Issue Number 7: 6th April 2018

Regulating fisheries – an update on WTO negotiations on fisheries subsidies and on illegal, unreported and unregulated (IUU) fishing in South East Asia
‘Brexit’ and trade – decreasing uncertainties?
US audit finds that Spain’s raw and processed pork products inspections are equivalent to US requirements
Recently Adopted EU Legislation

Regulating fisheries – an update on WTO negotiations on fisheries subsidies and on illegal, unreported and unregulated (IUU) fishing in South East Asia

On 28 March 2018, the Negotiating Group on Rules at the World Trade Organisation (hereinafter, WTO) elected its new Chair. The new Chair, Mexican Ambassador Roberto Zapata Barradas, announced the arrangements for meetings and consultations to move forward in the negotiating work on fisheries subsidies aimed at securing an agreement by the next WTO Ministerial Conference in 2019. At the same time, the EU continues to verify compliance by trading partners with its framework for combatting illegal, unreported and unregulated (hereinafter, IUU) fishing. On 4 April 2018, an EU delegation visited Thailand to carry out an inspection in order to determine whether Thailand has implemented necessary changes to address IUU fishing, while Taiwan hosted an EU delegation from 13 to 21 March 2018. Thailand and Taiwan are awaiting the EU’s decision on whether the EU will maintain the current ‘yellow card’, remove it or even issue a ‘red card’, which would bring all trade in fishery products from the respective countries to a halt. Viet Nam also continues to cooperate with the EU to address IUU fishing in its waters.

According to the United Nations Conference on Trade and Development (UNCTAD), the value of fisheries subsidies favouring overfishing, fishing overcapacity and illegal fishing is estimated to be between USD 15 and 35 billion per year. Efforts to address such subsidies within the WTO began in 2001, when Ministers agreed in the Doha Ministerial Declaration to “clarify and improve WTO rules that apply to fisheries subsidies” (for details on the WTO history of this issue, see Trade Perspective, Issue No. 17 of 22 September 2017). Although negotiations did not ultimately progress under the anticipated timeline, substantial progress has been achieved in 2017 within the WTO Negotiating Group on Rules (hereinafter, NGR). In particular, documents released by the WTO, such as the compilation matrix reflecting seven textual proposals, and statements published by WTO Members, indicated that there was progress in the negotiations. Additionally, according to the United Nations (hereinafter, UN) Sustainable Development Goal (hereinafter, SDG) 14.6, UN Members committed that, by 2020, they would “prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU fishing, and refrain from introducing new such subsidies, recognising that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the WTO fisheries subsidies negotiation”.

From 10 to 13 December 2017, the Eleventh WTO Ministerial Conference (hereinafter, MC11) took place in Argentina. Despite the progress prior to the MC11, WTO Members failed to achieve a binding agreement on fisheries subsidies. Instead, they only agreed to a work program, in which WTO Members commit to find an agreement to implement SDG 14.6 by the end of 2019, in time for the next WTO Ministerial Conference. WTO Members also agreed to improve reporting on existing fisheries subsidy programs, thereby improving transparency. Considering that WTO Members had already concluded discussions on a work program for future negotiations in Geneva, and that only five alternative text proposals were still on the table, prior to the MC11, an agreement on fisheries subsidies by the end of 2017 had appeared feasible. A number of WTO Members continued to request Special and Differential Treatment (hereinafter, SDT), even though all UN Members had committed to achieve SDG 14.6. This insistence was considered unacceptable by other WTO Members, which considered that SDT for fishery policies in general did remain a legitimate option, but not within the context of IUU fishing.

When, on 28 March 2018, the Mexican Ambassador Roberto Zapata Barradas was elected as new Chair of the NGR, he immediately announced the decision to relaunch negotiations and consultations to work towards a binding agreement by the end of 2019, ending harmful subsidies. One of the main aspects to be addressed during the upcoming discussions will be the issue of SDT. During the MC11, WTO Members recognised the importance that an “appropriate and effective special and differential treatment for developing country members and least developed country members should be an integral part of these negotiations”. Ambassador Zapata will reportedly hold consultations with interested delegations to hear their views on organising the work and he is expected to table a work agenda at the next meeting of the NGR on 11 April 2018.

