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Monday, April 19, 2010

China-U.S. Poultry Dispute

Renée Johnson
Specialist in Agricultural Policy

Geoffrey S. Becker
Specialist in Agricultural Policy

In April 2006, the U.S. Department of Agriculture's (USDA's) Food Safety and Inspection Service (FSIS) published a final rule allowing certain poultry products processed in China to be imported into the United States. However, USDA appropriations measures for recent years have prohibited FSIS from using funds to implement the rule. In October 2009, Congress enacted the FY2010 Agriculture appropriations bill (P.L. 111-80), which contains language that seeks to address this issue. Instead of continuing this prohibition, the FY2010 Agriculture appropriations bill allows USDA to use appropriated funds to implement the FSIS rule permitting U.S. imports of certain processed poultry and poultry products from China, if specified preconditions are met. 

The appropriations language is intended not only to ensure the safety of Chinese poultry imports but also to address trade concerns. The Chinese government has strongly criticized the ban on implementation of the rule as a violation of trade rules, and on April 17, 2009, it formally requested World Trade Organization (WTO) consultations on the issue, the first step toward referral to a dispute settlement panel. This panel was established later in 2009 and said it will issue its final report by July 2010. 

Many food safety advocates have supported the ban on the poultry rule, arguing that China—the third-leading foreign supplier of food and agricultural imports into the United States—lacks effective food safety protections. They have noted that China has experienced outbreaks of highly pathogenic avian influenza, and have argued that USDA's determination, that Chinese-processed poultry was appropriately regulated, was flawed. These advocates have argued, among other things, that China has been the source of a number of unsafe consumer products, including dairy products, infant formula, and wheat gluten (used in pet and animal feeds) intentionally contaminated with melamine to heighten measurable protein levels, and farmed seafood with illegal levels of antibiotics. 

Earlier, a coalition of U.S. animal product exporters had opposed appropriations language banning the China poultry rule. This group argued that the ban had fueled trade retaliation by China, where a rising quantity of U.S. poultry products are now being marketed and where U.S. meat exporters have been seeking expanded sales of their products. Meanwhile, China announced on September 14, 2009, that it was launching anti-dumping and anti-subsidies investigations regarding chicken meat (and automobile parts, after the United States imposed import safeguard tariffs on Chinese tires) produced in the United States, which Chinese manufacturers allege have harmed them domestically due to unfair competition. A Chinese ministry in early February 2010 released a preliminary ruling against U.S. poultry products, including anti-dumping penalties on individual U.S. companies ranging from 43.1% to 80.5%.

Date of Report: April 5, 2010
Number of Pages: 11
Order Number: R40706
Price: $29.95

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