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China has challenged the United States’ embargo on its chicken exports, but a change in US import rules may make the case moot or harder to argue.
The three members of a WTO dispute settlement panel on China’s complaint on US restrictions on its processed poultry exports were appointed on 25 September, setting the clock ticking for a ruling within six months. China contends that US measures to prevent imports of Chinese poultry are inconsistent with several provisions of the Agreement on Sanitary and Phytosanitary Measures (SPS), as well as the Agreement on Agriculture.
The origin of the dispute dates back to 2004, when both countries banned each other’s chicken exports due to health concerns arising from avian flu. China subsequently revoked the embargo, but the US kept it in place, notably by prohibiting the US Department of Agriculture (USDA) from using government funds to implement measures that would result in resumed Chinese poultry imports. The US also decreed a moratorium on the consideration, granting and implementation of approvals for Chinese poultry imports.
China alleged that, inconsistent with the SPS Agreement’s Article 2, these administrative measures were not based on scientific principles and constituted a disguised restriction on international trade. In addition, they were not based on a risk assessment within the meaning of SPS Article 5, and failed to conform to the control, inspection and approval processes established under SPS Article 8, China maintained.
On 1 October, the US requested the panel to issue a preliminary ruling on the admissibility of China’s SPS claims, which the defendant said were not properly covered in the initial consultation request. While this could have meant a considerable delay in the proceedings, US Congress may have defused the dispute by approving a new USDA spending bill, which allows the import of Chinese poultry under stringent health and quality controls.
US Changes Law, But Requires Equivalent Safety Standard
The US Senate approved the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act 2010 on 8 October. Under the legislation, poultry products may be imported from China if the department of agriculture takes a number of steps that allow the agriculture secretary to determine that China’s poultry inspection system, and its enforcement, achieve a ‘level of sanitary protection equivalent to that achieved under US standards’. Those steps include inspection system audits, as well as on-site reviews of Chinese slaughterhouses, laboratories and other control operations before USDA certifies that a facility is eligible to export poultry products to the US. Port-of-entry re-inspections must also be reinforced. USDA must report to Congress twice a year on actions taken toward certification and the determination of equivalence.
These provisions - contained in Section 743 of the 2010 appropriations act - will replace those challenged by China at the WTO once President Obama signs the bill into law. At the time of writing, China had not withdrawn its complaint, possibly because it could take years before USDA has completed its investigations, and the outcome is uncertain.
One the other hand, the US might have a stronger hand in defending the new import regime since it is clearly premised on public health grounds. The inspection system audits and on-site reviews of facilities could be used as elements of a risk assessment under the SPS Agreement, which provides that relevant processes and production methods, as well as inspection, sampling and testing methods, are among the factors to be taken into account in the assessment of risk.
In related news, China announced in mid-September that it was launching anti-dumping and anti-subsidy investigations into some US chicken and auto imports. The move came in the wake of hefty tariffs imposed by the Obama administration on Chinese tyres (see opposite), but Beijing said the trade remedy probes were a response to complaints from domestic industries.
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