BEIJING - The United States announced on Sept 20 it started action at the World TradeOrganization by challenging Chinese duties on US poultry products that Beijing imposed lastyear.
The move is illogic. The United States does not check its policies on agricultural subsidieswhich lead to the dumping of poultry products in the Chinese market. Instead, it took actionagainst China, where a number of poultry industries have fallen victims to the dumping.
Last September China decided to levy anti-dumping duties of between 50.3 percent to 105.4percent on imports of US chicken products for five years. The decision was based uponfindings of an investigation by the Ministry of Commerce which show that the US chickenindustry has dumped broiler products into the Chinese market and caused "substantialdamage" to China's domestic industry.
Statistics show that US exports of chicken products have risen sharply since 2006. In 2008, USexports of chicken products to China rose 12.34 percent year-on-year to 584,300 tons, and inthe first half of 2009, about 305,600 tons of US chicken products landed in China, up 6.54percent year-on-year, or 89.24 percent of China's total chicken product imports.
US dumping of chicken products stems from low cost of feed, mostly corn, and the substantiallow price of corn comes from US policies on crop subsidies. This is a simple and clear chain ofconsequences.
The US government provides diversified subsidies for farmers under its farm bills. According toa Canadian report, for every dollar US farmers earn, 62 cents comes from some forms ofgovernment subsidies, with total aid from all levels of government adding up to more than $180billion in 2009. Among the subsidies, feed grains account for the biggest share of around 35percent.
In a closed economy, crop subsidies would cause no problem as agriculture is less competitivecompared to other sectors such as industry and services, and subsidies serve to protect thefarmers.
However, in a globalized world, huge agricultural subsidies by developed countries, more oftenthan not, put developing countries including China at a great disadvantage by unfaircompetition.
Meanwhile, agricultural subsidy has been a stumbling block in trade negotiations. In 2006, talksat the Doha round of WTO trade negotiations stalled because the United States refused to cutsubsidies to a level where other countries' non-subsidized exports would have beencompetitive.
Mark Malloch Brown, former head of the United Nations Development Program, said agriculturalsubsidies caused "extraordinary distortion of global trade," adding that Western countriesspend $360 billion a year on protecting their agriculture with a network of subsidies and tariffsthat costs developing countries about $50 billion in potential lost agricultural exports.
The US move is also politically motivated.
Last October, US senators Charles Grassley and Orrin Hatch sent a letter to top US trade andagriculture officials, urging the Obama administration to ask China to withdraw duties on USpoultry they said were part of a larger pattern of unfair trade practices by Beijing.
As the presidential campaign is getting into high gear, the White House is increasinglypressured to play the "China card."
It is quite clear that China has strictly followed the WTO rules, and what it has done is commonpractice in world trade today.
For instance, in 2009, Brazil was authorized by the WTO to apply trade sanctions against theUnited States over the latter's illegal cotton subsidies for its cotton producers. Later, Brazilraised tariffs on 102 US products.
In short, it is the Unites States that started the unfair poultry trade and jeopardized the interestof Chinese poultry and other industries. In response, China was forced to take trade remedymeasures to protect its vulnerable enterprises.
Therefore, the United States is strongly advised to examine the negative impact of its cropsubsidies on China's poultry industry and look for a proper solution through consultationsrather than seek confrontations and retaliations.
It is understandable that the US government has adopted the strategy of giving higher priorityto exports when the US economy is in trouble. But if it resorts to trade protectionism or eventrade war, Washington would surely suffer more losses rather than reap gains.
Business-Opinion-Garden
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