Carper, Coons, Carney Praise WTO Decision that Chinese Poultry Barriers are Unfair

WASHINGTON – Today, Senators Tom Carper and Chris Coons and Congressman John Carney (all D-Del.) praised a major U.S. victory on Friday at the World Trade Organization (WTO), which found that certain Chinese trade barriers were punitive to American poultry farmers. The decision proves that China’s imposition of higher duties on chicken “broiler products” – which was followed by an 80-percent drop in American exports of those products to China – is unjustified under international trade rules. A WTO dispute settlement panel agreed with the United States, finding that China violated numerous WTO obligations in conducting its investigations and imposing anti-dumping duties and countervailing duties on chicken imports from the United States.

Delaware’s congressional delegation has long called for open, fair trade relationships for American poultry exports, many of which are produced in Southern Delaware. Last year, the delegation wrote to former Trade Representative Ron Kirk requesting an end to Mexico’s antidumping charges against U.S. poultry. Additionally, for years, the delegation has criticized and decried unfair Chinese barriers against U.S. poultry exports. Delaware’s poultry industry generates more than $700 million in revenue each year – making poultry Delaware’s top agricultural product.

“For years, I’ve been fighting for fair trade with China for Delaware’s poultry growers,” said Senator Carper. “Friday’s decision will make a huge difference for our state’s agriculture industry. Since China imposed its shortsighted duties on American poultry in 2010, American exports had fallen by 80 percent. This was a significant blow, since producers in Delaware had long counted China as one of their biggest foreign customers. The WTO’s decision will ensure that we have a level playing field and will help Delaware farmers export more poultry to more customers – growing our state’s economy and helping the Chinese gain less expensive access to a vital food product. It’s a true win-win.”

“Open and fair access to international markets is the cornerstone of a thriving economy,” Senator Coons said. “This ruling is an important victory for Delaware’s poultry industry, which supports more than 13,000 jobs in our state. Illegitimate anti-dumping and countervailing duties create unjust barriers that manipulate markets and stifle trade opportunities. I am thankful to the USTR, Department of Commerce, and Department of Agriculture for their strong advocacy on behalf of Delaware’s hardworking farmers, and look forward to the new export opportunities made possible by this ruling.”

“By reopening markets in China, this ruling will help southern Delaware continue as the country’s leader in broiler production. This is a victory for Delaware chicken growers,” said Congressman Carney. “Any time we level the playing field for U.S. businesses, particularly Delaware businesses, it’s good news. This decision illustrates the vital role of a strong U.S. Trade Representative who can keep our trading partners honest and combat unfair trade practices.”

Background:

On September 27, 2009, China’s Ministry of Commerce (MOFCOM) initiated antidumping and countervailing investigations of imports of so-called “broiler products” from the United States. Broiler products include most chicken products, with the exception of live chickens and a few other chicken products such as cooked and canned chicken. MOFCOM imposed antidumping and countervailing duties on these products on September 26, 2010 and August 30, 2010, respectively. The antidumping duties ranged from 50.3 percent to 53.4 percent for the U.S. producers who responded to MOFCOM’s investigation notice, while MOFCOM set an “all others” rate of 105.4 percent. In the CVD investigation, MOFCOM imposed countervailing duties ranging between 4.0 percent and 12.5 percent for the participating U.S. producers and an “all others” rate of 30.3 percent.

On September 20, 2011, the United States requested dispute settlement consultations with China concerning the conduct and results of MOFCOM’s antidumping and countervailing duty investigations. After consultations proved unsuccessful, the United States requested that the WTO establish a panel to hear U.S. claims that China violated numerous procedural and substantive obligations under the WTO’s Antidumping Agreement and Agreement on Subsidies and Countervailing Measures.

In its report, the Panel found in favor of the United States on nearly all U.S. claims.

Specifically, with regard to MOFCOM’s substantive errors, the Panel found that China breached its WTO obligations by:

• Levying countervailing duties on U.S. producers in excess of the amount of subsidization;
• Relying on flawed price comparisons for its determination that China’s domestic industry had suffered injury;
• Unjustifiably declining to use the books and records of two major U.S. producers in calculating their costs of production; failing to consider any of the alternative allocation methodologies presented by U.S. producers and instead using a weight-based methodology resulting in high dumping margins; improperly allocating distinct processing costs to other products inflating dumping margins; and allocating one producer’s costs in producing non-exported products to exported products creating an inflated dumping margin; and
• Improperly calculating the “all others” dumping margin and subsidy rates.

With respect to procedural failings in the MOFCOM investigations, the Panel found that China breached its WTO obligations by:

• Denying a hearing request during the investigation;
• Failing to require the Chinese industry to provide non-confidential summaries of information it provided to MOFCOM;
• Failing to disclose essential facts to U.S. companies including how their dumping margins were calculated.

See a copy of the Panel’s report here.

The United States may request adoption of the panel report by the WTO’s Dispute Settlement Body. Both parties have the right to appeal issues of law or legal interpretation in the panel report to the WTO Appellate Body.