United States Trade Representative Ron Kirk announced on September 20, 2011 that the U.S. has filed a case against China before the World Trade Organization (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. This is the latest in a series of enforcement steps the United States has taken to hold China accountable for its WTO commitments, including actions at the WTO against China’s treatment of steel products, industrial raw materials, electronic payment services and wind power equipment as well as actions in the United States to address rapidly increasing Chinese tire imports. In each of these matters, the key principle at stake is that China must play by the rules to which it agreed when it joined the WTO, including commitments to maintain open markets on a non-discriminatory basis, and to follow procedures in a transparent way.
“To be clear, the United States does not arbitrarily seek disagreements with China,” said Ambassador Kirk in a news conference today. “However, we will not stand still if we believe that China has violated its commitments as a WTO member and is therefore threatening American jobs – in this case hundreds of thousands of American poultry industry jobs. Our actions against China simply demonstrate that 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.”
Specifically, the United States is requesting dispute settlement consultations – the first step in a WTO dispute – to challenge China’s imposition of antidumping and countervailing duties against imports of U.S. chicken “broiler products,” which are both chicken products that are not cut into pieces, as well as various cuts and pieces. Through this case, the United States is addressing its concerns that China’s duties appear to be inconsistent with WTO rules. Under WTO rules, parties that do not resolve a matter through consultations within 60 days may request the establishment of a WTO dispute settlement panel.
Before the imposition of these duties, the United States was China’s largest chicken broiler products supplier with over 600,000 metric tons of broiler products exported in 2009. Since the duties have come into force, U.S. exports to China are down 90 percent. According to industry sources, if these duties are not lifted, the U.S. poultry industry will have lost approximately $1 billion in sales to China by the end of this year alone.
On September 27, 2009, China’s Ministry of Commerce (MOFCOM) initiated antidumping and countervailing investigations of imports of chicken broiler products from the United States, and then imposed antidumping and countervailing duties on September 26, 2010 and August 30, 2010, respectively. The duties were based on China’s findings that American broiler products had been sold at less than fair value (i.e., “dumped”) into the Chinese market as well as subsidized. WTO rules permit member countries to impose duties on imports of merchandise that are found to be dumped or subsidized, if those imports cause injury to the domestic industry. However, WTO rules also require member countries to follow specific procedures and legal standards when conducting their investigations and making determinations.
The United States is concerned that China’s investigating authorities, in levying these duties, appear to have failed to adhere to their WTO obligations in numerous respects. In particular, China seems to have failed to observe numerous transparency and due process requirements, failed to properly explain the basis for its findings and conclusions, incorrectly calculated dumping margins, incorrectly calculated subsidy rates and made unsupported findings of injury to China’s domestic industry.
In the antidumping investigation, China imposed dumping duties ranging from 50.3 percent to 53.4 percent for the participating U.S. producers and exporters, and set an “all others” rate of 105.4 percent. In the countervailing duty investigation, China imposed countervailing duties of between 4.0 percent and 12.5 percent for the participating U.S.