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China, the largest market for U.S. chicken, will impose anti-dumping duties of as much as 105.4
percent on imports of American poultry products, threatening to
deepen a trade rift.

Importers of U.S. broiler-chicken products will be required to pay after an investigation showed they had caused “material damage” to local suppliers by selling at below-market prices,
the Ministry of Commerce said in a statement on its Web site,
citing a preliminary ruling. The duties are effective Feb. 13.

The ruling may further strain trade relations between the U.S. and China, which began its investigation in September, two weeks after the U.S. imposed tariffs on Chinese tire shipments.
Ties have soured over proposed U.S. arms sales to Taiwan and
President Barack Obama’s plan to meet the Dalai Lama this month.

“This is probably a result of political tension, although a trade war between the two economies is unlikely,” said Li Qiang, a managing director of Shanghai JC Intelligence Co. China
consumed almost 800,000 metric tons of U.S. chicken in 2008,
valued at $722 million, according to the USA Poultry & Egg
Export Council.

China’s chicken probe also was a response to a decision by Congress that effectively bans imports of cooked poultry, James Sumner, the president of the poultry export council, said on
Sept. 14.

Trade Spat

The U.S. and China, with $409 billion in annual trade, have been engaged in a spat over allegations of dumping and subsidies. China says U.S. complaints are signs of
protectionism, while the U.S. says it’s enforcing trade rules.
World Trade Organization judges agreed last month to review
whether tariffs on Chinese tires are proper.

Imports by Pilgrim’s Pride Corp. will be levied with an 80.5 percent preliminary duty and Tyson Foods Inc. imports 43.1 percent, according to the ministry.

“We just heard the ruling, and we are a bit surprised,” said Hu Jijun, the chief China representative of the U.S. Poultry & Egg Export Council, when reached by telephone. The
group will be meeting with the ministry to seek clarification,
he said.

Still Assessing

Tyson, based in Springdale, Arkansas, is “still assessing” the impact of the ruling, Chief Executive Officer Donnie Smith said. About 14 percent of Tyson’s $1.6 billion of
international chicken sales were to China during the 2009 fiscal
year, according to the company’s Web site.

“We haven’t had a chance yet to sort out all the issues associated with the potential anti-dumping,” Smith said today on a conference call with analysts. He declined to comment
further.

Mike Cockrell, the chief financial officer of Sanderson Farms Inc., said he won’t be in a position to comment until he has seen a copy of the order translated from Chinese.

“We are certainly aware of the order, and it’s going to take up a good portion of my day trying to figure out what they have done,” Cockrell said from Laurel, Mississippi.

China, EU

China’s trade relations with the European Union have also been strained, with Beijing yesterday complaining to the World Trade Organization against the European Union’s anti-dumping
measures targeting leather shoes made in China.

Beijing submitted its request for WTO consultations with the EU after bilateral talks failed to address its concern, Yao Jian, a Ministry of Commerce spokesman, said in a statement on
the ministry’s Web site. In December, the EU prolonged tariffs
of as much as 16.5 percent on leather shoes from China and
Vietnam for 15 months to help producers in the bloc counter
below-cost, or “dumped,” imports.