ANALYSIS - Late last week, the World Trade Organization (WTO) issued a panel report on China's measures on US broiler products, which supported the case brought by the US. Senior editor, Jackie Linden, analyses the reaction from both sides on the issue and the ruling.
On 2 August 2013, the WTO issued the panel report in the dispute 'China — Anti-dumping and countervailing duty measures on broiler products from the United States'
In summary, the WTO upheld the US claims that China imposing anti-dumping and countervailing duties on broiler products from the United States.
The decision follows action by the US on 20 September 2011, when it requested consultations with China concerning China's measures imposing anti-dumping and countervailing duties on broiler products from the United States.
The dispute concerns China's imposition of anti-dumping and countervailing measures on broiler chicken products from the United States. The United States challenged before the Panel both the substantive analysis of China's Ministry of Commerce (MOFCOM) under several provisions of the Anti-Dumping and Subsidies and Countervailing Measures (SCM) Agreements and the GATT 1994, as well as the manner in which MOFCOM conducted its investigations.
United States Department of Agriculture (USDA) has reported that the WTO dispute settlement panel had agreed with the United States, finding that China violated numerous WTO obligations in conducting its investigations and imposing anti-dumping (AD) duties and countervailing duties (CVD) on chicken imports from the US.
A joint statement from US Trade Representative Michael Froman, Secretary of Commerce Penny Pritzker, and Secretary of Agriculture Tom Vilsack said that the United States won a major case at the WTO on behalf of American chicken producers, proving that China's imposition of higher duties on chicken 'broiler products' – which was followed by an 80-per cent drop in American exports of those products to China – is unjustified under international trade rules.
Secretary Vilsack commented: "Agricultural exports continue to be a strong and growing component of US exports. Farm exports in fiscal year 2012 reached US$135.8 billion and supported one million jobs here at home. More than $23 billion worth of those agricultural products went to China alone. But China's prohibitive duties on broiler products were followed by a steep decline in exports to China – and now we look forward to seeing China's market for broiler products restored. This is an important victory today for the US poultry industry, and for American farmers and ranchers."
Representing the poultry industry, Bill Lovette, National Chicken Council chairman and president and CEO of Pilgrim’s Pride, said in a statement: "This announcement is welcome news to US poultry producers and the US poultry industry. Regaining meaningful access to this critical market presents an opportunity to compete in a valuable and viable export market.
"We thank United States Trade Representative Michael Froman, Secretary of Commerce Penny Pritzker and Secretary of Agriculture Tom Vilsack for their successful efforts to secure a fair international playing field for the US chicken industry.
"We look forward to sharing the high-quality poultry products that American consumers enjoy every day with our partners and customers in China," said Mr Lovette.
Reaction from China
Official reaction from China's Ministry of Commerce (MOFCOM) today was brief. A statement said that China will evaluate seriously the Panel's report, and will handle the follow-up work in line with the dispute settlement procedures.
The ruling against China's imposition of duties on broiler chicken imports from the US will cause severe harm to China's poultry industry, according to an official source, citing comments from poultry analysts.
"China's poultry industry grew faster after China imposed duties on broiler chicken from the US, indicating that the dumping of the US chicken products had materially damaged China's poultry industry," Ma Chuang, secretary-general of the Chinese Association of Animal Science and Veterinary Medicine (CAAV), told Global Times.
He continued: "But affected by the bird flu early this year, China's poultry industry has had a hard time recently and is now in a period of recovery. The removal of the tariffs on US chicken products means adding insult to injury for Chinese poultry farmers."
China has 60 days to appeal against the ruling.
"The US superficially uses market means to sell its chicken products in China but in fact, it is manipulating China's chicken market to create an unfair competitive environment for the Chinese poultry farmers," Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Co, told the newspaper.
In September 2010, China imposed anti-dumping duties on broiler chicken, ranging from 50.3 per cent and 105.4 per cent for five years. The US filed a complaint with the WTO against China's duties in 2011.
The US has been the largest exporter of broiler products to China, accounting for 90 per cent of China chicken imports, according to industry analysts.
"Friday's ruling is no doubt a bad news for Chinese poultry farmers who are still struggling with impact from the bird flu," Guo Huiyong, a Beijing-based industry analyst, told the newspaper. "But the US may not necessarily be the ultimate winner. China's chicken imports from countries such as Brazil and Argentina have greatly increased in the past few years."
Top image via Shutterstock