US chal­lenges Chi­nese agri­cul­tural sub­si­dies

The Myanmar Times - - International Business -

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. –

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