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UPDATE 2-China says policies legal after U.S. challenge on chicken duties
September 21, 2011 / 5:00 AM / in 6 years

UPDATE 2-China says policies legal after U.S. challenge on chicken duties

* Beijing says trade policies in line with WTO rules

* Duties seen as retaliation for U.S. bans on chicken, tyres

* China’s official news agency says United States started it (Adds Xinhua comments)

By Michael Martina

BEIJING, Sept 21 (Reuters) - China defended its decision to impose duties on U.S. poultry products on Wednesday, responding to the United States’ challenge of the policy by saying it was in line with World Trade Organization rules.

The duties are widely seen as retaliation for a U.S. congressional ban on imports of cooked chicken from China, as well as U.S. President Barack Obama’s decision in September 2009 to slap an emergency 35 percent tariff on Chinese-made tyres.

“China believes its anti-dumping and countervailing measures on U.S. chicken products are legal and in line with World Trade Organization rules,” China’s Ministry of Commerce said in a statement on its website (www.mofcom.gov.cn).

Beijing has accused U.S. companies of selling chicken in China at below market prices and of receiving government subsidies. It finalised the duties last year.

But the United States said Chinese officials did not follow WTO rules in their dumping and subsidy investigations. .

China had sought to overturn the tyre tariffs at the WTO, but the world trade body’s appellate court ruled the United States was justified in taking the action under the terms of China’s 2001 accession to the WTO.

The office of the U.S. Trade Representative said Beijing had won its case on the ban of cooked chicken and that the U.S. Congress had let the provision expire.

U.S. producers sold about $650 million in poultry to China in 2008 and 2009, but shipments fell to about $136 million in 2010 and totaled only $37 million in the first half of this year, a U.S. industry aide said after the U.S. announcement on Tuesday.

WTO procedures require the two countries to first try to resolve the trade dispute through consultations. If no agreement is reached within 60 days of starting talks, the United States can ask a WTO panel to hear the case.

China’s Commerce Ministry said it would carefully review the U.S. request for consultations and appropriately resolve the issue according to WTO dispute settlement procedures.

But China’s official Xinhua news agency was less concerned about ruffling feathers, issuing a commentary that said the United States and its massive farm subsidies were to blame for the trade spat.

“In the Pacific trade of poultry products, the initiator of unfair trade practices was the United States. China had no choice but to adopt anti-dumping measures and levy duties in self defense,” Xinhua said.

The commentary criticised the United States for the collapse of the WTO Doha round trade negotiations with its refusal to reduce farm subsidies, calling them “hugely injurious and unfair” to developing countries.

“The reason U.S. poultry products can be dumped at a low prices is linked to low cost cultivation, which is due to cheap feed. And the fundamental reason behind cheap feed is massive U.S. government agricultural subsidies,” Xinhua said.

Editing by Chris Lewis and Sanjeev Miglani

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