Fighting for Fairness Through the Rules-Based Trading System
On Feb. 15, 2019, the United States submitted a counter notification, co-sponsored by Canada, in the World Trade Organization (WTO) Committee on Agriculture on India’s market price support for pulse crops – based on publicly available information. With this counter notification, the U.S. government continues to use the rules-based trading system established by the WTO as an appropriate and welcome step toward fairness and transparency for all its member countries.
In May 2018, the U.S. Trade Representative (USTR) formally questioned data India has reported to the WTO about its market price support programs for wheat and rice from marketing years 2010/11 to 2013/14. And in 2016, U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) welcomed two trade dispute actions by the USTR challenging Chinese government policies that distort the wheat market and harm wheat growers throughout the rest of the world.
Specifically, in September 2016 a U.S. trade enforcement action challenged the level of China’s trade-distorting market price support programs for wheat as well as for corn and rice. In describing its action, the USTR said domestic price support to Chinese farmers “significantly exceeds China’s aggregate measure of support commitments under the WTO Agreement on Agriculture.” In December that year, a U.S. dispute case alleged that China is not fairly administering its annual tariff rate quotas (TRQ) for corn, rice and 9.64 million metric tons of imported wheat. This request stated that China’s TRQ administration unfairly impedes wheat export opportunities.
The WTO is expected to announce the panel decision in the next few weeks on the original U.S. challenge to China’s domestic agricultural subsidies. The TRQ challenge also continues moving through the dispute process at the WTO.
Progress in these dispute cases indicate the WTO dispute mechanisms continue to provide an effective way to challenge unfair practices and policies. But the approach represented by the Trump administration’s use of unilateral tariffs and the threat of escalation to challenge unfair trade practices threatens the stability of the global trading system. That said, instability channeled properly could be beneficial to the trading system and result in greater long-term stability if it results in eliminating trade barriers, rather than creating new ones.
The past two decades have been a lost opportunity for the WTO negotiating function as major countries like China have refused to take on new responsibilities. Perhaps this unfortunate situation will be the wake-up calls countries need to realize that restricting trade and unfairly advantaging domestic industries in global markets winds up hurting everyone.
USW’s stakeholders hope that that the Administration’s alternative policy does result in positive shifts toward a more open trade environment that encourages strong domestic development in all countries. Yet the Administration’s continued use of the WTO dispute settlement and counter notification processes is also a positive sign that trade disciplines, supported by most of the world, will remain an essential part of global trade.