China formally begins probe into U.S. chicken parts

BEIJING (Reuters) - China on Sunday formally launched an anti-dumping and anti-subsidy investigation into chicken parts imports from the U.S., two days after U.S. lawmakers agreed to end a gag order that prevented the U.S. from even considering importing Chinese cooked poultry.

China had said it would investigate chicken wings and feet, as well as automotive imports from the U.S., immediately after the Obama administration decided to impose hefty "safeguard" duties on Chinese-made tires.

"The Ministry of Commerce believes that this case meets the legal conditions and has decided to conduct an investigation of unfair trade practices like dumping and subsidizing of U.S. chicken products," the ministry said, adding that the case had been requested by Chinese chicken producers.

"The case will be decided according to law and facts."

The tire case marks the first time the U.S. has used a "safeguard" provision against a surge of Chinese imports, a clause China agreed to when it joined the World Trade Organization. The duties took effect on Saturday, immediately after the conclusion of the G20 summit in Pittsburgh.

The U.S. poultry industry had used the threat of the Chinese investigation, and curbs on wing and feet imports, to lobby for an end to a Congressional prohibition against the U.S. Department of Agriculture moving ahead on certifying Chinese plants for exporting cooked poultry to the U.S.

China has already brought a WTO case against the ban.

On Friday, U.S. lawmakers agreed to remove the ban from the USDA funding bill, but restated that poultry processed in China must live up to U.S. sanitary conditions before being shipped.

The author of the ban, Representative Rosa DeLauro, had expressed concern for the safety of U.S. consumers, after a series of food safety scandals in China.

The ban was renewed last year after a scandal in which melamine, a plastic component introduced into milk to cheat protein tests, killed at least six Chinese babies and affected about 300,000 who had drunk tainted milk formula.

Chicken wings and feet are virtually worthless in the U.S., where they sell for about 2 U.S. cents a pound, but are a delicacy in China where they fetch 40 U.S. cents/lb.

Imports from the U.S. are equal to about half of the total output of Chinese poultry producers, and rose to over 60 percent of Chinese production in the first half of this year, the Ministry of Commerce said, citing figures from the Chinese Animal Agricultural Association.

The case joins a number of anti-dumping cases being conducted by both sides, including a Chinese investigation of U.S.-made silicon steel and U.S. investigations of a number of Chinese steel products.