we dealt with the question of the 
assessment of the impact of the rule and the disparity between 
dealing with live cattle versus----
    Secretary Johanns. I will ask Dr. Collins because you have 
raised some issues that he has worked on specifically.
    Senator Coleman. Before he responds, I do want to say for 
the record, I want to thank Dr. Collins and his staff. You have 
been extraordinarily responsive, and from the perspective of my 
staff, it has been a pleasure working with them, and I did want 
to state that publicly, doctor.
    Mr. Collins. Thank you very much, Senator Coleman.
    Let me make a comment about the economic analysis. It has 
come up here and I have not commented on it since sort of the 
beginning of the hearing. It is important to understand that we 
have been reducing cattle numbers in the United States for 9 
years. We are at a cyclical low in cattle slaughtering in the 
United States. In 2003 we slaughtered 35-1/3 million cattle. 
Last year we slaughtered 32.8. This year, without opening up 
the border to Canada, we will slaughter 32.5. Without opening 
up the border to Canada, slaughter numbers are going now, 
capacity utilization is going down, packer costs are going up. 
We have a situation with no trade with Canada that the packing 
industry is under some stress.
    What this rule does is it takes another step in the return 
to normalcy with trade. We will import, by various estimates, 
900,000 to 1.8 million head of cattle. Those are cattle that 
will be killed in the United States. Those are cattle that 
packers will be able to use to increase their capacity 
utilization, lower their labor costs, and presumably help their 
profitability. That context has to be understood. Now, within 
that, there is the issue of cow packers, those who slaughter 
cows, which is the basis for most of the concern here today 
because the broader picture of what we are doing here 
economically has been lost. Cow packers kill about 5 million 
head year out of the 32 to 33 million head. That is an 
important sector of the meat packing business, but it is one-
sixth of the meat packing business, but it is a very important 
sector. It is a sector that is in the spotlight here today 
because this rule does not allow cattle in over 30 months, but 
allows the beef in over 30 months. Not allowing the beef in 
over 30 months versus allowing it in over 30 months, those two 
options were explicitly addressed in the regulatory impact 
analysis that accompanied the rule.
    The answer to your question is, yes, these issues were 
looked at. Were they looked at thoroughly enough? As I sit here 
today I can answer that and say no. What we have learned over 
the six to 9 months since most of that analysis was done was 
that there will be a differential effect on cow packing plants. 
You look at Canada, cows sells for less than $20 a hundred 
weight. In the United States they sell for $50 a hundred 
weight. If you look at the price of lean beef in the United 
States, it is $140 a hundred weight. In Canada a packer can buy 
a cow for $20 a hundred weight and sell the beef for $140 a 
hundred weight in the United States. That is one heck of an 
incentive to pull cow beef across the border.
    There are estimates ranging from 250,000 head to 460,000 
head additional cows will be killed in Canada, and that beef 
will come to the United States. Now, that comes here at a time 
when, as I said, there is a cyclical low in cattle slaughter in 
the United States which means that cow prices are higher than 
they would normally be because cow packers are bidding against 
one another to find a scarce number of cows. All of a sudden 
they are going to face lower beef prices at the same time they 
have high cow prices. Their margins, already low, will be 
further stressed, and their capacity utilization, already low, 
is another factor that will hurt them as well.
    There is no question. I have communicated this to the 
Secretary. The Secretary is aware of the differential effects 
on the cow industry. That is why he took great pains in his 
opening statement to mention the fact that he did not want to 
see differential effects in the meat packing industry. That was 
not spelled out in his statement, but that is what that 
referred to. We are well aware of this issue. It is an economic 
issue, and it comes into collision with the science issues 
about whether you should import this beef or not.
    I just wanted to make sure, and you gave me the opportunity 
to do so, that our economic analysis is aware of what is going 
on, and the Secretary is informed on this issue.
    Senator Coleman. I appreciate it.
    I know my time is up, Mr. Chairman. As I said, I will 
submit some other questions. On the one hand we want to be 
judged by sound science. We want Japan to judge us by sound 
science so we have to be very clear. Mr. Secretary, I will 
repeat it again if it has not been said enough, you have been 
on it from day one. The opening of that market is critically 
important, but at the same time the economic impact issues are 
significant, and I appreciate the fact that you have looked at 
this. We will have to take a close look, and clearly, we want 
to minimize any kind of disparate treatment that we can.
    Secretary Johanns. Mr. Chairman, if I might offer a 
thought, I welcome the opportunity to visit with you. The 
question has come up as we have visited with your colleagues on 
a number of occasions. As I sat down and kept looking at this 
rule, I kept bringing these folks at the USDA back into 
meetings and say, ``Now, why did we do that, and where are we 
coming from?'' They are probably behind me nodding their heads 
because more than one meeting was devoted to this. That is an 
area that very, very clearly I am concerned about, I am taking 
a very close look at, that is a part of this rule, but a very 
important part because it does involve a lot of animals and it 
involves packers on this side of the line, small and probably 
some of the larger ones. I am taking a look at it.
    I will share with you that in terms of cattle over 30 
months, as I understand the process that was developed some 
time ago, and Dr. DeHaven can address this, a risk analysis was 
not done on that, so we would have some work to do on this. 
That is exactly what I am trying to pull together here.
    Senator Dayton. Mr. Secretary, I see your Minnesota 
education is holding you in good stead.
    Secretary Johanns. Thank you.
    The Chairman. Senator Lincoln.

