When China announced it was investigating U.S. chicken parts for dumping a few weeks ago, there were immediate suggestions of an incipient trade war, a Chinese “retaliation” over U.S. safeguards imposed on commercial tires, which we discussed in Trade War? , a recent article on this blog. Yet, there have been disputes between China and the United States over chickens and chicken parts for several years. The United States has been blocking access to the U.S. market for Chinese chickens, and even before questioning trade in the other direction China has been challenging the U.S. actions.
Less than six months after China requested WTO consultations with the United States over measures that they claimed unfairly banned chicken imports from China, members of the U.S. Senate and House of Representatives reached agreement on legislation that eventually may reopen the door to Chinese chickens. On September 25, 2009, U.S. Secretary of Agriculture Tom Vilsack and U.S. Trade Representative Ron Kirk announced that members of the U.S. Senate and House of Representatives had reached an agreement on legislation that would provide the U.S. Department of Agriculture (USDA) funding for the year 2010 to implement rules allowing the import of poultry products from China. The announcement came two days after the WTO declared a panel had been formed to hear the case raised by China in April of this year that the United States’ restrictions on imports of Chinese poultry violated its obligations under the WTO. The public announcement from these Obama Administration officials suggests that the Administration had concerns about the legitimacy of the ban and finally succeeded in moving members of Congress from a protectionist position to a more pragmatic one on questions of the food safety of Chinese imports.
The history of the chicken trade dispute goes back to 2004, when China and the United States suspended trade in poultry amid concerns about the spread of avian bird flu. China claims that, at the Sino-US Joint Commission on Commerce and Trade in 2004, the two countries mutually agreed to lift the bans, but that the United States had failed to live up to that promise. Congresswoman Rosa DeLauro, a Democrat from Connecticut and the Chairwoman of the Agriculture Subcommittee of the House Appropriations Committee, has been an outspoken critic of safety standards for food imported from China, and was primarily responsible for legislation that effectively banned imports of Chinese poultry products. The legislation cut off funding for USDA to implement rules that would allow the importation of Chinese chicken parts consistent with U.S. food safety guidelines. Section 727 of the Omnibus Appropriations Act of 2009 (Public Law 111-8) unabashedly stated that, “None of the funds made available in this Act may be used to establish or implement a rule allowing poultry products to be imported into the United States from the People’s Republic of China.”
Congresswoman DeLauro’s version of the 2010 appropriations bill would have continued the ban on Chinese chicken, but the U.S. Senate version of the bill removed the ban subject to USDA’s adoption of safety inspection and approval procedures. The Senate version of the bill appears now to have prevailed in U.S. House and Senate negotiations, and soon may be approved by Congress.
Although the imbalance in the bilateral chicken trade is a dispute at least five years old, it received greater attention in 2009 as China requested WTO consultations with the United States on April 17, and then initiated an antidumping investigation and threatened to cut off U.S. chicken imports following President Obama’s decision in September to impose safeguard duties on Chinese tires. The U.S. Poultry and Egg Export Council has been lobbying Congress and the Obama Administration to keep the chicken trade open with China, at least for U.S. exports, especially as China is responsible for consuming 19% of U.S. chicken exports, and jumbo-sized chicken feet produced in the United States have been very popular in China and can be sold at much higher prices than in the United States.
Whether the Senate and House agreement on the 2010 appropriations bill ultimately will lead to USDA’s approval of Chinese chicken imports remains to be seen. The Obama Administration’s USDA will continue to face competing domestic pressures from Congresswoman DeLauro, food safety critics, and trade protectionists to require strict audits and on-site review of Chinese poultry processing facilities for compliance with U.S. food safety standards. But U.S. poultry exporters, as well as U.S. poultry producers looking to import from facilities located in China, will be pushing for free trade in chicken. The question is whether China’s WTO complaint can provide the additional impetus to ensure that USDA inspection procedures are conducted fairly, without the taint of protectionism, and will open the door for the import of safe and sanitary Chinese poultry products.
Does China Have A Case At The WTO?
China has argued that the U.S. chicken ban is a quantitative restriction on trade in violation of Article XI:1 of the General Agreement on Tariffs and Trade (GATT 1994) and Article 4.2 of the WTO Agreement on Agriculture, and that the ban is not consistent with the Agreement on the Application of Sanitary and Phytosanitary Measures (“SPS Agreement”). Even though legitimate questions have been raised in the United States about the safety of Chinese food products generally, it would seem that China has a good case regarding chickens that the U.S. ban is not consistent with the WTO Agreements.
It is not clear that the ban would even qualify as an SPS measure that the United States might justify on the basis of concerns for protecting public health. As a WTO panel noted in paragraph 7.149 of European Communities – Measures Affecting the Approval and Marketing of Biotech Products, the purpose, form and nature of a law determines whether it qualifies as an SPS measure. That panel went on to note that the “nature” of an SPS measure is that it has “requirements and procedures, including, inter alia, end product criteria; processes and production methods; testing, inspection, certification and approval procedures… ." Section 727 of the Omnibus Appropriations Act of 2009 does not establish any requirements or testing procedures for determining whether Chinese poultry products meet public safety criteria. To the contrary, Section 727 denies funding for the USDA to adopt and implement any such requirements or procedures exclusively for poultry products from China (“None of the funds made available in this Act may be used to establish or implement a rule allowing poultry products to be imported in the United States from the People’s Republic of China.”).
