Bridges Weekly Trade News Digest • Volume 14 • Number 5 • 10th February 2010
China Sets Anti-Dumping Penalties on US Poultry Imports
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China’s Ministry of Commerce announced new anti-dumping penalties on imports of US chicken products last Friday, a move likely to upset one of the few US industries that profitably exports to China.
The Chinese Ministry of Commerce (MOFCOM) released its preliminary ruling after investigations showed that dumping of US chicken products on the Chinese market had “caused substantial damage to China’s domestic industry,” according to a press release. “Dumping” refers to a practice of strategically selling goods below cost in order to undercut competitors.
For the companies that complied with MOFCOM’s anti-dumping investigation of their sales, the penalties range from 43.1 percent for Tyson Foods to 80.5 percent for the Pilgrim’s Pride Corporation. Most firms were hit with a penalty of 64.5 percent. The companies that did not comply will be given anti-dumping penalties of 105.4 percent, the top tariff, unless they comply before the investigation is finalised.
China is the largest foreign market for US chicken exports. In 2008, the Chinese consumed almost 800,000 metric tonnes of US poultry, valued at US$ 722 million, according to the USA Poultry & Egg Export Council. Tyson Foods sent approximately 14 percent of its US$ 1.6 billion in international poultry sales to China.
About half of the chicken products exported to China are chicken feet. The parts would be sold as scrap to be turned into animal feed in the US, but they are considered a delicacy in China. Almost all the chicken feet produced in the United States are sent to China, producing a solid profit for US poultry companies.
“Chicken feet and wings are not wanted in the US, so they sell them to China, [and] they dump them below cost,” said Wang Xiulin, president of the Chinese Poultry Association. “Last year, the Chinese poultry industry was really hurting so we asked for this investigation.”
The US Trade Representative’s Office says that it is “following the investigation closely.”
“We will want to ensure that MOFCOM follows the applicable WTO rules,” said Carol Guthrie, Assistant US Trade Representative for Public and Media Affairs. “We will study MOFCOM’s preliminary determination…and will consult with US industry.”
The penalties are the latest development in a long string of Sino-US trade disputes. The Chinese Ministry of Commerce started investigating dumping allegations against US poultry in September, just two weeks after the US had imposed tariffs on Chinese tyre shipments.
The US had also instituted anti-dumping duties on Chinese oil-well pipes of up to 99 percent, a move that provoked China to investigate US automobile imports. The US Department of Commerce is investigating alleged dumping of Chinese copper pipes and tubes as well as Chinese-made blankets and magnesia carbon brick.
The trade disputes take place against a background of tense relations between the two countries due to proposed US arm sales to Taiwan, US President Barack Obama’s decision to meet with the Dalai Lama this month, and Google’s threat to pull out of China.
“This is probably the result of political tension, although a trade war between the two economies is unlikely,” said Li Qiang, a managing director at Shanghai JC Intelligence Company.
ICTSD reporting; “China to Impose Dumping Penalties on US Chicken,” BUSINESS WEEK, 5 February 2010; “Wrapup 2-Chicken Parts Join Menu of US-China Disputes,” REUTERS, 5 February 2010.
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Profitably exporting chicken (feet) and dumping seem inconsistent. If it is profitable, how is it dumping?
Can Pakistan export chicken feet to mainland china?