China continues to be a “difficult and unpredictable market for U.S. agricultural exporters” because it flouts international trade standards set by the World Trade Organization, according to a new report to Congress from the Office of the U.S. Trade Representative.

The U.S. challenged China over its administration of quotas and its domestic supports for farmers in 2016, but Beijing still has not properly complied with WTO rulings in either case.

“The inability or unwillingness of China’s regulators to routinely follow science-based, international standards and guidelines and to apply regulatory enforcement in a transparent and rules-based manner further complicates and impedes agricultural trade,” the USTR concluded in the 64-page report that dedicated about five pages just to agricultural irritants.

When it comes to China’s tariff rate quota promises, the country is now likely importing enough to meet the goals set out in China’s WTO accession agreement, but often that’s not the case and there are still problems, USTR says.

“Due to China’s poorly defined criteria for applicants, unclear procedures for distributing TRQ allocations and failure to announce quota allocation and reallocation results, traders are unsure of available import opportunities and producers worldwide have reduced market access opportunities,” USTR says in the report. “As a result, China’s TRQs for wheat, corn and rice seldom fill even though they are often oversubscribed.”

The WTO ruled in favor of the U.S. in 2019 and China did not appeal the decision, but the USTR is still not satisfied with China’s compliance.

When China joined the World Trade Organization about 20 years ago, it agreed to erect a 9.64-million-metric-ton quota for wheat, a 7.2-million-metric-ton quota for corn, a 2.66-million-metric-ton quota for long grain rice and a 2.66-million-metric-ton quota for short and medium grain rice. China was not obligated to buy any of the grain from the U.S., but it was generally assumed U.S. farmers would benefit.

One common complaint from the U.S. ag sector is that China has not adequately ensured that its large State Trading Enterprises will not block imports as they have done in years past.

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As to China’s domestic support policies, a WTO panel also ruled in 2019 that the country was unfairly calculating its support prices for wheat and rice farmers. The WTO ruled that China pushed subsidies much higher than it was allowed in 2012 through 2015. Again, China didn’t appeal the ruling and the U.S. accepted the win.

But now the U.S. is bitterly complaining that China’s proposed new way of calculating subsidies is just as unfair as the old method.

Beyond that, China continues to erect new domestic supports that hurt U.S. ag exporters.

“In 2016, China established subsidies for starch and ethanol producers to incentivize the purchase of domestic corn, resulting in higher volumes of exports of processed corn products from China in 2017 and 2018," the report says.

China could also argue that the U.S. is not compliant with its WTO obligations. A WTO panel ruled in 2020 that the U.S. broke its international commitments by circumventing the WTO dispute system and hitting China in 2018 with tariffs on $234 billion worth of its goods. Those Section 301 tariffs – initiated during the Trump administration – are still in place, as are Chinese retaliatory tariffs on a wide variety of U.S. farm commodities. China continues to waive some of those tariffs on an ad hoc basis if importers apply for temporary exemptions.

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