Background

A World Trade Organization dispute settlement panel has found that China provided trade-distorting domestic support to its grain producers well in excess of its commitments under WTO rules.  A Bloomberg article notes that if China complies with this “landmark ruling” it could “help make America’s farmers more competitive as they struggle with the fallout of Trump’s trade war with China.” On the other hand, the article notes, China could appeal the decision, which would likely leave the issue in limbo for the foreseeable future because the WTO Appellate Body will be unable to hear and decide cases if the number of active judges drops below three later this year.

A press release from the Department of Agriculture and the Office of the U.S. Trade Representative states that under WTO rules China may provide non-exempt support up to the de minimis level of 8.5 percent of the value of total production of a particular commodity. According to the release, the WTO panel found that China had provided support in excess of permitted levels for Indica (long-grain) rice, Japonica (short- and medium-grain) rice, and wheat from 2012 to 2015. However, the panel declined to make findings on the support provided to corn in these years given that China had apparently changed its program in 2016, just prior to the WTO’s establishment of the panel.

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