WASHINGTON — The chairman of the House Agriculture Committee called on the Obama administration Tuesday to file a trade case against China over its cotton policy as the government announced a new action against China at the World Trade Organization on other agricultural products.
The U.S. Trade Representative’s office filed a case at the WTO against China on Tuesday over what it said is “excessive government” support of rice, wheat and corn production in China that distorts prices and puts U.S. farmers at a competitive disadvantage.
U.S. Trade Representative Michael Froman said China’s “market price support” in 2015 for the three agricultural products amounted to nearly $100 billion, an amount in excess of the levels China committed to when it joined the WTO.
USTR said China’s excessive market price support for rice, wheat and corn “inflates Chinese prices above market levels, creating artificial government incentives for Chinese farmers to increase production.”
Froman noted that China committed to not provide domestic support above a level of 8.5 percent of the value of the production for each agricultural product.
“Since 2012, China has provided domestic support for wheat, Indica rice, Japonica rice and corn well in excess of the 8.5 percent level,” Froman charged. “By distorting Chinese prices, these subsidies encourage Chinese farmers to increase production to the detriment of U.S. exporters of competitively priced corn, price and wheat. That represents a direct hit to American farmers who are not subsidized in excess of the United States’ WTO commitment and face unfairly limited export opportunities.”
He noted that the U.S. has raised concerns in the WTO about the “increase in trade distorting domestic support by China and other large emerging economies and has called on those economies to improve transparency of the levels and type of domestic support programs they put in place.”
“This is the first time such a subsidy program has been challenged at the WTO and we think it’s an important milestone with systemic implications,” Froman said.
The new WTO action against those three Chinese agricultural commodities spurred a call by Rep. Mike Conaway (R., Tex.), chairman of the House Agriculture Committee, for the U.S. to file a similar case against China on its cotton policies.
“I’m grateful that the U.S. government has opened a case against China on the treatment of corn, rice and wheat. I do believe this is a good start, but it is only the tip of the iceberg in terms of predatory prices going on around the world that harm our producers,” Conaway said.
“I’m hopeful that beyond the challenges announced today that our government will also vigorously pursue a case against China considering its cotton policy which has wreaked havoc on domestic producers,” he said. “Absent this, I fear that domestic cotton production and all it means to our nation’s economy will be lost in much the same way that we forfeited our textile industry, which was at one time the largest manufacturing sector in our country.”
Froman revealed in January 2015 that the U.S. was taking a closer look at China’s cotton subsidization.
The trade chief, testifying at a Senate Finance Committee hearing last year, said the administration was engaging China on cotton subsidies and taking a “fresh look at where subsidies were being provided.”
“The whole pattern of agriculture subsidies has changed a lot in the last 10 or 15 years,” Froman said at the hearing. “When the Doha Round was first started, the focus was on the U.S. and European Union, but in both of those areas subsidies have come down while subsidies in China and India in the agricultural area have increased. By some measures, China is now the largest subsidizer of cotton.”
He noted that the U.S. was reviewing where the subsidies were being provided at the time.
“USTR and [the U.S. Department of Agriculture] are monitoring China’s cotton program closely, including its impact on American cotton producers,” a USTR spokesman said.