The complaint was announced through the office of the US Trade Representative (USTR) earlier this month. It came prior to China imposing anti-dumping duties against the US for exports of dried distiller’s grains (DDGS).
The complaint addressed market price supports for several crops, including feed crops like corn and wheat, the office said. The goal of the challenge is to allow farmers in the US to compete on a more even basis.
“These programs distort Chinese prices, undercut American farmers, and clearly break the limits China committed to when they joined the WTO,” said US Ambassador Michael Froman about the complaint. “As this administration has consistently and repeatedly shown, we will not stand by when our trading partners fail to follow the rules like everyone else. We will aggressively pursue this challenge on behalf of American farmers and hold the Chinese government accountable to the standards of fair global trade.”
Distortion
Mathew Roberts, associate professor in the department of agricultural, environmental and development economics at Ohio State University said China's crop market supports guarantee pretty high prices.
“From the WTO perspective, the real problem is it still provides incentive to over produce so that creates economic distortion,” he told FeedNavigator.
Changes to tariffs and other barriers to trade have changed China from a $2bn to a $20bn market for the US, said Tom Vilsack, US secretary of agricultural, in a statement about the challenge. “But we could be doing much better, particularly if our grain exports could compete in China on a level playing field,” he added.
“Unfortunately, China’s price supports have encouraged wheat, corn and rice production in China that has displaced imports,” he said. “When China joined the WTO, it committed to limit this kind of trade-distorting support, which it has failed to do. 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.”
Market supports
Market price supports for 2015 are estimated to be about $100bn more than what China committed to in its accession, said the USTR. The complaint is the 14th that the US has brought against China.
An analysis done by the office found that the domestic support established for the crops, goes beyond the aggregate measurement of support (AMS) commitments in the WTO agreement on agriculture.
Through these programs, China has set a minimum price at which the government would buy the feed grains and other commodities raised in major producing provinces during the harvest season, said the office.
China has had domestic prices that were more than world market prices since 2012, which both influences domestic production and distorts the Chinese market, said the USTR.
In its WTO schedule, China agreed not to use trade-distorting domestic supports, the office said. Rather it would offer a bolster at or below the de minimis amount of 8.5% for each agricultural product.