U.S. files trade complaint against China, claiming excessive price support

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harvesting corn
(Farm and Dairy file photo)

WASHINGTON — The U.S. Department of Agriculture and U.S. Trade Representative Michael Froman filed a complaint against China this week concerning excessive government support provided for Chinese production of rice, wheat, and corn.

Bipartisan members of Congress joined in announcing the complaint, which challenges China’s use of “market price support” for these three crops, in excess of China’s commitments under World Trade Organization rules.

Excessive support

In 2015, China’s “market price support” for these products is estimated to be nearly $100 billion in excess of the levels China committed to during its accession.

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, according to USDA.

The USDA is challenging China’s government support to help reduce distortions for rice, wheat, and corn, and help American farmers to compete on a more level playing field.

“These programs distort Chinese prices, undercut American farmers, and clearly break the limits China committed to when they joined the WTO,” said Froman. “We will not stand by when our trading partners fail to follow the rules like everyone else.”

Vilsack said China is still a major U.S. trade partner for ag products — but that trade would be even greater if the playing field was level.

“Through tariff cuts and the removal of other trade barriers, China has gone from a $2-billion-a-year market for U.S. agricultural products to a $20-billion-plus market,” Vilsack said. “But we could be doing much better, particularly if our grain exports could compete in China on a level playing field. Unfortunately, China’s price supports have encouraged wheat, corn and rice production in China that has displaced imports.”

When China joined the WTO, it committed to limit this kind of trade-distorting support, which it has failed to do, Vilsack said. This has resulted in significant losses to American producers.

“We see substantial opportunities to meet import demand for grains in China if China is willing to operate a WTO-consistent trade regime,” Vilsack said.

History of actions

This trade enforcement action marks the 14th complaint brought by the Office of the United States Trade Representative against China at the WTO since 2009.

“Eliminating barriers to trade, and gaining access to new markets is critical for our producers,” said Sen. Pat Roberts, R-Kan., chairman of the Senate Committee on Agriculture, Nutrition, and Forestry. “But, those efforts will go without reward if the existing trade rules are not enforced.”

Held accountable

Debbie Stabenow, D-Mich., ranking member of the Senate Committee on Agriculture, said “we need to hold countries like China accountable for anti-competitive trade practices that hurt American farmers and businesses.”

House Ag Committee Chairman and U.S. Rep. Michael Conaway, R-Tex., said China also is failing to report the support it offers its farmers.

“Not only does China refuse to abide by the commitments it made in joining the WTO, it attempts to obscure its illegal actions by consistently failing to even report on the support it is providing to its farmers,” Conaway said.

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