World Trade Organization officials ruled that the Chinese government over-subsidized the country’s grain producers, artificially raising Chinese prices for grain and reducing imports.
U.S. Trade Representative Robert Lighthizer and Secretary of Agriculture Sonny Perdue announced today that a World Trade Organization (WTO) dispute settlement panel found that China has provided trade distorting domestic support to its grain producers well in excess of its commitments under WTO rules. China’s market price support policy artificially raises Chinese prices for grains above market levels, creating incentives for increased Chinese production of agricultural products and reduced imports.
The panel report agreed with the United States that China provided domestic support to its agricultural producers in 2012, 2013, 2014, 2015, well in excess of its WTO commitments. Specifically, the panel found that China had provided support in excess of permitted levels for Indica (long-grain) rice, Japonica (short- and medium-grain) rice, and wheat, in every year. Each finding individually established that China broke its overall agricultural domestic support commitment for agricultural producers. For corn, the panel declined to make findings on the support provided to corn in 2012-2015 given that China had apparently changed its program in 2016, just prior to the WTO’s establishment of the panel.
“The United States proved that China for years provided government support for its grain producers far in excess of the levels China agreed to when it joined the WTO. China’s excessive support limits opportunities for U.S. farmers to export their world-class products to China. We expect China to quickly come into compliance with its WTO obligations,” said Ambassador Lighthizer. “We know that America’s farmers and ranchers thrive in a market-oriented, rules-based global economy. That means all countries must play by the rules, which is why this finding is so important to U.S. agriculture,” said Secretary Perdue.
China would continue to promote development of its agriculture sector in line with WTO rules and safeguard the stability of the multi-lateral trade system, the Ministry of Commerce said in a statement. China’s WTO membership agreement permits trade-distorting subsidies of up to 8.5 percent 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.The ruling, which may be appealed, could have ramifications for India, which has made similar arguments to China.