USA complains of unfair government aid for Chinese farmers

The complaint is the 14th brought by the USTR against China at the WTO since 2009, and comes as free-trade policy as well as US trade with the Asian country become hot topics in this year’s USA presidential election campaign.

“The U.S. Grains Council believes in free and open trade and the importance of both strong trade policy and market development”, said U.S. Grains Council president and CEO Tom Sleight.

Today, House Agriculture Committee Chairman K. Michael Conaway (R-TX) joined U.S. Trade Representative Michael Froman, U.S. Secretary of Agriculture Tom Vilsack and a bipartisan group of Members of Congress in announcing the U.S. has launched a new trade enforcement action against China at the World Trade Organization (WTO) as a result of China’s excessive government support for corn, rice, and wheat production.

The US Trade Representative’s office said China’s “market price support” for rice, wheat and corn was estimated to be almost $US100 billion above the WTO limits. “Addressing Chinese over-subsidization can help support the price of US wheat and corn, and that’s good news for North Dakota farmers”.

“These programs distort Chinese prices, undercut American farmers and clearly break the limits China committed to when they joined the WTO”, Froman said. China’s excessive market price support for rice, wheat, and corn inflates Chinese prices above market levels, creating artificial government incentives for Chinese farmers to increase production.

The case argues that China has set prices for wheat, corn, and rice well above market levels that have in turn led to government subsidies in violation of WTO rules.

“But we could be doing much better, particularly if our grain exports could compete in China on a level playing field”, Vilsack said.

U.S. wheat industry trade groups estimate that the Chinese price supports guarantee Chinese farmers about US$10 per bushel, artificially boosting production and lowering world prices.

USA Rice President and CEO Betsy Ward said, in a statement, that the enforcement action also sends “a clear signal to other countries with whom we compete and who are not living up to their WTO obligations with regard to rice, such as Viet Nam, Thailand, and India”.

He said the USA has won all the cases decided so far.

Chairman Conaway convened two full committee hearings a year ago (June and October) to review foreign agricultural subsidies and their detrimental, trade-distorting impact on American agricultural producers. Pat Roberts, chairman of the Senate Committee on Agriculture, Nutrition, and Forestry. Heidi Heitkamp of North Dakota said Tuesday. “We also believe the WTO provides structure and accountability for global trade”.

That’s what my Administration has done consistently in taking more claims to the World Trade Organization than any other country – and that’s exactly what we’re doing once again today by filing our latest complaint against China before the WTO. “Consultations and negotiations are integral parts of the WTO process, and we welcome USTR’s and USDA’s move on this critical issue”.

Critics of the administration’s trade policy say WTO cases can result in remedies that are too small or too late for USA companies. Lawmakers acknowledged that it could take years for the complaint to be resolved, but they said the action was important to maintain support for trade agreements from the public.

The action marks the Obama administration’s 23rd trade enforcement challenge lodged with the WTO since 2009, and the 14th against China. China, however, has provided domestic support for each product substantially above the 8.5 percent de minimis level.