The World Trade Organization said in a major ruling Friday that China violated international trade rules by improperly imposing tariffs on imports of U.S. chicken parts, reports Brian Wingfield of Bloomberg. The decision puts an end to a long-standing dispute between two of the world’s largest economies.
China among top two markets for U.S. chicken producers
A WTO panel upheld U.S. complaints that the largest Asian economy imposed improper tariffs on imports on U.S. chicken broiler parts. China imposed tariffs as high as 105.4 percent of the chicken products’ actual price in September 2010 to prevent the sales of these products at lower costs, according to the panel report published on WTO website. Chinese officials argued that U.S. chicken exporters benefited from subsidies, so they were exporting their products to China at below cost prices. U.S. filed the complaint with WTO in September 2011.
A country has the rights to impose duties to prevent such practices. However, China violated regulations by not following proper procedures. These tariffs affected tens of thousands of jobs in the U.S. because China was one of the two largest markets for U.S. chicken before the duties were imposed.
U.S. poultry exports to China down 80 percent
U.S. chicken producers like Pilgrim’s Pride Corporation (NASDAQ:PPC), Tyson Foods, Inc. (NYSE:TSN) and Sanderson Farms, Inc. (NASDAQ:SAFM) had sought relief from tariffs. Sanderson Farms CFO Mike Cockrell told Bloomberg in a telephonic interview that it’s a big relief for U.S. chicken producers. The WTO ruling is a big blow to China. United States has already been challenging China over its currency manipulation and trade practices. Washington has accused that Beijing has substantially undervalued yuan for trade advantages in the international market.
Michael Froman, the U.S. Trade Representative said that improper tariffs had denied U.S. chicken producers access to a lucrative and valuable market. He said, since the duties took effect, U.S. poultry exports to China have declined more than 80 percent. If the WTO ruling stands, China will once again become a good market for U.S. chicken producers.