Wednesday, July 15, 2009

US ban on Chinese poultry – US House Committee proposes to extend import ban

by M. Ulric Killion

How Obama’s Tariff on Tires escalate China-U.S. trade Frictions? | CEOWORLD Magazine: "The Obama Administration will impose new import tariffs on tires from China, Beijing announced it was launching anti-dumping and anti-subsidy investigations targeting U.S. poultry and American-made cars;" Photo source, 2009.

China launched the first World Trade Organization case against the administration of President Barack Obama on Friday, challenging a U.S. ban on Chinese poultry. Beijing said Washington was violating a number of global commerce rules by preventing Chinese chicken parts from entering the U.S. market. Its request for consultation kicks off a 60-day consultation period, after which it can ask the WTO to launch a formal investigation. The WTO can authorize sanctions against countries failing to comply with trade rules, usually after years of litigation. In Washington, Deborah Mesloh, a spokeswoman for U.S. Trade Representative Ron Kirk, said the administration viewed the WTO procedure as a “… constructive mechanism to allow trading partners to resolve their differences.” China and the United States banned each others’ poultry in 2004 following an outbreak of bird flu. China lifted the ban after a few months and complains Washington refuses to do the same; Source: PoultryMed, 2009-China challenges U.S. ban on its poultry, April 18, 2009. 

The Background

On June 23, 2009, and as mentioned in an earlier blog (Killion, Sino-US trade, China export restrictions, protectionism and "Buy-China" requirements, July 11, 2009), the United States and the European Union filed complaints with the WTO over Chinese restrictions on the export of key industrial raw materials, such as coke, bauxite, fluorspar, magnesium, silicon metal, yellow phosphorus and zinc. The heart of the controversy are allegations by both the US and EU that China failed to reduce its export tariffs and raise quotas on these industrial raw materials, and that China's export restrictions created an unfair advantage for Chinese industries.

China's immediate response, as announced by China's Ministry of Commerce (MOC), is that the policy of limiting exports of these raw materials intends to protect the environment and natural resources; therefore, China's policy is in accordance with the WTO rules (Bloomberg, 2009). China, more importantly, also responded by announcing on June 25, 2009 the filing of its own challenge to a US ban on the imports of Chinese poultry (WSJ, 2009).

The US Ban on Poultry

On June 18, 2009, the US House Appropriations Committee approved legislation, for the fiscal year ending September 30, 2010, establishing appropriations for the operation of the U.S. Department of Agriculture. The legislation, more importantly, included a provision precluding the use of any of the funds appropriated under legislation for FY 2010 for establishing or implementing a rule allowing mainland China poultry products to be imported into the United States. The legislation for FY 2010 parallels provisions earlier included in the appropriation bills for both FY 2008 and FY 2009.

[On July 3, 2009, The Hong Kong Trader, House Committee Proposes to Extend Import Ban on Chinese Poultry, reported]: "While mainland China is not eligible to export to the U.S. poultry products that are slaughtered in domestic establishments, the Food Safety and Inspection Service issued a final rule in April 2006 allowing processed poultry products from China to be imported into the U.S. if they are processed in certified establishments from poultry slaughtered in certified slaughter establishments in other countries eligible to export poultry to the U.S. Among other things, the regulation requires that those poultry products be subject to re-inspection at the pertinent port of entry for transportation damage, labelling, proper certification, general condition, accurate count, defects and microbiological contamination. However, no mainland Chinese facilities have yet been certified to export processed poultry products to the U.S. and Congress has continued to block any such facilities from being certified.

According to various reports, China recently requested the establishment of a WTO dispute settlement panel to examine allegations that these restrictions violate multilateral rules. China requested consultations with the U.S. on this issue in April but the two sides have not reached a mutually acceptable agreement. China's request for the formation of a panel will be considered at the 20 July meeting of the Dispute Settlement Body. While theU.S. has the ability to block this request, that action would probably only delay the establishment of the panel by a few days or weeks.

Reportedly, House Appropriations Agriculture Subcommittee Ranking Republican Jack Kingston (Georgia) is trying to amend the appropriations bill language on mainland Chinese poultry to avoid a protracted and possibly losing battle with China at the WTO. Such an amendment would require the FSIS to commit to conduct audits and on-site reviews and enhance its inspection capabilities at U.S. ports of entry before allowing that agency to move forward with the implementation of the rule allowing poultry shipments from the mainland" (Hong Kong Trader, July 3, 2009).

Copyright © Protected - All Rights Reserved M. Ulric Killion, 2009.

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