US seeks retaliation against China in trade dispute

The U.S. government officially moved to notify the World Trade Organization (WTO) that China was not complying with commitments made regarding transparency, predictability, and fairness of their tariff rate quota (TRQ) administration for rice, wheat, and corn. The U.S. requested permission from the WTO’s Dispute Settlement Body to retaliate against China, which was quickly followed by Chinese opposition and a request to the Body to establish a compliance panel to review the situation.

Following a 2017 case taken against China by the U.S., a WTO panel announced in 2019 that China was officially in violation of their commitments made when they joined the WTO. China did not object to the assertion and agreed to come into compliance by December 31, 2019. U.S. government officials granted China seven extensions, through June 29, 2021, to comply with
their TRQ commitments, and they have yet to provide documentation to support compliance with the 2019 ruling.

China, as the world’s largest rice importer, has a rice quota for 5.3 million metric tons annually, split evenly between private sector importers and the state grain traders. This total quota is also split 50-50 between long grain and non-long grain varieties. Because the quota does not fill and the quota allocations to importers are not transparent, China has been heavily scrutinized at the
WTO by the U.S. and many other countries concerned by the “black box” in which imports of grains are handled.

Louisiana rice miller and chair of both USA Rice and the USA Rice International Trade Policy committee Bobby Hanks said, “We commend the Administration for taking the first steps toward retaliation against China, following years of non-compliance. As an industry, we want to see China and other rice producing and consuming nations play by the WTO rules, and if they don’t, there need to be consequences, such as retaliation through tariffs.”

Hanks added, “Unfortunately, there are several more procedural hurdles before the WTO authorizes retaliation by the United States. The entire global rice community is impacted by China's continued non-compliance with its WTO obligations. It is frustrating that this situation has persisted for so many years, but we are grateful for the movement and hope to see this Administration continue pressing China to comply or take action to retaliate for both this TRQ
case and the WTO domestic support case, also won by the U.S. in 2019.”

China quickly rejected U.S. claims that China has failed to comply with a 2019 World Trade Organization ruling against China’s price supports for its wheat and rice farmers — subsidies that U.S. farmers say hurt international trade.

The U.S. recently requested WTO authorization to hit China with “countermeasures” worth $1.3 billion, and China railed against the request during the Wednesday meeting of the WTO’s Dispute Settlement Body.

“China took note of the US request and said it disagreed with the U.S. allegation that China has failed to bring its measures into compliance with its WTO obligations,” according to a Geneva trade official.

It’s still unclear whether or not the WTO would agree that China is not complying with the original ruling handed down last year. Under more normal circumstances, the disagreement would be handed over to a WTO compliance panel, which can be appealed. But the WTO’s appellate body has been effectively shut down because the U.S. refuses to approve new appeals court judges.

Another potential route is for both sides to ask for an arbitration panel, which could issue a final ruling that can’t be appealed.

The WTO’s Dispute Settlement Body is scheduled to meet on July 26 and will review the U.S. request to retaliate against China, as well as China’s request to establish a compliance panel.

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