The Office of the U.S. Trade Representative filed a claim against China in the World Trade Organization over market price supports for wheat, rice, and corn. The complaint says that China is using these supports in excess of its commitments under WTO rules. China’s support for those three commodities is roughly $100 billion over levels China committed to during its accession to the WTO. The excessive market price for wheat, rice, and corn inflates Chinese prices above market levels, creating artificial incentives for Chinese farmers to increase their production. The decision to file the complaint is a victory for rice, wheat, and corn groups that have been talking about the issue of Chinese subsidies for years.
The complaint will result in WTO-led negotiations with China over the alleged level of subsidies. If the U.S. prevails, China’s choice would be to reduce the subsidies or deal with U.S.-imposed punitive tariffs on its products. The process is likely to take several years. Indiana Senator Joe Donnelly praised the action, “Trade only works when everyone plays by the same rules. Whether it’s illegal subsidies for corn or steel, China continues to manipulate prices to undercut American farmers and manufacturers. That is why I support strong efforts, like today’s enforcement action, that hold the Chinese accountable, so we can ensure that Indiana’s farmers can compete on a level playing field.”
Zippy Duvall, President of the American Farm Bureau Federation, said in a statement, “It is good to see our government enforcing the trade commitments that already exist. This kind of accountability leads to stronger trade relationships with all our partners.” “The National Corn Growers Association is committed to the development and maintenance of fair and open global trade practices and policies as part of our efforts to feed and fuel a growing world. We believe in both strong trade policy and market development,” said Chip Bowling, President of the National Corn Growers Association.