Astonishing Notice

Folks:

Rather alarming this notice (see the date)...then read the two after it.


News 03/13/1989

Chilean Grapes

P89-11 Food and Drug Administration
FOR IMMEDIATE RELEASE Bill Grigg - (301) 443-3285

The Food and Drug Administration said today it has found and confirmed
traces of cyanide in a small sample of seedless red grapes from Chile and, as
a result, is detaining all grapes and other fruit from that country and is
urging that they be withdrawn from the U.S. market.

Consumers are being advised to check the source of any fresh, non-citrus
fruit and not to eat any Chilean fruit they have on hand. ...
Chilean-originated fruit sold in the United States at this time of year are
peaches, blueberries, blackberries, seedless watermelon, cantaloupes, Juan
Canary and honeydew melons, raspberries, nectarines, quince, Granny Smith
green apples, cactus pears, pears and plums. While no cyanide has been
detected in any of this fruit, as a precaution consumers are advised to avoid
any fruit from Chile at this time.

The low levels of cyanide in the grapes were detected and confirmed by
laboratory tests in two punctured grapes spotted among hundreds of crates of
grapes inspected at the port in Philadelphia. The two grapes were also
discolored, with a ring of crystaline material around the puncture area. A
third grape adjacent on the bunch was slashed, but cyanide could not be
detected in it. ... FDA said that since potassium or sodium cyanide converts
to
hydrogen cyanide in acid fruit and then can dissipate, scientists could not
determine how much of the poison was originally introduced.

"This may be an isolated incident," FDA Commissioner Frank E. Young, M.D.,
Ph.D., said, "but we can hardly take that chance."

HHS Secretary Louis W. Sullivan, M.D., said, "We regret any adverse effect
this action may have on the Chilean fruit industry and the people of Chile."

***
Amazing. The inspectors went straight to the 3 poisoned grapes. None other
in the entire could be found.

***

Chilean fruit embargo of 1989

The U.S. Food and Drug Administration (FDA) embargoed 2 million crates of
Chilean grapes for 11 days in overreaction to questionable test data
concerning low levels of
cyanide in two grapes. Over 20,000 Chilean workers lost their jobs, and the
U.S. was sued for $330 million as a result.

The killer grapes terrorized American consumers, swept tons of fruit off
supermarket shelves, and severely damaged the Chilean economy. First
perceived as an averted
tragedy and then as an overreaction by the FDA, it now appears that the
Chilean Grape Scare of 1989 was a farce. The fruit producers claim that the
suspect grapes were most
likely contaminated not by terrorists in Chile, as the FDA first implied, but
by the FDA itself.

On March 2, 1989, an anonymous caller to the U.S. Embassy in Santiago warned
that fruit headed for the United States had been injected with cyanide as an
act of protest
against the Pinochet regime. The call was repeated on March 8. Three days
later the FDA spotted three suspicious-looking grapes on the docks at
Philadelphia, in a shipment
that had just arrived from Chile. Two of the grapes had puncture marks
surrounded by concentric white rings; the third grape was slashed.

The fruit was rushed to the FDA's Philadelphia laboratory, where the two
punctured grapes were tested and found to contain cyanide. The FDA impounded
2 million crates at
airports and docks across the country and warned consumers not to eat any
fruit from Chile, which included most of the peaches, blueberries,
blackberries, melons, green
apples, pears, and plums that were on the market at the time.

If the two suspected grapes had been injected with cyanide, the surrounding
grapes in the bunch and the box itself would likely show traces of the
poison. Using the same
tests as did the chemists in Philadelphia, not a trace of cyanide
contamination was found in the grapes or on anything else.

The obvious next step was to retest the Philadelphia sample. However, as the
Chileans reveal in their suit, the Philadelphia sample had been destroyed. In
violation of both the
Code of Federal Regulations and the FDA Regulatory Procedures Manual, which
require that part of any original sample be set aside for just such a
situation, the Philadelphia
lab had used sodium hydroxide to neutralize the grape sample, instead of
liquid nitrogen. Sodium hydroxide rendered the sample useless for further
tests.

Noting that the anonymous caller had specifically said the fruit would be
"injected" with cyanide, the FDA had attempted to poison some grapes of their
own, according to
documents filed with the court. Lab studies had shown that the internal
pressure of the fruit pulp in grapes would force virtually all of the cyanide
injected back out onto the
surface of the grape. This would turn the grape black, hardly an effective
poisoning technique.

The box containing the suspect grapes had been loaded aboard the Almaria Star
in a position that was inaccessible during the entire voyage. If the grapes
had not been
poisoned in Chile, and could not have been reached aboard ship, then they had
to have been contaminated in Philadelphia while under FDA control.

