Eligibility of the People's Republic of China (PRC) To Export to the United States Poultry Products From Birds Slaughtered in the PRC, 60318-60324 [2019-24234]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food Safety and Inspection Service

[Federal Register Volume 84, Number 217 (Friday, November 8, 2019)]
[Rules and Regulations]
[Pages 60318-60324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24234]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Part 327

[Docket No. FSIS-2016-0002]
RIN [0583-AD64]


Eligibility of the People's Republic of China (PRC) To Export to 
the United States Poultry Products From Birds Slaughtered in the PRC

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Food Safety and Inspection Service (FSIS) is amending the 
Federal poultry products inspection regulations to add the People's 
Republic of China (PRC) as eligible to export to the United States 
poultry products from birds slaughtered in the PRC. FSIS has reviewed 
the PRC's poultry laws, regulations, and inspection system, as 
implemented, and has determined that they are equivalent to the Poultry 
Products Inspection Act (PPIA), the regulations implementing this 
statute, and the United States' food safety system for poultry. Under 
this final rule, slaughtered poultry, or parts or other products 
thereof, processed in certified PRC establishments, are eligible for 
export to the United States. All such products are subject to 
reinspection at United States ports of entry by FSIS inspectors.

DATES: Effective December 9, 2019.

FOR FURTHER INFORMATION CONTACT: Roberta Wagner, Assistant 
Administrator, Office of Policy and Program Development, Food Safety 
and Inspection Service, U.S. Department of Agriculture, 1400 
Independence Avenue SW, Washington, DC 20250-3700; Telephone: (202) 
205-0495.

SUPPLEMENTARY INFORMATION:

Background

    On June 16, 2017, FSIS published a proposed rule in the Federal 
Register (82 FR 27625) to amend FSIS's poultry products inspection 
regulations to list the PRC as eligible to export to the United States 
poultry products from birds slaughtered in the PRC. FSIS proposed this 
action after the Agency conducted a documentary review of the PRC's 
laws, regulations, and poultry slaughter inspection system, as well as 
an in-country audit of the system, and determined that it is equivalent 
to the U.S. system established under the Poultry Products Inspection 
Act (PPIA) and its implementing regulations. This final rule is 
consistent with the provisions of the proposed rule.
    The PRC is already eligible to export processed poultry products to 
the United States if the products are derived from poultry slaughtered 
in the United States or in other countries with a poultry slaughter 
inspection system equivalent to that of the United States. Under this 
final rule, the PRC is eligible to export to the United States poultry 
products derived from birds slaughtered in the PRC. The PRC may not 
export raw poultry at this time because of restrictions owing to animal 
disease risk put in place by the USDA Animal and

[[Page 60319]]

Plant Health Inspection Service (APHIS). Regarding processed poultry, 
the PRC may only export Fully Cooked-Not Shelf Stable products, because 
FSIS has only assessed information and audited the government controls 
for the production of products under this processing category.\1\ The 
PRC would need to submit additional information for FSIS to review, and 
would likely need to undergo an additional audit before FSIS would 
allow the PRC to export other processed poultry products to the United 
States.
---------------------------------------------------------------------------

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

    As explained in the proposed rule, under the PPIA and implementing 
regulations, poultry and poultry products imported into the United 
States must be produced under standards for safety, wholesomeness, and 
labeling that are equivalent to those of the U.S. system (21 U.S.C. 
466). Section 381.196 of Title 9 of the Code of Federal Regulations 
(CFR) sets out the procedures by which foreign countries may become 
eligible to export poultry and poultry products to the United States.
    Paragraph 381.196(a) requires that the standards of a foreign 
country's poultry inspection system, its legal authority for the 
inspection system, and the regulations implementing the system must be 
equivalent to those of the United States. These requirements include: 
(1) Ante-mortem and post-mortem inspection performed or supervised by a 
veterinarian; (2) national government controls over establishment 
construction, facilities, and equipment; (3) verification of 
slaughtering of poultry and processing of poultry products by 
inspectors to ensure that product is not adulterated or misbranded; (4) 
separation of establishments certified to export from those not 
certified; (5) maintenance of a single standard of inspection and 
sanitation throughout certified establishments; (6) requirements for 
sanitation and for sanitary handling of product at certified 
establishments; (7) controls over condemned product; (8) a Hazard 
Analysis and Critical Control Point (HACCP) system; and (9) any other 
requirements under the PPIA and its implementing regulations (9 CFR 
381.196(a)(2)(ii)).
    The country's inspection program must also impose requirements 
equivalent to those of the United States with respect to: (1) 
Organizational structure and staffing in certified establishments to 
ensure uniform enforcement of laws and regulations; (2) national 
government control and supervision over the official activities of 
employees or licensees; (3) qualified inspectors; (4) enforcement and 
certification authority; (5) administrative and technical support; (6) 
inspection, sanitation, quality, species verification, and residue 
standards; and (7) any other inspection requirements (9 CFR 
381.196(a)(2)(i)).

