VZCZCXRO1586
RR RUEHCN RUEHVC
DE RUEHGH #0620/01 2620714
ZNR UUUUU ZZH
R 190714Z SEP 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6273
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHGP/AMEMBASSY SINGAPORE 0086
RUEHKO/AMEMBASSY TOKYO 0208
RUEHUL/AMEMBASSY SEOUL 0125
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHDC 0170
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6755

UNCLAS SECTION 01 OF 03 SHANGHAI 000620 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR H AND EAP/CM 
STATE PASS FEDERAL RESERVE BOARD FOR JOHNSON/SCHINDLER 
SAN FRANCISCO FRB FOR CURRAN/LUNG 
NEW YORK FRB FOR DAGES/CLARK 
STATE PASS CEA FOR BLOCK 
STATE PASS USTR FOR STRATFORD/WINTER/MCCARTIN/ALTBACH/READE 
USDOC FOR 4420 
USDOC FOR ITA/MAC DAS KASOFF, MELCHER AND MCQUEEN 
TREASURY FOR EXEC - TSMITH, OASIA/ISA -DOHNER/BAKER/CUSHMAN 
TREASURY FOR WRIGHT AND AMB HOLMER 
NSC FOR MCCORMICK AND TONG 
 
E.O. 12958: N/A 
TAGS: OREP ECON PREL ETRD CH
SUBJECT: NODEL LARSEN DISCUSSES FOOD SAFETY IN SHANGHAI 
 
 
SHANGHAI 00000620  001.2 OF 003 
 
 
(U) This cable is sensitive but unclassified and for official 
use only.  Not for distribution outside of USG channels or via 
the internet. 
 
¶1. (SBU) Summary.  Shanghai-based U.S. businessmen told visiting 
Congressmen Rick Larsen (D-WA) and Mark Kirk (R-IL) that 
concerns about China's food and product safety were 
"legitimate."  While China's laws and regulations were adequate, 
the inability of the Central Government to implement these laws 
created dangers for both U.S. and Chinese consumers.  U.S. 
businesses were also concerned that Chinese retaliatory measures 
on imports from the United States would prove problematic for 
their companies.  China's newly passed Anti-Monopoly Law was not 
targeted at U.S. businesses in China, according to Chinese 
officials.  End summary. 
 
¶2. (SBU) Representatives Rick Larsen and Mark Kirk met with 
Shanghai political leaders, U.S. business representatives, and 
held a press conference with Chinese press during their August 
31-September 1 non-official visit.  Larsen and Kirk are 
co-founders of the bi-partisan "U.S.-China Working Group" in the 
House of Representatives.  The Members were accompanied by Rep. 
Larsen's Senior Legislative Aide Louis Lauter, Rep. Kirk's Chief 
of Staff Lester Munson, Johns Hopkins School of Advanced 
International Studies Professor David Lampton, and National 
Defense University Professor Phillip Saunders.  The NODEL was 
sponsored by the National Committee on United States-China 
Relations.  The major themes of their discussions centered on 
China's efforts to address its food and product safety concerns 
and the impact of China's recently implemented anti-monopoly law. 
 
--------------------------------------------- -- 
Food And Product Safety Concerns Are Legitimate 
--------------------------------------------- -- 
 
¶3. (SBU) The NODEL met with Emerge Logistics Managing Director 
Jeffrey Bernstein, B&L Group President Phil Branham, ALC 
Advisors CEO Dale Colling, Cargill Investment President Norwell 
Coquillard, Asia Media Managing Director Wm Patrick Cranley, 
Hewitt Associates Consulting Regional Director (and Amcham 
Chairman) Eric Fiedler, Baker & McKenzie Partner John Grobowski, 
DE Global Managing Director Edward Gwinn, Charles Mo & Company 
Principal Charles Mo, and Weyerhaeuser China Shanghai 
Representative Office General Manager Zhang Renren at a meeting 
sponsored by the American Chamber of Commerce on September 1. 
In their opening comments, the Representatives noted their 
interest in steps that can be taken to protect the American 
consumer from unsafe imported products. 
 
¶4. (SBU) ALC Advisors' Colling said that U.S. concerns over the 
safety of food produced in China were legitimate concerns, not 
only for the U.S. consumer, but also domestic Chinese consumers. 
 He said that when he had visited a turkey jerky plant in July, 
he had been so horrified at the sanitation issues at the plant 
that he had refused to enter the premises.  Quality control and 
enforcement of standards was something that the Chinese would 
need to address in order to maintain the competitiveness of 
their exports, he said. 
 
¶5. (SBU) Cargill's Coquillard said that he spent a great deal of 
time meeting with General Administration of Quality Supervision, 
Inspection and Quarantine (AQSIQ).  He was concerned about 
politically-motivated retaliation against U.S. exports to China. 
 AQSIQ had "locked a couple of silos" due to perceived problems 
with food products from the United States, including Chinese 
complaints about "noxious weeds in American soybeans."  Cargill 
was "very concerned" about possible disruptions to their supply 
chain here in China that would be caused if the AQSIQ insisted 
on inspecting every shipment that arrived here.  To address this 
concern, Cargill was working to negotiate a "certified supplier" 
status, he said. 
 