However, in spite of the overwhelming evidence that the fruit posed no
danger, the FDA announced the embargo. National television urged consumers to
throw away the fruit
they had on hand and instructed grocers to pull it from their shelves. The
agency declined to be interviewed for this story, but the answer may be
relatively simple: the FDA
panicked.


****

In the late 1980's, USA trade negotiators were not pleased with Chile, and
their independent ways. The Chilean economy was booming.

***
US DEPARTMENT OF STATE
DAILY PRESS BRIEFING
Wednesday, February 2, 1994

Q A brief question on Latin America. Yesterday, there was a (inaudible)
meeting between the two group negotiations from the U.S. and Chile to settle
the case of the poison
grapes. I understand the negotiations are pretty close to being closed.

I would like to know what kind of compensation is planning for the U.S. to
give to Chile? And if that kind of compensation in any degree assess any kind
of responsibility
from the U.S. Government in the case?

MR. McCURRY: I am a total blank slate on that question, so I'll have to check
further and see if we can find something out. I follow a lot of things but I
have not followed that
issue. We'll try to find some more and we'll take the question and see if we
can prepare some answer for you.

***
End of story.

John Spiers

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301 Alert List

Folks,

As a part of this class, you will learn to get "tied in" to the information
flow about your product, especially if politics threatens your livelihood.

The U.S. Department of Commerce provides something called a 301ALERT-L
(the e-mail component of its 301alert service), which delivers timely
alerts
concerning Retaliatory Actions under Section 301 of the 1974 Trade Act
(USA).

Read all about it at

http://www.ita.doc.gov/td/industry/otea/301alert/

and then I recommend you join the email list.

John Spiers

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Most Important vs. Most Difficult

Folks,

The reason I teach on the side is because teaching is the fastest way to
understand a topic, and occasionally the parts will fall together and become
clear to me. Let me offer this note on a point that has come together for me
recently...

The most important thing is the customer in this business and any business
and this is a point I've already made. Of course, no product (or service),
then no customer. So coming up with the right product is critical.

What I teach is to grow a business from a problem you experience, and offer a
solution that will please your customers. This is sound in theory and in
experience, and in what we see historically in businesses we see that thrive.
So far so good.

Here is the rub: those who come to the class with a product in mind, or a
resource like a contact overseas, or a desire that focusses on a resource and
not on a customer tend to run into problem not in finding a product, which is
rather simple in such instances, but finding a customer.

So let me refine my arguments a step further today: The easier it is to find
your product, the harder it is to find a customer. I am afraid this is one
of those revelations that is so obvious that it is embarrassing to admit I
just realized it. I dare say I knew this before, it was just
"pre-articulate"...that is I never had put it so pithily before.

Let me elucidate with an exaggeration. Toblerone chocolate is a brand
familiar world-wide. Surely you can find a customer anytime and anywhere.
And you can get it easy enough, if not directly from the factory, then
certainly from one of the multitudinous distributors. Now comes time to find
a customer in the USA. Since Toblerone is so easy to come by, competing on
price is required, or narrow margins. And with narrow margins, volume is
required. Now the product was easy to find, but we have to find a customer
who will trust us to handle a very big load of chocolate. Proper finance,
logistics, handling, etc. must be organized and the product delivered on
time, normally within a 24 hour "delivery window." Who will trust us with
such a deal? And as we have seen, forget WalMart.

Or how about the business that proposes to sell native handicrafts, the idea
that one might visit a country, buy up samples of various items, bring them
back to sell at a trade show? Will this work. Sadly no, even if you try to
charge a nice premium price on your items. The reason is that the items are
rather easy to find, and therefore you are probably the 10,000th person in
the last 25 years to bring those exact items to a trade show, and becoming
disenchanted as nothing sells, or sell so little as to never cover the costs
of the trade show booth, etc. you quit.

Now I dont expect people who are excited about the idea they presently have
in mind to be persuaded by me. Indeed, I think I am a terrible judge of what
sells, hence my complete dependence on the retailers themselves. And since
none of them claims to have any idea of what sells either, we all depend on
their ability to take small test orders to get us precise feedback from the
ultimate consumer.

So again, don't trust me. No matter what your plan, idea, hopes prayers, at
some point you must speak to a customer. You are free to do this first,
instead of last. Certainly the earlier you speak to a customer the better.
The customer will dispel all nonsense instantly. They will tell you. No
charge. if your product solves a problem and provides a benefit not
otherwise available, then the conversation with the retailer will be easy.
If it has been done before, or serves no particular purpose, you may find the
conversation harder.

My goal in this class is to get you to the point faster than you otherwise
would. A thriving company is the point. I offer this to that end. I also
invite critique, challenges, disagreements, etc on this point, especially
since it is newly presented and untested by peer review.

