The WTO ruled last week that the EU's tarrifs on salted, frozen chicken from the two countrieswere illegal and restrictive under the body's trade rules. If the EU complies with the ruling foodprocessors could have access to cheaper cuts of salted chicken from the two countries under a lower rate of duty.
The issue began in 1996, when Thailand and Brazil began the exports in response to requests from European food companies for salted chicken meat that could be used directly in the manufacture of processed products, the WTO said in its decision. The chicken was impregnated with a minimum salt content of 1.2 per cent and fell under a concessionary 15.4 percent duty rate until mid-2002.
In a bid to restrict the imports the EU's parliament decided in 2002 to reclassify the products as "salted meat' rather than "frozen" products, making the imports subject to a 58.9 per cent rate of duty instead of the 15.4 per cent rate. The decision prompted the two countries to eventually complain to the WTO.
Before the WTO arbitration panel the EU argued that Thai salted chicken meat is "salted" within the meaning of its tariff concession only if the salt has been added for the purpose oflong-term preservation. The EU says that if long-term preservation is achieved through freezing, the Thai chicken meat can no longer be deemed to be "salted" and should not benefit from theconcession.
"The basic interpretative issue is whether the term 'salted' describes the physical characteristics of the products benefiting from the tariff concession - as claimed by Thailand - orwhether that term refers to the objective or purpose for which the product has been salted - as argued by the EC," the WTO said in its decision. " The EC's argument is entirelynovel and would mean that in order to determine the customs classification of a product, it would no longer be sufficient to examine the physical characteristics of the product. Instead, itwould also be necessary to examine for what purpose the product was given its physical characteristics."