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USTR Press Conference on the WTO Enforcement Victory Against China
August 5, 2013

United States Wins Trade Enforcement Case for American Farmers, Proves Export-Blocking Chinese Duties Unjustified Under WTO Rules

Transcript of August 2, 2013 press conference held at the Office of the United States Trade Representative in Washington, D.C.

Speakers:  United States Trade Representative Michael Froman, Secretary of Commerce Penny Pritzker, and Secretary of Agriculture Tom Vilsack

AMBASSADOR FROMAN:  Well, good morning.  The United States has scored an important victory today for American farmers and for fair play in international trade.  We prevailed in a World Trade Organization dispute against China’s use of its trade laws to block exports of U.S. chicken products into China’s market.

China’s high anti-dumping and countervailing duties on imports of chicken broiler products from the United States has been denying American chicken producers access to what was formerly a very valuable market.  Significant sales have been lost since these duties were put in place.

This decision sends a clear message that the Obama administration will fight and win for American farmers, businesses, and workers in the global trading system.  It will ensure that America gets the benefit of the rules and market access we’ve negotiated in our International Trade Agreements.

In a report just released this morning, a WTO dispute settlement panel found that China breached numerous procedural and substantive WTO obligations when it imposed these high duties.

Let me highlight just one of those important substantive wins.  For years, we’ve been concerned about other countries rejecting costs based on U.S. producers’ books and records and instead using the weight of a product to allocate production costs.  This methodology artificially inflates and creates antidumping margins.  China had adopted this flawed approach, and the WTO panel found that China breached WTO rules.  This is a significant win for American chicken producers.

I want to underscore the significance of this decision in part because we have seen similar market-distorting errors committed by China before in its use of trade remedies.  In fact, this is the second of three WTO disputes in which the United States has challenged important flaws in China’s administration of its antidumping and countervailing duty measures.  We have won the first two disputes, and we are actively litigating the third, which raises many of the same serious concerns.

It is critical to use trade remedies strictly in adherence with WTO obligations and not to unfairly use them to hit back at WTO members that have taken legitimate actions under their own trade remedy laws.  We will continue to act assertively when we see signs that WTO rules are being undermined and our exporters may be hurt.  I also hope that these WTO reports build momentum to help end the behaviors that have required us and other trading partners to bring these kinds of cases.

In this case, USTR has worked in close partnership with USDA and with the Department of Commerce, which administers many of our trade remedy laws, to respond to the troubling trade remedy practices we have seen.  Their participation was critical to winning this case for America’s chicken farmers, and this is a good example of our whole-of-government approach we’re taking to opening markets and to enforcing our trade laws.

I know that Secretary Pritzker and Secretary Vilsack will want to say a few words.  Let me invite Secretary Pritzker to the podium.

SECRETARY PRITZKER:  Thank you, Ambassador Froman.  Thanks to everyone at USTR as well as Secretary Vilsack and the USDA for their close partnership in this case.  From day one, the President has worked to ensure a level playing field for America’s businesses, including our farmers.  Due to strong enforcement and trade promotion efforts, coupled with the competitiveness of our private sector, U.S. exports have hit record highs.  Our businesses and workers expect and deserve a fair rules-based trade system.  That includes our poultry producers.  Today’s a win for them.  Today is a win for fairness.

At the Commerce Department, we work hard to ensure that the U.S. abides by our WTO obligations and that our investigations are transparent and procedurally fair to all parties.  We expect the same treatment for U.S. farms involved in foreign trade remedy investigations.  When U.S. producers or exporters face antidumping or countervailing duty investigations abroad, the Commerce Department works with them to help them understand their rights and to secure a fair process, and if WTO rules have not been followed, we support USTR as it develops and brings challenges in the WTO.
That’s what happened in this case.  My Department was proud to work with USTR in addressing this misuse of trade remedies.  We will continue to work across the government to ensure that China recognizes that pursuing antidumping or countervailing duty measures that are unjustified are based on political considerations is a losing strategy.  More broadly, the Commerce Department will continue to support America’s entrepreneurs and businesses as they compete in the global economy and create good jobs here at home.

Secretary Vilsack, I’ll turn this over to you.

SECRETARY VILSACK:  Well, thank you very much, and I really want to express my appreciation and the appreciation of all those associated with the United States Department of Agriculture and producers around the country for the solid and strong work of the Commerce Department and the United States Trade Representative’s office in pursuing this case on behalf of America’s poultry producers and our poultry industry.

You know, America flat out competes, and when we have a fair and equitable market, Americans will compete well.  The decision of the WTO affirms that basic principle of the need for a fair and equitable market.  We lost nearly 80 percent of the market in China that we had enjoyed as a result of the imposition of unfair and unwarranted duties.  Today, that gets rectified.

Chinese consumers lost, American producers lost, and American workers lost as long as those duties were assessed.  Today, all three can win.  The Chinese consumer will have the benefit of a quality product.  American producers will have an opportunity to continue to produce at record levels, and American workers will continue to be employed processing those parts.

This effort, I think, also acknowledges the tremendous effort on the part of the Obama administration in trade enforcement.  I recognize that the United States Trade Representative’s office is small, but it is mighty, and they have dedicated resources in an effort along with their partner, the Department of Commerce, to send a clear message that America will seek fair and equitable enforcement of trade rules.

We have experienced record agricultural exports as part of those record exports Secretary Pritzker referred to.  We want to continue that opportunity because we know it provides record income for our farmers and nearly supports almost a million jobs here at home.

This victory together with our urging our Congress to continue working on the passage of a 5-year Farm Bill and immigration reform, which is critical to the poultry industry, will allow this industry to continue to succeed.

So, once again, I want to thank USTR and the Department of Commerce for this extraordinary work.  We appreciate their partnership and will continue to work with them.

Mr. Ambassador?

AMBASSADOR FROMAN:  Thank you, Secretary Vilsack and Secretary Pritzker, and I think at this point, we’re going to turn the podium over to our General Counsel’s office and the team of lawyers to answer any particular technical questions you might have on the WTOdispute results.

QUESTIONER:  Secretary Vilsack, not a technical question.  These duties have been in effect for going on 4 years, and they’re not going to be reduced overnight.  Have we significantly—not permanently, but is it going to be hard to get that market back, and what country is taking over poultry market in turn?

SECRETARY VILSACK:  Well, again, I think I’d refer back to the fact that America competes and competes well when the playing field is fair and equitable, and I have no doubt that we’ll be able to make the case to Chinese consumers that American poultry products are poultry products of choice in terms of exports. We’ll continue to work hard aggressively to regaining that market share that we’ve lost, and I have no doubt that over time we’ll be able to do that.

But I think the more important point here is the United States understands and recognizes the need for fair and equity—fairness and equity in our trading system, and that we have an administration that understands the importance of enforcement.  And this victory today I think should send a message about these various techniques that have been used in the past, and hopefully, it will discourage that kind of activity in the future.