WRAPUP 2-Chicken parts join menu of U.S.-China disputes

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[ID:nCHINA].

* China to slap duties of 43.1-105.4 pct on chicken parts

* Rising trade and currency tensions

* U.S. poultry sector says disappointed, paragraphs 6-8
(Adds poultry industry group response)

By Lucy Hornby and Roberta Rampton

WASHINGTON/BEIJING, Feb 5 (BestGrowthStock) – China said on Friday
it will slap heavy anti-dumping duties on U.S. chicken parts, a
move likely to aggravate trade ties between two of the world’s
most important economies at a time of strained political
relations.

The Chinese Commerce Ministry’s initial investigation
showed that U.S. companies had dumped chicken products into the
Chinese market, according to the ministry’s website
(www.mofcom.gov.cn).

The preliminary tariffs were announced a day after Beijing
requested a World Trade Organization ruling on European Union
duties on shoes made in China in the latest case demonstrating
China’s use of the WTO to keep markets open to the exports on
which it depends.

The United States Trade Representative was muted in its
response, saying it would consult with U.S. producers as it
analyzed China’s move.

“USTR is following the investigation closely, and we will
want to ensure that MOFCOM follows the applicable WTO rules,” .
spokeswoman Carol Guthrie said in a statement.

But the USA Poultry & Egg Export Council said the American
poultry industry was “deeply disappointed” by China’s move.

The tariff decision disregarded facts provided by producers
and “will virtually eliminate U.S. chicken exports to China for
the foreseeable future,” the lobby group said in a statement.

“We’re hopeful that if Chinese officials study our
submissions in greater detail, they will conclude that U.S.
chicken products were, in fact, not dumped,” said USAPEEC
President Jim Sumner.

The United States and China are embroiled in a series of
economic and political disputes, ranging from the value of the
Chinese currency to Internet control, Taiwan and Tibet.

President Barack Obama this week vowed to get tough in
dealing with complaints that U.S. exports are disadvantaged by
China’s artificially cheap yuan, drawing a sharp rebuke from
China that its currency was set at “reasonable” levels.

CHINESE PRODUCERS CRY FOUL

The various disputes following placid ties during Obama’s
first year in office have alarmed the business community.

“The world needs strong U.S.-China economic engagement now,
not a ratcheting up of trade tensions,” said Michael Barbalas,
president of the American Chamber of Commerce in China.

Chicken feet and wing tips, virtually worthless in the U.S.
market, are a delicacy in southern China. Many U.S. poultry
producers count on the Chinese market to round out their
profits.

Chicken feet and wing tips fetch about 2 U.S. cents per
pound in the United States, but land in China at about 42 U.S.
cents – a figure that Chinese rivals say represents the cost of
the freight only.

“Chicken feet and wings are not wanted in the U.S. so they
sell them to China, they dump them below cost,” said Wang
Xiulin, president of the Chinese Poultry Association.

“For over a decade, the U.S. has sent big volumes of
chicken to the Chinese market, hurting producers here. Last
year, the Chinese poultry industry was really hurting so we
asked for this investigation.”

Tyson Foods (TSN.N: ), an active investor and lobbyist in
China, got the lowest duty of 43.1 percent. Pilgrim’s Pride
Corp (PPC.N: ) was hit with an 80.5 percent duty. Most other
firms, including Sanderson Farms (SAFM.O: ), face a 64.5 percent
duty.

Those that did not appeal the finding would pay duties of
105.4 percent, the ministry said.

China began its investigation of U.S. chicken parts after
the U.S. imposed safeguard duties on Chinese-made tires, which
China is fighting at the WTO [ID:nLDE60I1H8].

DALAI LAMA ROW LOOMS

The latest flare-up in Sino-U.S. ties comes against a
backdrop of disagreements over human rights after Beijing
jailed a top dissident and over Internet freedoms after
search engine Google Inc (Read more about Google Stock Analysis) (GOOG.O: ) threatened to pull out of
China over censorship and hacking attacks.

U.S. senators have taken up the Google case, backing the
search engine with unanimous resolution. a Congressional panel
will hold a high-profile hearing on Google on Feb. 10.

China has been warning Obama against meeting the Dalai
Lama, reviled by Beijing as a separatist for seeking self-rule
for Tibet. The meeting may happen as early as this month.

Beijing is also upset with Washington over a $6.4 billion
U.S. weapons package for Taiwan, the self-ruled island that
Beijing deems a breakaway province. China has said it will
impose unspecified sanctions on U.S. firms selling weapons to
the island.

U.S. officials have voiced frustration that the issues
roiling ties now were all discussed directly by Obama and
Chinese President Hu Jintao just last November in Beijing.

The Eurasia Group said in analysis published on Friday that
China’s government is reacting to nationalistic pressures at
home and to resistance from foreign countries who want more
Chinese action in correcting huge global imbalances.

“Beijing’s amped up rhetoric was likely driven by domestic
insecurities and an external environment that is less conducive
to perpetuating its export-led economic model,” it said.

Damien Ma, a China analyst at the Eurasia Group in
Washington, said there are still many bilateral working
relationships that can help defuse U.S.-China tensions.

“Just because there’s a lot of issues and a lot of headline
risk, doesn’t mean these things won’t be worked out through
back channels,” he said.

Stock Basics

(Additional reporting by Niu Shuping in Beijing; Writing by
Paul Eckert; Editing by Eric Walsh)

WRAPUP 2-Chicken parts join menu of U.S.-China disputes