FarmPolicy

August 23, 2017

U.S. Contests China Ag Subsidies in W.T.O. Case

Categories: Trade

Reuters writers David Lawder and Nathaniel Taplin reported yesterday that, “The United States on Tuesday launched a challenge to China’s price supports for domestic wheat, corn and rice at the World Trade Organization, charging that these far exceed limits that China committed to when it joined the WTO in 2001.”

The article noted that, “The U.S. Trade Representative’s office said China’s ‘market price support’ for wheat, corn and rice was estimated to be nearly $100 billion above the WTO limits and constituted an artificial government incentive for Chinese farmers to increase output, lowering prices worldwide.

“USTR said it found that China’s domestic price supports for wheat, Indica rice, Japonica rice and corn had all exceeded the 8.5 percent ‘de minimis’ level allowed under the WTO commitment for every year since 2012.

“The first step in its formal WTO complaint is to seek formal consultations with Chinese officials to try to resolve the dispute without litigation.”

Jeff Wilson reported yesterday for Bloomberg that, “China’s Ministry of Commerce responded by expressing regret at the U.S. action, saying on its website that it complied with WTO rules and would handle the complaint in accordance with established procedures.”

Mr. Wilson pointed out that, “American farmers have seen their incomes slide amid booming global supplies and lower commodity prices. But while Tuesday’s action was welcomed by some U.S. farm groups, others in the industry cautioned that there may be a backlash.

“‘The most likely impact in the next six months might be to motivate China to impose anti-dumping tariffs on U.S. products, including agricultural products,’ William Tierney, chief economist for Chicago-based research and analysis firm AgResource Co., said in a telephone interview. ‘It will have little or no impact on Chinese ag policies.'”

William Mauldin reported yesterday at The Wall Street Journal Online that, “The administration is also emphasizing compliance with existing trade rules in hopes of getting a majority of the Senate and the House to approve his signature trade agreement, the 12-nation Trans-Pacific Partnership, after the November election.”

Mr. Mauldin also reminded readers that, “The U.S. has run afoul of complicated WTO agricultural rules before, including in a cotton case Washington lost to Brazil.”

More broadly, the Journal article pointed out that, “The U.S. imported $482 billion in Chinese goods last year, compared with $116 billion in U.S. exports.”

Christopher Doering noted in today’s Des Moines Register that, “Agriculture Secretary Tom Vilsack said U.S. agricultural exports to China now exceed $20 billion a year, but the total could be more if American grains could compete ‘on a level playing field.’ China is expected to be the largest market for U.S. agricultural exports in fiscal year 2017, he said.”

Several lawmakers provided reaction, which was generally positive, to yesterday’s executive branch action against China.

– Senate Ag Committee Chairman Pat Roberts (R., Kans.)- “U.S. producers know the importance of sticking to their commitments, and they have experienced first-hand the harm caused to the agriculture industry by countries that don’t follow the rules.”

– House Ag Committee Chairman Mike Conaway (R., Tex.)- “Even as U.S. support for American farmers and ranchers declines, we have seen a tremendous and steady rise in foreign barriers to trade which is troubling. Foreign subsidies and tariffs make it very difficult for American farmers and ranchers to make a living and support their families.”

– Senate Ag Committee Member Heidi Heitkamp (D., N.D.)- “On top of challenging commodity prices, North Dakota farmers shouldn’t have to deal with China breaching trade commitments and making it tougher for us to get market value for our crops.”

– House Ways and Means Committee Member Adrian Smith (R., Neb.)- “With 96 percent of the world’s consumers living outside our country, trade agreements create opportunity for U.S. agriculture, and so long as the U.S. maintains a leadership role, I am confident American producers will continue to meet the demands of an ever-growing population around the world.”

– Senate Ag Committee Member Joe Donnelly (D, Ind.)- “Trade is important to our economy, and nobody knows that better than Hoosier farmers. We also know, however, that trade only works when everyone plays by the same rules. Whether it’s illegal subsidies for corn or steel, China continues to manipulate prices to undercut American farmers and manufacturers. That is why I support strong efforts, like today’s enforcement action, that hold the Chinese accountable, so we can ensure that Indiana’s farmers can compete on a level playing field.”

– Senate Ag Appropriations Subcommittee Chairman Jerry Moran (R., Kans.) tweeted the following yesterday:

And the House Ag Committee retweeted a previous tweet from October yesterday:

-kg

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