Taiwan President Tsai Ing-wen has recently proposed the lifting of
import restrictions on American pork products into Taiwan.
The decision has become immensely controversial in Taiwan here.
And it has sadly become a partisan issue. Which means that people aren’t going to
look at the merits of the decision itself but instead its politics.
In this video I am going to review the geopolitics and economics of the big deal of pork in Taiwan.
On August 28, 2020, Tsai Ing-wen announced
at a press conference that Taiwan would lift bans on two things:
First, beef from cattle more than 30 months old. This has more tied to mad cow disease fears.
Mad cow disease is less of a thing in the US, so it’s been generally out of the news.
US pork containing ractopamine, a livestock additive. This leanness-enhancing drug would
be allowed in trace amounts. The amount is in line with the Minimum Residue Levels set
by Codex Alimentarius Commission in 2012 (more on this later)
* 10 parts per billion in pork and beef meat
* 40 parts per billion in livers * 90 parts per billion in kidneys
Ractopamine has been banned from Taiwan’s domestic hog industry
(in line with China’s). This ban continues on as before.
Per the Cabinet-level Council of Agriculture, the meat ban would be lifted on Jan 1, 2021.
To support the domestic industry, the administration would take efforts to
label and subsidize domestic pork products - an industrial fund of $340 million was announced.
Okay let’s get the hard stuff out of the way first. Let’s talk about the “science”.
Ractopamine (I am going to call it RAC for pronunciation sake)
is what the majority of the press and industry has focused on.
Note that ractopamine has been allowed in Taiwanese beef imports since 2012.
But Chinese and Taiwanese people eat a lot more pork than beef.
And that includes organs such as intestines, kidneys and the like.
Why do pork farmers use it? Because it helps pigs gain more weight without more fat and it makes
them more money. RAC is fed to pigs in the last 28 days of their lives. When added to feedstocks,
it binds to beta receptors in muscle cell membranes which then increases muscle fiber size.
Such pigs produce 10% more meat which adds some $2 or more of profit per pig.
This effect has been widely researched over the past 30 years. The United States FDA
approved it for use in swine in 1999. The US limit is some 50 parts per billion in cuts like beef
and pork chops. Later the drug was approved for cows and turkeys too.
Some 25+ other countries such as Brazil, Canada, Japan, Australia, Mexico,
and New Zealand amongst others also allow it for their domestic pig/cattle industries.
RAC is banned for use in domestic pork industries in 160 other countries
including the European Union and Russia.
One of the major issues related to this ban is in how RAC is fed to pigs shortly before their
slaughter. Other leanness drugs require a 2 week clearing period before slaughter.
But since some 85% of RAC is excreted with very low level of tissue residues,
waiting 2 weeks would invalidate the point of using it in the first place.
Thus, it can be that people ingesting pork meat with this leanness drug may exhibit some of its
effects, which seems to act like a stimulant of some sort. It is not shown to be a carcinogen.
The international politics of food safety standards are messy.
When people say that RAC is internationally accepted, this is what it means.
July 5, 2012. The Codex Alimentarius Commission, which was created by the WHO and FAO in 1963 to
develop food standards and guidelines, voted very narrowly to adopt Minimum Residue Levels of RAC.
This decision, made by a really obscure panel most have never heard of,
is frequently cited on both sides as a reason for and against RAC usage.
I am going to briefly review the political wrangling involved with this decision.
The commission established an expert committee which reviewed RAC’s toxicology, residues
and intakes in 1993, 2004, 2006, and 2010.
In 2004, it came up with the Minimum Residue Levels (MRLs) of the 10 parts per billion
that President Tsai is right now recommending - and which is far below the American FDA approved
level (which to remind you was 50 parts). In 2010, it reviewed the data again but for pig organs like
liver, kidneys and fat in direct response to Chinese concerns about high consumption.
The 2010 review again found the 2004 MRLs to be compliant.
The EU’s European Food Safety Authority in 2009 criticized the Codex’s studies and the
2004 MRLs. Most Wikipedia artists will leave it at that - which I feel paints a biased image.
Here is what the EFSA actually opined.
The ESFA was not asked to produce its own study on RAC’s safety. It was asked
to make an Opinion on the Codex Commission’s sub-committee’s
science study. The EFSA opined that it cannot determine a Minimum Residue Level.
Not that RAC is unsafe or toxic or that the evil American pork industry is influencing the science.
The EFSA made this opinion because of a component of the Codex Committee’s
study - a sub-study on the drug’s effects on human cardiovascular health.
This component assumed that most people would eat some 0-1 micrograms of pork per kilogram
of body weight per day, the Acceptable Daily Intake or ADI. According to the EFSA,
ADI should not be assumed to be those levels because there is a subset of the population
with substantially higher cardiovascular risk and they might be negatively affected when
eating these muscular stimulants. It requested a bigger study with more human study subjects.
It is on this basis that the European Union continued to ban RAC
after the Codex’s eventual decision.
So thus 2012, the Codex voted 69 to 67 (with 7 abstentions) to approve the MRLs. Why?
The 26 countries already using RAC pointed out that it had been used for many years
without noticeable reported ill effects. And no scientific consensus has come up in the years
since when the original 2004 MRLs were proposed to overturn them.
Of course, there were huge dissents on that. But what everyone could agree on
was that the proper procedures as set out by the Codex’s laws
had been patiently followed. Thus, it needed to be approved.
