China Trade Cases Pushed

USTR Brings New Charges Against China Over Imports for Corn, Wheat, Rice

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Corn piles might not be so big if China followed global trade rules, the U.S. alleged on Thursday. (DTN file photo by Scott R Kemper)

OMAHA (DTN) -- The Obama administration is pushing one more trade case with China over corn, wheat and rice exports, claiming China is not upholding its import obligations under the World Trade Organization for those three commodities.

China's tariff-rate quotas for corn, wheat and rice combined are estimated worth more than $7 billion. If China had fully used those import quotas in 2015, the U.S. Trade Representative's Office concluded China would have imported as much as $3.5 billion more of those commodities.

The case comes as the U.S. has also separately asked the WTO to create a dispute settlement panel over the U.S. contention that China has paid nearly $100 billion in domestic support for Chinese producers of corn, wheat and rice. U.S. trade officials said Thursday that China has not responded to the U.S. investigation into China's subsidies.

The bottom line is China has effectively stopped importing cheaper global commodities of corn, wheat and rice because the country also poured billions of dollars to spur higher domestic production of those crops as well.

"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."

As with any actions with the World Trade Organization, both disputes with China will be turned over to the incoming presidential administration to defend and argue at the WTO.

TRQs set the levels of imports a country has agreed to accept under a specific import tariff. According to the USTR, China lacks transparency on the rules for importing commodity grains. When applying for licenses, exporters do not know how they will be treated or how the TRQ will be applied.

According to the USTR, last year China only filled 65% of its 7.2 million metric ton tariff-rate quota for corn, meaning exporters could have shipped another 2.52 mmt of corn into China. For wheat, China imported only 30% of the 9.63 mmt TRQ, meaning exporters could have shipped another 6.7 mmt of wheat to China.

The U.S. has been banned from shipping rice to China over yet another trade dispute involving phyto and phyto-sanitary measures. Yet, China also is not meeting its TRQ obligations for both long-grain and short- to medium-grain rice, the USTR claimed.

Agriculture Secretary Tom Vilsack said real access under tariff-rate quotas is vital to global trade and to providing farmers and ranchers the opportunity to export American-grown products. Although China has become a significant market for U.S. crops, Vilsack said more commodities would be exported if China abided by trade rules.

"When China joined the WTO, it committed to implementing an agriculture regime that would facilitate market access consistent with international obligations," Vilsack said. "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."

The U.S. Wheat Associates and National Association of Wheat Growers stated the groups welcomed the continued push in the two WTO cases against China, which the groups stated is distorting the wheat market globally.

"The facts in these two cases go hand-in-hand, demonstrating how Chinese government policies create an unfair advantage for domestic wheat production," said Gordon Stoner, president of NAWG and a wheat farmer from Outlook, Montana. "Both actions call attention to the fact that when all countries follow the rules, a pro-trade agenda and trade agreements work for U.S. wheat farmers and their customers."

In the USTR announcement, several key members of the House and Senate Agriculture Committees praised the U.S. action. Sen. Pat Roberts, R-Kan., said China's actions reflect another example of the country's inability to play by the rules. "I am committed to working with our producers and alongside USDA and USTR as we continue to fight for U.S. farmers' ability to compete in the global market on a level playing field," Roberts said.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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Chris Clayton