China's Support for Wheat, Rice Farmers Violates WTO Promises

China's financial support to its wheat, short-grain and long-grain rice farmers is valued at more than 8.5 percent of the value of production, and therefore is more generous than what China said it would do when it joined the World Trade Organization, a WTO dispute panel ruled. The report, which said that China pays a minimum price for these commodities, was circulated at the WTO on Feb. 28. The case was first filed in 2016.

The Office of the U.S. Trade Representative said when the government pays guaranteed prices, it creates incentives for increased production of the crops, which leads to reduced imports. "Market price support programs are some of the most trade-distorting agricultural policies, and are therefore subject to clear limits under the WTO Agreement on Agriculture and a WTO Member’s specific commitments," USTR said. When China joined the WTO, it said it would give no support of this kind; the WTO would still allow support of this kind worth less than 8.5 percent of the market value of the crop, because that is considered de minimis.

House Ways and Means ranking member Kevin Brady, R-Texas, called the case "an important win." He said, "Today’s panel findings confirm that China’s subsidies to rice and wheat producers have significantly violated China’s WTO commitments for years, harming U.S. farmers in China and other global markets." House Agriculture Committee Chairman Collin Peterson, D-Minn., said, "Today’s ruling is a huge win at a time when such wins are sorely needed. It should enable a fairer playing field and allow our farmers to focus on farming ... it’s also my hope that this ruling can help our negotiators reach a positive path forward to reopen trade with China and reclaim the markets that the trade war has cost our farmers."

China has not indicated if it will appeal the ruling. USTR Robert Lighthizer testified that his team and Chinese negotiators are talking about resolving WTO disputes as part of a broader agreement.