Evaluation of the PRC's Poultry Inspection System

    In 2004, at the request of the PRC, FSIS conducted a document 
review of the PRC's poultry (slaughter and processing) inspection 
system, concluding that the PRC's laws, regulations, control programs, 
and procedures were equivalent to those of the United States. FSIS 
proceeded with an on-site audit to verify that the PRC's General 
Administration of Quality Supervision, Inspection, and Quarantine 
(AQSIQ), which was the PRC's central competent authority (CCA) in 
charge of food inspection, had effectively implemented a poultry 
inspection system equivalent to that of the United States.\2\ However, 
FSIS identified problems involving sanitation, slaughter, processing, 
residue controls, supervision, and enforcement. In 2005, FSIS conducted 
a follow-up on-site audit and concluded that the PRC had satisfactorily 
addressed the previous audit findings for poultry processing only.
---------------------------------------------------------------------------

    \2\ Since FSIS completed its preliminary determination regarding 
equivalence of the PRC's poultry inspection system, the PRC has 
reorganized and renamed its CCA, now organized under the General 
Administration of Customs of the People's Republic of China. This 
reorganization has no substantive impact on FSIS' determination of 
equivalence.
---------------------------------------------------------------------------

    In 2006, FSIS published a final rule in the Federal Register making 
the PRC eligible to export poultry products to the United States, but 
only from birds slaughtered under Federal inspection in the United 
States or other countries eligible to export slaughtered poultry 
products to the United States (71 FR 20867, April 24, 2006). Shortly 
after the publication, Congress prohibited FSIS from allowing poultry 
products to be imported from the PRC (see Sec. 733 of Pub. L. 110-161). 
In 2009, Congress removed this prohibition.
    In June 2010, FSIS experts traveled to the PRC to collect 
information related to legislation applicable to the country's poultry 
inspection system, including the PRC's 2009 Food Safety Law. In 
December 2010, FSIS conducted separate but concurrent on-site audits of 
the PRC's poultry slaughter and processing inspection systems. FSIS 
reviewed the effectiveness of the PRC's food safety program based on 
whether the following equivalence components were addressed 
satisfactorily with respect to standards, activities, resources, and 
enforcement: (1) Government Oversight (e.g., Organization and 
Administration); (2) Government Statutory Authority and Food Safety and 
Other Consumer Protection Regulations (e.g., Inspection System 
Operation, Product Standards and Labeling, and Humane Handling); (3) 
Government Sanitation; (4) Government HACCP Systems; (5) Government 
Chemical Residue Testing Programs; and (6) Government Microbiological 
Testing Programs.
    The auditors concluded that the PRC was able to meet the principal 
requirements for the equivalence components of Government Sanitation 
and Government Chemical Residue Programs. However, FSIS identified 
systemic inadequacies in both the slaughter and processed poultry 
inspection systems regarding the other four equivalence components. For 
example, FSIS found that the CCA lacked a standardized method to assign 
inspection personnel to slaughter facilities and also utilized 
establishment-paid inspectors to conduct official inspection duties. 
The CCA responded by developing a comprehensive corrective action plan 
addressing the findings.
    In March 2013, FSIS conducted follow-up on-site audits to verify 
whether the PRC had implemented the corrective actions proffered in 
response to the previous audit findings. Based on the audit findings, 
FSIS concluded that the PRC's processed poultry inspection system was 
equivalent to the U.S. system and announced that the PRC could export 
processed poultry products to the United States. However, FSIS also 
found that the CCA had not adequately addressed all of FSIS's concerns 
about its poultry slaughter inspection system. Specially, the CCA still 
lacked a standardized method to assign inspection personnel to 
slaughter facilities on the basis of objective measurements. The CCA 
responded to these concerns, stating that it would implement changes to 
its poultry slaughter inspection system.
    In May 2015, FSIS conducted an on-site audit to verify whether the 
CCA adopted the necessary corrective measures to its poultry slaughter 
inspection system. Based on the audit, FSIS concluded that the PRC had 
satisfactorily addressed all issues of concern that FSIS had raised in 
its 2013 audit of the PRC poultry slaughter

[[Page 60320]]

