December 15, 2016 / 8:37 PM / 8 months ago

U.S. challenges China's grain import quotas at WTO

FILE PHOTO - A man loads rice onto a cart for a rice-buying agent in Tay Mo village, outside Hanoi November 27, 2012.Kham

(Reuters) - The United States on Thursday launched a challenge to China's use of tariff-rate quotas (TRQs) for rice, wheat and corn at the World Trade Organization, charging that Beijing's administration of the program breached its WTO commitments and hurt U.S. farm exports.

The USTR said global prices for the three commodities were lower than China's domestic prices, yet the country did not maximize its use of TRQs, which offer lower duties on a certain volume of imported grains every year. The USTR said that limited market access for shipments from the United States, the world's largest grain exporter, and other countries.

The TRQs for the three commodities were worth more than $7 billion in 2015, according to the U.S. Department of Agriculture. China would have imported up to $3.5 billion more of the crops last year if the quotas had been fully used, the Office of the U.S. Trade Representative said on Thursday.

"The United States will aggressively pursue this challenge on behalf of American rice, wheat, and corn farmers," U.S. Trade Representative Michael Froman said in a statement.

It was the second challenge to China's agricultural policies by the U.S. Trade Representative since September and the latest in a series of trade disputes between the world's largest economies.

China on Monday launched a complaint at the WTO against the United States and Europe after they failed to treat China as a market economy and ease their calculations of anti-dumping duties on Chinese goods.

The United States in September charged that China's domestic grain price supports exceeded agreed upon limits when Beijing joined the WTO in 2001. The USTR has since requested that the WTO launch a dispute settlement panel to investigate the matter.

Industry groups said Thursday's action would benefit all global grain exporters that have struggled recently with low prices and historically large supplies.

"This troublesome administration of China's wheat TRQ is restraining export opportunities for U.S. wheat farmers and farmers from Canada, Australia and other wheat exporting countries to the detriment of Chinese consumers," said Alan Tracy, president of the trade promoting group U.S. Wheat Associates.

China is second largest importer of U.S. agricultural products behind Canada, with $20.3 billion in purchases last year, according to USDA data.

Thursday's action was the 15th trade enforcement challenge against China by the Obama administration at the WTO since 2009.

Reporting by Karl Plume in Chicago; Editing by Chris Reese and Bill Trott

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