WASHINGTON — The World Trade Organization ruled in favor of the U.S. on Friday in a long-standing trade dispute over allegations China unfairly imposed anti-dumping tariffs that restricted American poultry exports.
The chicken dispute is part of a larger strain in trade relations between the world's two largest economies. The U.S. appeal to the WTO dates to 2011, after China said that America had engaged in dumping and had imposed tariffs on imports of so-called "broiler products," which include most chicken products, with the exception of live chickens.
China said U.S. chicken producers benefited from subsidies and were exporting their goods at unfairly low prices. Countries are allowed to impose punitive tariffs to offset both practices, but U.S. officials claimed China did not follow proper procedures when it imposed them in September 2010.
The U.S. also said tens of thousands of jobs were affected – China was one of the two top markets for U.S. chicken exports before the tariffs.
The ruling found that China breached its WTO obligations and recommended it comply with WTO rules. However, it did not specify the actions China must take. China is entitled to a period of time to comply with the rules and can also appeal the ruling.
U.S. Trade Representative Michael Froman said the ruling was a victory that he hopes will discourage further violations that hurt American exporters.
"WTO members must use trade remedies strictly in accordance with their commitments," he said.
Officials at the Chinese Embassy in Washington could not immediately be reached for comment.
The U.S. runs a larger trade deficit with China than with any other country in the world. The gap widened by 15.6 percent to $27.9 billion for the month of May, the most recent month for which figures are available. That was more than half of the total U.S. trade deficit of $45 billion with the whole world for that month and close to an all-time monthly high set in November. So far this year, the U.S. deficit with China is running 3 percent higher than last year.
One of the biggest disputes with China is over its currency. The U.S. accuses Beijing of under-valuing the yuan to gain a trade advantage by making its exports cheaper to drive up domestic growth rates. U.S. officials are pressing China to let the yuan exchange rate float freely against the dollar and shift more to an economy based on domestic consumption instead of relying on exports.
They are also urging China to enforce intellectual property rights and roll back subsidies for Chinese state-owned enterprises.
Siva Yam, president of the U.S.-China Chamber of Commerce, which primarily represents U.S. companies in China, said the WTO decision will not have much significance for the larger bilateral relationship and that it would continue to be fraught with trade disputes.
"I do not believe it will change the equation," he said. "U.S. and China relations will continue to be up and down. ... I think the relationship will become more tense in the future, but not only because of this."
He said the U.S. does not export much to China. But because China is one of the only markets in the world for chicken feet and internal chicken organs, it was seeking to gain leverage to counter U.S. dumping complaints against Beijing. He predicted China would now look for other levers to strike back against the U.S.
Agriculture Secretary Tom Vilsack said agricultural exports are a strong and growing component of U.S. exports. Farm exports in fiscal year 2012 reached $135.8 billion and supported 1 million American jobs, he said, adding that more than $23 billion worth of those agricultural products went to China alone.
"But China's prohibitive duties on broiler products were followed by a steep decline in exports to China – and now we look forward to seeing China's market for broiler products restored," Vilsack said in a statement.