On September 27, 2009, the Ministry of Commerce of the People’s Republic of China announced the initiation of formal anti-dumping and anti-subsidy investigations of imports of US poultry amid allegations that the imports are priced unfairly low and are subsidized. The formal investigations were launched even though US lawmakers voted to lift the prohibition on funding for removing the ban on Chinese poultry imports that has been in place since the bird flu outbreak in 2004. Section 727 of the US Omnibus Appropriation Act of 2009, which expired on September 30, 2009, prohibited the US Department of Agriculture (“USDA”) from taking action, including expending funds, to establish or implement measures: (1) allowing for the importation from China of poultry products that the USDA has already determined are eligible for importation, and (2) expanding the scope of poultry products that may be imported from China. Members of the US House Appropriations Committee responsible for drafting a 2010 agriculture spending bill decided to resume processed poultry imports from China, provided more rigorous food safety standards are met. Under the bill, the USDA will be able to use appropriated funds in fiscal year 2010 to resume imports of processed poultry or poultry products from China only after the Secretary of Agriculture notifies Congress that certain food safety conditions have been met. In order to meet the safety standards, Chinese poultry imports must undergo onsite audits and sanitary inspections, as well as greater scrutiny at the port of entry. The US House of Representatives initially extended the ban in a version of the 2010 spending bill (HR 2997), but a compromise was reached after the Senate voted against the ban.

The US lawmakers’ decision to remove the ban on Chinese poultry imports came after the World Trade Organization (“WTO”) accepted on July 31, 2009 a request from China for the establishment of a WTO dispute panel to determine whether Section 727 of the US Omnibus Appropriation Act of 2009 unfairly blocked Chinese poultry exports in violation of global trade rules.