And keep in mind, the means I advocate are far more fun, faster, easier and
profitable than those I challenge in my arguments.

john Spiers

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Re: Economics of "Dumping"

In a message dated 11/6/00 6:51:15 AM, yibin.xiang@biodiv.org writes:

<< Dumping is often related to governmental or business strategies.

***Exactlty!***

I do not

think Chinese farmers would even think of dumping american farmers.

***I agree again...Chinese business people are too smart for that when they
are free, and the products they would grow if they were free to do so would
be superior to what they grow now, and command a superior price.***

They

actaully feel quite weak. My general impression is that anti-dumping

measures would benefit poor countries more than developed countries.

***No, never, as you said dumping is related to government strategies. If
dumping is real, then USA is the #1 dumper, and it is based in strategies put
into law as the Perishable Agricultural Commodities Act of 1933. 1933!!!
this is here to stay, and any anti-dumping law that americans do not like
they will simply ignore.***

The

price in poor countries is so low that they do not even need to lower the

price in order to gain access to American and European markets.

***correct again***

In

addition, they do not have necessary capacity to pursue dumping strategies.

***But governments do by moving others people money over to the farmers, as
we do in the USA***


However, developed countries have overall much high price, and they need to

reduce their price in order to feed poor people.

*** Whenever, and wherever the USA has offered cheap food (subsidized by usa
taxpayers) to a country, within a few years famine follows. Cheap food ruins
the domestic systems of socialist economies. We have a higher overall price
of food because we throw away about 40% of the food we produce...this is
perfectly fine nutritious food, but to keep the prices high, we destroy
massive amounts (which we could avoid growing in the first place if our
agriculture was not socilaized.)

Of course, they have all

means to expand their capacity to dominate the markets of poor people. I

wish I were wrong in this respect. >>

*** And poor countries have the perfect defense. Free markets. Allow the
cheap USA subsidized goods in, sell to highest bidder, who will end up
selling the goods back on the USA market. This is precisely the crisis the
pharmaceutical companiesa are facing in the USA, with the relatively more
free pharmaceutical industry in Mexico selling USA made medicines that were
exported on subsidies overseas (and "dumped") are being resold to consumers
in the USA. Charles Dow did the same thing in the 1910's when the Germans
tried to dump bromide on the USA market to destroy his business. He simply
bought up the cheap german bromide and exported it around the world from the
usa. He became quite wealthy, and the germans lost a tremendous amount of
wealth. Dow chemical is his company. Freedom to trade is the key.

John Spiers



Mon Nov 6, 2000 9:22 am

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wileyccc@aol.com
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Ban Author

In the first years I were in North America, I spent a lot of time reading
China-related reports. Now I simply quited.

Your message raised an interesting issue on China's price system. Although
we strived to set up a free price system for years, price system there is
still not fully free. You must ask why? The first step in China's price
reform was to free industrial goods, which took place in middle 1980s. Then
came agricultural goods. As in all western countries, China has been
subsidizing agriculture. China used to subsidize agricultural inputs. As a
result, Chinese agricultural prices tended to low and governmental
expenditure tended to be very high. Based on the suggestions from World
Bank and of course many american economists, China reformed the system and
privides agricultural subsidies at the end of the pipe: farmers pay full
price on whatever they have to and at the end of day, government helps to
cover the loss.

Your question therefore is more related to price system than to dumping.
Since consumers and farmers receive subsidies not through the price system
but through direct grants, the production cost often comes out higher than
demostic market price. So far, this system does not cause much domestic
problem. However, it seems to cause misunderstanding internationally as in
the case you cited.

The whole price system in China is still under reform. After so many years
in price control, this can not be done overnight. Fortunately, Chinese
government is strongly commited to pursuing this. Your question and USA
reactions would actualy prompt even earlier actions. I believe they have to
assess the whole system in order to resolve the problem: it is not a minor
one.

Dumping is often related to governmental or business strategies. I do not
think Chinese farmers would even think of dumping american farmers. They
actaully feel quite weak. My general impression is that anti-dumping
measures would benefit poor countries more than developed countries. The
price in poor countries is so low that they do not even need to lower the
price in order to gain access to American and European markets. In
addition, they do not have necessary capacity to pursue dumping strategies.
However, developed countries have overall much high price, and they need to
reduce their price in order to feed poor people. Of course, they have all
means to expand their capacity to dominate the markets of poor people. I
wish I were wrong in this respect.


-----Original Message-----
From: WileyCCC@aol.com [mailto:WileyCCC@aol.com]
Sent: Friday, November 03, 2000 11:05 AM
To: yibin.xiang@biodiv.org
Subject: Re: RE: [tradeforum] Economics of "Dumping"



In a message dated 11/3/00 7:14:58 AM, yibin.xiang@biodiv.org writes:

<< What I intended to argue is that dumping is

a bad practice. >>

I agree completely...I use in my class on the topic of becoming an importer,

a recent news article, and intersperse my comments (noted with * * and
here
is what I am teaching my students...:

Panel Finds Juice Imports Hurt U.S.