On a related note, the EU continues to verify compliance by trading partners with its framework for combatting IUU fishing. IUU fishing refers to fishing that is: 1) Illegal (i.e., lacks authorisation, violates national laws or international obligations or does not comply with conservation and management measures); and/or 2) Unreported (i.e., it is not properly reported under international, regional or national laws and regulations); and/or 3) Unregulated (i.e., it is performed by vessels without national flag or that jeopardise fish stocks). According to the European Commission (hereinafter, Commission), between 11 and 26 million metric tonnes of fish are caught illegally each year around the world (i.e., about 15% of global catches). The Commission bases its decisions on the EU’s IUU Regulation, which entered into force in 2010, and on additional instruments adopted in November 2013 (see Trade Perspective, Issue No. 23 of 13 December 2013). The EU is the biggest fish importer in the world and the IUU Regulation is the EU’s key instrument in the fight against illegal fishing. It aims at ensuring that only those fishery products that are certified be offered legal access to the EU market.

The EU’s framework to address IUU fishing requires the flag State of the fishing vessel to certify the origin and legality of fishery products in order to guarantee traceability. If a country is unable to comply, the Commission will first attempt to assist and improve the legal framework of said country via its ‘card system’. The first issuance by the Commission (i.e., the issuance of a ‘yellow card’) pre-identifies the country as non-cooperative and opens a six-month formal dialogue to assist the country to improve its system. After this dialogue, the Commission evaluates the country’s situation and either lifts the pre-identified status (i.e., issues a ‘green card’) or formally identifies the country as being non-cooperative (i.e., issues a ‘red card’). A ‘red card’ results in the imposition of a ban of all fishery products imported directly or indirectly from the country listed as non-cooperative. In practice, the Commission often extends the six-month ‘dialogue’ period, if efforts are progressing in the right direction.

On 4 April 2018, Thailand hosted an EU delegation, which inspected Thailand’s progress on addressing IUU fishing. Already in November 2017, an EU delegation had carried out a first inspection of Thailand’s new traceability system for fishery products. Thailand has taken numerous steps in its commitment to combat IUU fishing and to comply with EU recommendations. However, so far, the Commission has maintained Thailand’s ‘yellow card’, which was issued in 2015, citing Thailand’s inadequate legal framework on fisheries, as well as inadequate monitoring, traceability and control systems. During the April 2018 visit, the EU delegation was expected to particularly discuss and inspect compliance regarding labour issues. Seeking to have the EU’s ‘yellow card’ lifted, the Government of Thailand has reportedly completed the registration of migrant workers, established the Command Centre for combating Illegal Fishing and Port In / Port Out Centres (in charge of providing information about commercial trawlers’ arrivals and departures), implemented new laws, and established vessel monitoring and traceability systems. Furthermore, a law is being drafted to allow the Government to ratify the relevant International Labour Organisation (hereinafter, ILO) Conventions. Thailand is the world’s third largest exporter of fishery products. A ‘red card’ by the EU would effectively mean a trade ban on Thai fishery exports to the EU, with an estimated yearly loss for the country of around USD 500 million. Thailand is hoping for a favourable decision by the EU on its ‘yellow card’ during the course of April 2018.

Similar to Thailand, Taiwan is also awaiting an EU decision on its ‘yellow card’, also issued in 2015. An EU delegation visited Taiwan from 13 to 21 March 2018 and EU officials recognised Taiwan’s efforts to improve its relevant legal framework, the fishing industry supervision, monitoring and management, the traceability systems for fishery and aquaculture products, and greater international cooperation. Labour issues appear to remain an additional concern. Taiwan is hoping for a swift decision by the EU on whether its ‘yellow card’ would be lifted or maintained, or whether the EU would even issue a ‘red card’, after considering whether Taiwan’s efforts to address illegal fishing have been satisfactory or not. The issuance of a ‘red card’ by the EU would effectively mean a ban on Taiwan’s fishery exports to the EU, resulting in an estimated loss of over USD 200 million USD per year for Taiwan.

