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U.S. Regulation of Catfish – and Basa and Tra

April 2009 Brenda A. Jacobs Sidley Austin LLP Washington, DC

Catfish . . . Basa and Tra

• Since 2002, U.S. catfish producers have battled against competition with imports.

– First, they initiated an antidumping investigation that resulted in an order applying additional duties on imports from Vietnam (Certain Frozen Fish Fillets).

– Second, a law was enacted banning Vietnamese basa and tra from being labeled “catfish” in the U.S. market.

– Most recently, another new U.S. law will make imports of catfish subject to inspection upon entry into the United States.

• Is basa and tra subject to this new rule?

• Can the U.S. say a fish cannot be labeled “catfish” for purposes of marketing, but it is considered catfish for purposes of inspection requirements?

Catfish . . . Basa and Tra

• What is going on?

• Different laws, different federal agencies • U.S. political interests – Strong U.S. catfish industry – Anti-China backlash • China accounts for a large share of U.S. food imports, including seafood (As of 2006, China reportedly accounted for 10 percent of the seafood consumed in the United States.) • Increased concern about the safety of the U.S. food supply – According to U.S. Department of Agriculture data, approximately 85 percent of all U.S. seafood consumption (including catfish) is from imports.

• Compare that with a 15 percent import share for all U.S. food consumption

The Labeling Rule

• In 2002, the U.S. Farm Security and Rural Investment Act amended the food misbranding provision of the Federal Food, Drug and Cosmetic Act, to say that a food is misbranded “if it purports to be or is represented as catfish, unless it is a fish classified within the family Ictaluridae.” – Basa and tra are pangasius • The U.S. Food and Drug Administration (FDA) is responsible for enforcing the labeling provisions.

– FDA is part of the U.S. Department of Health and Human Services.

The Labeling Rule

• FDA provides a guide to “acceptable market names” for seafood sold in the United States • The Guidance defines the different categories of names found in THE SEAFOOD LIST and outlines principles that can be used to label seafood species sold in the U.S. with an appropriate, nonmisleading statement of identity.

• http://www.foodsafety.gov/~comm/seaguid7.html

The Labeling Rule

• Despite the antidumping duty order and the labeling rule, U.S. imports of Vietnamese basa and tra have continued to grow.

– In 2002, Vietnam accounted for 4,361 tons of basa and tra into the U.S.; In 2006, Vietnam accounted for 17,998 tons.

– U.S. imports of basa and tra from Vietnam accounted for US$77 million in 2008, up from US$55.7 million in 2007.

• But so have U.S. imports of catfish from China.

– U.S. imports of catfish from China totaled US$40 million in 2008 (up from US$29 million in 2007) and – China also shipped US$12.5 million worth of basa and tra in 2008

The Safety Concern

• “Tainted imported catfish may be reaching consumers’ dinner tables.” – Catfish Farmers of America • “During the 12 months

ending January 2007, 49 shipments of Chinese farmed catfish were refused by the U.S. FDA, because they contained banned and potentially dangerous chemicals and antibiotics. In January 2007 alone, 10 shipments were refused entry, up from 2 refusals in January

2006.”

The Safety Concern

• In response, as part of the “2008 Farm Bill,” the U.S. Congress amended the Federal Meat Inspection Act to designate catfish, as defined by the Secretary of Agriculture, an “amenable species.” – Amenable species means that it is subject to mandatory inspection.

– Definition of catfish to be decided by implementing regulations.

• This new law is implemented by the Food Safety and Inspection Service – FSIS is part of the U.S. Department of Agriculture.

The Safety Concern: Inspections

• It is the intent of Congress “that catfish be subject to continuous inspection and that imported catfish inspection programs be found to be equivalent under USDA regulations before foreign catfish may be imported into the United States.” • As a result of the new law, FSIS is responsible for ensuring that meat, poultry, egg and catfish in interstate and foreign commerce “are wholesome, not adulterated, and properly marked, labeled and packaged.” • FSIS is required to implement the new law within 18 months of enactment (which was June 18, 2008). That means it should issue implementing regulations by December 2009.

The Safety Concern: Inspections

• FSIS said that it would issue a “Notice of Proposed Rulemaking,” (NPRM) by March 2009, in order to meet the December 2009 deadline for a final rule.

– No NPRM was issued in March.

– But FSIS says the regulations will define catfish and the scope of coverage of the regulations to apply to establishments that process catfish and catfish products.

• Chinese production is based on imported brood stock from

the U.S., so it is the same species (ictalurus) as the U.S.

– FSIS says the regulations will “take into account the conditions under which the catfish are raised and transported to a processing establishment.”

Grading Too?

• Another provision in the new law amends the Agricultural Marketing Act to require USDA to establish a voluntary grading program for catfish, which producers could opt into and pay for with user fees.

What Next?

• Vietnam should urge FSIS to define catfish consistent with the definition applied by FDA, BUT even if FSIS agrees that the definition of catfish should be limited to Ictalurus, excluding Panga, all signs point to more food safety legislation in the United States.

• The recent outbreak of salmonella at a peanut processing plant in the U.S., causing more food recalls than ever before in the history of the U.S. (with 100 companies recalling 3,500 different products), means that both the new Administration and the Congress are looking at additional updates to existing food safety laws.

Obama Administration

• In March, President Obama announced the creation of a Food Safety Working Group.

– will include the Secretaries of HHS and Agriculture, to advise him on which laws and regulations need to be changed, to foster coordination across federal agencies, and to ensure that laws are enforced. – Obama appears to support increased inspections over proposals to rely upon third party auditors.

The Congress

• A number of food safety bills have been introduced in the Congress.

– There is a debate within the Congress about whether to bolster food oversight at the FDA or assign those responsibilities to a separate agency that would eventually absorb the food-oversight duties of 11 other agencies, including the FSIS. – Bills already introduced in 2009 seek to increase the frequency of inspections and tighten recordkeeping requirements.

• Food import shipments would have to be accompanied by documentation that they meet safety standards that are at least equivalent to U.S. standards.

– Certifications might be provided by governments or other accredited third parties.

• Consider the Consumer Product Safety Improvement Act a model.

Likely Importer (Customer) Demands

• Buyers want to know how product is being handled, whether chemicals or antibiotics are used.

• Buyers want a written record of inspections and other steps taken or tests administered to ensure the safety of seafood and other food products. – What systems do you have in place to remove unsafe product?

– What systems do you have to trace product after it leaves your plant?

• If you use third party laboratories, how are they accredited?

• Buyers may demand that inspection information be included on the commercial invoice.

U.S. Regulation of Catfish -- Basa and Tra

• Brenda A. Jacobs Sidley Austin LLP 1501 K Street, NW Washington, D.C. 20005 202-736-8149 direct 202-736-8711 fax email: [email protected]