STATEMENT OF HON. BLANCHE LINCOLN, A U.S. SENATOR FROM ARKANSAS

    Senator Lincoln. Thank you, Mr. Chairman, and thanks for 
holding such a timely hearing so that we all might offer the 
Secretary our concerns and thoughts, and we can share some 
wisdom and hopefully come about something that is going to 
really in the long term provide us what we need, both as a 
trading partner and for the safety of our consumers as well. It 
is a very important rule that has been proposed here in terms 
of what it means to a very important industry in the U.S., our 
cattle industry, and our consumers.
    Mr. Secretary, welcome back. I am glad to see that you 
still want the job.
    [Laughter.]
    Senator Lincoln. I certainly appreciate the opportunity to 
talk with you about something that is of great concern to the 
cattlemen and women of Arkansas and to our cattle industry as a 
whole. The rule and the issues around it are very complex. You 
have seen that from the response of many of us, both complex, 
and they come at an unfortunate time when certainly we 
recognize that Canada has two more positive cases, or has had 
two more positive cases of BSE, and has been expressed by many, 
that the Japanese and the South Korean and some of our other 
U.S. export markets remain closed.
    I want to associate myself a little bit with the comments 
of Senator Roberts, where he talks about perception and 
reality. That is a critical thing for all of us up here. We 
continually have to remember it, and it is important for us as 
a nation that oftentimes when dealing with others globally that 
perception can be reality to them. We want to make sure that we 
are very, very clear about what the reality really is.
    In any case, during our last hearing when you were here we 
talked an awful lot about the Japanese and the South Korean 
markets and the negative impact that it is having on the entire 
U.S. cattle industry, and particularly my cattlemen in Arkansas 
which I hear about on a daily basis. I know this issue has been 
probably, we have discussed it a great deal here today, but I 
just feel compelled to have to emphasize that point one more 
time. The time has really come where the President of the 
United States needs to step up, and he has to step up to the 
plate and deal with this issue personally, and I hope that you 
will encourage that. This is certainly, with no offense 
intended to you or to USDA, with your authority or your power, 
but at the juncture we have come to, that we really need the 
President to weigh alongside you with his counterparts and with 
your counterparts in Japan. That is going to be essential.
    I do not know what you know about the horizon and the 
opening of those markets, and if you have anything further that 
you can divulge to us in terms of those perspectives. I have 
just personally come to the conclusion if the President does 
not personally engage himself in this, we are going to spend 
too much more time at a disadvantage here that is going to just 
exacerbate the problem that you have with the rule and Canada.
    We look at these markets that we seem to be losing, and we 
always talk about what it is going to take to fight to get them 
back. We lose these markets, sometimes we never get them back. 
That is something very important to put into this equation in 
terms of the timeliness of it, do I hope that you will consider 
that.
    In regard to the rule with Canada, looking at that, is it 
going to move the process with Japan and South Korea and others 
faster? Is it going to move us along faster in that initiative? 
I hope it will. Again, I reiterate I just cannot impress upon 
you enough how important that is. Is it going to set us back in 
terms of opening export markets in other places? We have talked 
about that, the impression that we leave globally and the 
science that we use, and its predictability and dependability 
in negotiating future markets is important.
    Dr. Collins, I just wanted to make sure I am clear. Is your 
economic evaluation complete, and do we have that up here? Have 
I just not seen it?
    [The prepared statement of Senator Lincoln can be found in 
the appendix on page 53.]
    Mr. Collins. There is what is called a Regulatory Impact 
Analysis that is available. It is required by both statute and 
Executive Order and regulation. It was complete for the 
promulgation of this rule. It is about 57 pages with another 30 
pages of appendices.
    Senator Lincoln. That is available to us?
    Mr. Collins. That is available to you.
    Senator Lincoln. It is complete, or do you have further 
work?
    Mr. Collins. The analysis of this issue will never be 
complete. We will be revising our thinking as we continually 
get new information. That is a snapshot of how we saw this 
rule, a snapshot of what we saw as the effects of this rule or 
one that would go into place on March 7th. It is based on data 
available to the Department through the first half of 2004. It 
is complete as of that point in time. Every month we put out 
official forecasts of the price of fed beef, the beef 
production in the United States and so on, and so every month 
we will be reevaluating those variables based on new 
information.
    Senator Lincoln. You will send us the updated information 
that you have which is consistent with the study that you have 
been doing ongoing, is that correct?
    Mr. Collins. I would be happy to do that.
    Senator Lincoln. OK, great.
    Well, Mr. Chairman, as a member of the Senate Finance 
Committee, which has jurisdiction over international trade, we 
certainly spend a lot of time there talking about the needs to 
base decisions on scientifically sound ways, and we work to 
ensure that we are treated fairly in the international 
marketplace based on rules that we all agree to live by.
