WTO Ruling Favors Brazil and Thailand in Salted Poultry Export Dispute

The recent World Trade Organization ruling has dealt a significant blow to the European Union's protective tariffs on salted poultry exports from Brazil and Thailand. The EU's attempt to increase the tariff rate on salted chicken products from 15.4% to 58.9% as of January 1 has been deemed an obstacle to trade by the WTO. The dispute, which dates back to 2002, centers on the EU's practice of giving preferential treatment to poultry products containing at least 1.2% salt. Brazilian and Thai poultry producers claim that they add salt to their products in order to evade higher tariff rates for unsalted chicken products, while European producers argue that this practice is in violation of the tariff break's spirit.

Key Takeaways:

• The WTO ruled that the EU's tariff increase on salted chicken products constitutes an obstacle to trade, requiring the commission to adjust the tariff in compliance with international rules.
• The dispute dates back to 2002, when the European Commission attempted to close a loophole in its tariff structure by giving preferential treatment to poultry products containing at least 1.2% salt.
• European poultry producers claim that suppliers in Brazil and Thailand deliberately add salt to their products to gain a cost advantage in Europe.
• Brazilian and Thai producers reject this argument, stating that modern-day preservation is achieved through refrigeration, and adding high levels of salt would make the product unpalatable.
• The EU's attempt to increase the tariff rate on salted poultry products is expected to be met with resistance, with both sides vowing to continue the dispute.
• The WTO has called on the EU to adjust the tariff rate to bring it into compliance with international rules, potentially paving the way for increased imports from Brazil and Thailand.
• The ruling may lead to increased imports of inexpensive poultry into Europe, but the impact remains uncertain due to sanitation issues affecting Thai poultry exports.

Statistics:

• The EU's proposed tariff rate on salted poultry products is 58.9%, which is higher than the normal EU tariff schedule of 15.4%.
• The WTO ruled that the EU's tariff increase constitutes an obstacle to trade, calling for the commission to adjust the tariff rate.
• Brazilian poultry exports to Japan, Russia, and the Middle East rose by double digits during the first six months of this year, while sales to Europe increased by only 5%.
• During this period, Brazilian poultry exports to Europe stood at approximately 100,000 tons, with 80% of these exports meeting the EU's 1.2% salt threshold.
• Brazilian and Thai poultry producers exported over 400,000 tons of poultry to the EU in the first half of this year, with a significant portion of these exports containing added salt.

Sources:

• FCN (Food Chemical News) Oct. 13, 2003, Page 23
• British Poultry Council
• World Trade Organization