The United States filed a complaint Tuesday against China for violating World Trade Organization commitments by excessively subsidizing its corn, wheat and rice production — hampering the global sale of American commodities in the process.
The formal complaint adds yet another chapter to the growing list of trade tensions between the United States and China, a country that has been notably active in recent years trying to boost its own agriculture economy both at home and abroad. Even before Tuesday’s complaint, the United States had several active complaints against the Chinese government including grievances related to steel safeguards, anti-dumping and poultry imports.
Sen. Pat Roberts (R-Kan.), U.S. Trade Representative Michael Froman, Secretary of Agriculture Tom Vilsack and bipartisan members of congress announced the action against China. Roberts serves as the Senate Committee on Agriculture, Nutrition and Forestry’s chairman.
“I have long heard from our farmers and ranchers about the need for a level playing field with our global partners in trade,” Roberts said. “If we are to remain competitive in the global marketplace, it is critical that our partners adhere to and abide by the same rules that we have all agreed to.”
In 2015, the Chinese government’s price support of its domestic corn, wheat and rice exceeded its WTO commitment limit by $100 billion, according to the White House administration. That, in turn, made it difficult for American farmers to sell their goods to China.
Research from Iowa State University estimates that China’s price supports cost U.S. wheat farmers alone between $650 and $700 million annually. The 2016 study was sponsored by the U.S. Wheat Associates.
“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,” President Barack Obama said in a statement. “These unfairly distorted prices on important crops lead to overproduction in China and disadvantage American farmers who export these same crops around the world.”
The complaint case solidifies the importance of the Trans-Pacific Partnership trade deal, Obama said.
The controversial deal is a free-trade agreement between the United States and 11 other Pacific Rim countries. Current presidential candidates Hillary Clinton and Donald Trump have each denounced the trade agreement. While the deal has steadily lost political support throughout the past few months, its supporters say it will open new markets for American farmers by eliminating strict tariffs.
“It’s not enough to enforce the existing rules; as our global economy evolves, we have to ensure America plays a leading role in setting the highest standards for the rest of the world to follow,” Obama said. “That’s what the Trans-Pacific Partnership, or TPP, is all about.”
China joined the World Trade Organization in 2001.
Since taking office, the Obama administration has launched 14 WTO cases against China, winning every case that has been decided. The United States has launched 23 complaints against China overall.
Under standard World Trade Organization proceedings, the next step in the complaint will be for U.S. officials to try to address concerns with China directly. If those talks are unsuccessful, the complaint will go to litigation.
Despite tensions, Secretary Vilsack said U.S. trade relations have improved as a whole, contributing to a better market and increased opportunities for American farmers. Vilsack added, though, that those opportunities could be much bigger if WTO commitments are upheld.
“Through tariff cuts and the removal of other trade barriers, China has gone from a $2-billion-a-year market for U.S. agricultural products to a $20-billion-plus market," Vilsack said. "But we could be doing much better, particularly if our grain exports could compete in China on a level playing field.”
Correction, Sept. 16, 2016: An earlier version of this story inaccurately stated China's price supports as nearly $100 billion. It has since been updated to reflect that China's price supports exceeded its WTO commitment limit by $100 billion.