    I do not envy you, Mr. Secretary, you are in a perfect 
storm right now. You have two sides that are coming at you, and 
it is going to be critical, in my opinion, one, that the 
President weighs in, and two, that every ounce of consideration 
can be given in the timeframe of the rule, as Senator Salazar 
has mentioned, and what kind of impact it is going to have on 
our constituency. I look forward to working with you.
    Mr. Chairman, I am sorry. I will probably have to excuse 
myself too if you finish this up, and I am hoping that one of 
these three lunch meetings I am going to is going to serve me a 
steak after this.
    [Laughter.]
    Senator Lincoln. I am looking forward to it.
    Thank you, Mr. Secretary.
    Secretary Johanns. Absolutely.
    The Chairman. If you get a steak, how about calling me?
    [Laughter.]
    The Chairman. Mr. Secretary, do you want to comment on 
anything that Senator Lincoln has said?
    Secretary Johanns. Just a quick comment. I do appreciate 
your thoughts in this area, and the economic analysis is 
available. I have taken the time to review it, and the 
regulations, and the Executive Order that are the basis upon 
which that is built.
    Dr. Collins' observations are correct, this is a dynamic 
industry. What do I mean by that? It changes. Decisions are 
made at an individual basis that all of a sudden collectively 
can have a very profound impact. I would assert again that a 
very important issue for us to pay attention to is that raising 
cattle and processing go hand to hand, and without one or the 
other, the industry can really have, there can be very serious 
consequences. If we delay on this rule without basis we impact 
our trade negotiations. I just have no doubt about it. We get 
caught in a situation where the industry in Canada will, I 
believe, continue to build the capacity to slaughter. Once 
those decisions are made and those capital investments occur, 
it will not be in your lifetime or mine that the industry will 
retool itself in all likelihood, and all of a sudden you have a 
whole different dynamic.
    In the short term we may be thinking we are helping the 
producer. In the long term it may be a very devastating 
decision for him. You have a major presence in your State in 
this area, so you share my concern, I would be pretty 
confident.
    Senator Lincoln. No doubt, but it is important to always 
remember that we have to have, in this dynamic industry, a 
customer. Again, as Senator Salazar mentioned, there are very 
few of us that come from rural America any more up here, and it 
is critical, that impact. I just really implore upon you and 
the President to recognize. Hopefully the President will seize 
this as an opportunity to show rural America that he is willing 
to step in and fight for them in those marketplaces like Japan, 
and I encourage that heavily.
    Secretary Johanns. He has and he will. In his conversations 
with the Prime Minister of Japan a few months ago, he 
aggressively worked this issue, and I could not be more 
appreciative of his efforts.
    The Chairman. Let me ask one final question. We, Mr. 
Secretary, have been talking here, obviously, about animal 
health versus food safety relative to this issue. FDA is not 
here today, but you mentioned FDA early on in your statement. I 
want to make sure that as this issue is publicized and this 
hearing is publicized, it is clear what role food safety plays 
in this issue. Would you or Dr. DeHaven quickly comment on 
that, please?
    Dr. DeHaven. I would simply say that food safety hospital 
always been the paramount issue that has been before us as we 
made the decisions on all of our programmatic changes and 
enhancements we have made to the program. Even to the extent 
that we increase surveillance to determine what the prevalence 
of the disease is or is not in the United States, that then has 
implications for what additional measures we may need to take 
with regard to a feed ban, additional food safety measures we 
may need to take with regard to SRM removal or some of the 
other actions. Clearly the starting point is ensuring food 
safety. The fact that Secretary Veneman very quickly initiated 
an SRM removal program shortly after the finding in the case is 
indicative of that, but again, the starting point has been food 
safety and all of the other actions we taken then stem from 
that.
    The Chairman. Thank you very much. Gentlemen, thank you for 
being here. Thanks for providing this testimony.
    We have received written statements and testimony from 
Senators Allard, Burns, Craig and Cantwell, that I would like 
to submit for the record, and without objection, it is so 
ordered.
    [The prepared statements of Senators Allard, Burns, Craig 
and Cantwell can be found in the appendix on page 72-79.]
    The Chairman. I would remind all Senators that the hearing 
record will remain open for 5 days to allow for Senators to 
submit statements for the record, as well as questions, to 
which, I would appreciate, Mr. Secretary, you all would respond 
to as quickly as possible so we can move ahead with this issue.
    [The prepared statement of Secretary Johanns can be found 
in the appendix on page 57.]
    The Chairman. With that, this hearing is concluded.
    [Whereupon, at 1:17 p.m., the committee was adjourned.]
      
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                            A P P E N D I X

                            February 3, 2005



      
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                   DOCUMENTS SUBMITTED FOR THE RECORD

                            February 3, 2005



      
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                         QUESTIONS AND ANSWERS

                            February 3, 2005



      
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