Bloomberg News

China Says Duties on U.S. Poultry In Line With WTO Rules

September 21, 2011

Sept. 21 (Bloomberg) -- China said the nation’s duties on American poultry are “in line” with rules by the World Trade Organization after the U.S. filed a complaint with the trade arbiter about the Chinese taxes.

The complaint targets Chinese anti-dumping and countervailing duties on American poultry products, U.S. Trade Representative Ron Kirk told reporters yesterday. A request for consultations is the first step in the case, and the U.S. and China must now hold talks for at least two months in a bid to resolve the dispute.

China will “carefully study” any request from the U.S. on consultation and will “deal with the issue properly,” an unnamed Ministry of Commerce official said in a statement posted on the ministry’s website today, without elaborating.

The U.S. complaint may add to tensions between the world’s two largest economies, which have clashed over access to each others’ markets for products including steel pipes, tires, movies and music. The WTO earlier this month rejected China’s appeal of a ruling that backed U.S. duties on Chinese tire imports, a move Chinese commerce ministry spokesman Shen Danyang said yesterday will distort bilateral trade and won’t benefit American industries.

China put in place a duty of as much as 105.4 percent last year on U.S. broiler-chicken products. About 300,000 workers and farmers have been hurt by China’s actions, Kirk said at a news conference in Washington. “The United States is prepared to take every measure necessary to stand up for American workers by ensuring that China or any of our other trading partners does not misuse laws to prevent exports of U.S. products,” Kirk said.

Falling Exports

Since the duties took effect, U.S. poultry exports to China are down 90 percent, according to the trade agency. The U.S. poultry industry may lose an estimated $1 billion in sales to China by the end of this year, the agency said.

The U.S. was China’s largest chicken-broiler products supplier, accounting for more than 600,000 metric tons of products in 2009.

“This is a very important issue for the United States because a significant portion of our exports to China are in agriculture, especially in poultry and pork,” James Bacchus, chairman of the global practice at Greenberg Traurig LLP and a former chairman of the WTO appeals tribunal, said in an interview. “This is a great market for us potentially, and one where we’re seeking fair treatment.”

’Retaliatory Action’

Poultry producers Sanderson Farms Inc. and Tyson Foods Inc. fell yesterday in New York trading. Farha Aslam, a Stephens Inc. analyst in New York, wrote that China may choose “to engage in some form of retaliatory action” for the complaint.

China used “average cost of production” to determine value rather than U.S. market prices for comparable sales, which doesn’t reflect how companies use their accounts, the USA Poultry & Egg Export Council in Stone Mountain, Georgia, and the Washington-based National Chicken Council said in a statement. The methodology is flawed, along with China’s insistence that poultry exporters benefit from farm subsidies, according to the statement.

“This action is essential to demonstrate to the international community that anti-dumping measures based on average cost of production is a form of unfair protectionism that is inconsistent with multilateral trade rules,” the groups said in the statement.

The U.S. has in the past filed WTO complaints about China on steel, industrial raw materials, electronic payment services, wind power and tire imports.

--Li Yanping. Editors: Ken McCallum, Patrick Harrington

To contact Bloomberg News staff for this story: Li Yanping in Beijing at yli16@bloomberg.net

To contact the editors responsible for this story: Larry Liebert at lliebert@bloomberg.net; Paul Panckhurst at ppanckhurst@bloomberg.net


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