Viet Nam also aims at having the EU’s ‘yellow card’ removed. On 23 October 2017, the Commission had issued a ‘yellow card’ stating that Viet Nam was not doing enough to address illegal fishing (see Trade Perspectives, Issue No. 21 of 17 November 2017). At the end of March 2018, the Vietnamese Minister of Agriculture and Rural Development, Nguyen Xuan Cuong, held meetings in Brussels with the European Commissioner for Environment, Fisheries and Maritime Affairs, Karmenu Vella, in view of having the ‘yellow card’ lifted after the visit of an EU delegation to Viet Nam scheduled for May 2018. Previously, the Commission had identified a number of shortcomings in Viet Nam, such as the lack of an effective sanctioning system to discourage IUU fishing activities, a lack of action to address illegal fishing activities conducted by Vietnamese vessels in the waters of neighbouring countries, and an inadequate system to control landings of fish that is processed locally before it is exported to international markets. Viet Nam maintains that it has implemented a number of changes to comply with the EU’s recommendations: 1) Improving anti-IUU fishing regulations; 2) Better enforcement of regulations; 3) Enhancing the cooperation with coastal areas and islands to prevent IUU fishing; and 4) Continuing a dialogue to update the Commission on Viet Nam’s efforts to improve fisheries management. More specifically, Viet Nam appears to have amended its Law on Fisheries on 21 November 2017, which intends to incorporate the Commission’s recommendations. The Commission has recognised Viet Nam’s drastic efforts to address IUU fishing, but stated that any decision on the ‘yellow card’ would only be taken after a careful analysis of the actions undertaken by the authorities to remedy the deficiencies that led to the issuance of the card. Viet Nam announced that it would provide the EU with a progress report addressing the implementation of the action plan in April 2018, which would be evaluated by the EU delegation visiting the country for an inspection in May 2018.

Regulating fisheries subsidies that favour overfishing, fishing overcapacity and illegal fishing, and addressing IUU fishing by implementing and enforcing relevant legal frameworks, remains a global issue, which significantly affects trade. The upcoming meeting of the WTO’s NGR can be seen as a new opportunity to set a feasible working program towards an agreement on fisheries subsidies. As regards IUU fishing, EU trading partners in South East Asia are continuing their efforts to address the issue, in particular in view of avoiding the issuance of a ‘red card’ by the EU. The effective implementation of the EU’s IUU fishing framework is also important for other EU trading partners in the region that are already complying with the framework and that are incurring high costs. There must be a level playing field, for purposes of market access to the EU, and all fisheries exporting countries, certainly all ASEAN exporting countries, must be treated equally. Interested stakeholders should closely follow the upcoming negotiations on fisheries subsidies, as well as the upcoming EU decisions on the ‘yellow cards’ currently issued to Taiwan, Thailand, and Viet Nam.

‘Brexit’ and trade – decreasing uncertainties?

On 23 March 2018, the European Council, composed of the leaders of the EU Member States, confirmed the agreement on the transition period following the UK’s exit from the EU on 29 March 2019 (hereinafter, ‘Brexit’), as part of the overall negotiations on an Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community on the basis of Article 50 of the Treaty on European Union. The agreement had been reached by EU and UK negotiators and had been announced on 19 March 2018. The agreement on the transition period, and the rules contained therein, provide important clarifications for trading partners around the world and are a first step in decreasing the vast uncertainties surrounding ‘Brexit’. The UK has already started preparations for its post-‘Brexit’ trade agreements with important trading partners, such as Australia and the US.

In September 2017, the UK Prime Minister Theresa May had announced her intention to negotiate a two-year transition period with the EU, in order to allow for a ‘smooth’ departure from the EU. The EU and the UK agreed on 15 December 2017 that sufficient progress had been made in the first phase of ‘Brexit’ negotiations and decided that negotiations would move to a second phase, meaning that negotiations regarding the future (trade) relationship of the EU and the UK could start. During the final meeting of the first phase, both Parties adopted guidelines for a transition period and a timetable for the next steps of the negotiations. On 7 February 2018, the European Commission (hereinafter, Commission) published a position paper titled “Transitional Arrangements in the Withdrawal Agreement”, which provided a text proposal for the provisions of the chapter on a transition period. On 21 February 2018, the UK Government published its own proposal (for details on the various positions, see Trade Perspectives, Issue No. 4 of 23 February 2018).

