WTO, China & Chicken

March 12, 2009

This story is a bit complicated. Let’s start with the latest news:

China said Wednesday it will file a World Trade Organization case challenging a U.S. ban on Chinese poultry imports, criticizing the measure as protectionist. (IHT)

How did we get to this point? This sordid tale (well, I’m not sure how sordid it is, but you never know) begins in 2004 and the H5N1 Bird Flu scare. The trade posturing at that point led to bans on chicken from both the U.S. and China (reciprocity, and all that).

Next, it looked like a deal was struck in 2007 between Beijing and the Bush Agriculture Department but was scuttled by Congress:

The U.S. congress in 2007 stopped the Agriculture Department from moving forward with a proposed rule that would have allowed cooked poultry from China to enter the U.S. market, according to the government agency.

China allowed U.S. raw poultry to enter its market after it was given assurance that Chinese cooked poultry would be allowed access to the U.S. market, China Animal Agriculture Association’s Gong said. (Bloomberg)

I haven’t been able to devote a huge amount of time to this, so I’m not sure exactly what happened in 2007. Why did Congress step in to thwart this deal? Certainly there was a great amount of criticism back then from Democrats in Congress regarding lax enforcement by U.S. agencies involved in food safety. If I wasn’t such a cynical bastard, I would accept those press releases that describe how the Democrats fought so hard for public safety and acted to stop a flood of tainted Chinese chicken parts from reaching American shores.

Since I am a cynical bastard, however, I would want to find out exactly who it was in Congress who was pushing against these Bush policies and then find out if they were from a big chicken-producing area, like Arkansas, where the producers were mostly concerned with domestic competition. I don’t have the facts here, so I’m just identifying a few important factors for further research.

By the way, this is all even more complicated than I’m describing. Don’t assume that we have Beijing and Chinese chicken producers on one side and the U.S. government and producers on the other. This is the age of globalization, where U.S. chickens/chicken parts are sent to China for processing and sent back to the U.S. for consumption (I think that this was behind the proposed 2007 deal, by the way). Keep in mind, therefore, that there are U.S. enterprises that have a stake in the ability to export chicken parts from China to the U.S. Fun, huh?

Fast forward to March 10 and more congressional action:

The Omnibus Appropriation Act of 2009, approved by the US Senate on Tuesday, includes a section which bans any fund[s] from being used to "establish or implement a rule" allowing the import of poultry products from China. (China Daily)

Trade protectionism is a hot button issue in Beijing these days as China is desperately trying to stop the bleeding with respect to falling exports. No surprise, therefore, that the import ban was not seen favorably over here. No doubt that Chinese producers are none too pleased that the deal they thought they had back in 2007 is still not moving forward.

So what’s the deal with that budget language? Motivation aside, the 2007 move by Congress wasn’t all that surprising given the relationship between Congressional Democrats and the Bush Administration back then. I don’t think it is an exaggeration to say that no one had much faith in the Bush FDA or Ag Dept.

So why is the Democratic Congress making sure that the Democratic Obama Administration does not have the ability, through its administrative agencies, to strike a trade deal with Beijing with respect to chicken trade?

Is there protectionism going on here? I have no idea, although when in doubt, I usually suspect that there is something weird going on. Did I mention that I’m a cynical bastard when it comes to trade policy?

Without more info, that’s about all I can bloviate about at the moment on this topic. If and when China actually goes ahead and files a case with WTO, perhaps I can take a look at the merits. That being said, chicken parts is not exactly my field of legal expertise.