Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 9/14/09

China has launched anti-dumping and anti-subsidies investigations into some U.S. automobile and chicken products, China's Ministry of Commerce announced on Sunday.

The announcement came on the heels of an Obama administration announcement Friday that the United States will increase duties on imports of tires from China for three years to remedy a market disruption from a surge in tire imports. As part of its accession to the World Trade Organization, China agreed to allow its trading partners to implement remedies in response to import surges and under other circumstances.

China's Commerce Ministry said its auto and chicken product probe follows complaints from Chinese manufacturers alleging the products entered the country's markets in an "unfair competition manner," which harmed domestic industries.

The announcement did not specify which chicken products would be investigated.

Industry reaction

"The Chinese are saying it's not related to the tire tariffs, but I think we know better than that," Toby Moore, vice president of communications for the USA Poultry and Egg Export Council told Meatingplace. USAPEEC was one of a number of organizations that sent a letter last week to the U.S. Trade Representative urging the administration not to impose increased tariffs on Chinese tires.

"Charges of dumping of poultry products are completely unjustified," according to a statement by the National Chicken Council, which added its belief that China is also targeting chicken because of concerns over the provision in the House version of a U.S. appropriations act that prohibits USDA from determining China's ability to ship fully cooked poultry products to the United States. China has requested a dispute resolution panel from the WTO over the appropriations provision. The Senate version of the bill, however, contains language that somewhat offsets the provision.

China is one of the top two export markets for U.S. poultry products, the other being Russia. The United States exported 436,544 metric tons of chicken, valued at $376 million, to China in the first seven months of 2009, according to NCC. In 2008, chicken exports to China totaled 757,786 metric tons valued at $682 million.

Potential impact

About 70 percent of U.S. chicken exports to China are in the form of paws (chicken feet), according to J.P.Morgan analyst Ken Goldman. He speculated China could impose a U.S. chicken import tariff as high as 35 percent to match the U.S. tire tariff but also questioned where that supply would come from if China limits U.S. imports.

"We think that Chinese citizens, by paying up for product, probably will bear the brunt of the tariff's cost," he wrote in a note to investors.

Goldman said while chicken exports to China could decline, the impact on companies such as Tyson Foods, Sanderson Farms and Pilgrim's Pride "may be less than devastating even if a tariff is applied.

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