So thus it was by that incredibly tight vote. And you can think about what that means for you.
Beyond its effects in humans, there are some animal welfare concerns as well.
RAC’s use seems to affect the pigs themselves. A 2003 study funded by the USDA found that pigs fed
RAC beyond their fourth week tend to have elevated heart rates and increased stress
levels. It made them more aggressive and could lead to potential injury. This was also taken
into account by the Codex in its approval of MRLs of the drug - which is a recorded first.
Taiwan’s exports-related electronics economy has been humming. A surge in
demand from the work-from-home economy has driven
demand for their semiconductors, electronics hardware, and accessories.
August 2020 exports totaled $45.5 billion,
up for the sixth consecutive month and over 13.6% year over year.
The United States is Taiwan’s second largest trading partner after China/Hong
Kong. Two-way trade between the two areas in 2018 totaled $94 billion,
half the size of trade between Taiwan and China.
The US has seen the Taiwanese ban on pork/beef products
as a significant barrier to better trade relations.
This is per the Office of US Trade Representative’s 2018
Trade Policy Agenda. It was repeated in the 2019 Agenda as well:
``` The United States continues to express
serious concerns about Taiwan’s agricultural policies that are not based upon science.
Priorities for the United States include removing Taiwan’s bans on U.S. pork products
and certain U.S. beef products produced using ractopamine and removing other barriers to U.S.
beef offal products. ```
So yes, this is a real barrier to establishing better trade relations between Taiwan and the US.
Considering how strong Taiwan’s electronics and hardware industry already was though, I
wondered what a US-Taiwan trade agreement would be focusing on.
More laptops? Heavy industrial equipment. Could be. Nothing is off the table.
But let’s put on our tinfoil hats and talk some speculation.
Per the US Trade Report, it appears that the talks between the US and Taiwan authorities
were not centered on semiconductors, gaming accessories and laptops
but instead mostly medical devices and pharmaceuticals (and copyright things on IP).
Taiwan exported some $680 million of items classified as medical devices in 2019. The US
has the world’s largest import market for medical instruments worth some $25 billion in 2018.
Opening up America’s titanic healthcare market to Taiwan’s medical instruments industry
would be a huge boon for an administration looking to beef up that part of its economy.
And then as for pharmaceuticals - this is a bit more murky and I am just drawing lines
between news items. So mark this with a especially big speculation alert.
Starting in 2013 and continuing into 2016, China and Taiwan
attempted to achieve regulatory convergence in the approval of pharmaceutical drugs.
This would have supercharged Taiwan’s pharmaceutical industry as it would have
meant that drugs approved by Taiwan’s version of the FDA could also be automatically sold
into China’s immense market without needing to go through the approval process all over again.
But things changed after the DPP took power and it appears that the pathway to regulatory convergence
has fallen through. Replacing the Chinese pharma market with the American pharma market would help
Taiwan’s pharmaceutical industry. But my reading of the trade report makes me less sure of this.
There are still substantial copyright issues that need to be overcome first.
Okay, end of crazy speculation section.
Ah, and one last thing. This is not a move by Taiwan to help Trump’s standing with
rural voters in the US. The ban won’t be lifted until after the election.
President Tsai and her DPP party won comprehensive victories in the 2020 Taiwanese elections.
Taiwan’s economy has managed to avoid a crippling recession in 2020.
Part of this is due to the greater number of exports as mentioned earlier. Another part of
this can also be tied to the bureaucracy’s effectiveness in managing the pandemic.
These two things have bought Tsai a substantial amount of economic
and political capital. And it looks like she intends to spend it.
And boy oh boy, this decision is going to bring her some heat.
First, there is the issue of the political opposition. In 2012 when the Codex first issued
its decision, the DPP was not in power - the KMT was. The KMT’s decision to let in beef with RAC
had caused protests. The DPP led the way in criticizing the administration
for doing so. So yes, her administration is going to look like hypocrites now.
Secondly, there is the economic issue. When poorly done,
globalization can accelerate the hollowing out of an economy and encourage brain drain. More
competitive foreign products in a domestic market can snuff out jobs for people who need them.
Taiwan is no longer an economy heavily reliant on exporting agricultural products.
Food stuffs do not even appear in the top ten and are less than 2% of total exports.
However, its domestic agricultural industry is critical for national security reasons. Hong
Kong independence was and is impossible for so many different reasons - but chief amongst others
is the fact that its water and food supply always depended on friendly relations with the mainland.
In addition, Taiwan’s economy is distributed unequally.
Many of the top performing electronics manufacturers are in the island’s North and West.
The economies of Taiwan’s more rural south and east are more agricultural and tourist
based. These are some of Taiwan’s rust belt areas and they need the jobs.
The government is going to establish an industry fund
to help the domestic pork industry - which right now supplies some 90%
of the Taiwan market. And at the same time, it is unveiling a series of measures and cute designs
to make it clear to consumers when they are buying Taiwanese pork products.
So that is good, but more competition is naturally going to hit the industry
and there will be consequences. It appears that the DPP is going to lean
on its electoral advantages in the South to maintain power throughout these challenges.
This is a long and complicated video with twists and turns. We tried to analyze as objectively as
possible the risks and the benefits of this move as well as its costs.
In the end, it looks like Tsai looked hard at the current situation and decided that
this move would achieve multiple benefits on multiple levels. Let’s see if it works.
Alright I am done with this. I am going to go eat some pork rice.