USTR Report: China’s WTO Non-Compliance Harms US Agriculture | 2022-02-16

China continues to be a ‘difficult and unpredictable market for US agricultural exporters’ as it flouts international trading standards set by the World Trade Organization, according to a new report to Congress from the office of the U.S. Trade Representative.

The United States challenged China over its quota administration and domestic support for farmers in 2016, but Beijing has still failed to properly comply with WTO rulings on both counts.

“The inability or unwillingness of Chinese regulators to consistently follow science-based international standards and guidelines and enforce regulatory enforcement in a transparent and rules-based manner further complicates and impedes agricultural trade,” concluded the USTR in the 64-page report which devoted about five pages to agricultural irritants alone.

With regard to China’s tariff quota promises, the country is now probably importing enough to meet the targets set out in China’s WTO accession agreement, but this is often not the case and problems remain, according to the USTR.

“Due to China’s ill-defined criteria for applicants, unclear procedures for distributing TRQ allocations, and failure to announce the results of quota allocation and reallocation, traders do not are unsure of available import opportunities and producers around the world have reduced market access opportunities,” the USTR said in the report. “As a result, China’s TRQs for wheat, corn and rice are rarely filled, although they are often oversubscribed.”

The WTO ruled in favor of the United States in 2019 and China has not appealed the ruling, but the USTR is still unhappy with China’s compliance.

When China joined the World Trade Organization about 20 years ago, it agreed to set a quota of 9.64 million metric tonnes for wheat, a quota of 7.2 million metric tonnes for corn, a quota of 2.66 million metric tons for long grain rice and a quota of 2.66 million metric tons for short and medium grain rice. China was not obligated to buy grain from the United States, but it was generally assumed that American farmers would benefit.

A common complaint from the US agricultural sector is that China has not been careful enough that its large state trading enterprises do not block imports as they have done in the past.

Regarding China’s domestic support policies, a WTO panel also ruled in 2019 that the country was unfairly calculating its support prices for wheat and rice producers. The WTO ruled that China pushed subsidies much higher than allowed from 2012 to 2015. Again, China did not appeal the ruling and the United States accepted victory.

But now the US is complaining bitterly that China’s proposed new subsidy calculation method is just as unfair as the old method.

Beyond that, China continues to erect new domestic supports that hurt US agricultural exporters.

“In 2016, China established subsidies for starch and ethanol producers to encourage the purchase of domestic corn, which led to increased export volumes of processed corn products in China. from China in 2017 and 2018,” the report said.

China could also argue that the United States is not complying with its WTO obligations. A WTO panel ruled in 2020 that the United States broke international commitments by circumventing the WTO dispute settlement system and hitting China in 2018 with tariffs on $234 billion. of its goods. These Section 301 tariffs – initiated under the Trump administration are still in place, as are Chinese retaliatory tariffs on a wide variety of American agricultural products. China continues to waive some of these tariffs on an ad hoc basis if importers request temporary exemptions.

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