Washington Insider-- Monday

US, China Dispute Still Percolating

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Moffitt Pledges to Reach Out to Stakeholders if Approved for USDA Post

Members of the Senate Agriculture Committee were repeatedly assured by Jennifer Moffitt, nominated to be USDA undersecretary for marketing and regulatory programs, that she would study issues under her purview carefully and seek input from a host of stakeholders in making decisions and that she would taken an “inclusive approach to solving problems.”

Moffitt has been a walnut farmer in California and served as an undersecretary at the California Department of Food and Agriculture.

On the coming regulations ordered by President Joe Biden to update the Packers & Stockyards Act, Moffitt said she would reach out to stakeholders across the food supply chain and “weigh those complexities, and really understand what it means for farmers and ranchers,” promising to take “a nuanced approach” to the rulemaking. She also indicated it was important to “ensure that the food system and the meat system is fair and competitive.”

There were no specifics offered by Moffitt relative to several issues, a situation which can be typical for nominees to various government posts that require Senate confirmation and it is a pattern seen with many other appointees to such roles across the Biden and prior administrations.

USDA Seeks Input From Public On Program To Expand Meat Processing

USDA on Friday published a notice in the Federal Register seeking public input on a host of issues related to their announcement of deploying $500 million in a combination of grants, loans and technical assistance to expand U.S. meat processing capacity.

The agency has set an August 30 deadline for those to provide information on scores of questions posed by USDA on the effort.

USDA is seeking input on “how to invest an estimated $500 million of American Rescue Plan funds to improve infrastructure, increase capacity, and hasten diversification across the processing industry.”

Washington Insider: US, China Dispute Still Percolating

The dispute between the U.S. and China at the World Trade Organization over China's implementation of their tariff-rate quotas (TRQs) on grain imports continues to linger at the world trade body.

The U.S. originally filed a complaint at the WTO over China's TRQ operation which they maintained restricted U.S. grain shipments to China. The WTO sided with the U.S. in 2019 and China did not challenge the WTO ruling.

The dispute centered on China's WTO 2001 commitment to set TRQs for wheat, corn and rice that impose a lower tariff rate to imports up to a certain quantity.

China did not appeal the ruling and agreed to bring its measures into WTO compliance by June 29, 2021

However, the filing Friday at the WTO Dispute Settlement Body (DSB) indicated the U.S. believes China has not brought their program in line with that WTO ruling from 2019.

“United States requests authorization from the DSB to suspend concessions or other obligations with respect to China at an annual level based on the level of the nullification or impairment of benefits accruing to the United States under the covered agreements from the failure of China to implement the recommendations of the DSB,” the U.S. said.

The U.S. said their sought-after retaliation was based on a formula “that relates to the value of the unfilled portion of any tariff-rate quota (TRQ) for wheat, rice, or corn, as set out in China's WTO Schedule.”

With June 29 having come and gone, the U.S. said China “failed to bring its measures into compliance with its WTO obligations within that period. The parties have not reached agreement on compensation.”

That means, the U.S. said, they are now entitled to take countermeasures against China over the situation.

The U.S. has previously maintained that the unfilled portion of the TRQs prevented some $3.5 billion in U.S. exports to China.

However, China maintained they have met the requirements of the WTO ruling and the two sides have agreed to let the U.S. continue to evaluate its actions to come into compliance.

Indeed, China had failed to fill its TRQs for the three commodities for several years leading up to the U.S. complaint. And only in the past two years have they exceeded their TRQ levels for corn.

China also committed as part of the Phase One agreement between the U.S. and China that they would import levels of commodities that would suggest the country was going to exceed their TRQ levels. But it is not clear that they have done so yet for certain other than corn.

So we will see. This is the latest in what has been rising tensions between the U.S. and China since the Biden administration took office and this could have yet another impact on trade between the two sides and should be watched very closely as it unfolds, Washington Insider believes.

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