Export promise could make trade troubles worse
NEW YORK -- President Obama pledged during his State of the Union address to double America's exports in the next five years. Just don't mention that to chicken farmers, who now are bumping up against an unintended consequence of Obama's trade po...
NEW YORK -- President Obama pledged during his State of the Union address to double America's exports in the next five years. Just don't mention that to chicken farmers, who now are bumping up against an unintended consequence of Obama's trade policy.
China's Ministry of Commerce has proposed antidumping duties of 43 percent to 106 percent on imports of American poultry. Although Beijing claims the U.S. illegally sells chicken feet in China at a price less than the cost of production, this really is a political case. The step is widely viewed as retaliation for the 35 percent "safeguard" tariffs Obama imposed on Chinese tires in September. China launched its antidumping investigation days after the tire tariffs were announced.
Chinese poultry producers have long been angry with the U.S. about barriers to cooked-chicken imports inspired by spurious safety concerns, and they filed a suit at the World Trade Organization. Pressure from other quarters is mounting as Washington piles up antidumping duties on other Chinese products, whether it's $2.6 billion worth of steel pipe or, also recently, $33 million of ribbon used for wrapping gifts.
Seen in this light, it hardly matters that the technical merits of China's chicken case are questionable. Far from dumping, U.S. companies are able to sell chicken feet at a dramatic mark-up in China, where they're a delicacy, as compared with the U.S., where most consumers spurn them. It seems more likely that Beijing tinkered with its estimates of the cost of producing chicken feet to generate a sufficiently punitive duty rate. U.S. poultry exports worth at least $677 million as of 2008 are caught in the crossfire of a bigger trans-Pacific trade spat.
These duties will be as bad for Chinese consumers who face higher prices on imports as they are for U.S. exporters. Beijing recently took a far smarter course in a different trade dispute: It sued the European Union at the WTO contesting the EU's 16.5 percent antidumping duties on Chinese shoes.
As foolish as China's chicken duties are, they at least offer a useful lesson in the U.S. Obama often has highlighted the virtues of "trade enforcement" such as antidumping cases, including in his State of the Union address. The problem is that the U.S. isn't the only country that can play this game and the danger of tit-for-tat retaliation is real. Measures meant to burn China's tire industry have ended up roasting American chicken producers.