US Files WTO Complaint Regarding China's Management of TRQs for Rice, Wheat and Corn

The Obama administration on Dec. 15 filed a World Trade Organization challenge against China’s employment of tariff-rate quotas for rice, wheat and corn, the Office of the U.S. Trade Representative said (here). Chinese quotas for these commodities were valued at more than $7 billion last year, but USTR claims that China only filled about half the total value of its listed quotas. “China’s TRQ policies breach their WTO commitments and limit opportunities for U.S. farmers to export competitively priced, high-quality grains to customers in China,” U.S. Trade Representative Michael Froman said in a statement. USTR alleges that China’s administration of quotas for those products is “opaque” and “unpredictable,” and is inconsistent with China’s WTO Accession Protocol and the General Agreement on Tariffs and Trade. Although China annually announces the opening of tariff-rate quotas, its application criteria and procedures are unclear, and China doesn’t provide meaningful information on how it administers the quotas, USTR said.

Furthermore, China maintains impermissible restrictions on importation, and regularly fails to provide notice of total quantities permitted for importation and changes to the total quantity allowed to be imported, USTR said. “Despite lower global prices that favor the importation of grains into China, the TRQs for each commodity persistently do not fill,” the agency said. “Real access under tariff-rate quotas is vital to global trade and to providing our farmers and ranchers the opportunity to export high-quality, American-grown products to the world,” Agriculture Secretary Tom Vilsack said in a statement. “Although China has become a significant market for our grain exports, we could be doing much better than we are today.”

In a separate but related case, USTR also requested a WTO dispute settlement panel to examine China’s domestic support for producers of rice, wheat and corn (see 1609130069). The Obama administration in September filed a WTO complaint on the matter, alleging that China provided subsidies in 2015 for domestic production of the products of $100 billion in excess of its WTO commitments. Consultations held Oct. 20 in Geneva didn’t resolve the dispute. A Dec. 16 WTO Dispute Settlement Body meeting will consider the U.S. request for formation of a dispute settlement panel.

“Not only is China unfairly subsidizing its producers to the detriment of American farmers, they are also refusing to provide the market access they promised,” House Agriculture Committee Chairman Mike Conaway, R-Texas, said in a statement: “We have been sounding the alarm, and I am pleased to see USTR taking action to hold China accountable.” House Ways and Means Committee Chairman Kevin Brady, R-Texas, also reacted favorably to USTR’s challenge of China’s administration of quotas on rice, wheat and corn. “The nontransparent and intentionally unpredictable management of China’s commitments is unfair trade that hurts hardworking American farmers. Strong enforcement of our trade agreements -- including the WTO -- ensures that our farmers, businesses, and workers are treated fairly,” Brady said in a Dec. 15 statement (here).