WASHINGTON,
Aug. 2, 2013 – A World
Trade Organization panel has ruled that China violated its WTO obligations
by imposing higher duties on broiler chicken imports from the United States
in 2010. The duties precipitated an 80 percent drop in U.S. chicken sales
to China.
China’s
Ministry of Commerce began antidumping and countervailing duty investigations in
September 2009 in a move believed to be in retaliation for U.S. trade
restraints on Chinese tires. The duties were imposed the following August and
September, ranging from 50.3 percent to 105.4 percent for dumping (selling at
less than cost) and 4 percent to 30.3 percent for countervailing duties (to
offset alleged subsidies).
The U.S. Trade Representative’s office took the case to the
WTO process in September 2011 and the panel found in favor of the United States
on nearly all U.S.
claims, according to a statement from USDA, USTR
and the Department of Commerce.
The panel ruled that the countervailing duties exceeded the
amount of any subsidy and relied on flawed price comparisons in determining
that China’s
domestic industry had suffered injury. It also was found to have followed many
flawed procedures, including unjustifiably declining to use the books and
records of two major U.S.
companies in calculating their costs of production and failing to consider
alternative allocation methodologies presented by U.S. producers.
The effect of the decision is to invalidate the production
cost estimating method employed by China that resulted in high dumping
margins. Mexico
subsequently filed what the U.S.
industry said is a “copy cat” complaint. Both countries calculated an average
cost of production for an entire chicken, while U.S. companies price different
parts, with dark meat cuts favored by export markets generally commanding lower
prices than chicken breasts preferred in the U.S. market.
“For years, we have been concerned about other countries
rejecting costs based on U.S.
producers’ books and records and instead using the weight of a product to
allocate production costs,” U.S. Trade Representative Michael Froman said in a
statement. “This methodology artificially inflates or creates dumping margins. China had
adopted this flawed approach, and the WTO panel found that China breached
WTO rules.”
Among procedural flaws, the panel said that China improperly
denied a hearing request, failed to require the Chinese industry to provide
non-confidential summaries of information it provided to the government, and
failed to disclose essential facts to U.S. companies on how dumping
margins were calculated. Each side has the right to appeal issues of law or
legal interpretation in the panel report to the WTO Appellate Body. See a copy
of the WTO panel’s report here.
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