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U.S. Seeks to Bring Down Chinese Poultry Duties, Avoid Mexican Tuna Labeling Retaliation

Wednesday, May 11, 2016
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative announced May 10 a challenge at the World Trade Organization against the Chinese government’s failure to bring its antidumping and countervailing duties on U.S. chicken broiler products into compliance with WTO rules. Also at the WTO the U.S. is continuing its efforts to avoid nearly half a billion dollars in trade retaliation by Mexico in a long-running dispute over “dolphin-safe” tuna labeling.

China. In 2010 China imposed AD duties of 50.3 percent to 105.4 percent and CV duties of 4 percent to 30.3 percent on imports of chicken broiler products from the U.S. The U.S. challenged those duties at the WTO, which found that China had breached several procedural and substantive obligations in conducting its AD and CV investigations and that there were numerous defects in China’s determination that imports from the U.S. caused adverse price effects in the Chinese market. China subsequently issued a redetermination advancing additional rationales for the duties, some of which were lowered and some of which were increased, and asserted that it had complied with the WTO’s findings.

After an intensive review USTR has concluded otherwise and is therefore challenging China’s redetermination on various grounds. These include China’s failure to properly calculate costs of production for a U.S. producer, failure to conduct a transparent reinvestigation and various failures with respect to the finding that the Chinese industry has been injured on account of U.S. exports.

Mexico. At a WTO meeting in April the U.S. asserted that its modified dolphin-safe tuna labeling rules bring it into compliance with a WTO decision that those rules had unfairly discriminated against Mexico. This week the U.S. said it has discussed the modified rules with Mexico but that Mexico has insisted that WTO arbitration proceedings on its request for authorization to impose $472 million in retaliatory sanctions (likely in the form of higher duties on an as-yet-unidentified list of U.S. exports) move forward.

The U.S. has therefore requested, and the WTO has established, a compliance panel to confirm that the U.S. has brought its tuna labeling rules into compliance with the WTO’s recommendations and rulings. Mexico responded by indicating that it too will request a compliance panel to examine the amended rules.

Both the arbitration and compliance decisions are expected to be delayed due to the WTO’s workload. However, the arbitration decision is likely to come first, which could mean the imposition of sanctions before the WTO has a chance to reach a conclusion on the amended rules.

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