China unfairly slapped the U.S. with tariffs on products made from broiler chickens amid a 2010 series of trade disputes, including U.S. tariffs on Chinese-made tires, according to the World Trade Organization, or WTO.
China claims the duties were imposed because it said the U.S. was dumping chicken products into the Chinese market at below market prices, but the WTO ruled Friday that China “acted inconsistently” in several respects and harmed the export business of three major U.S. poultry companies: Tyson Foods Inc. (NYSE:TSN) of Springdale, Ark., Pilgrim’s Pride Corp. (NASDAQ:PPC) of Greeley, Colo., and the privately held Keystone Foods LLC of West Conshohocken, Pa.
“It sends a sends a message that while the WTO certainly allows for duties, there has to be a process that is fair, open and fact-based,” John Veroneau, a partner at the Covington & Burlington law firm and a former U.S. trade representative, told the Wall Street Journal.
In 2011 U.S. trade officials took their case to the WTO, claiming China had no justification for curbing chicken exports to China worth about $600 million a year. According to the U.S. Department of Agriculture, U.S. broiler chicken product exports were worth $3.1 billion in 2010, making up nearly 20 percent of all poultry exports.
U.S. Trade Representative Michael Froman said he hoped the ruling would “discourage further violations that hurt American exporters,” Bloomberg News reported.
China has 60 days to appeal the ruling.
Although tit-for-tat moves to impose retaliatory trade barriers are often a part of disputes among WTO members, the U.S. and China have been sparring aggressively in recent years, especially after a 2010 decision by the Obama administration to impose tariffs on Chinese-made automobile tires.
The WTO ruled in favor of that measure after the U.S. argued China was flooding the market with its cheaper product -- a move that was decried during the presidential election last year by Republican nominee Mitt Romney as a handout to U.S. labor unions that would harm free enterprise.