ICYMI: USTR News: United States Challenges Chinese Grain Tariff Rate Quotas for Rice, Wheat, and Corn

Today, the Obama Administration launched a new trade enforcement action against the People’s Republic of China at the World Trade Organization (WTO) concerning China’s administration of tariff-rate quotas (TRQs) for rice, wheat, and corn. The complaint filed by the Office of the United States Trade Representative (USTR) charges that China’s administration of its TRQs for these commodities breaches China’s WTO commitments and undermines American farm exports. The United States is launching this trade enforcement challenge to hold China to its trade commitments and help level the playing field for American rice, wheat, and corn farmers. Today’s announcement marks the 15th trade enforcement challenge the Obama Administration has launched against China at the WTO.

“Today’s new challenge – as well as the steps we are taking to advance our case against China’s excessive government support for rice, wheat, and corn – demonstrates again the Obama Administration’s strong and continued commitment to enforcing the rules of global trade, and protecting the interests and livelihoods of American farmers,” said United States Trade Representative Michael Froman. “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. The United States will aggressively pursue this challenge on behalf of American rice, wheat, and corn farmers.”

The United States Department of Agriculture (USDA) estimates that China’s TRQs for these commodities were worth over $7 billion in 2015. If the TRQs had been fully used, China would have imported as much as $3.5 billion worth of additional crops last year alone.

“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,” said Agriculture Secretary Tom Vilsack. “Although China has become a significant market for our grain exports, we could be doing much better than we are today. When China joined the WTO, it committed to implementing an agriculture regime that would facilitate market access consistent with international obligations. However, China has frustrated exporters through generous price support and unjustified market restrictions. Taking action against grain price supports was one piece of the puzzle, and now we must confront China’s improper administration of its TRQs to ensure that our grains have the meaningful market access that China bound itself to as a member of the WTO. Today’s announcement is another step towards advocating for fairness in the global trading system on behalf of American farmers.”

In a separate matter, USTR also announced today that it has requested that the WTO establish a dispute settlement panel to examine China’s level of domestic support for Chinese producers of rice, wheat, and corn. USTR launched a WTO challenge on this matter in September 2016, noting that China’s market price support for these commodities was estimated to be nearly $100 billion in excess of its WTO commitments. According to USTR’s analysis, China's domestic support measures and non-transparent TRQ regime work together to distort global markets for wheat, rice and corn. Compliance with WTO rules would lead to a reduction in the excessive domestic support provided to China’s grains producers to bring Chinese production in line with market forces, and improvements to China’s TRQ administration would facilitate market access for U.S. and other exporters of these commodities.

"In September, I joined in the bipartisan call for China to be held accountable to their World Trade Organization commitments. Today's enforcement action on China's administration of tariff-rate quotas for wheat, corn, and rice appears to be yet another example of China's refusal to play by the rules,” said Senator Pat Roberts, Chairman of the Senate Committee on Agriculture, Nutrition, and Forestry. “I am committed to working with our producers and alongside USDA and USTR as we continue to fight for U.S. farmers' ability to compete in the global market on a level playing field."

“China continues to ignore the commitments it made in joining the WTO,” said Representative K. Michael Conaway, Chairman of the House Agriculture Committee. “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. We have been sounding the alarm, and I am pleased to see USTR taking action to hold China accountable.”

"We need to hold China accountable for unfair trade practices that hurt American farmers,” said Senator Debbie Stabenow, Raking Member of the Senate Committee on Agriculture, Nutrition, and Forestry. “I applaud the USTR for taking steps today to level the playing field so that our businesses can create jobs and compete in the global economy."

"China's strategy of gaming the system makes it virtually impossible for Oregon wheat growers and other American farmers to get the market access China promised when it joined the WTO,” said Senator Ron Wyden, Ranking Member of the Senate Finance Committee. “That access is essential to the livelihoods of farms and rural communities across the nation. Together with the action the Administration took in September challenging Chinese agriculture subsidies, launching this case demonstrates that the United States will fight for fair trade for farmers and rural communities."

"An equal playing field is vital for America's farmers to compete in a global marketplace," said House Agriculture Committee Ranking Member Collin Peterson. "It is imperative that the United States take this action to hold China accountable for failing to meet WTO commitments."

"Today we're again standing up and working to hold China accountable for cheating North Dakota farmers," said Senator Heidi Heitkamp, member of the Senate Committee on Agriculture, Nutrition, and Forestry. "When China or any other country cheats on a trade agreement, they make it harder for North Dakota wheat and corn farmers to access markets and get fair value for our state's top-notch crops. This is the second time the U.S. Trade Representative has brought an agricultural compliance case against China this year, and that's good news for North Dakota farmers and rural communities – especially when commodities prices are already challenging."

“I welcome this USTR action against China’s misadministration of tariff-rate quotas for rice, wheat, and corn. It is not the first, nor will it be the last, enforcement action brought against China, which routinely adopts protectionist policies ranging from unscientific regulations on biotech products to excessive market price supports for agriculture commodities,” said Representative Adrian Smith, member of the House Ways and Means Committee and Chair of the Modern Agriculture Caucus. “China represents a large and growing market for American producers, and our involvement in trade negotiations and institutions such as the WTO is what enables us to hold our trading partners accountable. We must continue to remain a vigilant and engaged actor in the international economy to ensure a level playing field for our farmers and ranchers.”

Overall, the Obama Administration has launched 24 trade enforcement challenges at the WTO since 2009 – more than any other country in the world over that period. USTR has won every trade enforcement challenge decided so far at the WTO, worth billions of dollars in trade opportunities for U.S. exporters.

Click here to read more on USTR's website.