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Trade Dispute over US Ban of Chinese Poultry

As the shadow of the financial crisis looms over national economies,  government’s worries about protectionist measures of their trade partners spread.

A recent example for this can be found in the China’s recent displeasure about the US rules on Chinese poultry. This regulation blocks imports of Chinese poultry products because of the alleged health risk they pose to US consumers. While it seems that China is currently not intending to bring the matter before the WTO Dispute Settlement System, there seems to be increasing disenchantment over the US measures. As Reuters reports, the Chinese ambassador angrily stated that “any trainee with a preliminary knowledge of the WTO disciplines will tell that this section violates the basic rules of the WTO”.

While the rage of the Chinese official may be understandable, the legal stakes are more complicated than he suggests. At first glance, a ban of imports is indeed likely to contravene the provisions of the GATT, in particular Article III:4 of the GATT on national treatment. However, Article XX (a) of the GATT provides for an exception for measures that are “necessary to protect human, animal or plant life or health”, provided that the application of the exception does not result in discrimination or a disguised restriction of trade.

The WTO dispute settlement bodies have constructed this provision in a rather broad manner. In the “European Communities-Asbestos” case, the WTO Appellate Body held that each WTO Members may determine its own standard of health production even if it goes beyond what the majority scientific opinion considers necessary. The WTO Appellate Body went even further by stating that in some cases a serious health risk would be a valid reason to distinguish two similar products from one another meaning that Article III:4 of the GATT would not apply at all (see the instructive paper by Krishna Ravis Srinivas on this issue).  

Of course, the US would have to prove that there is indeed a health risk at stake. Also, it should be noted that China continues to export poultry to the EU, Switzerland and Japan. Nonetheless, it seems clear, given the rather pro-health approach of the Appellate Body, that the case the Chinese ambassador tries to make is a quite difficult one. In this light, it seems much more efficient to threaten, as the Chinese indeed did (see the Reuters press release), to block the import of US poultry to China. This would put the US in a quite uncomfortable situation as China is one of the States’ major markets for poultry goods. Indeed, the U.S. Poultry and Egg Export Council has, for obvious reasons, already endorsed the Chinese position. At the end of the day, counter-pressure may still the best method against protectionism in these times.

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