China to hit US chicken with new tariffs

China to hit US chicken with new tariffs
By Geoff Dyer in Beijing
Copyright The Financial Times Limited 2010
Published: April 28 2010 05:33 | Last updated: April 28 2010 16:50
http://www.ft.com/cms/s/0/c585639c-5277-11df-8b09-00144feab49a.html


China announced on Wednesday it would impose a second round of tariffs on imports of US chicken products of as much as 31.4 per cent, raising the temperature in the trade tussles between the two countries.

The commerce ministry said the new tariffs were a response to what it said were unfair subsidies given to poultry farmers in the US. The duties come on top of tariffs of up to 105.4 per cent that China placed on US poultry two months ago because of alleged dumping.

The new tariffs come at a time when economic friction between the two countries appeared to be relaxing, after the US Treasury department delayed its decision over whether to label China a currency manipulator and signals from Beijing that it will abandon its dollar peg.

It is a reminder of the number of thorny bilateral trade issues between the two countries, following the Obama administration’s decision to levy tariffs on Chinese tyres in September.

The decision all but closes off what had become a lucrative side-business for the US poultry industry after China became its biggest export market, with sales of $722m in 2008. Chinese consumers favour chicken wings and feet, parts of the bird that are usually shunned in the US, which means they can fetch prices 20 times higher in the Chinese market.

Although there have been complaints from Chinese companies for several years about surging US chicken imports, Beijing announced it would investigate US poultry imports two days after the US decision to impose tariffs on Chinese imports of tyres. It was angered by the tyre duties because they used the safeguard provisions under China’s World Trade Organisation accession agreement which can be invoked if there is a surge in imports from China.

This is the first time China has imposed duties on imports of agricultural goods on the grounds of alleged subsidies. Similar duties were placed on some US specialist steel products last year. The commerce ministry did not say how it had calculated the level of subsidies received by US farmers, although it said they were the result of the subsidised corn and soyabeans used in chicken feed.

Under the new ruling, US companies that submitted information to the Chinese government investigation, such as Pilgrim’s Pride and Tyson Foods, would face duties of 3.8 per cent to 11.2 per cent, while companies which did not co-operate would face duties of 31.4 per cent.

Earlier this year Beijing threatened to impose sanctions on a number of leading US companies for participating in a planned arms deal with Taiwan. There have also been trade disputes between China and either the US or the European Union over aluminium, chemicals, nylon and auto parts.

However, despite dire predictions that the global economic downturn would lead to a rash of trade disputes, business groups calculate that only 1-2 per cent of trade with China is affected by ongoing trade cases.