Sun, Feb 23, 2003 page11

• US confronts Beijing on its agricultural barriers

  • BLOOMBERG
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  Bill Northey need look no further than the grain-pricing boards in his northwest Iowa town to gauge the impact of China's falling corn imports on US farmers.

  Northey, who grows about 400 acres of corn a year, says the US$2.17-a-bushel price would be as much as US$0.25 higher if China had kept its promise to buy more US corn after joining the WTO. That amounts to US$16,500 a year in losses for Northey, enough to pay for a car or a year of college.

  The US, whose US$94 billion trade deficit with China in the first 11 months of last year was the largest with any country, is threatening trade sanctions. US farmers backed China's December 2001 entry to the WTO, expecting greater access to a market of 1.3 billion people. Instead, they say China is curbing imports of US corn, soybeans and cotton and elbowing them out of markets they used to dominate, such as South Korea.

  "It's really frustrating and disappointing," said Northey, former president of the National Corn Growers Association, a trade group. "Each bushel of corn that goes into [South] Korea from China is a bushel that used to come from the US."

  China says other countries' barriers to its exports have forced it to retaliate.

  "Many developed countries still rely on large-scale subsidies to protect their farmers, and this causes the most harm to developing countries like China," said Huang Zhihu, an official in China's trade ministry.

  China hasn't just butted heads with the US Japan, the nation's No. 1 trade partner, and Korea protested a flood of cheap Chinese farm exports last year. They backed down after Beijing threatened to raise import tariffs on mobile phones, cars and air conditioners from the two countries.

  Surging exports to the US, Japan and other countries since WTO entry helped China's economy grow 8 percent last year, more than three times as fast as the US economy.

  The US is considering filing a WTO complaint against China, Agriculture Secretary Ann Veneman said last month. A WTO ruling in the US's favor would allow the US to impose sanctions on China to compensate for its losses.

  US Trade Representative Robert Zoellick visited Beijing Monday to push China to remove trade obstacles he said violate WTO rules. American farmers aren't getting the access China promised them, he said before the visit.

  US corn and soybean exporters are leading the lobbying effort against China's trade practices. US corn farmers say they've lost US$500 million as China, the world's second-largest corn grower, uses illegal export subsidies to help farmers undercut US crops in Asian markets such as [South] Korea and Taiwan -- previously supplied exclusively by the US.

  China's corn prices fell below US prices in Asian markets last year after the Chinese government waived fees and taxes on corn exports. The US says that amounts to an illegal subsidy.

  Since September, US corn exports to Korea have dropped almost 90 percent from the same period the previous year, according to US statistics.

  Bringing China into the WTO hasn't helped foreign farmers sell more corn in the country's US$550 billion agriculture market, either. China cut its corn imports to 6,000 tons last year from 36,000 tons in 2001, citing rising global prices.

  "We've seen some very creative efforts to limit agricultural imports," said Jon Huntsman, a deputy US trade representative who oversees China.

  "When one barrier is knocked down, it seems like another is quickly installed in its place."
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