Last week, 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.”
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.