On 19 March 2018, the EU and UK negotiators announced that: 1) The negotiation round in March allowed negotiators to reach full agreement on the conversion into a legal text of the points agreed in December on citizens’ rights and the financial settlement; 2) They had reached an agreement on the transition period, for which the December European Council had already noted an agreement in principle, 3) That important progress had been achieved in certain areas of the negotiations (e.g., customs procedures and the surveillance of goods placed on the market), but that negotiations should continue on other separation topics, in particular geographical indications, the protection of data, and the automatic recognition of judgments; and 4) That negotiations still needed to advance on two significant areas of divergence: the governance of the Withdrawal Agreement and questions related to Ireland and Northern Ireland.

The transition period will last from ‘Brexit’ day on 29 March 2019 to 31 December 2020. Earlier this year, the UK had still insisted on a flexible timeframe, underlining that the transition period “should be determined simply by how long it will take to prepare and implement the new processes and new systems that will underpin the future partnership”. During the transition, EU citizens arriving in the UK will still enjoy the same rights and guarantees as those who arrived before ‘Brexit’ and the same will apply to UK citizens living and arriving in other EU Member States. The UK will be able to negotiate, sign and ratify its own trade agreements during the transition period, while still being party to existing EU trade agreements with third countries. The UK’s share of fishing catch will be guaranteed during the transition, but the UK will effectively remain subject to the EU’s Common Fisheries Policy without being able to participate in the rule-making. Finally, Northern Ireland will effectively remain part of the EU Single Market and the Customs Union to avoid a hard border with the Republic of Ireland, unless and until another solution is agreed. On 23 March 2018, the European Council, without requesting any changes to the agreed text, confirmed the compromises that had been negotiated between the EU and the UK, as announced on 19 March 2018.

A first major aspect of the transition agreement is that it would postpone the threat of the UK falling back to trading with the EU under WTO most-favoured nation (MFN) rules (see Trade Perspectives, Issue No. 4 of 23 February 2018) The agreement by the EU and the UK on the transition period allows the UK and UK-based businesses to continue enjoying full access to the EU Customs Union and the EU Single Market for an additional 21 months after the UK’s exit from the EU. However, as the transition period will expire on 31 December 2020, it remains crucial that the UK agrees with the EU on the framework of a future permanent trade relationship that will apply from 1 January 2021. Negotiations on a future permanent trade relationship look poised to begin in the coming weeks. In addition, and apart from negotiating its own trade agreements with third countries, the UK must address a number of further trade policy issues: 1) Confirm its legal obligations as an independent Member of the WTO; 2) Accede to the WTO Government Procurement Agreement; and 3) Establish the legislative framework for UK trade policy beyond March 2019, which would include a new Trade Remedy Authority.

The second major aspect of the transition agreement concerns international agreements. As part of the compromises that form the basis of the agreement announced in March, the issues of citizen rights and trade agreements appear to constitute an important trade off, with the EU agreeing to the UK already negotiating its own trade agreements during the transition period, in exchange for legal certainty for EU citizens living in the UK. Part Four of the current Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (hereinafter, Draft Withdrawal Agreement) provides the agreed rules for the ‘transition’. In simple terms, the UK will remain bound by and continue to benefit from all international agreements currently binding the EU. In this regard, Article 124(1) of the Draft Withdrawal Agreement provides that, “during the transition period, the United Kingdom shall be bound by the obligations stemming from the international agreements concluded by the Union, or by Member States acting on its behalf, or by the Union and its Member States acting jointly”. This includes all trade agreements of the EU that the UK is currently benefitting from. More importantly, Article 124(4) of the Draft Withdrawal Agreement, in relevant part, provides that, “during the transition period, the United Kingdom may negotiate, sign and ratify international agreements entered into in its own capacity in the areas of exclusive competence of the Union, provided those agreements do not enter into force or apply during the transition period, unless so authorised by the Union”.

