What is in this article?:
- US requests consultation over Indian poultry prohibition
- Indian actions perplexing
USTR has requested consultations with India over the prohibition of imports of U.S. poultry meat and chicken eggs. India claims the trade ban prevents transmission of avian influenza, but USTR said they have provided no scientific evidence consistent with international standards on avian influenza control.
Indian actions perplexing
The Indian government’s actions are perplexing when considering the structure of the industry in India. According to the U.S. Attaché, the highly organized “formal” broiler industry accounts for 85 percent of the nation’s output, with 60-65 percent of that integrated and the remaining 20-25 percent independent producer. Despite the degree of industry development, industry sources estimate that live birds are over 90 percent of total retail sales. A reasonable guess would be that zero percent of U.S. broiler imports would compete for that live market.
Indian consumers generally consider live chickens to be disease free, fresher and more hygienic. Consumers lack confidence in handling procedures for commercially processed chickens and the conditions of the local “cold chain.” Any imports would be targeted to the relatively small hotel, restaurant and institutional (HRI) trade. The U.S. industry estimates potential U.S. poultry exports to India at $300 million per year. Given the modernization of India with a growing middle class and increasing urbanization which will change consumption patterns, a consumer retail market will likely develop for processed chicken.
This appears to be an industry where some import competition would be a positive contribution to supply development to respond to future demands of consumers. The U.S. industry produces a high quality product at reasonable costs. They certainly know how to set up and manage cold chains. India is like many developing countries where infrastructure development needs technology and management support. The U.S. industry could help the HRI industry make giant strides in supply chain development for chicken meat and supply retailers when they detect changes in customers’ demands.
The consultations between the U.S. and India could be the beginning of a huge reassessment of import policies by India and other middle-income developing countries. A shift could occur from using import policies to protect agricultural producers and existing middlemen at the expense of consumers to recognizing the needs of consumers, while increasing efficiencies in agricultural production and processing. This would be similar to the transformation in South Korea that resulted in free trade agreements with the U.S. and the EU. The changes could also impact middle income developing country exporters like Brazil who are interested in serving growing world markets.
This trade policy situation has the potential to be a win-win for the U.S. and India. These problems could have been solved through negotiations if the Doha Round of talks had ever gotten serious. The current Indian policies are relics of the past in need of updating. The U.S. has started the process by asking for consultations that should be resolved without litigation in a WTO dispute settlement case. All WTO members have a stake in seeing an amicable resolution.
Ross Korves is an economic policy analyst with Truth About Trade & Technology.