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U.S. wins trade dispute with China over chicken parts

By Tom Miles and Charles Abbott

GENEVA/WASHINGTON (Reuters) - The United States won a long-running trade dispute with China on Friday when the World Trade Organization found Beijing had broken global rules by imposing anti-dumping duties on U.S. chicken broiler parts.

The U.S. complaint, first raised in September 2011, was widely seen as one of a string of tit-for-tat disputes between the world's largest economies, and followed a U.S. ban on imports of Chinese cooked chicken.

The ruling could be a boost to U.S. poultry exporters. The U.S. complaint cited damage done to exporters like Pilgrim's Pride , Tyson Foods Inc and Keystone Foods, a brand held by Brazil's Marfrig Alimentos SA .

An official with the U.S. Trade Representative's office estimated that the United States has lost about $1 billion in broiler product sales since the duties were imposed by China in 2010.

Since 2010 the Chinese Ministry of Commerce has had anti-dumping duties on Tyson, Keystone and Pilgrim's Pride ranging from 43.1 percent to 80.5 percent, and a "weighted average" duty of 64.5 percent on imports from 32 additional U.S. companies.

"China's prohibitive duties on broiler products were followed by a steep decline in exports to China - and now we look forward to seeing China's market for broiler products restored," U.S. Agriculture Secretary Tom Vilsack said at a press conference.

The United States had been the largest exporter of broiler products to China, but the duties cut its exports by some 80 percent. U.S. chicken exports to China in 2012 were 95,000 tonnes valued at $113.5 million.

China has 60 days to appeal. We're going to press China to re-open the market," a USTR official said in a technical briefing on the case.

China and the United States have had a series of trade spats at the Geneva-based WTO.

Beijing first said it might impose the chicken duties in September 2009, just weeks after U.S. President Barack Obama's decision to slap an emergency 35 percent tariff on Chinese-made tires to stop a market-disrupting surge.

China challenged the tire tariff at the WTO, and lost. Within a week of the United States saying it wanted to litigate the broiler dispute, China slapped anti-dumping duties on more than $3 billion worth of U.S. cars. Those duties are now the subject of a separate WTO complaint by the United States.

U.S. Trade Representative Michel Froman said he hoped the latest win would "discourage further violations" of the WTO rule book.

"This decision sends a clear message that the Obama Administration can fight and win for American farmers, businesses, and workers in the global trading system," Froman said.

China had justified its duties on chickens by saying U.S. imports were unfairly subsidized and dumped on the Chinese market, causing material injury to China's domestic industry.

But the United States challenged the "opaqueness" of how China conducted its anti-dumping case, including the calculations it used to conclude whether or not U.S. chicken was being sold at a fair price in China.

The trade group's panel found that China's basis for finding dumping was "flatly inconsistent with WTO rules," the USA Poultry and Egg Export Council said in a statement.

"The WTO agrees with the U.S. argument that China had arbitrarily calculated costs, and from there allowed itself to impose anti-dumping duties," the USTR official said.

China's Ministry of Commerce did not immediately comment on the WTO ruling.

(Additional reporting by Theopolis Waters in Chicago; Editing by Sonya Hepinstall, Ros Krasny and Vicki Allen)

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