US challenges Chinese agricultural subsidies
US President Barack Obama has launched legal action against “unfair” Chinese rice, wheat and corn subsidies at the World Trade Organisation, setting up a culturally sensitive multibillion-dollar trade spat.
The United States alleges that China doled out US$100 billion in “market price support” for the grains, above levels agreed at the Geneva-based WTO.
“When other countries flout the rules to try and undercut American workers and farmers, we hold them accountable,” Mr Obama said in announcing the action.
China is the world’s largest producer of wheat and rice, holding significant sway over world markets.
In announcing the WTO action, US officials said Chinese officials had since 2012 overshot agreed subsidy levels of 8.5 percent above reference prices on the grain commodities.
“These programs distort Chinese prices, undercut American farmers and clearly break the limits China committed to when they joined the WTO,” US Trade Representative Michael Froman said.
He was joined by US Agriculture Secretary Tom Vilsack, who said the US could improve on its annual $20 billion in agriculture exports to China, which accounts for 200,000 US jobs, “if China is willing to operate a WTOconsistent trade regime”.
China’s government has put a premium on agricultural self-sufficiency and safeguarding supply, much to Washington’s ire.
It believes that Chinese state aid lowers production costs for the country’s farmers, making them more competitive around the world.
Many of the jobs supported by agricultural trade with China are in states like Iowa and Kansas which, because of peculiarities of the US electoral system, have a big role in deciding presidential elections.
Beijing’s commerce ministry countered yesterday that China’s rice, wheat and corn subsidies were in line with WTO rules.
“Agriculture is a fundamental industry in any country and is key to the economic interests of the mass of agricultural producers,” a ministry official said.
Government support for the sector was a “common international practice”, said the official. –