The agreement to allow the UK to begin negotiating its own trade agreements with third countries is an important success for the UK. Indeed, the UK has already started to prepare the launch of trade negotiations with a number of trading partners. Immediately after the agreement with the EU, key UK officials have been conducting meetings with US and Australian government officials, in order to lay the groundwork for enhanced post-‘Brexit’ economic ties. Already before the announcement of 19 March 2018, the UK’s Secretary of State for International Trade, Liam Fox, had met with the US Trade Representative Robert Lighthizer on 14 March 2018. The meeting was followed by working group meetings on 21 to 22 March 2018. At the end of March, the UK’s Secretary of State for International Trade and the UK’s Secretary of State of Environment, Food, and Rural Affairs, Michael Gove then met with the Minister for Trade, Tourism, and Investment of Australia, Steven Ciobo, in order to advance the discussion and plan the next steps for the negotiation of a bilateral trade agreement. The UK also continues to look at its options and priorities for further post-‘Brexit’ trade agreements. In a March media interview, Secretary Fox even stated that the UK could be “interested” in joining the Trans-Pacific Partnership (TPP), now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade agreement bringing together Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Viet Nam. At the same time, the UK appears to look beyond traditional trade agreements, as Fox noted that one of the UK’s core objectives was to create a single global services market, bringing together Japan, the UK and the US, which would require “new, creative” approaches.

The negotiations on the various outstanding issues will continue in the weeks and months to come. At the its meeting of 23 March 2018, the European Council formally adopted a document providing the EU’s guidelines for the next rounds of ‘Brexit’ negotiations. In this document, the European Council “calls for intensified efforts on the remaining withdrawal issues as well as issues related to the territorial application of the Withdrawal Agreement, notably as regards Gibraltar, and reiterates that nothing is agreed until everything is agreed”. Indeed, and also with respect to the transition period, the EU’s chief negotiator Michel Barnier underlined that legal certainty, including on the transition period, which forms part of the overall agreement, would “only come with the ratification of the Withdrawal Agreement on both sides”. This must happen before 29 March 2019 to avoid any gap in the EU-UK relationship.

The agreement on the transition period is a significant step in the process leading up to ‘Brexit’. A key aspect of the transition, which bears fundamental importance for trading partners around the world, is the issue of international negotiations being allowed during the transition period. The EU and the UK are hoping to further outline the details of their future trade relationship by October 2018. Therefore, the coming weeks and months will be decisive for future EU-UK trade. According to the agreement on the transition period, the UK may begin negotiations on its own post-‘Brexit’ trade agreements during this timeframe and preparations are reportedly already under way. All trading partners should prepare to begin negotiations with the UK now, so as to allow for the start of formal negotiations from March 2019. All interested stakeholders should prepare and engage with their respective interlocutors in the EU, the UK and in trading partners around the world.

US audit finds that Spain’s raw and processed pork products inspections are equivalent to US requirements

On 27 March 2018, the United States Department of Agriculture’s (hereinafter, USDA) Food Safety and Inspection Service (hereinafter, FSIS) released the report on the audit conducted in Spain from 27 September to 19 October 2017 (hereinafter, the new audit report). The USDA’s onsite equivalence verification audit of Spain’s inspection system for raw and processed pork products confirmed that Spain’s inspection system for raw and processed pork products continues to remain equivalent to that of the US. This is an important result likely maintaining the current degree of trade facilitation and allowing pork exports from Spain to the US to continue to grow.

Spain is the third most important exporter of pork and pork products in the world, with an export value in 2017 of USD 4,073 million, only behind Germany and the US. Of Spain’s total exports, France received pork and pork products worth USD 705 million in 2017, ahead of Japan (USD 458 million in 2017) and China (USD 412 million in 2017). With exports starting in 2007, the US is a relatively new market for Spanish pork and pork products, with exports worth USD 37 million in 2017. In recent years, exports from Spain to the US have significantly increased from an export value of just USD 7.3 million in 2013.

The USDA’s Animal and Plant Health Inspection Service (APHIS) recognises Spain as having a low risk for classical swine fever (i.e., CSF), having a negligible risk for bovine spongiform encephalopathy (i.e., BSE), being free of rinderpest and foot-and-mouth disease (i.e., FMD) with restrictions, and being free of swine vesicular disease (i.e., SVD) with restrictions. In this context “with restrictions” means that the importation of meat and other animal products from Spain into the US is subject to restrictions specified in 9 CFR 94.11. In 2015, a FSIS audit had found that the Spanish Central Competent Authority (hereinafter, CCA) was not adequately verifying that establishments met requirements for ventilation to control contamination. From 1 June 2014 to 31 May 2017, FSIS import inspectors performed a 100% re-inspection of labelling and certification of about 16.7 metric tonnes of slaughtered and processed pork products exported by Spain to the US. Of that amount, additional types of inspections were performed on about 2.1 metric tonnes, of which no product was rejected for food safety or any other reason.

