WTO rules against China in US chicken dispute

GENEVA - Agence France-Presse

This file photo shows a man cycling past chicken feet on sale in a market in Tongxian, a suburb of Beijing. The WTO ruled in favor of the US against China in a chicken trade row. AP Photo/Greg Baker, File

China breached the rules of global commerce by imposing duties on imports of US chicken, the World Trade Organization ruled Friday, saying Beijing must fall into line.

A WTO disputes settlement panel said that China’s actions had been inconsistent with rules that allow countries to impose duties when their trade partners dump goods on their markets.

Dumping is the practice of selling goods at cut-price in order to increase market share, which can harm domestic producers.

The WTO panel said that China’s chicken duties were found to have “nullified or impaired benefits accruing to the United States” under international trade accords. The issue has been a major bone of contention in the often tense trade relations between the world’s two largest economies.

It concerns chicken ‘broiler products’ -- chickens less than 13 weeks old -- imported from the United States.

China imposed the duties in August 2010, claiming that the chicken products were subsidised in the United States and then sold at less than fair value on the Chinese market.

Prior to the duties, the United States was the largest exporter of broiler products to China.

After the duties were imposed, US officials said that US broiler chicken exports to China fell sharply, and warned that 300,000 US agricultural jobs were at risk.

Washington, which turned to the WTO in September 2011, welcomed the decision.

“The United States has scored an important victory today for America’s farmers and for fair play in international trade,” United States Trade Representative Michael Froman said in prepared remarks.

Under the 159-nation WTO’s rules, member economies pledge to take their disputes to the Geneva-based body in an effort to avoid all-out trade wars.

The WTO’s complex trade dispute settlement process can last for several years, with the possibility of appeals, an option still open to China, and reviews of respect for its rulings.

Its dispute panels are made up of independent trade experts, and if they find in favour of an aggrieved member, they can eventually authorise retaliatory trade measures if countries at fault fail to fall into line.

Like his predecessors, US President Barack Obama has faced repeated domestic political pressure to get tough over China’s trade record.

The WTO ruling “sends a clear message that the Obama Administration can fight and win for American farmers, businesses, and workers in the global trading system,” said Froman.

Many in the United States blame Chinese trade and currency policies for the loss of jobs, particularly in manufacturing, and a massive trade gap.