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U.S. challenges China over chicken duties

China failing to bring its duties against imports of U.S. chicken products into compliance with WTO rules.

U.S. Trade Representative Michael Froman announced Tuesday that the U.S. is mounting a challenge to China at the World Trade Organization because of the Chinese government’s failure to bring its antidumping and countervailing duties against imports of U.S. broiler chicken products into compliance with WTO rules.

As one of the main export destinations for products like chicken paws and wing tips, China is an important market to the U.S. The sale of these products added considerable value to the U.S. broiler industry, and the duties imposed by China have unfairly hindered access to this important market.

These duties, which act as high taxes on American poultry exports to China, have remained despite a previous WTO report that found China to be breaching its WTO obligations. Now, the U.S. is challenging these taxes on behalf of American poultry producers and the hundreds of thousands of people employed in the poultry industry.

China’s Ministry of Commerce (MOFCOM) imposed antidumping and countervailing duties on U.S. chicken products on Sept. 26, 2010, and Aug. 30, 2010, respectively. The antidumping duties ranged from 50.3% to 53.4% for the U.S. producers that responded to MOFCOM’s investigation notice, while MOFCOM set an “all others” rate of 105.4%. In the countervailing duty investigation, MOFCOM imposed countervailing duties ranging from 4% to 12.5% for the participating U.S. producers and an “all others” rate of 30.3%.

In 2013, a WTO dispute settlement panel comprehensively found that China's antidumping and countervailing duties violated its WTO obligations. Despite that decision, China still has refused to remove these duties. The U.S. government has reasonably tried to work with China since then to resolve this matter consistent with the panel's decision but said China's continued failure to abide by the ruling and to meet its obligations is unacceptable.

The U.S. and China agreed that China could have until July 9, 2014, to come into compliance. On that date, China issued a re-determination asserting that U.S. producers still benefited from subsidies and were dumping product onto the Chinese market, to the detriment of China’s domestic industry. The countervailing duties dropped to about 4% for most U.S. exporters. The antidumping duties either declined slightly or, in some instances, increased. In the re-determination, China continued to assert that U.S. exports cause adverse price effects in the Chinese market and that U.S. exports cause material injury to its domestic industry.

Froman said the taxes “tilt the playing field further against America’s poultry farmers.” The action is the 12th case the Obama Administration has taken against China at WTO, and to date, the U.S. has won every case that has been decided.

“These unfair and unjustified taxes are in direct violation of China’ s international commitments, and American farmers deserve a fair shot to compete and win in the global economy; ... this Administration will continue to hold China responsible when they attempt to disadvantage our farmers, businesses and workers,” Froman said.

In a joint statement, the National Chicken Council and the USA Poultry & Egg Export Council applauded USTR’s action, saying, "We are heartened to see that USTR will not back down when it comes to enforcing our rights and in making sure we truly get the market access we bargained for."

Members of the Senate’s Chicken Caucus have steadily pushed for action on the case. The senators welcomed the move and hope it will give U.S. chicken producers a level playing field.

One of the caucus members, Sen. Tom Carper (D., Del.), said, “China’s hefty tax on American poultry imports is unfair, and while I’m still hopeful that China will right this wrong on its own, we must be prudent and pursue action by the World Trade Organization.”

Sen. Johnny Isakson (R., Ga.), a member of the Senate Finance Committee and co-chair of the Senate Chicken Caucus, added, “The United States has been the only country that has been willing to challenge China’s compliance at the World Trade Organization. Trade works when the rules are followed, and it is imperative that China — the world’s second-largest economy — lives up to the rules it agreed to when it joined the WTO in 2001.”

Sen. Chris Coons (D., Del.) said it’s critical for the U.S. to fight the unfair protectionist policies of some of the world’s biggest markets, like China. “Today’s announcement sends a clear message that the United States will continue to hold China’s feet to the fire until it plays by the rules and opens up its market to our poultry. I will continue to fight to make sure poultry farmers in Delaware and across the country have access to markets around the world,” Coons said.

Secretary of Agriculture Tom Vilsack said the U.S. Department of Agriculture resolved more than 150 trade-related issues last year alone. “I am pleased to stand with USTR to show China and all of our trading partners that the United States means what we say when we call for fair and enforceable trading policies,” Vilsack noted.

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