TradeLane

Why Did the Chicken Cross the Road...

Posted by Michael Bellezza

Find me on:

9/2/15 1:55 PM

stand-back-magellanA friend of mine was over a few weeks ago and while relaxing on the deck, the topic of EU Agriculture Regulation came up. I typically try to confine my weekend leisure discussions to things like how the NY Giants are doing, but alas, it was July. My friend is also a professor whose expertise lies in biotech regulation for EU member States, so I might have been out of my league. In a simultaneous attempt to confuse, amaze and distract, I brought up the US Chicken tax, one of the most obscure, draconian pieces of Trade Regulation I could come up with that somehow explains why we aren’t all driving German Pickup Trucks.

The story of the US Chicken Tax is actually pretty interesting... and relatively long. A condensed version goes something like this: Post WWII, the US had become unquestionably dominant in the industrial raising of chickens which caused all sorts of havoc with the domestic market in what is now the EU, as the price of poultry plummeted. Several countries including West Germany and France fought back with a mixture of propaganda and good old fashion Trade Controls. The US, not one to take this lying down, levied an astounding 25% duty on potato starch, dextrin, brandy… and light trucks. Keep in mind this was happening in 1962-1963, which was a relatively exciting time in diplomacy. The Chicken Tax might have otherwise been center stage.

The Chicken Tax is still on the books if you look at Subheading 8704. The long term effects that can be seen are relatively significant. If you are in the US, go to VW.com and search for a pickup truck. You won’t find one. It has been argued that the tax both protected the US light truck industry as well as hurt it by removing competition. In a last bit of irony, in 2009 the Wall Street Journal noted that Ford had to import one model of light truck from Turkey as a passenger vehicle and then strip it down to a light truck upon arrival in order to circumvent the very tax meant to help it. Meanwhile, the Dodge Ram is made in Mexico and Canada and free under NAFTA.

 

Written by Michael Bellezza

Before joining Tradewin in 2010 as Principal of the US Consulting Practice, Michael had worked for Expeditors for 8 years in a wide variety of management positions including Customs Brokerage Operations, Import & Export Compliance, Freight Forwarding, and Supply Chain Analytics. Michael is responsible for all aspects of Tradewin's global consulting practices in North America, Europe, Asia, and the South Pacific. He has a talent for bringing common sense solutions to complex regulatory scenarios. He specializes in building compliance programs, providing educational seminars and workshops, advising risk mitigation, and implementing duty reduction programs. Michael is a U.S. Licensed Customs Broker. He is IATA/FIATA certified and is a member of the International Compliance Professionals Association. He is a graduate of Boston College with a degree in Economics.