inspection system and had met the FSIS equivalence criteria for all six 
components.
    On August 21, 2014, FSIS published the final rule Modernization of 
Poultry Slaughter Inspection (79 FR 49566). The rule created regulatory 
changes that apply to all poultry slaughter establishments and 
established a new optional post-mortem inspection system, the New 
Poultry Inspection System (NPIS). On August 11, 2016, the PRC sent a 
letter to FSIS outlining the changes that were made to the PRC's 
poultry inspection system to achieve equivalency with the new U.S. 
regulations. These included requirements that establishments have 
procedures to ensure that carcasses with visible fecal contamination do 
not enter the chiller and prerequisite programs to prevent 
contamination of carcasses and parts by enteric pathogens and visible 
fecal material. The PRC also stated in the letter that it had adopted 
the U.S. requirements for NPIS. On September 1, 2016, the PRC sent 
copies of its updated inspection manuals to FSIS. The letter and the 
relevant portions of the inspection manuals are available at: 
www.fsis.usda.gov/wps/portal/fsis/topics/regulations/federal-register/proposed-rules. FSIS reviewed the submitted letter and updated manuals 
and determined that the PRC's poultry slaughter inspection system is 
equivalent to the U.S. system in regard to the Modernization of Poultry 
Slaughter Inspection requirements.
    Consequently, on June 16, 2017, FSIS published a proposal to find 
that the PRC's poultry slaughter inspection system is equivalent to the 
United States' system and, therefore, to remove from the regulations 
the limitation that the products must originate from birds slaughtered 
under Federal inspection in the United States or in a country eligible 
to export slaughtered poultry products to the United States. For more 
detailed information on FSIS's evaluations of the PRC's poultry 
inspection system see the proposed rule (82 FR 27625) and for the full 
audit reports, go to: https://www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/importing-products/eligible-countries-products-foreign-establishments/foreign-audit-reports.
    In November 2018, FSIS conducted an audit of PRC's poultry 
inspection system, reviewing the inspection and regulation by the PRC 
of both poultry processing and slaughter. FSIS identified no 
significant problems and the PRC poultry inspection system was again 
found to be equivalent. FSIS will publish the findings from this audit 
in the future.

Final Rule

    After considering the comments received on the proposed rule, 
discussed below, FSIS concludes that the PRC's poultry inspection 
system is equivalent to the United States' inspection system for 
poultry and poultry products. Therefore, FSIS is amending its poultry 
products inspection regulations to permit imports from the PRC of 
poultry products, derived from birds slaughtered in the PRC (9 CFR 
381.196(b)). Under FSIS's import regulations, the PRC must certify to 
FSIS that those establishments that wish to export poultry product to 
the United States are operating under requirements equivalent to those 
of the United States (9 CFR 381.196(a)).
    Although a foreign country may be listed in FSIS regulations as 
eligible to export poultry products to the United States, the exporting 
country's products must also comply with all other applicable 
requirements of the United States, including those of APHIS. These 
requirements include restrictions under 9 CFR part 94 of APHIS's 
regulations, which regulate the export of poultry products from foreign 
countries to the United States to control the spread of specific animal 
diseases.
    Also, under this final rule, all poultry and poultry products 
exported to the United States from the PRC will be subject to 
reinspection by FSIS at United States ports of entry for, but not 
limited to, transportation damage, product and container defects, 
labeling, proper certification, general condition, and accurate count. 
FSIS also will conduct other types of reinspection activities, such as 
sampling and testing product to detect any drug or chemical residues or 
pathogens that may render the product unsafe or any species or product 
composition violations that would render the product economically 
adulterated. Products that pass reinspection will be stamped with the 
official mark of inspection and allowed to enter U.S. commerce. If they 
do not meet U.S. requirements, they will be refused entry and within 45 
days will have to be returned to the country of origin, destroyed, or 
converted to animal food (subject to approval of the Food and Drug 
Administration (FDA)), depending on the violation. The import 
reinspection activities can be found on the FSIS website at: https://www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/importing-products/port-of-entry-procedures.
    Under current congressional appropriations,\3\ poultry products 
permitted for importation under this final rule may not be used in the 
school lunch program under the Richard B. Russell National School Lunch 
Act (42 U.S.C. 1751 et seq.), the Child and Adult Care Food Program 
under section 17 of such Act (42 U.S.C. 1766), the Summer Food Service 
Program for Children under section 13 of such Act (42 U.S.C. 1761), or 
the school breakfast program under the Child Nutrition Act of 1966 (42 
U.S.C. 1771 et seq.). In addition, poultry products from birds 
slaughtered in the PRC will be eligible for importation into the United 
States only if they are from animals slaughtered on or after the 
effective date of this final rule.
---------------------------------------------------------------------------

    \3\ See Section 749, Consolidated Appropriations Act, 2019, 
Public Law 116-6, enacted February 15, 2019.
---------------------------------------------------------------------------

    Finally, within one year of the effective date of this final rule, 
FSIS will conduct an ongoing equivalence audit of the PRC's poultry 
inspection system. During the audit, FSIS auditors will verify that the 
PRC's CCA has implemented its food safety inspection system as 
described in the Self-Reporting Tool and supporting documentation. FSIS 
auditors will visit government offices, establishments, and 
laboratories to verify that the CCA has implemented its inspection 
system as documented and verify that the country's system of controls 
remains equivalent to the U.S. inspection system. FSIS will be 
conducting such audits for all newly equivalent countries within one 
year of the effective date of the final rules granting equivalence. 
This policy results from an Agency response to a September 2017 audit 
of FSIS equivalence processes by the USDA Office of Inspector General 
(Evaluation of Food Safety and Inspection Service's Equivalency 
Assessments of Exporting Countries: Audit Report 24601-0002-21).

