Pressure Mounting on Capitol Hill to Resolve Mexican Antidumping Charges Against US Chicken

June 1, 2012

A bipartisan group of 49 congressmen sent a letter to U.S. Trade Representative Ron Kirk yesterday expressing their strong concern about the antidumping duties Mexico has preliminarily assigned to U.S. chicken leg quarters, ranging from 64 percent to 129 percent. Although these duties have not yet been applied in final form, under Mexican law, a final decision will have to be reached by mid-August. “The Mexican antidumping action, when finalized, will severely damage the U.S. poultry industry and the market access provided under the North American Free Trade Agreement (NAFTA),” the letter said.

The letter was led by Congressional Chicken Caucus Co-Chairs Rep. Sanford Bishop (D-Ga.) and Rep. Rick Crawford (R-Ark.).

“Pending antidumping duties from Mexico would be a blow to chicken producers in my district and across the country.  The Chicken Caucus is committed to expanding markets for producers, and working with Ambassador Kirk to ensure that American producers are treated fairly by foreign governments. We are hopeful an agreement can be reached and Mexico will fulfill its commitments to free and fair trade,” said Congressman Crawford.

“As Georgia continues to be the number one poultry exporter in the nation, it goes without saying that increased duties by the Mexican government against the chicken market would cause great concern to my constituents,” said Congressman Bishop. “Like Congressman Crawford, I would hope that Mexico would heed the concern of the Congressional Chicken Caucus and push for a positive outcome for the American poultry industry.”

Early in 2011, Mexican poultry companies petitioned the Mexican government to begin an anti-dumping investigation of imports of chicken leg quarters from the United States, claiming that U.S. companies were exporting chicken leg quarters to Mexico at below-market prices.

This week’s letter to Ambassador Kirk pointed out that Mexico has used a calculation that is unacceptable to the World Trade Organization (WTO) to determine if U.S. chicken leg quarters are “dumped” onto the Mexican market.   Using the “average cost of production” assumes that every part of the chicken should be priced at least at this cost. “This assumption is flawed, discriminates against U.S. producers, and concerns us as members from poultry producing districts,” the letter said. “U.S. companies submitted their costs of production information using a value-based cost accounting method–a method well established and recognized by the poultry industry worldwide as a reasonable basis to calculate costs.”

Value-based cost accounting is used by U.S., Mexican and other chicken producers; is consistent with Mexican financial reporting standards; is consistent with the generally accepted accounting principles in both the United States and Mexico; and reasonably reflects the costs of production of U.S. poultry, the letter said. “Given those facts, under the WTO Antidumping Agreement, Mexico may not disregard the costs of production reported in this case and use average costs instead.”

Mexico is the United States’ most important poultry market, with over 250,000 metric tons imported in 2011, valued at over $275 million.

“As the Trans-Pacific Partnership negotiations continue, we urge you to resolve this situation as promptly as possible and ensure that Mexico honors its commitments under NAFTA and the WTO,” the letter concluded. The letter, including the names of the 49 members of Congress who signed the letter, is available here.

On April 2, a bipartisan group of 16 senators sent a similar letter to Ambassador Kirk urging the termination of Mexico’s anti-dumping duties.

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