America has won a World Trade Organization (WTO) verdict on 18th April (last week) against China's use of tariff-rate quotas for wheat, corn and rice, which it successfully argued, limited market access for American grain exports.
The case, which was lodged by the Obama government in the year 2016, marks the 2nd US victory in as many months. It came in the middle of Washington-Beijing trade talks and on the heels of US clinching a WTO judgment on China's price support for grains in the month of March.
On last Thursday, a WTO dispute panel ruled that under the terms of its 2001 WTO accession, Beijing’s administration of the tariff rate quotas (TRQs) as a whole breached its obligation to govern them in a “transparent, predictable & fair basis”.
It is important to mention that TRQs are two-level tariffs, with a limited volume of imports permitted at the lower 'in-quota' tariff & subsequent imports charged an “out-of-quota” tariff that is usually much higher.
The panel said the administration of state trading enterprises & the non-state enterprises' portion of TRQs are not in agreement with WTO rules.
Brazil, India, Australia and the European Union (EU) were among those countries reserving their rights in the argument brought by the world's largest grain exporter.
Robert Lighthizer, US Trade Representative (USTR) and Sonny Perdue, Secretary of Agriculture in a statement welcomed the verdict, saying that China's system “eventually restrains TRQs from filling, denying American farmers access to Beijing’s market for grain”. If China's TRQs had been fully utilized then $3.5 billion worth of rice, corn and wheat would have been imported in 2015 only, it told citing estimates from US Department of Agriculture.
On the other hand, China’s Ministry of Commerce in a statement said it “regrets” the panel's ruling and that it will “earnestly assess” the report. It will “handle the matter properly in accordance with WTO dispute resolution procedures, vigorously safeguard the stability of the multilateral trading system & continue to administer the pertinent agricultural import tariff quotas in compliance with WTO rules”.
Source – Hindu BusinessLine
