Source: US TRADE REP, 12/15/16

Today, the Obama Administration launched a new trade enforcement action against the People’s Republic of China at the World Trade Organization (WTO) concerning China’s administration of tariff-rate quotas (TRQs) for rice, wheat, and corn.  The complaint filed by the Office of the United States Trade Representative (USTR) charges that China’s administration of its TRQs for these commodities breaches China’s WTO commitments and undermines American farm exports.  The United States is launching this trade enforcement challenge to hold China to its trade commitments and help level the playing field for American rice, wheat, and corn farmers.  Today’s announcement marks the 15th trade enforcement challenge the Obama Administration has launched against China at the WTO.

“Today’s new challenge – as well as the steps we are taking to advance our case against China’s excessive government support for rice, wheat, and corn – demonstrates again the Obama Administration’s strong and continued commitment to enforcing the rules of global trade, and protecting the interests and livelihoods of American farmers,” said United States Trade Representative Michael Froman. “China’s TRQ policies breach their WTO commitments and limit opportunities for U.S. farmers to export competitively priced, high-quality grains to customers in China. The United States will aggressively pursue this challenge on behalf of American rice, wheat, and corn farmers.”

The United States Department of Agriculture (USDA) estimates that China’s TRQs for these commodities were worth over $7 billion in 2015. If the TRQs had been fully used, China would have imported as much as $3.5 billion worth of additional crops last year alone.

“Real access under tariff-rate quotas is vital to global trade and to providing our farmers and ranchers the opportunity to export high-quality, American-grown products to the world,” said Agriculture Secretary Tom Vilsack. “Although China has become a significant market for our grain exports, we could be doing much better than we are today. When China joined the WTO, it committed to implementing an agriculture regime that would facilitate market access consistent with international obligations.

However, China has frustrated exporters through generous price support and unjustified market restrictions. Taking action against grain price supports was one piece of the puzzle, and now we must confront China’s improper administration of its TRQs to ensure that our grains have the meaningful market access that China bound itself to as a member of the WTO. Today’s announcement is another step towards advocating for fairness in the global trading system on behalf of American farmers.”

In a separate matter, USTR also announced today that it has requested that the WTO establish a dispute settlement panel to examine China’s level of domestic support for Chinese producers of rice, wheat, and corn. USTR launched a WTO challenge on this matter in September 2016, noting that China’s market price support for these commodities was estimated to be nearly $100 billion in excess of its WTO commitments. According to USTR’s analysis, China's domestic support measures and non-transparent TRQ regime work together to distort global markets for wheat, rice and corn. Compliance with WTO rules would lead to a reduction in the excessive domestic support provided to China’s grains producers to bring Chinese production in line with market forces, and improvements to China’s TRQ administration would facilitate market access for U.S. and other exporters of these commodities. 

For more info, click here.