Update on the US-China Chicken War

September 30, 2009

I first wrote about the US ban on China chicken exports back on March 12. That post had a fair amount of detail, so I’ll just link to it here and not rehash the history, which is kind of weird.

I updated the story, including details on China’s WTO complaint and the US Food Safety Law, on August 1.

OK, so here’s the latest. Last week, the U.S. government (specifically language in an agriculture bill) came out with a compromise position that would allow imports of Chinese chicken, essentially lifting the US ban.

A sub-committee chairman in the House who was involved in the process, Rosa DeLauro, had this to say about the compromise:

The conference report language will allow the rulemaking to go forward, but DeLauro said the language would firmly establish that Chinese poultry imports must live up to American sanitary conditions before being shipped to the U.S. because it requires more on-site audits, more on-site inspections and an increased level of port-of-entry re-inspections. (Agweek)

This is government-speak for “we are lifting the ban but want to minimize any heat from consumer groups, so we are adding in these bullshit ‘protective measures.’

You might enjoy this bit of fluff from another US House member (same article as cited above):

House Agriculture Appropriations Subcommittee ranking member Jack Kingston, R-Ga., also praised the agreement. Kingston, who visited a Beijing processing plant that would export to the United States if allowed, said, China not only opened their doors to me but their books as well. I am confident that the USDA can get all the information it needs to provide for the importation of safe, processed chicken products.

No idea whose plant he visited, whether it was a foreign-invested enterprise, etc. I assume he knows that what he says is complete and utter bullshit, but you never know. Lots of foreigners visit factories over here and get to see their “books,” and think they have been given access to real information. Kingston is a conservative Republican from the South, so he already (professes) to believe in a lot of fairy tales. That being said, his statement that “China” opened its “books” to him is a bit odd, and I’m not sure what he means.

Why did this finally happen? Basically the Chinese trade negotiators complained at length about the ban and eventually starting threatening cross-retaliation. They also filed a case at WTO, which appointed a panel in July to hear the dispute, and banned some chicken imports from several US states. Bilateral trade talks on other products also began to suffer, so someone on the US side finally stepped in and said that this needed to be fixed.

This is not quite a done deal yet, though. According to what I’ve read, which admittedly is a few days old at this point, the bill is still in conference (i.e., the House and the Senate have to sit down and agree on final language, before both bodies can vote on it and send it to the president for signature).

Last, but certainly not least, Beijing announced last Friday that it will move forward with an anti-dumping case against US chicken parts, a formal investigation that may last up to a year. This is all about government-level trade negotiations, but it could really have a major effect on chicken imports:

US poultry exports to China were worth $676m (460m, 422m) last year and the US accounted for 90 per cent of the 407,000 tonnes of chicken products China imported in the first half of this year, according to figures reported in state media. (FT)

That’s some nice market share, eh? Not sure what percent of the entire chicken market that represents (i.e., imports plus domestic production for the China market) — that would be interesting to know.

Seems strange that they would do so after the US chicken ban appears to be reaching its end, right?

Yes, if this action had anything to do with the US chicken ban (it doesn’t). In reality, this investigation is moving forward at this time as a direct consequence of the US decision to slap duties on Chinese tire imports (I’m still working on Part III of my series on that topic, but you can read Part I and Part II).

So where does all this leave the US chicken imports? Well, if the US ban is lifted, Beijing will no longer have a reciprocity argument to make, and I assume the WTO dispute will be history. However, the tire case has thrown all of this into chaos and made the chicken dispute much more complicated. Beijing can afford to let the chicken investigation move forward, knowing that they have this weapon in their trade negotiation arsenal — note that this is an anti-dumping case, and if Beijing wants the investigation to show dumping, MOC will salute and come up with that finding.

If I was in the chicken industry, all of this would piss me off. As of several months ago, all I had to worry about was a chicken-related, reciprocity-based trade dispute that was contained to a specific US law. Now, I have to worry about tires, and generally about any other dispute relating to US-China trade. Makes it awfully difficult to be a lobbyist.

Stay tuned.