WTO Panel Backs China in Poultry Dispute with US

7 October 2010

A WTO panel has handed victory to China in a dispute over access to the US poultry market. The panel's ruling, made public on 30 September, determined that a clause in a 2009 US budget bill that effectively blocked Chinese access to the US poultry market contravened Washington's WTO obligations.

The clause was in a bill that provided funding to several federal agencies. It prohibited the US Department of Agriculture's food safety service from using funds allocated by the bill to create a rule that would allow the importation of poultry from China. This in effect prevented US food safety inspectors even from examining whether Chinese poultry inspection standards were on par with US requirements - a prerequisite for allowing imports.

The US and China had stopped trading poultry in 2004 due to fears of avian flu. However, China removed its ban after the scare ended, while the US did not.  After President Barack Obama signed the budget bill into law in March 2009, China sought consultations with the US on the issue (see Bridges Weekly, 22 April 2009). But the two sides were unable to resolve their differences, and a panel was created to adjudicate the case.

The US had argued that the measure was justified under the WTO's Agreement on Sanitary and Phytosanitary Measures (SPS), which allows countries to establish safety requirements based on scientific evidence. China countered that the measure was purely protectionist, pointing out that the EU, Japan, and Switzerland all allowed the imports of Chinese poultry, and that the US law did not allow for risk assessment.

The dispute panel found that the budgetary clause violated the SPS agreement since it was not based on a risk assessment. It also found that the law, which was specifically aimed at Chinese imports, violated the WTO's fundamental most-favoured nation principle (GATT Article I).  As an SPS measure that breached the requirements of the SPS agreement, the panel found that the clause could not be justified under the general exceptions in GATT Article XX, which spells out the circumstances under which WTO members can deviate from standard obligations in order to protect "human, animal or plant life or health."

US-China trade relations have taken a hit recently, between tensions over the yuan-dollar exchange rate and a raft of trade spats. Poultry trade alone has been the source of multiple irritants: China is currently levying anti-dumping duties on several US poultry imports, a step seen in China as a sort of reparation for the harm to the Chinese poultry market caused by the US's import ban.

The panel did not make any recommendations as the disputed US restrictions have since expired.

ICTSD reporting; "WTO rules China win over US imports dispute," CHINA DAILY, 9 September 2010; "Chinese Tariffs on U.S. Chicken Meat and Feet," TRUTH ABOUT TRADE AND TECHNOLOGY, 30 September 2010.

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