U.S. senators assail China's 'abusive' poultry duties

WASHINGTON (Reuters) - Two senior Republican senators on Tuesday urged the Obama administration to ask China to withdraw duties on U.S. poultry they said were part of a larger pattern of unfair trade practices by Beijing.

"China is one of the major beneficiaries of the global trading system, and it needs to understand that the abusive application of its trade remedy laws is increasing tensions and further undermining our bilateral relations," Senator Charles Grassley and Senator Orrin Hatch said in a letter to top U.S. trade and agriculture officials.

U.S. poultry producers complain they are the victims of unjustified Chinese retaliation because of President Barack Obama's decision last year to slap a 35-percent duty on tire imports from China at the behest of a U.S. union group.

China protested Obama's tire decision as protectionism and has challenged it at the World Trade Organization.

U.S. officials say it was legal under an anti-surge import safeguard provision of China's WTO entry agreement.

Last month, China's Commerce Ministry set final duties ranging from 50.3 percent to 105.4 percent on poultry imports from the United States, hitting companies including Tyson Foods, Pilgrim's Pride and Sanderson Farms.

The U.S. Trade Representative's office has been considering challenging the duties at the WTO, but Grassley and Hatch said the case required a more immediate solution.

CHINA'S CURRENCY STRAINS TIES

"We request, therefore, that you seek high-level consultations with the Chinese government to explain the negative effects of its actions and to ask more specifically for the withdrawal of the anti-dumping and countervailing duties on poultry," the senators said.

They also accused China of initiating anti-dumping and countervailing duty investigations against U.S. autos in retaliation for Obama's tire decision.

China recently won a case at the WTO against U.S. restrictions on imported chicken from China.

The United States says it is taking steps to comply with the ruling, including an evaluation of whether the imports can be allowed under U.S. food safety laws.

The poultry dispute comes at a time when U.S. frustration with China's currency policy is straining bilateral ties.

Last month, the U.S. House of Representatives approved legislation that would allow the United States to impose punitive duties on imports from countries with "fundamentally undervalued" currencies, a bill aimed primarily at China.

Deputy U.S. Trade Representative Demetrios Marantis is scheduled to be in Beijing on Wednesday to prepare for this year's U.S.-China Joint Commission on Commerce and Trade.

That high-level forum to discuss ways of boosting trade between the two countries is now expected in mid-December, having been delayed at least once amid current frictions.

Senate Finance Committee Chairman Max Baucus also planned to raise concerns about China's currency and trade practices on a trip this week to Shanghai and Beijing.

(Reporting by Doug Palmer; Editing by Todd Eastham)