The new audit report describes the outcome of a routine onsite equivalence verification audit conducted by the FSIS from 27 September to 19 October 2017. The purpose of the audit was to determine whether Spain’s food safety system governing slaughtered and processed meat remained equivalent to that of the US, with the ability to export products that are safe, wholesome, unadulterated, and correctly labelled and packaged. Spain currently exports the following categories of raw and further processed pork products to the US: 1) Raw – intact; 2) Raw – not intact; 3) Fully cooked – not shelf stable; 4) Not heat-treated – shelf stable; and 5) Heat-treated – not fully cooked – not shelf stable. The FSIS auditors were accompanied throughout the entire audit by representatives from the CCA and representatives from the regional offices in the Comunidades Autónomas (hereinafter, CAs) of Catalonia, Castilla la Mancha, La Rioja, and Valencia, as well as the local inspection offices.

The audit was undertaken to verify whether Spain’s food safety system was equivalent to the FSIS’s system in regards to specific provisions of US’ laws and regulations, in particular: 1) The Federal Meat Inspection Act (21 United States Code [U.S.C.] 601, et seq.); 2) The Humane Methods of Livestock Slaughter Act (7 U.S.C. 1901, et seq.); and 3) The Food Safety and Inspection Service Regulations for Imported Meat (9 CFR Part 327). The audit standards applied during the review of Spain’s inspection system for slaughtered and processed meat included several pieces of applicable EU legislation originally determined by the FSIS as equivalent during the initial review process, including the following: 1) Regulation (EC) No 178/2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety; 2) Regulation (EC) No. 852/2004 on the hygiene of foodstuffs; Regulation (EC) No. 853/2004 laying down specific hygiene rules for food of animal origin; 3) Regulation (EC) No 854/2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption; 4) Regulation (EC) No 882/2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules; 5) Regulation (EC) No. 2073/2005 on microbiological criteria for foodstuff; 6) Regulation (EC) No. 1/2005 on the protection of animals during transport and related operations; 7) Regulation (EC) No. 1099/2009 on the protection of animals at the time of killing; 8) Directive 96/22/EC concerning the prohibition on the use in stockfarming of certain substances having a hormonal or thyrostatic action and of ß-agonists; and 9) Directive 96/23/EC on measures to monitor certain substances and residues thereof in live animals and animal products.

The FSIS auditors reviewed administrative functions at the CCA headquarters, one CA regional office, and at six local inspection offices. The FSIS auditors evaluated the implementation of control systems to ensure that the national system of inspection, verification, and enforcement is being implemented as intended. Seven of the 24 establishments certified as eligible to export to the US were selected for the audit (as of now, 26 Spanish establishments are authorised). The new audit report explicitly notes that one of the seven establishments (i.e., Pernils LLemena, S.A. located in Sant Aniol de Finestres) “was not audited as planned due to safety concerns for FSIS auditors during a general citizen’s strike resulting from political tensions from the Catalonia independence referendum [which the Spanish Constitutional Court declared illegal]. The establishment cancelled production”. During the visits of the establishments, the FSIS auditors paid particular attention to the extent to which industry and government interacted to control hazards and prevent non-compliances that threaten food safety. The FSIS auditors examined the CCA’s ability to provide oversight through supervisory reviews conducted in accordance with FSIS equivalence requirements for foreign inspection systems. These requirements are outlined in Title 9 of the United States Code of Federal Regulations (9 CFR) Part 327.2. Additionally, the FSIS audited one government microbiological laboratory to verify the CCA’s ability to provide adequate technical support to the inspection system.