WASHINGTON -- The International Trade Commission ruled Monday that apple
juice concentrate imports from China are harming U.S. producers
economically.

*Please understand to earn such a ruling you need only assert there is a
problem. Then the other side, China, must defend itself. This always means

the defendants must reveal trade secrets. they will not. Therefore,
everyone
accused is convicted. Always. But note how no one asks "were the consumers

benefitted?"*

The ruling clears the way for the Commerce Department to impose duties
of
nearly 52 percent, retroactive to last November, on most apple juice
concentrate imported from China.

* Now keep in mind, you love fruit juice, Chinese fruit juice is more
flavorful since they use natural fertilizers and have newer trees and newer
varieties...(older the tree and variety, the less flavor), and you find Chna

is the best place in the world to have apple juice made. So you import. And

then you find not only is your duty shooting up enough to end your business,

since the penalty is retroactive, you no doubt will go bankrupt.*


"This is tremendous news for the apple industry," said Kraig Naasz,
president of the U.S. Apple Association in McLean, Va. "This was the final
hurdle our industry had to clear in seeking relief from the damage of
unfairly priced imports from China."

*I know Kraig Naasz, he is a talented and well paid advocate for apple
growers. he is not afraid to say things such as he was quoted here.*


The Commerce Department ruled last month that China was selling the
concentrate at prices 52 percent below production costs, a practice called
dumping. Commerce officials said they would impose an anti-dumping duty of
51.74 percent on most of the imports.

*The US complainant merely asserts, the Chinese will not defend, the Chinese

lose, the importer loses, the consumer loses.*

But Commerce officials were unable to go forward with the duties until
the trade commission found the dumped imports injured U.S. producers. All
five commission members found Monday there was injury.

*They are required by law to find injury, if it is asserted and not
defended.*

Commerce officials are expected to begin applying the duties in about two
weeks.

*As well as Customs will break the importer by demanding duties going back
to
November previous; the importer has already sold the goods and cannot cover
the huge dutiy increases.*

The two agencies' decisions will remain in place for about five years,
although the duties could be recalculated in one year.

*A monoply in place for 5 years.*


Between 1995 and 1998, the average price for Chinese concentrate imports d
ropped by more than 53 percent, from $7.65 a gallon to $3.57 a gallon. The
volume imported by the United States increased by more than 1,200 percent,
from 3,000 metric tons to 40,000 metric tons,federal statistics show.

*so, an importer does a crackerjack job of supplying consumer demand in USA,

getting better value for the money, and the apple growers fight back. What
is not mentioned, but commonly known, is the apple growers in USA,
particularly Washington, used government subsidies and cheap credit to
vastly
over cultivate apple orchards, knowing full well recored crops (and record
low prices, record bankruptcies, etc) were on the way. I know, because I
was
there selling and exporting fruit... to the Chinese*

At the same time, the average price for U.S.-made concentrate fell by 50
percent. Growers nationwide lost more than $135 million, federal figures
show.

*Of course, and I know for a fact US producers were selling fruit for less
than it cost them.*

The import of cheap concentrate hit Washington state

- the nation's No. 1 apple producer - particularly hard in 1998, driving
down prices in both the juice and fresh apple markets in a year of record
production.

*as was the year before that, and the year before that...smart companies
were
tearing out trees, while others were planting more...your tax dollars at
work.*

With some Washington growers getting as little as $10 a ton for their
juice
apples, down from 1995's $153 a ton, many apples were left in the orchard to

rot.

*they knew this was coming, and they new the taxpayers would bail them
out...*

An apple industry group, the Coalition for Fair Apple Juice Concentrate
Trade, filed an anti-dumping petition last June asking the federal
government
to impose a duty of 91 percent.

The International Trade Commission made a preliminary decision in July that
the Chinese imports hurt U.S. producers.

The Commerce Department in November made a preliminary decision that the
Chinese were guilty of dumping and set duties at 54.55 percent. Those
duties were lowered to 51.74 percent by Commerce's final decision in
April.

*The overproduction of produce in the USA presently about 40% too much,
means there is over-diversion of water resources, over fertilization of
crops, over-immigration to harvest, over-welfare to support the human
services of the immigrants, over financing of the harvests, and so on.
Why environmentalists do not complain, I am not sure. In any event, the
upshot is the smaller growers cannot stand these swings in fortune, and go
bankrupt or sell out. What is left is Archer Daniels Midland...huge
corporations wherein predatory practices, such as price fixing worldwide in
food products. *

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