* World animal health body due to upgrade Japan BSE status
* Move to increase pressure on Japan to allow more U.S. beef
* U.S. industry seeks end to age rules on American beef
* U.S. beef imports still down 70 pct from pre-BSE levels
By Miho Yoshikawa
TOKYO, May 26 (Reuters) - Japan, pushing for other countries to end curbs on its beef exports, will itself face pressure to let in more U.S. imports when the world animal health body upgrades its safety rating on Japanese cattle this week.
Japan was the biggest export market for U.S. beef until bovine spongiform encephalopathy (BSE), or mad cow disease, hit American cows in 2003, prompting a ban on U.S. imports that has only ever been partially lifted. Sales are 70 percent below where they were before that, to the benefit of Australian exporters.
Yet, ironically, Japanese beef has until now been considered by the World Organization for Animal Health (OIE) as higher risk than U.S. meat, prompting other countries to restrict imports.
The OIE is expected to raise its rating on Japan to a "controlled risk" for BSE, a Japanese agricultural official said, matching the rating for U.S. beef. A formal decision is expected on Friday, but it could get an initial nod as soon as Tuesday.
The question is whether Japan can use its upgraded status to push other countries to end restrictions on its meat, such as the tender, marbled Wagyu beef that sells for up to $150 a kg, without easing its own limits on U.S. imports.
One compromise may be extending the age limit of Japan's ban on any U.S. beef from cattle over 20 months old, a measure that has crimped shipments to what was once the United States' biggest beef buyer, taking more than a third total U.S. exports.
"Many experts believe the age limit is meaningless and think it should be ended, but something had to happen to provide the impetus to move the discussion," says Professor Hideaki Karaki, a food safety expert at the University of Tokyo.
Industry sources and other experts agree that negotiations will likely centre on raising the age limit on U.S. beef, rather than removing the ban completely.
For details of Japan's beef imports by source: http://graphics.thomsonreuters.com/059/JP_BFIMP0509.jpg
For details of Japan's beef exports, click on: http://graphics.thomsonreuters.com/059/JP_BFEXP0509.jpg
JAPANESE EXPORT HOPES
Japan hopes a raised BSE rating will pave the way for major markets to relax import restrictions on Japanese cattle.
"Countries such as Hong Kong and Singapore have been particularly demanding about the safety of beef imports from Japan, and this step will help ease that," said Takashi Onodera, a panel member of the country's food safety regulatory agency.
Industry sources say there is growing interest in Wagyu beef, particularly in increasingly affluent China, but so far there have been only limited sales.
While Japan's exports have surged fivefold in just two years to just over 500 tonnes last year thanks to heavy promotion, they are still tiny compared to imports that totalled about 470,000 tonnes last year, more than half the beef consumed in Japan.
U.S. beef exports to Japan, which had totalled 240,000 tonnes in the year ended March 2003, are now stuck at only around 30 percent of those levels.
AMERICAN EYES WATCHING
The American industry has been quick to note the significance of the expected OIE ruling, which would put Japan's BSE status on the same level the United States has had since 2007.
"That puts us basically on the same plane," Philip Seng, head of the U.S. Meat Export Federation, said last week. [ID:nN21289676]
Japan's strong opposition to removing the age restriction on U.S. beef since authorities found a case of mad cow disease in December 2003 has been a thorn in ties between the allies.
After prolonged bilateral talks, Tokyo agreed in 2005 to resume U.S. beef imports but only from cattle aged 20 months or younger, one of the world's strictest import rules on cattle age. South Korea relaxed its own ban on U.S. beef last year, but still limits imports to cattle under 30 months of age.
Washington has pushed Japan to scrap all age restrictions and negotiations have been virtually deadlocked since mid-2007, when the last face-to-face talks were held.
But there is speculation that both sides are tired of the row, prompting suggestions that Washington may live with a higher age limit while Japan looks for an excuse to give ground.
"Apart from the issue on Japan's exports, I think there might be a third, sort of, covert agenda to this OIE matter, and that is Tokyo's wish to do something to move the deadlocked talks," said a beef industry official who declined to be named.
However, an OIE ruling would not mean a quick resumption in full U.S. beef exports.
Japan's Food Safety Commission will first have to review and revise domestic safety guidelines that require all cattle over 21 months to be inspected for BSE before it can turn to grappling with changing age rules on exports.
Industry sources say the process could take until the middle of next year, adding that the discussion could also be swayed by wary Japanese shoppers who have been made very sensitive about food safety after scandals on products ranging from Japanese milk to pesticide-laced Chinese frozen vegetables. (Editing by Clarence Fernandez)