Summary of Comments and Responses

    FSIS received 96 comments from trade associations representing meat 
and poultry processors, consumer interest groups, a foodborne illness 
research center, a large food-processing corporation, and individual 
consumers. Comments from the meat and poultry industry and two 
individual consumers supported the proposed rule. Comments from the 
consumer interest groups and most individual consumers opposed the 
proposal. The following is a brief summary of the relevant issues 
raised in the comments and FSIS's responses.

[[Page 60321]]

    Comment: Two consumer interest groups and many individual consumers 
opposed the rule because of reported outbreaks of avian influenza in 
the PRC. A consumer interest group stated that even if cooking killed 
the avian influenza virus, consumers should not have to consume poultry 
from birds that were sick.
    Response: To export poultry products to the United States, 
countries need to meet APHIS requirements for animal disease prevention 
and control. APHIS uses several methods to ensure that harmful animal 
diseases do not enter the United States. These include actively 
monitoring the animal disease status of foreign countries and 
maintaining lists of countries and regions considered to be free (or 
not free) of certain diseases. If an animal disease is found to exist 
in a country (or a region within a country) that exports meat, poultry, 
or egg products to the United States, APHIS requires specific 
processing steps to ensure that any product from that country or region 
will not cause the disease to be transmitted to the United States (see 
9 CFR part 94).
    In addition to these monitoring and processing provisions, APHIS 
requires imported meat, poultry, and egg products to have accompanying 
documentation regarding their origin, animal disease status, degree of 
processing, and intended use. At the U.S. border, Customs and Border 
Protection (CBP) officials verify that such documentation is accurate 
and that the products do not pose an animal disease transmission risk. 
These steps take place before FSIS reinspects imported product for food 
safety and other regulatory compliance. All meat and poultry products 
that APHIS restricts from entering the United States because of animal 
disease concerns will be refused entry by CBP.
    As FSIS explained in the proposed rule, APHIS has classified China 
as a region where highly pathogenic avian influenza (HPAI) exists. 
APHIS also does not currently list the PRC as a region free of Exotic 
Newcastle Disease. Therefore, before a shipment of poultry products may 
be presented for FSIS reinspection at the port of entry, it must have 
been processed in a manner sufficient to inactivate these viruses if 
they were present in the meat, in accordance with APHIS requirements at 
9 CFR 94.6. FSIS reinspection of this imported poultry, in addition to 
the equivalent PRC inspection system, ensures that the product is 
otherwise safe, wholesome, and unadulterated.
    Any poultry intended for export to the United States from certified 
establishments in the PRC will be subject to ante-mortem and post-
mortem inspection (see 9 CFR part 381, subparts J and K), and will be 
subject to reinspection at United States ports of entry for any 
conditions which may render the product adulterated or misbranded.
    Comment: Individuals and consumer interest groups opposed to the 
rule questioned whether FSIS can ensure that poultry slaughtered in the 
PRC will be safe for consumption in the United States. Many individual 
commenters, three consumer interest groups, and a foodborne illness 
research center argued that the PRC cannot ensure that their poultry 
products are safe, because the PRC has produced and exported unsafe 
products in the past. These commenters were concerned that 
establishments in the PRC would use antibiotics and chemicals that are 
banned in the United States; poultry products would contain antibiotic 
resistant pathogens and harmful residues; similar standards of 
sanitation would not be maintained; or the products would not be 
properly labeled. Two consumer interest groups and a few individuals 
stated that on-site audits would not ensure that exporting 
establishments meet U.S. requirements. A consumer interest group 
questioned how the PRC will ensure that each province consistently 
enforces food safety requirements since the PRC is such a large 
country. Another such group was concerned that the PRC would certify 
establishments that do not meet U.S. requirements. One individual 
expressed concern that residues of a certain type of antibiotic would 
remain in products.
    Response: FSIS has determined that this rule will not adversely 
affect human health. FSIS explained in a 2006 proposed rule, and again 
in 2013, its determination that the poultry processing system in the 
PRC is equivalent to the United States' system. Under FSIS's 
regulations, initial eligibility to export poultry products to the 
United States depends on the results of FSIS's documentary reviews and 
on-site audits of a foreign poultry inspection system. Once the country 
becomes eligible to ship product to the United States, it is required 
to continue to submit such documents and other information related to 
the foreign inspection system as FSIS may find necessary to determine a 
foreign country's eligibility (9 CFR 381.196(a)(2)(iii)).
    During these reviews and audits, FSIS verifies that foreign 
inspection systems: Have in place a chemical residue control program 
that is organized by the national government; include random sampling 
of chemical residues, including veterinary drugs, identified by the 
exporting country or by FSIS as potential contaminants; and employ 
methods to deter recurrence of chemical residue violations. FSIS 
reviewed the PRC's chemical residue program and found that it met 
FSIS's equivalence criteria. In addition, once the country begins 
shipping product, the product is subject to reinspection, which 
includes periodic testing for residues.
    Under the regulations, only those establishments that an official 
of the PRC's poultry inspection system certifies as fully complying 
with requirements equivalent to the provisions of the PPIA and the 
regulations issued thereunder will be eligible to export to the United 
States. As with other countries that FSIS has found equivalent, the PRC 
may certify any poultry establishment within its territory. The PRC 
will be required to renew these certifications annually (9 CFR 
381.196(a)(3)). The PRC is required to ensure that certified 
establishments separate, by time or space, product destined for export 
to the United States from product intended for distribution 
domestically. All establishments certified by the PRC are subject to 
review by FSIS, which may terminate the eligibility of an 
establishment, if it does not comply with FSIS equivalence regulations 
or if current information about the establishment cannot be obtained (9 
CFR 381.196(a)(3)). All certified establishments and records relevant 
to their certification and operation will be available for on-site and 
documentary audits by U.S. officials.
    The regulations also require that a foreign inspection system, such 
as that of the PRC, maintain a program to ensure that the requirements 
equivalent to those in the United States are met. Specifically, the 
regulations require that a representative of the foreign inspection 
system periodically visit each establishment certified as complying 
with requirements equivalent to those of the PPIA and implementing 
regulations. The regulations also require that this representative 
prepare written reports documenting findings concerning compliance with 
requirements equivalent to those of the poultry inspection system in 
the United States (9 CFR 381.196(a)(2)(iv)). FSIS will evaluate these 
reports during audits.
    Furthermore, each consignment of poultry products exported to the 
United States from a foreign country must be accompanied by a foreign 
inspection certificate that certifies that the products: Are sound, 
healthful, wholesome, clean and otherwise fit for

