Geneva | Reuters — The United States won a World Trade Organization ruling on China’s price support for grains, successfully challenging a calculation methodology that is also used by India.
A WTO adjudication panel agreed on Thursday with the U.S. complaint that China had paid farmers too much for wheat, Indica rice and Japonica rice in 2012-2015. A disputed corn subsidy had already expired.
“China’s excessive support limits opportunities for U.S. farmers to export their world-class products to China,” U.S. Trade Representative Robert Lighthizer said in a statement. “We expect China to quickly come into compliance with its WTO obligations.”
The trade representative’s office filed the complaint in September 2016, saying China had paid farmers nearly US$100 billion more than allowed by the WTO rules. That provided an artificial incentive for farmers to produce more, lowering prices worldwide.
China’s WTO membership agreement permits trade-distorting subsidies of up to 8.5 per cent of the total value of production.
China argued that it was not breaching that limit because only the grains procured by government should be counted as subsidized. The United States successfully argued that state buying at a guaranteed price raised the whole market.
“U.S. farmers have been hurt by China’s overproduction and protectionist measures for too long and it’s past time for China to start living up to its commitments,” Vince Peterson, president of export promotion group U.S. Wheat Associates, said of the ruling in a separate release.
The ruling, which may be appealed, could have ramifications for India, which has made similar arguments to China.
At a meeting of the WTO’s agriculture committee on Wednesday, the U.S. and Canada rejected India’s claim that its market price support for pulses was 1.5 per cent of the value of production, saying that it was actually 31 per cent to 85 per cent, far above allowed limits.
— Reporting for Reuters by Tom Miles in Geneva. Includes files from Glacier FarmMedia Network staff.