In its audit, the FSIS applied a risk-based procedure that included an analysis of Spain’s performance within six equivalence components: 1) Product types and volumes; 2) Frequency of prior audit-related site visits; 3) Point-of-entry (POE) testing results; 4) Specific oversight activities of government offices; 5) Testing capacities of laboratories; and 6) Analysis of data collected by FSIS over a three-year period, in addition to information obtained directly from the CCA. The audit focused on the following six components, upon which system equivalence is based: 1) Government oversight (e.g., organisation and administration); 2) Government statutory authority and food safety and other consumer protection regulations (e.g., inspection system operation, product standards and labelling, and humane handling); 3) Government sanitation; 4) Government hazard analysis and critical control points (i.e., HACCP) System; 5) Government chemical residue testing programs; and 6) Government microbiological testing programs.

In conclusion, an analysis of each equivalency component did not identify any deficiencies that represented an immediate threat to public health. Inter alia, within component 1, the FSIS auditors verified that Spain ensures source meat products, used in processing operations, to originate only from establishments certified to export to the US in accordance with Regulation (EC) No 178/2002 and the Ministry Order of April 4, 1995, Technical-Sanitary Conditions and Conditions of Authorization Applicable to Establishments of Meat and Meat Products for Export to the United States of America. Official controls are carried out in the country of origin of the raw materials, as there is no border control between EU Member States. Spain is not importing raw materials from countries outside of the EU.

Within component 2 (i.e., Government Statutory Authority and Food Safety and Other Consumer Protection Regulations), the FSIS auditors identified the following deficiency: “However, during two establishment visits, the FSIS auditors identified that the Central Competent Authority (CCA) did not adequately verify that establishments met government sanitation requirements that ensure ventilation is sufficient to control condensation in order to protect product and prevent the creation of insanitary conditions. The same finding was noted during the 2015 FSIS audit. The CCA’s verification efforts did not ensure that the establishments’ corrective actions were effective at controlling condensation to prevent recurrence of noncompliance”. This finding was the main deficiency of Spain’s meat inspection system.

The fourth of six equivalence components that the FSIS auditors reviewed was the Government Hazard Analysis and Critical Control Points (i.e., HACCP) System. The inspection system is supposed to require that each official establishment develop, implement, and maintain a HACCP system. In this regard, the new audit report notes that the CCA adopted FSIS requirements consistent with 9 CFR Part 417 for the implementation of the HACCP. The CCA, through the Questionnaire for the Authorization for Fresh Meat and/or Meat Products for the United States of America, outlines required legislation for HACCP requiring establishments exporting to the US to develop, implement, and maintain HACCP programs The new audit report notes that the FSIS determined that the HACCP program, as described, is consistent with the criteria established for this component. The new audit report also determines that the microbiological testing program, as described, is consistent with the criteria established for the sixth equivalency component. In conclusion, the FSIS auditors verified that Spain’s meat inspection system is organised and administered by the national government in a way to ensure that meat products destined for export to the US are unadulterated, safe, and wholesome, in accordance with US requirements.

The new audit report states that, during the audit’s closing meeting, Spain’s CCA committed to begin addressing the preliminary findings as presented. The FSIS will evaluate the adequacy of the CCA’s documentation of proposed corrective actions. In its reply to the US authorities of 23 March 2018, Spain notes that, “After this meeting, in December 2017 an instruction to reinforce the ventilation controls was sent to the regional authorities in order to review the ventilation conditions in the 24 authorized establishments. This action has already been implemented and we have specific information on how each company is strengthening its controls to detect and eliminate condensation. With this measure and with the controls scheduled for 2018, a follow-up will be executed to check how ventilation conditions improve in all authorized establishments”. The reply also provides information on the corrective actions taken in some of the visited establishments.

The recent US audit report is very similar to reports of audits performed by EU officials from the Commission’s DG SANTE ‘Directorate F – Health and Food Audits and Analysis’ (formerly known as the EU’s Food and Veterinary Office, FVO) in third countries on the performance of control authorities regarding products destined for the EU. There is an important difference: operators and companies visited during the US audit are named (and eventually “shamed”) by US authorities, while EU audit reports refer to them anonymously. Either way, the audits, as well as the underlying concepts of mutual recognition, conformity assessment and the establishment of equivalence of domestic requirements, are important elements of trade facilitation which should be bilaterally pursued and enhanced.