U.S.-China Cockfight Heads To The WTO

If you thought the bilateral chicken wars were over, think again:

United States Trade Representative Ron Kirk announced today that the U.S. has filed a case against China before the World Trade organisation (WTO) to protect jobs in America’s poultry processing sector, which directly employs 300,000 workers, as jobs in this sector are threatened by China’s imposition of duties on imports of American chicken products.

I did a quick search on this topic right here on China Hearsay and found that I had posted no less than three times in 2009. Here’s the first instalment of how we got here:

  1. Bird Flu scares everyone, and bilateral chicken trade grinds to a halt.
  2. 2007 – U.S. Congress stops Bush Administration from lifting the ban. {cough – protectionism – cough}
  3. March, 2009 – U.S. Congress adds provision in law stripping funds from any attempt to lift the ban (i.e. these guys are serious)
  4. March, 2009 – China threatens WTO case

When next we became embroiled in this dispute, it was August, 2009, when China decided to go ahead with a formal complaint. That apparently was sufficient prodding, because the U.S. compromised at the end of September, 2009 when it lifted the ban. If you want some laughs, follow that last link to what I wrote two years ago. The bullshit statements from U.S. Congressmen are precious. One yokel from Georgia praised the compromise after visiting a chicken processing plant in China and getting access to “their books.” Ha ha ha. You can’t make this stuff up, folks.

OK, so that brings us up to date. Why has the U.S. filed a case against China? Well, the U.S. did lift the ban on China chicken imports, but China slapped tariffs on U.S. chicken in September, 2010. A bit of a reciprocity problem.

If this is confusing, note that many experts attribute China’s move not only to the earlier U.S. chicken ban, but also to the bilateral dispute over U.S. safeguard duties on Chinese tires. The appeal in that case was recently decided by the WTO in favour of the U.S. (here’s a link to my write-up of the initial panel decision).

So the new duties have been in place for a while, despite what I assume would be quite an energetic behind-the-scenes lobbying campaign by the U.S. The market in question is worth about USD 1 billion, and the companies involved have quite a lot of juice with D.C. (e.g. Tyson Foods).

Let’s also not forget that there is an election coming up next year in the U.S., and Obama is hating life at the moment, dog paddling desperately in a sea of disapproval as the economy worsens. Any move against China is good campaign fodder, and trade actions are political gold with the Democratic base. Note that headline of the USTR press release: “United States Files WTO Case Against China to Protect American Jobs.” It could easily have read “For God’s sake, let us win just one news cycle on an economic issue.”

What happens next? The consultation period will probably end with no deal, and then a panel will eventually be established at WTO to hear the dispute. If at any point the two nations cut a deal, then the case goes away.

You’d think that China might be motivated to cut a deal and end these additional chicken duties. Tit-for-tat is fun and entertaining, but when your citizens are reeling under high meat prices, slapping duties of between 50-100+% on chicken seems like a bad idea. But that’s just my opinion.

On the other hand, if I was involved in arguing the case, I’d probably want to be China. Granted, it’s possible that the U.S. has some exceptionally clear and persuasive arguments here. But we shouldn’t lose sight of the fact that this is about anti-dumping and countervailing duties. WTO establishes some limits, but the specific procedures followed in this case were according to Chinese law. Who do you think has the edge in a legal dispute?

If the case proceeds, I’ll let you know when/if something interesting happens.

© Stan for China Hearsay, 2011. | Permalink [No comment [Add to del.icio.us
Post tags: anti-dumping, chicken, countervailing duties, poultry, tariffs, world trade organisation, WTO

Feed enhanced by Better Feed from Ozh

Read more posts on China Hearsay »

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.