China’s administration of grain quotas breaches WTO rules

WASHINGTON — A World Trade Organization (WTO) dispute settlement panel found that China has administered its tariff-rate quotas (TRQs) for wheat, corn, and rice inconsistently with its WTO commitments.

Contrary to those commitments, the WTO panel said China’s TRQ administration is not transparent, predictable, or fair, and it ultimately inhibits TRQs from filling, denying U.S. farmers access to China’s market for grain, according to U.S. Trade Representative Robert Lighthizer.

In a prepared statement, Lighthizer and U.S. Secretary of Agriculture Sonny Perdue called the panel report is “the second significant victory for U.S. agriculture this year” and will help American farmers compete.

“This second important victory for the United States further demonstrates that President Trump will take all steps necessary to enforce trade rules and to ensure free and fair trade for U.S. farmers. The Administration will continue to press China to promptly come into compliance with its WTO obligations,” said Ambassador Lighthizer.

China’s grain TRQs have annually been underfilled. The USDA estimates that if China’s TRQs had been fully used, it would have imported as much as $3.5 billion worth of corn, wheat and rice in 2015 alone.

Background

Upon accession to the WTO, China made commitments specific to its administration of TRQs, including the commitment to administer its TRQs in a transparent, predictable, and fair basis, using clearly specified administrative procedures and requirements that do not inhibit the filling of each TRQ.

In August 2017, the United States requested that the WTO establish a dispute settlement panel to consider whether China administers its TRQs for long-grain rice, short- and medium-grain rice, wheat, and corn in a manner inconsistent with its WTO commitments.

The panel report released April 18 agrees with the United States that China administers its TRQs in a manner inconsistent with its Accession Protocol obligations, through its eligibility criteria, allocation and reallocation procedures, public comment process, and processing restrictions.

In addition, China allocates a significant portion of each TRQ to a designated state-trading enterprise (STE) and does not subject the STE to the same rules applied to non-state trading enterprises applying for and importing grains under the TRQs.

Each finding individually established that China’s TRQ measures are inconsistent with its obligations.