A few days ago, I came across an interesting post at my newest blog find, the fine China-US Trade Law, suggesting those imagining a US-China back-and-forth row (like your truly) are all wet:The United States is not capable of the tit-for-tat this imagined trade war requires, if for no other reason than it does not control the timing and subject matter of petitions. The ITC [International Trade Court] does not have the capacity to orchestrate hearing and determination dates according to actions in China. Nor have all the ITC determinations been affirmative, and in the one instance where Chinese interests (but not the Chinese government) have challenged the legality of agency actions, the Court of International Trade handed them a partial victory...My answer is that you have to look at the totality of US-China relations to grasp the overall picture. While relations have long been deteriorating between these two titans IMHO, the recent Google incident, the arms sale to Taiwan, Obama's invitation for the Dalai Lama to visit the White House (a fellow colourfully described by a PRC official as "a wolf in monk's robes, a devil with a human face but the heart of a beast"), and new calls for Chinese currency revaluation in light of the upcoming biannual review of trade partners' practices have now arguably triggered a backlash from the PRC and it's hard to interpret things differently.
China, by contrast with the United States, may be capable of retaliatory actions, although such capability ought not be exaggerated. Bureaucracies share the same infirmities everywhere. They all move slowly, and they all have difficulty with deadlines. There is surely more coincidence than conspiracy in the timing of apparently reciprocal actions, although retaliation is not impossible.
In July of last year, I brought up how the US and China were going at it in the poultry sector. In response to a US Department of Agriculture ruling prohibiting Chinese plants from sending poultry products to America over largely unsubstantiated safety grounds (DS 392 at the WTO), China retaliated by refusing to renew American firms' export licenses to sell poultry products in the PRC. This is no small beer as China had become the largest overseas market for American poultry producers. Today, we receive word that China's hackles have been raised yet again: It is slapping substantial anti-dumping duties on the aforementioned products according to Reuters:
Chicken wings and feet, virtually worthless in the U.S. market, are a delicacy in southern China. Many U.S. poultry producers count on the Chinese market to round out their profits. "Chicken feet and wings are not wanted in the U.S. so they sell them to China, they dump them below cost," said Wang Xiulin, president of the Chinese Poultry Association. "For over a decade, the U.S. has sent big volumes of chicken to the Chinese market, hurting producers here. Last year, the Chinese poultry industry was really hurting so we asked for this investigation."And here are the economics of chicken feet duties:
Tyson Foods, an active investor and lobbyist in China, got the lowest duty of 43.1 percent. Pilgrim's Pride Corp. was hit with an 80.5 percent duty. Most other firms, including Sanderson Farms, face a 64.5 percent duty. Those that did not appeal the finding would pay duties of 105.4 percent, the ministry said. Duties go into force on Feb 13, or Chinese New Year's Eve, ensuring the price of the popular delicacies remain steady for holiday shoppers already fretting about vegetable inflation.
China began its investigation in U.S. chicken parts after the U.S. imposed safeguard duties on Chinese-made tyres, which China is fighting at the WTO. The new tariffs could close a lucrative market for the U.S. poultry industry, which supplies more than ¾ of China's imports [of these particular products].So there you go. There's no tit-for-tat here over trade. None whatsoever. Slowly but surely, we are headed for a showdown of sorts--America and China, are you chicken?
Chicken feet and wings fetch about 2 U.S. cents per pound in the U.S., but land in China at about 42 U.S. cents - a figure that Chinese rivals say represents the cost of the freight only. A flat import tax of 500 yuan ($73) a tonne and a 13 percent value-added tax mean U.S. wings and feet can enter the Chinese market at about 54 cents a pound - compared to the Chinese wholesale price of about 76 cents.
Additional duties mean that U.S. imported chicken parts will cost about 5 cents per pound more than their Chinese competitors.
UPDATE: The WSJ's China Real Time Report points us in the direction of this MOFCOM document on tariff rates to be applied. In true guanxi fashion, American firms that have built a relationship in China are hit with lower tariffs.
