The World Trade Organization today sided with the U.S. in its complaint that China has not lived up to pledges it made nearly twenty years ago to buy billions of dollars of wheat, rice and corn through tariff rate quotas.
China agreed to set up the system of TRQs during its accession to the WTO in 2001, but the U.S. has claimed for years that China never lived up to the promise.
“Making sure our trading partners play by the rules is vital to providing our farmers the opportunity to export high-quality, American-grown products to the world,” Ag Secretary Sonny Perdue said in reaction to the ruling. “Today’s announcement is another victory for American farmers and fairness in the global trade system.”
If China had set up the TRQs, it would have boosted grain by $3.5 billion in 2015 alone, according to USDA estimates. The TRQs were to be for all foreign grains, but U.S. exporters were expected to get much of the added business. U.S. wheat farmers in particular had hoped to see increased exports to China because of the 9.64-million-metric-ton quota it agreed to.
After the ruling was announced, U.S. Wheat Associates President Vince Peterson urged the Chinese government "to come into compliance with the rules it accepted when it joined the WTO.
"The world now sees that their policies stifle market-driven wheat trade, block export opportunities and force private sector buyers and consumers to pay more than they should for milling wheat and wheat-based foods," he said in a statement.
Up until this year, the U.S. has not been able to export any rice to China. After nearly two decades, China has finally opened its borders to U.S. rice, including the approval of individual mills for export.
But U.S. rice, like most other U.S. ag commodities are suffering under Chinese retaliatory tariffs as the two countries negotiate an end to a yearlong trade war.
This is the second major U.S. victory against China in the WTO this year. A dispute panel ruled in February that China far exceeded WTO limits for domestic farm supports to improperly bolster its wheat and rice farmers with artificially high prices.
The U.S. initiated both WTO suits more than two years ago in late 2016 under the Obama administration. The White House announced early on in the Trump administration that it would continue the actions against China.
“The Administration will continue to press China to promptly come into compliance with its WTO obligations,” USTR Robert Lighthizer said in a statement today.
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