Ah, what's the IPE Zone without reports of trade conflicts? Just as I was scheduled to go comfortably numb heading into the weekend, I was awakened by news of two brewing trade conflicts. In both, the US is exercising the initiative. Briefly, the first concerns the US asking the WTO dispute settlement mechanism to rule on the EU's ban of American poultry exports over the use of chlorine in cleaning chickens. The following is the USTR's version of events:
That said, let's move to the steel pipe episode. Hot on the heels of the EU slapping anti-dumping duties on Chinese steel pipe comes news that the US is investigating doing the same. On top of this, the complainants are asking for countervailing duties. Interesting stuff. From Reuters:
What's becoming interesting to note is how EU and US actions against China are beginning to mirror each other. As always, watch this space.
In 1997, the EU began prohibiting the use of PRTs [pathogen reduction treatments] to reduce microbe levels on poultry carcasses sold in the EU, stopping the shipment of virtually all U.S. poultry. Since that time, the United States has attempted to address this market access barrier without litigation.To which the EU replies:
In 2002, the United States formally requested EU approval of four PRTs: chlorine dioxide, acidified sodium chlorite, trisodium phosphate, and peroxyacids, each of which was already approved for use in poultry processing by the U.S. Food and Drug Administration and the U.S. Department of Agriculture.
Various EU agencies have now issued scientific reports relating to the processing of poultry with these four PRTs. The cumulative conclusion of these reports is that the importation and consumption of such poultry poses no risk to human health. In addition, trisodium phosphate is approved for use as a food additive in the EU. On June 2, 2008, however, a committee comprised of the chief veterinary officers of the EU member States rejected a heavily conditioned European Commission proposal to approve the four PRTs by a vote of 26-0, with the United Kingdom abstaining. On December 18, 2008, the EU Agricultural and Fisheries Council, which is comprised of the agriculture ministers of the EU member States, voted against the same proposal in an identical tally. Neither body provided a scientific basis for their respective rejections of the Commission proposal.
"We regret that the United States has decided to ask for a panel to be established in this case. We feel that litigation is not the most appropriate way to deal with complex issues such as this one," the European Commission said in a statement reacting to the news on 8 October. "However, since the US has chosen this path, we will defend our food safety legislation, which does not discriminate against imported products," the EU executive added.Alike with the genetically modified dispute, I have no sympathy for the rather prissy EU position as I don't see Americans dropping dead all over the place consuming chicken. May the WTO strike down this pointless ban with haste.
The EU poultry ban has been in place since 1997, because US poultry producers use low-concentration chlorine to wash chickens before selling them – a practice not permitted in the EU. According to EU rules on hygiene and marketing of poultry, slaughterhouses can only use water or other approved substances to rinse meat products, in order to reduce their bacterial contamination.
That said, let's move to the steel pipe episode. Hot on the heels of the EU slapping anti-dumping duties on Chinese steel pipe comes news that the US is investigating doing the same. On top of this, the complainants are asking for countervailing duties. Interesting stuff. From Reuters:
The U.S. Commerce Department said on Wednesday it launched an investigation that could lead to new duties of nearly 100 percent or more on imports of steel pipes from China. The department said it accepted a petition asking for the probe from the United States Steel Corp, V&M Star LP, TMK IPSCO and the United Steelworkers union.This is the third straight high-profile case brought forth by the United Steelworkers--the tire episode, coated paper, and now steel pipe. Whether the last two are acted upon will certainly be interesting to observe. Note, too, that October marks Treasury Secretary Tim Geithner's second opportunity to label China a currency manipulator. In the meantime, China's official news agency is repeating its characterization of this action as "a serious act of trade protectionism" that "may increase US-China trade tensions."
The new investigation followed President Barack Obama's recent decision to slap a 35 percent duty on tires made in China after a U.S. trade panel said a market-disrupting import surge had occurred. The United States also imposed preliminary duties last month on $2.6 billion worth of Chinese-made steel pipe used to transport oil.
The latest case involves seamless carbon and alloy steel standard, line and pressure pipe used in industrial piping systems to convey water, steam, oil products, natural gas and other liquids and gases. Imports of the product from China increased nearly 132 percent by volume from 2006 to 2008 to an estimated $382 million, the Commerce Department said.
The petitioners have requested a 98.37 percent anti-dumping duty to offset what they allege to be unfairly low prices for Chinese-made steel pipe sold in the United States. They also want additional countervailing duties to offset suspected Chinese government subsidies.
The U.S. International Trade Commission will vote by early November on whether there is enough evidence for the case to proceed. If it gives the green light, the Commerce Department will make a decision on preliminary anti-dumping duties in December and preliminary countervailing duties in February.
What's becoming interesting to note is how EU and US actions against China are beginning to mirror each other. As always, watch this space.