China Govt to Address US Broiler Imports Issue

CHINA - The government is considering whether to launch trade remedy measures against imports of broiler meat from the United States.
calendar icon 2 September 2009
clock icon 4 minute read

Official sources say that the China Animal Agriculture Association, representing 20 large-scale broiler meat companies whose annual output accounts for more than 50 per cent of the total, is worried losing market share to the US.

It recently sent a proposal to the Ministry of Commerce (MOFCOM), claiming the large volume of the US imports and their comparatively lower prices have disrupted the Chinese poultry market, squeezing local companies' profits and hurting sales, Ma Chuang, vice-secretary general of the association, told China Daily in an exclusive interview.

"We are aware of the appeal from the industry and we will carefully study it and respond accordingly," said officials from MOFCOM.

The proposal, if enacted, will be the first trade remedy deal that China has launched in the agriculture industry and will seriously reduce the US broiler exports.

It comes at a critical time with China and the US embroiled in a row over possible tariffs imposed on some Chinese-made tyres. Tomorrow (3 September), the United States Trade Representative is expected to submit the final proposal to American President Barack Obama on the issue. He will make a final decision in 15 days. China is expected to take retaliatory measures if Obama agrees to the tariffs.

Rumours have been running rampant that the final proposal will probably not favour the Chinese side, although the Chinese government has expressed great concern over the situation and has sought consultations with the US several times.

"There is a high possibility that the Chinese government will start conducting an investigation into the broiler situation if the final decision on the tire special guarantee hurts Chinese industry," said a WTO expert who did not want to be named.

The US is the largest broiler producer worldwide, followed by Brazil and China, and the nation is also the largest exporter to China. In 2008, the US sold 584,300 tons of broiler meat to the Chinese market, accounting for 20 per cent of its exports.

The Chinese broiler industry has been bothered by the quantity of the US exports since 2000. Imports of broiler meat from the US have risen quickly more recently, stimulated by low prices over the past three years and especially late last year. This has posed an even bigger threat to Chinese manufacturers, said Mr Ma.

"We began to mull over an appeal three years ago," he said.

From 2006 to 2008, the broiler imports from the US accounted for 68, 66 and 73 per cent of the total Chinese broiler imports. The figure jumped to 89 percent during the first half of this year.

According to an investigation by the animal agriculture association into six major Chinese broiler companies whose output volume made up for 20 per cent of the total, the ratio of output to capacity was 79 per cent from 2006 to 2008. It dropped to 66 per cent during the first half of this year.

"Price is the key reason behind the shift, as consumers have become more sensitive to it during the financial crisis," said Mr Ma.

In 2008, China's broiler meat was priced at an average of 10,482 yuan per ton. It was 9,823 yuan (RNY) per ton for the US product over the same period – 659 yuan lower.

"Chinese manufacturers have the capability to meet domestic demand without the US imports," Mr Ma said.

The American Chamber of Commerce China refused to comment in detail on the issue, saying only that it was very concerned about it and would respond more fully when any official announcement was made.

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