US wins dispute over China grain subsidies before WTO

The Geneva, Switzerland-based World Trade Organisation found that the grain subsidies provided by Beijing exceeded the accepted level, and that China had "acted inconsistently with its obligations" under international trade rules. (AFP/THOMAS COEX)

Back in 2016, the United States alleged that China doled out US$100 billion in "market price support" for wheat and rice as well as corn production, above levels agreed at the Geneva-based WTO.

A panel established by the WTO's Dispute Settlement Body to rule on the matter found Thursday that the grain subsidies provided by Beijing exceeded the accepted level, and that China had "acted inconsistently with its obligations" under international trade rules.

The experts said they had found that each year from 2012 to 2015, China's market price support for wheat, Indica rice and Japonica rice "exceeded its 8.5 per cent de minimis level of support for each of these products."

The WTO panel said it had not considered whether China had also exceeded the acceptable subsidies for corn producers, since it found China had removed the challenged subsidy before the US launched its complaint.

Both sides have up to 60 days to appeal Thursday's ruling.

US Trade Representative Robert Lighthizer and Agriculture Secretary Sonny Perdue hailed the ruling in a statement as a "significant victory for US agriculture that will help American farmers compete on a more level playing field".

"The United States proved that China for years provided government support for its grain producers far in excess of the levels China agreed to when it joined the WTO" in 2001, Lighthizer said.

"We expect China to quickly come into compliance with its WTO obligations," he added.

China is the world's largest producer of wheat and rice, holding significant sway over world markets.

The news of the WTO ruling comes as Washington and Beijing strive to reach a new trade agreement to avoid escalating their trade war.

After exchanging punitive tariffs on more than US$360 billion in total two-way trade, US President Donald Trump and his Chinese counterpart Xi Jinping declared a truce in December and agreed to hold off on further tariffs or retaliation for 90 days.

Trump announced on Sunday that he would delay a planned further hike in tariffs on Chinese goods this week after he and Beijing both hailed "substantial progress" in trade negotiations.