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Chinese import quotas on rice, wheat and corn are the subject of the latest U.S. challenge at the WTO, adding yet another friction point to the Sino-US relationship that is becoming increasingly testy.
The US case charges there is a lack of detail and openness from China on how they determine and administer their tariff-rate quotas (TRQs) for imports of medium- or short-grain rice, long-grain rice, wheat and corn that allow those products to enter the country at lower duty rates.
USDA estimates the Chines TRQs for corn, wheat and rice were worth more than $7 billion in 2015. Had those TRQs been fully used, USDA said that Chinese imports would have been $3.5 billion higher.
“China’s TRQ policies breach their WTO commitments and limit opportunities for US farmers to export competitively priced, high-quality grains to customers in China,” US Trade Representative Michael Froman said in a statement.
“Although China has become a significant market for our grain exports, we could be doing much better than we are today,” USDA Secretary Tom Vilsack said. “China has frustrated exporters through generous price support and unjustified market restrictions.”
US trade data forecast China to be the top destination for U.S. agricultural products in Fiscal 2017 after the country slipped to the number two spot in Fiscal 2016.
“While the US government’s action today is long in coming and only a first small step, I welcome the action and urge much, much more to come in order to one day deliver to America’s farm and ranch families – and all Americans – a fair shake at what has been to date a decades old unfulfilled promise of free markets and a level playing field,” said House Ag Committee Chairman Michael Conaway (R-Texas).
“Together with the action the administration took in September challenging Chinese agriculture subsidies, launching this case demonstrates that the United States will fight for fair trade for farmers and rural communities,” said Senate Finance Committee Ranking Member Ron Wyden (D-Ore.).
Beyond the actions on wheat, rice and corn announced Thursday (December 15), Rep. Conaway expressed his frustrations at China’s actions in other areas. Specifically, he charged China’s actions on those commodities “pale by comparison to China’s conduct in regards to cotton, which continues to threaten the viability of the U.S. cotton industry. It is critically important that the U.S. government take prompt action to stop China’s assault on America’s cotton farmers.”
The latest challenge at the WTO comes as the U.S. also requested that a dispute settlement panel be established over the U.S. contention China has breached its commitments on domestic supports for wheat, rice and corn. The U.S. charges China has exceeded their commitments on that front by $100 million.
Comments: This latest U.S. case filed on China triggers a period of consultations between the two countries and most likely will end up where the matter of China’s domestic agricultural supports has ended up – with the U.S. requesting a dispute settlement panel be established. Under WTO rules, China can block the dispute panel request once, but would be unable to do so a second time. But this adds one more agricultural issue to what is a growing list of complaints on a host of areas –15 complaints in total from the U.S. – that is accelerating what has already been a contentious trade relationship between the two countries. As we’ve noted, the key is how China responds to these complaints and whether they opt to retaliate against other U.S. products, something reports out of China have signaled would likely be the case.
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