[[Page 60322]]

human food; are not adulterated and have not been treated with and do 
not contain any dye, chemical, preservative, or ingredient not 
permitted by FSIS's regulations; have been handled only in a sanitary 
manner in the foreign country; and are otherwise in compliance with 
requirements at least equal to those in the PPIA and FSIS's regulations 
(9 CFR 381.197). Thus, a representative of the Chinese government must 
certify that the product is not adulterated, does not contain harmful 
ingredients, and has undergone adequate cooking and processing, as 
necessary.
    In addition to evaluating the PRC's eligibility and performing 
ongoing audits to ensure that products shipped to the United States are 
safe, wholesome, and properly labeled and packaged, every shipment of 
poultry products exported to the United States from the PRC will be 
subject to reinspection at points of entry for transportation damage, 
labeling, proper certification, general condition, and accurate count. 
Other types of inspection will be conducted regularly, including 
testing for pathogens, residues, and species.
    Products that pass reinspection will be stamped with the official 
mark of inspection and allowed to enter U.S. commerce. If they do not 
meet U.S. requirements, they will be refused entry and must be re-
exported, destroyed, or converted to animal food. Imported poultry 
products are to be treated as domestic product upon entry into the 
United States.
    Comment: Many individual commenters stated that they preferred to 
purchase only domestically produced poultry products. Other individuals 
and two consumer interest groups expressed concern that poultry 
products from the PRC would not be subject to labeling requirements 
indicating the country of origin.
    Response: All poultry product imports are required to bear on the 
container in which they are shipped and their immediate container the 
name of their country of origin, as well as the number assigned by the 
foreign meat inspection system to the establishment in which they were 
prepared (9 CFR 381.205-.206). When an imported product is further 
prepared or processed, the labeling requirements for the resultant 
product are the same as for domestic product. The addition of a 
country-of-origin labeling statement is not required by FSIS on 
further-processed product, although the Agency would approve product 
labels with the original country-of-origin statement if they are 
truthful and not misleading and meet all of FSIS's labeling 
requirements.
    Comment: Several individuals expressed a general concern about on-
farm practices in China regarding animal raising and feed. Other 
individuals believed that poultry from the PRC would not be treated 
humanely.
    Response: FSIS is not authorized to mandate production practices on 
farms, either domestically or as a condition of permitting imports from 
foreign countries. FSIS regulates the safety of poultry products 
through its regulatory requirements that apply to slaughter and 
processing facilities, as well as products in commerce. These include 
HACCP, sanitation controls, ante- and post-mortem inspection by 
government inspectors, residue sampling, and Salmonella and 
Campylobacter performance standards, all of which are included in the 
evaluation process for foreign country equivalence.
    Poultry are not subject to the Humane Methods of Slaughter Act 
(HMSA) of 1978 (7 U.S.C. 1901, et seq.), which requires that humane 
methods be used for handling and slaughtering livestock. FSIS requires, 
however, that poultry be handled in a manner that is consistent with 
good commercial practices, which means they should be treated humanely 
(see 70 FR 56624, September 28, 2005, Treatment of Live Poultry Before 
Slaughter). FSIS verified that the PRC implements good commercial 
practices equivalent to those required in domestic establishments.
    Comment: A few individuals and a consumer interest group opposed to 
the rule questioned the timing of the publication of the proposed rule. 
These commenters argued that FSIS only determined that the PRC was 
equivalent to re-open U.S. trade of beef products with the PRC. A 
consumer interest group questioned whether a particular foreign 
establishment would be certified because it sponsored trips for foreign 
officials. Several commenters who supported the rule argued that FSIS 
conducted a rigorous and lengthy assessment of the PRC's poultry 
inspection system. These commenters also argued that the proposed rule 
was consistent with U.S. international trade obligations.
    Response: FSIS made its equivalence determination based on sound 
science, and in accordance with international obligations of the United 
States. The PPIA and the World Trade Organization's Sanitary and 
Phytosanitary Measures Agreement provide that countries with equivalent 
inspection systems may export poultry products to the United States. As 
FSIS explained in the proposed rule, the Agency reviewed the PRC's 
laws, regulations, and poultry slaughter inspection system as 
implemented before determining that the PRC's poultry slaughter 
inspection system is equivalent to the United States' system.
    Comment: Many individuals and a consumer interest group expressed 
support for U.S. domestic poultry production, with an emphasis on 
local, free-range, poultry. A few commenters were concerned that the 
PRC would export a large amount of poultry products, resulting in 
negative effects on domestic poultry producers. One individual asked 
which domestic industry segments were unlikely to be competitive due to 
lower labor costs in the PRC. However, comments from the poultry 
industry argued that the proposed rule would not have a significant 
impact on their business because the United States is the largest and 
most efficient poultry producer in the world and has a comparative 
advantage due to access to cheap, high-quality feed and birds. 
According to these comments, the United States is also a technological 
leader in poultry genetics and breeding, feed-compounding, and animal 
health practices.
    Response: As explained in more detail in the economic impact 
analysis below, FSIS believes the domestic poultry industry will be 
competitive with poultry from the PRC. Recently, labor costs in the PRC 
have been rising, which together with high feed costs have pushed the 
wholesale price of chicken in the PRC to be higher than in the United 
States. FSIS also does not believe that this rule will adversely affect 
the U.S. poultry industry, because the volume of trade that results 
from this rule will likely be small and have little effect on supply 
and prices.
    Comment: One consumer interest group questioned whether FSIS was 
interacting with the correct PRC government agency. Another such group 
asserted that FSIS should not find the PRC equivalent because it 
operated parallel systems for domestic poultry products and products 
intended for export.
    Response: FSIS's equivalence regulations require that before 
permitting poultry product imports from a foreign country, it find that 
the country's poultry inspection system complies with requirements 
equivalent to the PPIA and its implementing regulations, with respect 
to establishments preparing products for export to the United States (9 
CFR 381.196(a)). While FSIS was evaluating the PRC's food safety system 
for poultry exports, that system was administered

