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U.S. Challenges Mainland China’s Market Price Support Mechanism for Rice, Wheat and Corn

U.S. Trade Representative Mike Froman and Secretary of Agriculture Tom Vilsack announced on 13 September that the United States has requested WTO dispute settlement consultations with mainland China concerning excessive government support provided for production in the mainland of rice, wheat and corn. A request for consultations is the first step in the WTO dispute settlement process. If talks do not resolve the matter within 60 days, the United States may ask the WTO to establish a dispute settlement panel.

According to a USTR press release, in 2015 mainland China’s market price support for rice, wheat and corn was estimated to be nearly US$100 billion in excess of the levels Beijing committed to during its accession to the multi-lateral body. USTR adds that excessive market price support for these agricultural products inflates mainland Chinese prices above market levels, creating artificial government incentives for mainland Chinese farmers to increase production. The United States is challenging this practice on behalf of American rice, wheat and corn farmers to help reduce distortions for these crops and help American farmers to compete on a more level playing field.

Secretary Vilsack observed that through tariff cuts and the removal of other trade barriers mainland China “has gone from a $2-billion-a-year market for U.S. agricultural products to a $20-billion-plus market.” However, Vilsack believes the United States “could be doing much better, particularly if our grain exports could compete in China on a level playing field.” Vilsack added that the United States sees “substantial opportunities to meet import demand for grains in China if China is willing to operate a WTO-consistent trade regime.”

The USTR press release characterises the new case as a continuation of the administration’s “strong record” of enforcing U.S. rights under its trade agreements and says it “indicates the resolve that the United States would bring to enforce the high standards won in the Trans-Pacific Partnership.” However, that point may not do much to sway those members of Congress who have signalled their opposition to TPP based on other specific issues.

Content provided by Picture: HKTDC Research
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