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US pork producers under assault by canadian hog imports file unfair trade action

by 5m Editor
8 March 2004, at 12:00am

WASHINGTON, D.C. - NPPC President Jon Caspers today announced the filing of antidumping and countervailing duty cases against live hog imports from Canada stating that "unfairly traded Canadian hog imports are seriously injuring the U.S. pork industry and threaten the survival of thousands of producers."

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Caspers, a pork producer from Swaledale, Iowa, made the announcement at NPPC's annual meeting, the National Pork Industry Forum.

A petition filed today with the U.S. Department of Commerce and International Trade Commission (ITC) formally requests the U.S. government to investigate whether Canadian live swine producers are receiving illegal subsidies and selling hogs in the United States at prices that are lower than hog prices in Canada. Selling in the export market at a lower price than in the home market is known as "dumping." It is a violation of U.S. unfair trade laws and international trade rules as established by the World Trade Organization.

The petition also charges that Canadian producers benefit from billions of dollars in numerous government subsidy programs. The subsidies provide artificial price supports that allow Canadian producers to ignore market conditions and disrupt normal agriculture/business cycles in the United States.

To remedy the unfair subsidies and eliminate unfair pricing practices, the U.S. industry is requesting that antidumping and countervailing duties ranging from five percent to 20 percent be assessed on imports of live swine from Canada.

"Subsidized and dumped Canadian hogs are destroying competitive and efficient U.S. producers," said NPPC's International Trade Counsel Nick Giordano. "If these unfair Canadian practices are left unchecked and U.S. hog producers are forced to continue to compete with Canadian producers that do not have to meet the test of profit, U.S. producers will continue to lose sales, income, and market share. Removal of the unfairly traded Canadian hogs will allow the supply and demand mechanics of the North American hog market to return to normal."

According to the petition, the primary cause for the current depressed state of the U.S. hog industry has been the substantial and growing volume of unfair imports from Canada. The declining prices for hogs during 2002 resulted in severe operating losses for the domestic industry. The price declines were a result of an oversupply of hogs in the U.S. market brought on by an increase in imports of hogs from Canada. Slaughter rates in the U.S. increased as a result of an historical increase in imports from Canada.

The increased slaughter of hogs created an oversupply in the U.S. market, which resulted in U.S. prices plummeting to levels that were well below U.S. producers' production costs. Reacting to the low prices, U.S. producers reduced their pig crop in 2003 to get necessary price increases. Although U.S. producers reduced their crop by 938,000 head during 2002-2003, imports from Canada increased to yet another historical high level in 2003, at 7.3 million head. The continued increase in imports prevented U.S. producers from obtaining the price relief required to maintain profitable operations. As a result, U.S. producers were forced to incur depressed prices, reduced shipment volumes and financial losses over the period of investigation as unfairly subsidized imports from Canada continued to increase in the U.S. market at low prices.

"Producers and exporters in Canada are likely to continue their low-priced, high volume assault on the U.S. market absent the balancing effects of antidumping and countervailing duty orders," Giordano said.

Charges of excessive foreign government subsidization and dumping are investigated by Commerce Department and the ITC. Commerce is responsible for determining the margins of dumping and amount of countervailing duties. The ITC determines whether the unfairly traded imports injured an industry.

Commerce first will announce preliminary duties and then follow several months later with final duties. At the preliminary stage, the Customs Bureau will require importers to pay a cash deposit or post a bond equal to the estimated margins. This occurs about five months after a case is filed. When Commerce completes its investigation, final duties are announced. This final announcement normally occurs 135 days after the preliminary margins are announced.

The actual collection of duties begins after the ITC's final determination on whether the unfairly traded imports injured an industry. The ITC decision occurs within 45 days after Commerce announces final duties.

Source: National Pork Producers Council (NPPC) - 8th March 2004

5m Editor