[[Page 60323]]

by AQSIQ, the PRC's CCA at that time, in charge of food inspection and 
implementing a poultry inspection system equivalent to that of the 
United States. As noted above, the PRC's General Administration of 
Customs has taken over the functions of the prior CCA, but the 
reorganization did not result in substantive changes to the PRC's 
inspection system. The China Food and Drug Administration is 
responsible for food safety for domestically produced poultry products. 
As described above, FSIS has conducted a rigorous, comprehensive review 
of the Chinese food safety system and will continue to verify that the 
PRC maintains an equivalent inspection system through document review, 
systems audits, and reinspection of each shipment of poultry from the 
PRC.
    Comment: Two consumer interest groups stated that an establishment 
in the PRC audited by FSIS was reported in the media as running at 
higher line speeds than those permitted under FSIS's poultry inspection 
system. One of these groups asserted that FSIS had only audited the way 
in which the PRC planned to run its inspection system, instead of 
observing the system in operation.
    Response: As stated in the 2015 audit report, FSIS observed the 
audited establishments in operation, including the establishment 
referred to by these commenters. The audit included verification of 
adequate line speeds, as documented in FSIS's audit report. The PRC's 
system, as documented and observed, includes line speeds that comply 
with FSIS's requirements. After the final rule publishes, if the 
establishment mentioned in these comments is certified by the PRC, it 
must operate at line speeds in conformance with the inspection system 
FSIS reviewed and determined equivalent when producing product intended 
for export to the United States.
    Comment: A consumer interest group questioned why a document on 
FSIS's website was not fully translated.
    Response: The document the commenter referred was posted as 
supporting document to the proposed rule and is available here: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulations/federal-register/proposed-rules. It relates to the PRC's compliance with FSIS's final 
rule, Modernization of Poultry Slaughter Inspection (79 FR 49565, 
August 21, 2014). It is completely translated by AQSIQ, except for a 
short introductory letter, which does not affect the content.
    Comment: Commenters also raised concerns regarding Chinese labor 
practices and working conditions, the use of a certain pesticide in the 
United States, greenhouse gasses produced by agricultural activities, 
and FSIS's previous determination that the PRC is eligible to export 
processed poultry to the United States if the products are derived from 
poultry slaughtered in the United States or in other countries eligible 
to slaughter and export poultry to the United States.
    Response: These comments are either beyond the scope of this 
rulemaking or outside FSIS's authority. This rule is based on FSIS's 
determination that the PRC's poultry slaughter system is able to 
provide a level of protection equivalent to the United States' 
inspection system.

