China Takes US to WTO Over Poultry Exports

I haven't written anything involving the WTO for the longest time. Mostly, it's because there hasn't been much action at the international organization as other, more pressing domestic matters seem to be occupying the interests of member countries at the moment. Doha? Forget it. In December, I brought news that China would contest the US decision to impose countervailing duties on steel exports it believed were being dumped on the American market. Just last month, there were rumblings that China was showing increased displeasure over US legislation aimed at limiting chicken imports over safety concerns and that it was contemplating WTO action. The antagonist here, Rosa DeLauro (D-VT) is chairwoman of the Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. She has upheld a dubious rule against what she describes as a Bush-era quid pro quo:

In 2006, the USDA moved to allow imports of processed poultry from China -- a regulation DeLauro described as "a gift" from former President George W. Bush to Chinese Premier Wen Jiabao to try to restore U.S. beef trade to China, which had stalled in 2003 when the U.S. found mad cow disease. DeLauro's committee blocked the rule, but she said she has told the meat industry she is open to taking another look. The block by Congress is "kind of a slap in the face to the Chinese," a U.S. poultry processor told the Reuters summit.

You can now consider Chinese displeasure official. Reuters reports that China has now requested consultations with the US. As you know, if 60 days pass without sufficient movement on the issue from the Chinese POV, then it can initiate a case at the dispute settlement mechanism--WTO court, if you will:

China requested on Friday consultations with the United States over a U.S. laws affecting Chinese poultry products, launching a formal World Trade Organisation dispute on the issue. In the written request, obtained by Reuters, Beijing said it believes that U.S. limits on poultry imports from China violate Washington's international trade commitments, a particular concern at a time when protectionist fears are rising.

"By imposing these restrictions with respect to imports from China, but not similarly prohibiting the import from other (WTO) members of like products, China is concerned that the U.S. fails to accord immediately and unconditionally to China an advantage, favour, privilege or immunity granted to other (WTO) members," the Chinese statement read...

China and the United States have previously squared off at the Geneva-based trade body over issues including car parts, software piracy, copyright rules and export subsidies. The latest case centres on U.S. rules that restrict poultry products from China, a reaction to food safety scandals that have in recent years damaged the reputation of Chinese goods.

But Beijing says its poultry production meets international standards and that it exports poultry meat to other developed markets including Japan, the European Union and Switzerland.

It ought to be noted that--in food exports at least--the US runs a trade surplus with China, sending $12.16B worth to the PRC in 2008 while importing $3.45B of such goods. Hence, quite a few American agricultural producers are sympathetic to the Chinese over the ban (like I am, of course). What should we call them...communist sympathizers?

The U.S. Poultry and Egg Export Council -- fearful that the latest dispute will prompt retaliation in China, one of the biggest markets for U.S. poultry goods with sales worth $677 million in 2008 -- has expressed support for the Chinese complaint

Uncle Sam, poultry protectionism is the height of ridiculousness. If you cannot demonstrate that Chinese chicken is unsafe compared to other poultry imports, then I suggest you...[drumroll please]...let my chickens go.

4/21 UPDATE: Forbes has more on this case. Poultry exports are hardly a key part of China's export machine. Certainly, no one will make that mistake. However, given the increasing number of US-China trade rows, think of this case as an exercise in Chinese capacity-building for international economic diplomacy. In the beginning, you try your hand with smaller cases with a reasonably high likelihood for obtaining favorable results. Such formative experiences will come in handy if and when the US tries nastier tricks like slapping unilateral tariffs over currency manipulation and the like.