Playing by trade rules

THE World Trade Organization hasn't provided much in the way of a platform for advancing multilateral trade talks in recent years, but it has provided a way to keep countries' trade practices in check. Sometimes, that falls in favor of the U.S.; other times, it doesn't.

One of most significant agricultural trade cases mounted against the U.S. was Brazil's challenge to U.S. cotton subsidies in 2002. The program was later determined to be trade distorting.

In 2010, in order to avoid Brazil's threatened sanctions, the U.S. agreed to pay Brazil $147 million per year. While in Brazil last week, Agriculture Secretary Tom Vilsack emphasized that he doesn't have the authority to continue the payments to Brazil when the budget year begins Oct. 1 because Congress hasn't passed a farm bill or a budget.

The payout was just meant to buy time before the next farm bill was put into place, but this has become problematic. Vilsack has consistently called for Congress to complete a farm bill to resolve the cotton issue with Brazil.

Both the House and Senate farm bill versions eliminate direct payments for cotton producers as well as establish a new program, the Stacked Income Protection Plan (STAX), that works more like crop insurance.

Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) accompanied Vilsack on his trip to Brazil. Beforehand, she addressed some reports indicating that Brazil isn't convinced that STAX will solve its WTO concerns and that the White House hasn't been engaged enough in the discussion.

"We certainly understand these issues and want to make sure what we do is WTO compliant," Stabenow said, adding that the U.S. Department of Agriculture has been advising the agriculture committees throughout the process.

Although Vilsack met with Brazil's Minister of Agriculture Antonio Andrade and Eduardo dos Santo from the foreign ministry, no deadline was set for action to avoid retaliation, but bet that Brazil will be watching closely.


China chicken case

In a significant win for U.S. chicken producers, a WTO dispute settlement panel found Aug. 2 that China breached numerous procedural and substantive WTO obligations when it imposed high antidumping and countervailing duties on imports of U.S. broiler products.

National Chicken Council spokesperson Tom Super said the WTO panel made two important findings. First, it held that China's basis for finding dumping — the so-called "average cost of production" theory — was flatly inconsistent with WTO rules.

"Under China's approach, costs that are unique to a chicken product, such as a breast, are spread over all products, artificially inflating their price. The WTO panel firmly rejected that approach," he told Feedstuffs.

Second, the WTO panel found that China's determination that U.S. chicken imports were causing injury to the domestic industry was inconsistent with WTO rules and, therefore, not subject to countervailing or antidumping duties.

The U.S. may ask the WTO Dispute Settlement Body to adopt the panel report. Both parties have the right to appeal issues of law or legal interpretation in the panel report to the WTO Appellate Body.

Super said his group believes "it is in both countries' best interests to not get bogged down in the appeal process so that mutually beneficial trade in poultry products between China and the U.S. can be restored."

Following China's action, American exports of chicken products dropped 80%, or roughly $1 billion.

Vilsack said he has no doubt that the U.S. can regain lost market share over time.

U.S. Trade Representative Michael Froman said the case is a good example of a "whole-of-government approach" with USDA, USTR and the commerce department all working to open markets and enforce trade laws.

Volume:85 Issue:32

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