Executive Orders 12866 and 13563, and the Regulatory Flexibility Act

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order (E.O.) 13563 emphasizes the importance of quantifying both costs 
and benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This final rule has been designated a ``non-significant'' 
regulatory action under section 3(f) of E.O. 12866. Accordingly, the 
rule has not been reviewed by the Office of Management and Budget under 
E.O. 12866.

Expected Costs of the Final Rule

    The costs of the final rule will accrue primarily to domestic 
poultry producers in the form of greater competition from the PRC. In 
the short run, the volume of trade stimulated by this final rule is 
likely to be small because the PRC only intends to certify five 
slaughter establishments to provide poultry to certified processing 
establishments to export fully-cooked poultry products to the United 
States. Data from the PRC show that these five slaughter establishments 
will supply poultry to five processing establishments that the PRC will 
certify as eligible to ship product to the U.S. (three of them intend 
to export cooked chicken quarter-legs and chicken breasts, one to 
export cooked duck legs and duck breasts, and one to export roasted 
boneless duck to the United States).\4\ According to the data, the 
projected volume of exports to the United States will be about 324 
million pounds per year for the next five years.\5\ Given that the 
United States domestic annual production volume of ready-to-eat, fully-
cooked poultry is about 12,325 million pounds,\6\ the projected cooked 
poultry products from the PRC would only be about 2.6 percent of total 
United States production in the next five years.\7\ The immediate 
impact on U.S. consumers and domestic processors is likely to be minor, 
as the low volume of trade is likely to have little effect on supply 
and prices.
---------------------------------------------------------------------------

    \4\ Data is from the General Administration of Quality 
Supervision, Inspection and Quarantine of the People's Republic of 
China, November 2015. The projected annual production of these 
chicken and duck products at these five processing establishments 
will be about 838 million pounds per year, which could be sold in 
the PRC or to other foreign countries.
    \5\ Data is from the General Administration of Quality 
Supervision, Inspection and Quarantine of the People's Republic of 
China, November 2015.
    \6\ Calculated from PHIS data in November 2015. This number 
cannot be divided by species. If we adjusted it by the proportions 
of chicken and ducks in total domestic slaughtered poultry, which is 
88.3 percent, the volume would be about 10,833 million pounds per 
year.
    \7\ If we use 10,833 million pounds (see previous footnote) as 
the denominator, the projected PRC export would be about 3 percent 
of United States domestic production of fully-cooked chicken and 
duck.
---------------------------------------------------------------------------

    In the long run, domestic producers will probably start to feel 
competitive pressure of competition if more PRC establishments become 
certified to export to the United States. However, FSIS believes the 
domestic poultry industry will be competitive with poultry from the 
PRC. Recently, labor costs in the PRC have been rising,\8\ and the 
rising labor costs together with high feed costs have pushed the 
wholesale price of chicken in the PRC to be higher than the United 
States.\9\ Comments from three poultry trade associations on the 
proposed rule also asserted that the United States is the largest and 
most efficient poultry producer in the world. According to the poultry 
trade associations, the United States has a comparative advantage in 
poultry production and marketing.
---------------------------------------------------------------------------

    \8\ Gale, F. and C. Arnade. (2015). Effects of Rising Feed and 
Labor Costs on China's Chicken Price. International Food and 
Agribusiness Management Review, Vol 18, Special Issue A. 137-150.
    \9\ Ibid. In addition, the unit price of exported poultry meat 
and products from China is much higher than that from the U.S. in 
2016 and 2017, according to Global Trade Atlas data. We downloaded 
the data from https://www.gtis.com, and it will be available upon 
request.
---------------------------------------------------------------------------

Expected Benefits of the Final Rule

    The PRC is the second largest poultry producing country in the 
world, trailing closely behind the United States.\10\ If the

[[Page 60324]]

PRC begins to export other poultry products (for example, if APHIS 
allows the PRC to export raw chicken products) \11\ to the United 
States and more PRC establishments become certified to be eligible, 
consumers will likely benefit from more choices and more competitive 
prices in the marketplace; producers will likely benefit from 
efficiency gains as they have to become more efficient to be 
competitive.\12\ The Agency did not quantify the value of these 
benefits because of the lack of predictability associated with the many 
factors that heavily influence trade patterns and volume. These factors 
include results of Sanitary and Phytosanitary Standards issues (e.g. 
the avian influenza), exchange rates,\13\ and domestic political and 
economic conditions.
---------------------------------------------------------------------------

