ITC: China is stifling US food export potential

by Bryan Salvage
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WASHINGTON – US agricultural exports to China continue to be limited by tariffs, tariff-rate quotas and non-tariff barriers China created, states a recent International Trade Commission (ITC) study. Eliminating these trade barriers could lead to adding $3.9 billion to $5.2 billion in US exports to China. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, and Ranking Committee Member Senator Chuck Grassley (R-Iowa), requested this study.

The US is the largest supplier of agricultural products to China, with a 26% market share. China has a 14% share of total US agricultural exports, behind only Canada. During 2005-10, Chinese agricultural imports increased 23% annually.

In 2009, China’s non-tariff measures impeded between $2.6 billion and $3.1 billion in sales of selected US agricultural products and its tariffs and tariff rate quotas inhibited between $1.3 billion and $2.1 billion in sales of a broader range of US agricultural products that same year, the study claims.

China’s free-trade agreements and preferential trade agreements are primarily with trade partners in East Asia and Oceania. Excluding several key commodities such as soybeans, poultry and cotton, China is a major global producer of agricultural products and is largely self-sufficient.

During 2005 to 2010, Chinese meat imports increased from $431 million to $1.4 billion, an average annual growth of about 35%, the study stated. This increase is attributable primarily to an increase in per-capita meat consumption, which went up approximately 20% annually between 2005 and 2009. During this period, poultry made up three-quarters of China’s meat imports, followed by pork with a 13% share and sheep and lamb meat with a 9% share.

Chinese import growth reflects a larger trend of increasing poultry consumption in China that is outpacing domestic production. Health concerns about pork products, higher incomes and more frequent dining out by Chinese urban dwellers has led to increased poultry consumption in China.

From 2005 to 2009, poultry was one of China’s top four agricultural imports from the US, growing at an average annual rate of more than 50%. During 2005 to 2009, the US share of China’s poultry imports increased from 53% to 80%, edging out poultry imports from Argentina and Brazil.

In 2010, however, US market share fell significantly, with imports down 80% from 2009 because of China’s countervailing duty (CVD) and antidumping (AD) investigations and subsequent imposition of duties on US poultry products.

During 2005 to 2010, pork was the fastest-growing meat import by China, driven mostly by a fourfold increase between 2007 and 2008. Higher demand for foreign pork followed a domestic outbreak of blue ear disease in 2007, as well as poor weather that reduced the availability of domestic supplies.

This outbreak particularly encouraged imports of US pork, which increased from $1 million in 2006 to peak at $313 million in 2008. Once China recovered from the outbreak, however, its pork imports from the US dropped to only $30 million by 2010, the study said.
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