SHANGHAI 00000620  002.2 OF 003 
 
 
 
¶6. (SBU) Emerge Logistics' Bernstein said the problems with 
China's food and product safety were not caused by poor laws and 
regulation, but rather by China's inability to implement its own 
laws.  Implementing and enforcing its laws would be very costly 
for the Chinese government and required addressing issues of 
corruption.  He noted that many Chinese factories had been 
designated as "self inspecting work groups" in the past as a 
result of bribes to Chinese officials. 
 
¶7. (SBU) Bernstein also noted that AQSIQ has not been a lead 
agency dealing with the United States over trade issues.  AQSIQ 
has never felt any pressure from the Chinese government to act 
in a positive manner to address trade deficit or cost to 
supplier issues.  As such, it has "always felt free to take 
potshots at the U.S. companies because it never had to deal with 
any political fallout."   Now, however, AQSIQ has come under 
increased domestic and international scrutiny. 
 
¶8. (SBU) Asia Media's Cranley said that a U.S. approach that 
engaged the Chinese government and "put the onus on U.S. 
companies to enforce their own specifications," would find 
traction within the Chinese government.  He favored a solution 
that placed equal burden on all parties in the production chain 
-- the manufacturer, the shipper, and the retailer. 
 
--------------------------------------------- ------- 
Anti-Monopoly Law Does Not Target American Companies 
--------------------------------------------- ------- 
 
¶9. (SBU) In a meeting on September 1, Minhang Party Secretary 
Sun Chao told the Members that the newly-passed Anti-Monopoly 
Law (AML) was "a very good law" and was necessary to regulate 
market order.  He emphasized that this law was not designed to 
address issues within China stemming from its history of 
state-owned enterprises.  The goal of the AML was to protect 
consumer rights. 
 
¶10. (SBU) U.S. anti-monopoly laws and the new Chinese law "share 
the same spirit."  Since U.S. companies abide by U.S. laws in 
the United States, Sun anticipated that they would not run into 
any problems with the new law in China.  "American companies 
don't need to worry about this.  It is not targeting U.S. 
companies," he said. 
 
¶11. (SBU) Sun was confident that Shanghai's development would 
continue to be increasingly market-oriented.  While there was 
still room for future reforms, Sun said that Shanghai would 
maintain its role leading China towards further reform and 
opening-up. 
 
¶12. (SBU) Sun said that Shanghai government officials are very 
concerned about maintaining the integrity of its food supply and 
export products.  Any "complaining" about food-safety problems 
is "healthy" since it helps the government solve the problem. 
He had visited a local farm just two days previously where he 
had been briefed on food safety efforts. 
 
¶13. (SBU) Sun also noted that poor-quality Chinese products 
affect the marketability of all "Made in China" goods.  It is 
the Chinese consumers, however, who bear the brunt of 
product-safety problems since they are much closer to the source 
and have fewer choices. 
 
¶14. (SBU) Sun attributed the food and product safety problems 
that China is experiencing to the "very fast development" of 
China's market economy.  The government's ability to monitor and 
implement regulations has been unable to keep up with the pace 
of this development.  There are structural limits on government 
as well, he said.  He said that when he had transferred from his 
position as mayor of the more urban Xuhui District in Shanghai 
 
SHANGHAI 00000620  003.2 OF 003 
 
 
to his current post as Party Secretary of Minhang District, he 
had discovered that "the way of governing between these two 
adjoining areas in Shanghai was totally different."  While "we 
speak the same language and are implementing the same 
regulations," there were "big differences" between the two 
districts. 
 
--------------------------- 
Meeting with MPC Zhou Muyao 
--------------------------- 
 
¶15. (SBU) The Members met with Shanghai Municipal Peoples 
Congress (SHMPC) Vice Chairman Zhou Muyao on September 1. 
Representative Kirk expressed his appreciation for the strong 
"sister-city" relationship between Chicago and Shanghai.  He 
noted that Chicago Mayor Daley would be leading a delegation to 
Shanghai in October. 
 
¶16. (SBU) Representative Kirk said that Shanghai's role as 
China's leading financial center meant that it had a role in 
advocating for the greater opening up of China's financial 
service sector to foreign competition, particularly in regard to 
giving foreign banks more access.  Zhou agreed, and said that 
while "overall foreign policy is determined by the Central 
Government, Shanghai has played an effective role in 
communicating its concerns." 
 
¶17. (SBU) In response to a question from Professor Lampton on 
the SHMPC's use of the internet, Zhou said that the SHMPC uses 
its official website to communicate directly with Shanghai 
citizens.  All meeting documents produced by the SHMPC are 
posted on the website, he said.  Shanghai citizens also use the 
official website to engage in direct dialogue with the SHMPC. 
(Note: In the earlier meeting with Minhang Party Secretary Sun 
Chao, Sun said that he spends up to four hours every day reading 
and responding directly to emails sent by his constituents 
expressing their concerns.  End note.) 
 
¶18. (U) The delegation cleared this report. 
JARRETT