US says China actions on rice, wheat and corn put US farmers at disadvantage
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The U.S. is launching a challenge at the World Trade Organization (WTO) on China’s domestic price supports for the production of rice, wheat and corn, US officials announced Tuesday (Sept. 13), a likely action we alerted Pro Farmer members to months ago. China’s “market price support” for rice, wheat and corn is estimated to nearly be $100 billion above the WTO limits and provides an artificial incentive for Chinese farmers to increase production of those crops, the Obama administration detailed. “These programs distort Chinese prices, undercut American farmers, and clearly break the limits China committed to when they joined the WTO,” U.S. Trade Representative Michael Froman said in a statement. “We will not stand by when our trading partners fail to follow the rules like everyone else.” USTR analysis showed China’s domestic price supports for wheat, Indica rice, Japonica rice and corn have exceeded the 8.5 percent de minimis level allowed under the WTO commitment for every year since 2012. While US ag exports to China are at $20 billion, USDA Secretary Tom Vilsack said at a briefing announcing the action that they would be even higher if not for the Chinese domestic farm supports. Several lawmakers joined Vilsack and Froman in announcing the action, with Senate Ag Committee Chairman Pat Roberts (R-Kan.) stating, “If we are to remain competitive in the global marketplace, it is critical that our partners adhere to and abide by the same rules that we have all agreed to.” US growers have “invested their time and resources in the difficult task of understanding and documenting Chinese market price supports for wheat, corn, and rice,” Roberts said. “It is our government’s responsibility to listen to the concerns of the US agriculture industry and begin the process of holding China accountable to its commitments in the World Trade Organization.” House Ag Chairman Mike Conaway (R-Texas) also applauded the trade case. Conaway noted he convened two full committee hearings last year (June and October) to review foreign agricultural subsidies and their detrimental, trade-distorting impact on American agricultural producers. Conaway said he has long raised concerns about the actions of foreign competitors and has frequently called on the Obama Administration to initiate WTO challenges against the high and rising foreign subsidies, tariffs, and non-tariff trade barriers. While China has exceeded its allowable subsidy limits, Conaway said “the US abides by the limits agreed to in the WTO.” He said he appreciated Froman and Vilsack’s work “to begin to draw attention to — and to challenge — high and rising foreign subsidies, tariffs, and other barriers to trade, and particularly those of China. I also want to thank Ambassadors Darci Vetter and Michael Punke for their tireless work on these important issues.”
Comments: We alerted the investigation was underway back in July and the timing at that point was aimed at much later in the year. However, with the Obama administration now mounting a push for the Trans-Pacific Partnership (TPP) agreement to be voted on in the lame-duck session of Congress, it is clear the WTO case announced is aimed at further bolstering their push. And, seasoned observers note this at least gives the White House some ammo in its effort to get the TPP voted on in the post-election, lame-duck session of Congress, or in the new Congress as they can show they will enforce existing trade agreements. The market-sensitive issue now is what will be China’s reaction to the U.S. action and whether or not there will be Chinese trade implications. The Chinese Ministry of Commerce is expected to announce its decision this month on potential tariffs on imports of US dried distillers grains, or DDGs, an animal-feed byproduct from ethanol production. Chinese ethanol producers called for the investigation in January, arguing that US producers were selling DDGs at artificially low prices.
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