By: Ainsley Brown
It seems like there is more bad news for US exporters of Chicken to China – get ready for a whole new round of tariffs.
China has over the years become the largest export market for US chicken with sales of over US$722 million in 2008. The Chinese market for US exporters is a win/win; representing a dynamic market with tremendous growth potential, much of which consisting of chicken feet sales. The chicken feet market in the US is so small that chicken feet are often considered waste and therefore a cost; in China the reverse is true.
These new countervailing duties, of up to 31.4%, are on top of the anti-dumping duties China has already imposed earlier this year. The anti-dumping duties, as covered in a pervious post, range from 43.1% to 105.4% were imposed after a Chinese anti-dumping investigation which found that the Chinese domestic market had suffered material injury from the cheaper US imports. Unlike anti-dumping duties, countervailing duties are not imposed because of dumping – selling goods cheaper than the cost of production – but because of unfair subsidization – state support. In this case the Chinese are complaining about the subsidies on corn and soybeans that go into making chicken feed.
These new tariffs represent a first for China; it has never before imposed countervailing duties on an agricultural import. The move by the Chinese Commerce Ministry comes as a bit of a surprised considering the recent warming of relations between the two nations.