WASHINGTON, April 8, 2015 – A new study commissioned by U.S. commodity groups concludes that several so-called “advanced developing countries” have ramped up their subsidies to corn, wheat and rice producers in excess of their commitments to the World Trade Organization, creating unfair conditions for global commerce.
Representatives of USA Rice and U.S. Wheat Associates told reporters at a briefing Wednesday in Washington that the subsidies being provided by China, Brazil, Thailand, India and Turkey must be addressed as part of a renewed push to complete the Doha Round of WTO trade negotiations.
“We need to have a frank discussion about what really is happening here,” said Steve Mercer, a spokesman for U.S. Wheat Associates, who described the study, by DTB Associates, as an update of a 2011 review which at that time did not include data on China. The new study, focusing on corn, wheat and rice, was presented to WTO agricultural negotiators in February.
“WTO negotiators must address the trade conditions in today’s trading environment if the long-running Doha Round of negotiations is to conclude successfully,” said USA Rice Chief Operating Officer Bob Cummings, who noted that several of the countries targeted in the latest report are also likely using export subsidies to get rid of the surplus production encouraged by the domestic support.
China is the chief offender, according to the DTB study, with support price levels for wheat over the past two years at $384 per ton, for corn at $361, and for long-grain rice at $438 per ton. The support for wheat is 91 percent greater than the U.S. reference price for the commodity in the 2014 farm bill, 140 percent greater than the corn reference price, and 42 percent above the price for rice.
What the WTO calls Aggregate Measure of Support – the total annual agricultural subsidies that encourage production and are considered trade distorting – for China was calculated at $48.4 billion on the low end and almost $110 billion on the high end. The figures for India, according to the report, ranged from $36.1 billion to $93.4 billion. These figures compare to the most recent AMS by the U.S. for the marketing year 2012, of just under $7 billion, up from about $4.7 billion a year earlier.
Commodity group representatives at Wednesday’s briefing acknowledged that the increase in U.S. support in the most recent U.S. notification to the WTO – from $4.7 billion to just under $7 billion, reflecting the 2012 market year -- leaves the U.S. open to criticism on its own crop programs. But they note that the U.S. AMS has never exceeded its agreed-upon limit of $19.1 billion. Further increases are expected in the U.S. notification for 2014, reflecting 2014 farm bill changes, including in crop insurance premium subsidies.
During the briefing the commodity groups also called for more transparency by member countries in reporting their levels of support and a closer adherence to WTO rules about reporting.
Member countries are required to report domestic support levels regularly, but as of November 2014, 650 such notifications were late. Turkey has not reported its support since the 2001 crop year, China has not reported since 2008 and India last fall submitted a notification covering seven crop years to make it current through 2010.
“This study shines a light on what is really happening,” said USW Vice President of Policy Shannon Schlecht in a news release. “What it shows is a massive increase in government-sanctioned support prices and violations of Aggregate Measure of Support agreements that are distorting world trade in wheat, corn and rice.”
WTO member nations are facing a July 31st deadline to agree to work program on the remaining issues on the Doha agenda. Disagreements on agriculture remain among the biggest obstacles. Late last month WTO Director-General Roberto Azevêdo, a Brazilian, said members were “making progress in terms of understanding the issues and each other’s aspirations and limitations.”
“But, while we are making progress, this does not yet mean we are converging,” he said. “There remain many challenges to overcome before we can find solutions — but at least now we are looking for them.”
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