Dumped Chicken Feet
Phoenix Talons
We have another chicken war! The original “Chicken War” was a trade dispute between the United States and the European Union many years ago, and there have been several such trade spats since. The latest chicken war is between the United States and China, and it concerns the price of chicken feet and wings.
China slapped antidumping duties on U.S.-origin chicken parts last Friday, saying that American poultry producers are selling feet and wings in China at grossly reduced prices, far below actual costs. Computing a margin of dumping is an arcane and difficult business, but the dumping margins the Chinese say they found are astronomical. Dumping margins vary by company and depend on the information they supply during the dumping investigation. So, here’s the verdict from Beijing: out of 35 companies named in the dumping finding, Tyson Foods came off the best, assessed 43.1%. Most of the other U.S. suppliers will pay 64.5%, though Pilgrim’s Pride got tagged for 80.5%. Any unnamed U.S. chicken suppliers can get dinged by 105.4%. That should play havoc with profit margins. There is speculation that Tyson came off “lightly” (there is nothing light about a 43.1% duty) because the company has invested in China and has an active lobbying corps in Beijing. These antidumping duties have not been finalized, so payments will essentially go into an escrow account in China while the companies have twenty days in which to appeal. I wish them luck.
As trade disputes go, this is a small one – and nothing to match the original chicken war. Out of $77 billion in Chinese imports from the United States, we are talking less than $800 million here. Probably considerably less, because the $800 million is total sales of U.S. chicken products in China, and the case only addresses feet and wings. Still, this has all the hallmarks of a case that Washington will want to take to the WTO. The size of the dumping margins virtually guarantees that. Of course, the U.S. companies may really have dumped feet and wings at those levels. The U.S. market for chicken feet is nil and how many buffalo wings can you eat (now that the Super Bowl is over)?
That raises a curious issue, though. If the chicken parts in question have only a negligible value in the United States, how can selling them at a presumably higher price in China be considered dumping? There appears to be some curious accounting going on.
The amount of chicken parts involved is not significant for China’s internal market, which makes it doubly amusing that imposition of the duties was delayed until February 13, too late to impact prices for Chinese New Year.
[After drafting this, I saw a spot-on opinion piece in the Wall Street Journal about chicken feet and the unintended consequences of aggressive trade policies.]
