China Wednesday officially rejected U.S. claims that China has failed to comply with a 2019 World Trade Organization ruling against China’s price supports for its wheat and rice farmers — subsidies that U.S. farmers say hurt international trade.
The U.S. recently requested WTO authorization to hit China with “countermeasures” worth $1.3 billion, and China railed against the request during the Wednesday meeting of the WTO’s Dispute Settlement Body.
“China took note of the US request and said it disagreed with the U.S. allegation that China has failed to bring its measures into compliance with its WTO obligations,” according to a Geneva trade official.
It’s still unclear whether or not the WTO would agree that China is not complying with the original ruling handed down last year. Under more normal circumstances, the disagreement would be handed over to a WTO compliance panel, which can be appealed. But the WTO’s appellate body has been effectively shut down because the U.S. refuses to approve new appeals court judges.
Another potential route is for both sides to ask for an arbitration panel, which could issue a final ruling that can’t be appealed.
A WTO dispute panel ruled in 2019 that China was unfairly calculating its support prices for wheat and rice farmers, pushing subsidies far higher than it was allowed in 2012 through 2015. China did not appeal the ruling and the U.S. accepted the win the case that it began in 2016.
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But China’s newly proposed way of making the calculations is just as unfair as the old method, U.S. government and industry sources tell Agri-Pulse. China says the fact that it has set new procurement limits on how much wheat and rice it can buy solves the dispute. The U.S. argues that the new limits are far above what China buys, making them meaningless.
The Chinese proposal, while potentially complying with WTO precedent, is basically “sleight of hand,” says David Orden, a professor at Virginia Tech University’s Department of Agricultural and Applied Economics. “By announcing these limits, China is saying it is now in compliance. The limit is more than the expected procurement, so it’s not going to have any real effect on what they procure.”
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