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. The Hagstrom Report said China’s support for those three commodities are 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.
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