• US challenges $100B in China rice, cereal subsidies

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    WASHINGTON: US President Barack Obama launched legal action against “unfair” Chinese rice, wheat and corn subsidies at the World Trade Organization on Tuesday, setting up a culturally sensitive multi-billion-dollar trade spat.

    The United States alleges that China doled out $100 billion in “market price support” for the grains, above levels agreed at the Geneva-based WTO.

    “When other countries flout the rules to try and undercut American workers and farmers, we hold them accountable,” Obama said in a statement announcing the action.

    China is the world’s largest producer of wheat and rice, holding significant sway over world markets.

    Rice, in particular, is a food staple, with important cultural and political significance.

    Political edge

    In announcing the WTO action, US officials said Chinese officials had since 2012 overshot agreed subsidy levels of 8.5 percent above reference prices on the grain commodities.

    “These programs distort Chinese prices, undercut American farmers and clearly break the limits China committed to when they joined the WTO,” US Trade Representative Michael Froman said in remarks announcing the action.

    He was joined by US Agriculture Secretary Tom Vilsack, who said the US could improve on its annual $20 billion in agriculture exports to China, which accounts for 200,000 US jobs, “if China is willing to operate a WTO-consistent trade regime.”

    Just six decades ago, Mao Zedong’s Great Leap Forward — a drive to industrialize China — spurred mass famine that killed as many as 45 million people.

    Today, China’s government has put a premium on agricultural self-sufficiency and safeguarding supply, much to Washington’s ire.

    It believes that Chinese state aid lowers production costs for the country’s farmers, making them more competitive around the world.

    Many of the jobs supported by agricultural trade with China are in states like Iowa and Kansas which, because of peculiarities of the US electoral system, have an outsized role in deciding presidential elections.

    In a nod to that reality, Obama’s statement had a distinctly political edge.

    “China’s government has set prices for wheat, corn, and rice well above market levels, which has led to unfair government subsidies that are in violation of WTO rules,” Obama said.

    “These unfairly distorted prices on important crops lead to overproduction in China and disadvantage American farmers who export these same crops around the world.”

    14th WTO case

    The 2016 election race has seen Republican and Democratic presidential candidates take a much more protectionist line on trade.

    China has been the target of particularly tough campaign rhetoric.

    Republican nominee Donald Trump has skewered China for stealing US trade secrets and called Beijing “the greatest currency manipulators ever.”

    Obama’s administration has made a bet that binding China into international rules, like those at the WTO, will ultimately serve US interests better than sanctions.

    But the White House is quick to point out that it will hold Beijing to account.

    “This is the 14th WTO case we’ve launched against China since I took office,” Obama said. “And we’ve won every case that’s been decided.”

    “We’re confident the case we’re bringing today will be no different,” he added.

    The action also occurs as the Obama administration battles to save the Trans-Pacific Partnership, the 12-country Pacific-area trade agreement which both Trump and Democratic nominee Hillary Clinton have said they oppose and which activists have criticized as undermining member countries’ laws and sovereignty.

    “As we wait on Congress to act on TPP, China is pushing its alternative to it, a trade agreement that includes 16 countries stretching from India to Japan,” Froman, the trade representative, said Tuesday.

    Froman said the Chinese version, known as the Regional Comprehensive Economic Partnership, would exclude the US and would not preserve fair health and safety regulations or prevent unfair competition, cross-border data interception and intellectual property theft.

    “It has none of the high standards that TPP has,” said Froman.

    Senior US lawmakers have cast doubt on the chances of US ratification before Obama leaves office in January. AFP

    AFP/CC

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