China to Levy More Tariffs on U.S. Chicken Imports

China will impose an additional duty on U.S. chicken imports of as much as 31.4 percent in response to what it called unfair subsidies for poultry farmers, threatening to deepen a trade rift.

An initial investigation showed that the U.S. provides subsidized soybeans and corn to its poultry industry, hurting Chinese producers, the Ministry of Commerce said on its Web site today. Importers must pay the new tariff on top of anti- dumping duties of as much as 105.4 percent imposed in February. Corn and soybeans are used in chicken feed.

President Barack Obama in September placed tariffs on automobile tires from China after labor union complaints that imports were pushing U.S. factory workers out of jobs. In February, China, the largest market for U.S. chicken, said it would impose anti-dumping duties on imports of poultry products.

“These taxes effectively make it impossible to import any U.S. chicken products,” Li Qiang, managing director at Shanghai JC Intelligence Co., said by phone from Shanghai. “U.S. chicken product exports to China have already shrunk drastically since the announcement of an anti-dumping duty.”

China consumed almost 800,000 metric tons of U.S. chicken in 2008, valued at $722 million, according to the USA Poultry & Egg Export Council. Actual imports were probably higher, at more than 1 million tons, because of shipments transferred through Hong Kong and Macau, Li added.

Complimentary Trade

Chinese consumers are fond of chicken feet, innards and other parts that U.S. consumers don’t eat, while the U.S. is a market for Chinese chicken breasts. Two-way trade in chicken is mutually complementary, Li said.

Imports by Pilgrim’s Pride Corp. will incur a 4.9 percent preliminary anti-subsidy duty and imports by Tyson Foods Inc. 11.2 percent, according to the ministry. Companies that did not cooperate with the investigation will have a 31.4 percent duty levied on products, it said.

The U.S. and China, with $409 billion in annual trade, have been engaged in a spat over allegations of dumping and subsidies. China says U.S. complaints are signs of protectionism, while the U.S. says it’s enforcing trade rules.

Still, the new Chinese duties may not further strain trade relations between the U.S. and China, which began its investigation in September, two weeks after the U.S. imposed tariffs on Chinese tire shipments, Li said.

“It is still relatively contentious but I don’t think China and U.S. trade will be derailed by the chicken dispute,” Li said.

Feiwen Rong
Source: Bloomberg