Earlier today, the United States won a ruling of the World Trade Organization (WTO) against the use of tariff-rate quotas of China for wheat, corn, and rice which it successfully argued limited market access for grain exports from the United States.
The case was lodged by the Obama administration in late 2016. It marked the second victory of the United States in as many months. It came amid the trade negotiations between the United States and China and on the heels of Washington clinching a WTO ruling on the price support of China for grains last March.
Today, a WTO dispute panel ruled that under the terms of its 2001 WTO accession, the administration of the tariff rate quotas (TRQs) of China as a whole violated its obligation to administer them on a “transparent, predictable and fair basis.”
TRQs are two-level tariffs that have a limited volume of imports allowed at the lower ‘in-quota’ tariff and subsequent imports that charged an “out-of-quota” tariff, which is often much higher.
The panel said that the administration of state trading enterprises and non-state enterprises’ portions of TRQs are inconsistent with the rules of the WTO.
India, Brazil, Australia, and the European Union were among those that are reserving their rights in the dispute that is brought by the largest grain exporter in the world.
In a statement, Robert Lighthizer, the U.S. Trade Representative, and Sonny Perdue, the Secretary of Agriculture, welcomed the decision. They said that the system of China “ultimately inhibits TRQs from filling, denying U.S. farmers access to China’s market for grain.”
Citing the estimates of the U.S. Department of Agriculture, it said that if the TRQs of China had been fully utilised, $3.5 billion worth of wheat, rice, and corn would have been imported in 2015 alone.
The statement of the USTR said that the two rulings of the WTO would help American farmers “compete on a more level playing field.” It added: “The (Trump) Administration will continue to press China to promptly come into compliance with its WTO obligations.”