Final ruling not expected until 2019 or 2020
The World Trade Organization granted the Trump administration’s request to investigate whether Chinese trade policies violate international trade rules during a Sept. 22 meeting in Geneva.
Background. The U.S. dispute alleges that Beijing’s application of agricultural tariff-rate quotas (TRQs) for rice, wheat, and corn violates WTO rules because it unfairly undermines the ability of U.S. farmers to export their grains. In 2016, the Obama administration lodged the dispute and claimed China’s TRQ procedures violate its WTO accession agreement and the General Agreement on Tariffs and Trade because they were not transparent, predictable, or fair. As part of China’s WTO accession agreement, Beijing pledged to set specific TRQ levels for various products by applying a lower tariff rate to imports up to a certain quantity and then applying higher duties to imports that exceed the threshold.
China said it was “disappointed” by the investigation and would “strongly defend its interests” before the WTO dispute settlement body.
Impacts. Had China complied with its WTO obligations, Beijing would have permitted an additional $3.5 billion worth of crops to be imported into China, according to USDA estimates. Should the WTO rule China’s TRQ policies violate international rules, Beijing could be forced to accept increased amounts of U.S. grain imports or face retaliation from Washington.
Next steps. Over the next year, the WTO will evaluate U.S. allegations that China imposed “impermissible” restrictions on farm imports, failed to provide sufficient information about its import quantities, and didn’t disclose changes to those import quotas. The U.S. alleged that China never reached its agreed-upon threshold for agricultural TRQs despite lower global prices that favored the importation of grains into China. Trade policy analysts predict a ruling in the case is unlikely to come until 2019 or 2020, due in part to a series of delays and staff shortages in the WTO dispute settlement system. The case is closely linked to a separate U.S. dispute that claimed China provided more than $100 billion in illegal government subsidies for producing rice, wheat, and corn.