    \10\ See Food Outlook, Food and Agricultural Organization (FAO) 
of the United Nations, October 2015, p. 49, at https://www.fao.org/3/a-i5003e.pdf, accessed 1/11/2016. Also see the same publication of 
June 2017, p.122, at https://www.fao.org/3/a-i7343e.pdf, accessed 1/
8/2018.
    \11\ As mentioned above, APHIS has classified the PRC as a 
region affected by certain animal diseases, so the PRC will only be 
allowed to export cooked poultry products to the United States.
    \12\ It is well-established that international trade benefits 
trade partners because it allows countries to specialize in 
producing products at which they have a comparative advantage.
    \13\ The exchange rate affects the relative prices of exports 
and imports.
---------------------------------------------------------------------------

    This rule will likely increase trade between the United States and 
the PRC in poultry products. In the short run, however, the impact is 
likely to be small as the expected volume of trade stimulated by this 
rule is likely to be small (see Expected Costs section above).

Regulatory Flexibility Act Assessment

    The FSIS Administrator certifies that, for the purposes of the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.), this final rule will 
not have a significant impact on a substantial number of small entities 
in the United States. The expected trade volume will be small, with 
little or no effect on all U.S. establishments, regardless of size.

Executive Order 13771

    Consistent with E.O. 13771 (82 FR 9339, February 3, 2017), this 
final rule facilitates regulatory cooperation with foreign governments. 
Therefore, this rule is an E.O. 13771 deregulatory action.

Paperwork Reduction Act

    No new paperwork requirements are associated with this proposed 
rule. Foreign countries wanting to export poultry and poultry products 
to the United States are required to provide information to FSIS 
certifying that their inspection system provides standards equivalent 
to those of the United States, and that the legal authority for the 
system and their implementing regulations are equivalent to those of 
the United States. This information collection was approved under OMB 
number 0583-0153. The rule contains no other paperwork requirements.

E-Government Act

    FSIS and USDA are committed to achieving the purpose of the E-
Government Act (44 U.S.C. 3601, et seq.) by, among other things, 
promoting the use of the internet and other information technologies 
and providing increased opportunities for citizens access to Government 
information and services, and for other purposes.

Additional Public Notification

    FSIS will officially notify the World Trade Organization's 
Committee on Sanitary and Phytosanitary Measures (WTO/SPS Committee) in 
Geneva, Switzerland, of this rule and will announce it online through 
the FSIS web page located at: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulations/federal-register/interim-and-final-rules.
    Public awareness of all segments of rulemaking and policy 
development is important. Consequently, FSIS will announce this Federal 
Register publication online through the FSIS web page located at: 
https://www.fsis.usda.gov/federal-register.
    FSIS will also announce and provide a link to it through the FSIS 
Constituent Update, which is used to provide information regarding FSIS 
policies, procedures, regulations, Federal Register notices, FSIS 
public meetings, and other types of information that could affect or 
would be of interest to our constituents and stakeholders. The 
Constituent Update is available on the FSIS web page. Through the web 
page, FSIS is able to provide information to a much broader, more 
diverse audience. In addition, FSIS offers an email subscription 
service which provides automatic and customized access to selected food 
safety news and information. This service is available at: https://www.fsis.usda.gov/subscribe. Options range from recalls to export 
information, regulations, directives, and notices. Customers can add or 
delete subscriptions themselves, and have the option to password 
protect their accounts.

USDA Non-discrimination Statement

    No agency, officer, or employee of the USDA shall, on the grounds 
of race, color, national origin, religion, sex, gender identity, sexual 
orientation, disability, age, marital status, family/parental status, 
income derived from a public assistance program, or political beliefs, 
exclude from participation in, deny the benefits of, or subject to 
discrimination any person in the United States under any program or 
activity conducted by the USDA.

How To File a Complaint of Discrimination

    To file a complaint of discrimination, complete the USDA Program 
Discrimination Complaint Form, which may be accessed online at https://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your 
authorized representative.
    Send your completed complaint form or letter to USDA by mail, fax, 
or email:
    Mail: U.S. Department of Agriculture, Director, Office of 
Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410.
    Fax: (202) 690-7442.
    Email: [email protected].
    Persons with disabilities who require alternative means for 
communication (Braille, large print, audiotape, etc.), should contact 
USDA's TARGET Center at (202) 720-2600 (voice and TDD).

List of Subjects in 9 CFR Part 381

    Imported products.

    For the reasons set out in the preamble, FSIS is amending 9 CFR 
part 381 as follows:

PART 381--POULTRY PRODUCTS INSPECTION REGULATIONS

0
1. The authority citation for part 381 continues to read as follows:

    Authority: 7 U.S.C. 138f, 450; 21 U.S.C. 451-470; 7 CFR 2.7, 
2.18, 2.53.


Sec.  381.196   [Amended]

0
2. In Sec.  381.196, amend paragraph (b) by removing the footnote 2 
designation following ``People's Republic of China.''

Done at Washington, DC.
Carmen M. Rottenberg,
Administrator.
[FR Doc. 2019-24234 Filed 11-7-19; 8:45 am]
 BILLING CODE 3410-DM-P