Even were the ban considered an SPS measure, it would not likely satisfy the requirements of the SPS Agreement. Articles 5.1 through 5.4 of the SPS Agreement require that SPS measures be based on assessments of health risks, taking into account scientific evidence, the cost-effectiveness of alternative approaches to limiting risks, and the objective of minimizing negative trade effects. Article 2.1 requires that any SPS measure be “applied only to the extent necessary to protect human, animal or plant life or health” and that it be “based on scientific principles and is not maintained without sufficient scientific research ….” The very procedures that would allow for risk assessments, research, the gathering of evidence, and evaluation of competing effects have been blocked by legislation that precludes any financial support going to USDA to undertake such procedures.
USDA likely has known that the Chinese chicken ban is problematic with respect to the United States’ international obligations. A February 2006 fact sheet published by the Foreign Agriculture Service explains that the SPS Agreement was adopted during the Uruguay Round with the support of “[v]irtually all countries, including the United States” because countries previously had used vague and opaque SPS measures to disguise restrictions on trade. According to USDA, the SPS Agreement requires that measures “be based on science,” “be applied only to the extent necessary” to protect health, and “should not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail.” USDA, however, has had its hands tied thus far by the Chairwoman of the Agriculture Subcommittee of the House Appropriations Committee, who opposed earlier attempts by USDA to implement rules allowing the inspection and import of Chinese poultry products.
Were a WTO Panel to agree that Section 727 lacked the “nature” of an SPS measure, Section 727 would appear to be a quantitative restriction on trade in violation of GATT Article XI(1) and Article 4.2 of the Agriculture Agreement. Given the law’s unique and exclusive application to China, it would appear also to violate the principle of most-favored nation treatment, as China suggested in its request for consultations:
Moreover, by imposing these restrictions with respect to imports from China, but not similarly prohibiting the import from other Members of like products, China is concerned that the US fails to accord immediately and unconditionally to China an advantage, favour, privilege or immunity granted to other Members with respect to rules and formalities in connection with importation.
The United States certainly would have other trade disputes with China that would be more compelling and defensible at the WTO.
As pointed out previously on this blog, it is a significant undertaking to seek relief through WTO Dispute Settlement Proceedings. However, in this case there is no mechanism for China to challenge Section 727 in U.S. courts. A WTO challenge offers the best avenue for China to obtain meaningful relief. Here, simply filing the WTO challenge appears likely to have given the U.S. Government sufficient incentive to lift the chicken ban voluntarily.
The WTO challenge to the chicken ban has moved the internal U.S. discussion of the issue from one of purely domestic politics controlled by a powerful subcommittee within the U.S. House of Representatives, to one of respect for international obligations in which the President’s Cabinet-level policymakers—the Secretary of Agriculture and the U.S. Trade Representative — are involved actively. The President’s pragmatism suggests that he chooses his international trade battles carefully. While the President will want to be resolute on certain trade issues with China, the Chinese chicken ban seems transparently inconsistent with the United States’ WTO obligations and public safety concerns can be addressed through USDA’s implementation of prudent, non-discriminatory inspection procedures. WTO attention to the Chinese chicken ban, coupled with support from U.S. industry groups with aligned interests, should provide the Obama Administration and the Congress with the incentive they need to ensure that the U.S. Senate and House agreement to remove the ban from the 2010 appropriations bill is implemented in the final draft that reaches the President’s desk for signature.
就在中国针对美国限制中国鸡肉出口的“不公平”政策申请世贸组织磋商后不到六个月，美国参议院和众议院达成协议，将重新向中国鸡肉敞开大门。2009年9月25日，美国农业部长维尔萨克（Tom Vilsack）以及美国贸易谈判代表柯克（Ron Kirk）宣布美国参、众两院已经达成协议，将向美国农业部提供2010财政拨款以实施进口中国禽肉的法律条款。这一声明宣布之前两天，世贸组织宣布成立专家组审理中美鸡肉贸易纠纷，在这一案件中中国指控美国违背了入世承诺。奥巴马政府的声明说明美国政府担心这一进口限制的合法性，并最终成功地推动国会成员从保护主义立场转向更符合实际的立场——从食品安全角度对中国出口提出质疑。
美国这一以保护公众健康为基础的进口限制是否能被视为卫生和植物卫生政策仍不清楚。就如世贸组织专家小组在欧盟生物产品批准、营销程序一案裁决第7.149章（European Communities – Measures Affecting the Approval and Marketing of Biotech Products）指出，法律的目的、形式和性质决定它是否属于卫生和植物卫生政策。专家小组进一步指出卫生和植物卫生政策的性质是指，“它包括但不局限于终端产品标准、生产加工方法、测试、检验、许可证发放和批准程序等要求和程序规定。”《2009年综合拨款法案》第727款并未设立任何要求、或是测试程序以检验中国禽类产品是否符合公众安全标准。恰恰相反，第727款拒绝拨款给美国农业部，使之无法采纳、实施单单针对中国禽类产品制定的类似要求和准则（“这一法案涵盖的任何拨款不得用于建立、实施允许中国禽肉产品出口至美国的条款。”）