China’s rice, wheat and corn subsidies are in line with WTO rules, the Chinese Ministry of Commerce said after Washington launched legal action against what it says are “unfair” trade incentives worth US$100 billion.
The US alleges China, the world’s largest producer of wheat and rice, doled out “market price support” for the grains above levels agreed at the Geneva, Switzerland-based WTO, making Chinese farmers more competitive around the world.
The ministry said it had received the US request for consultations under the WTO dispute settlement mechanism, but insisted its policy was legal.
“Agriculture is a fundamental industry in any country and is key to the economic interests of the mass of agricultural producers,” an unnamed ministry official said in a statement late on Tuesday.
Government support for the sector is a “common international practice,” the official said.
According to US officials, China has been paying higher subsidy levels than the internationally agreed 8.5 percent above reference prices for grain commodities.
US Secretary of Agriculture Tom Vilsack said “if China is willing to operate a WTO-consistent trade regime,” US agricultural exports to China could rise above their current US$20 billion per year level, which accounts for 200,000 US jobs.
Many of those jobs are in states like Iowa and Kansas which, because of the peculiarities of the US electoral system, have an outsized role in deciding presidential elections.
The election race this year has seen US Republican and Democratic presidential candidates take a much more protectionist line on trade.
China has been the target of particularly tough campaign rhetoric.
The latest dispute marked the 14th WTO case launched against the Asian giant since US President Barack Obama took office in 2009, with Washington having won every case that has been decided.
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