US wins WTO case against China over grain exports USGC supports WTO finding that China misused corn TRQ

WASHINGTON (AP) — The World Trade Organization handed the United States a win Thursday in a trade dispute with China, ruling that Beijing did not fairly administer quotas on U.S. wheat, rice and corn.

The WTO, the Geneva organization that oversees the rules of global trade, found that China had not been transparent, predictable or fair in managing so-called tariff rate quotas on U.S. grain exports. The import tax, or tariff, is higher on U.S. grain shipments that exceed the quota.

The case, started by the Obama administration, is not directly related to a larger U.S.-China trade standoff: President Donald Trump has slapped tariffs on $250 billion in Chinese imports in a dispute over Beijing's aggressive drive to challenge U.S. technological dominance; China has retaliated by targeting $110 billion in U.S. products. The two countries are in talks to settle their differences.

The decision Thursday was the second U.S. victory over China this year in a trade dispute over agriculture. In February, the WTO ruled that China unfairly subsidized its grain producers.

"This second important victory for the United States further demonstrates that President Trump will take all steps necessary to enforce trade rules and to ensure free and fair trade for U.S. farmers," said U.S. Trade Representative Robert Lighthizer. "The Administration will continue to press China to promptly come into compliance with its WTO obligations."

The U.S. Grains Council (USGC) went on record supporting a World Trade Organization decision.

“The report is an important acknowledgement China has not fulfilled its obligations to allow for tariff-rate quotas for corn to be filled while maintaining high domestic corn prices consistently above international prices,” said Tom Sleight, Council president and CEO. "We believe this is an example of the WTO working to help move us all toward a more open and fair market for grains."

As part of its WTO accession commitments, China agreed to eliminate import prohibitions and move to a system establishing TRQs for several crops including corn, wheat, rice, sugar, cotton and wool.

The TRQ levels have not been adjusted since China’s accession to the WTO in 2001 and do not reflect prevailing demand. A lack of transparency and unpredictability in timing of quota distributions inhibits efficient use of the quotas and increases the cost of agricultural trade as traders are unsure of available import opportunities.

"The Council believes a stable market in which prices are determined by supply and demand as part of global dynamics will benefit the long-term development of China’s feed, livestock and corn-processing industries, as well as its consumers of animal and processed corn products,” Sleight said. “A more open market is in both China’s best interest and that of our members, farmers and exporters.

China can appeal Thursday's decision.

Colleen Kottke of the Wisconsin State Farmer contributed to this report.