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U.S. wins WTO dispute against China's ag policies

Mark Wilson/Staff/GettyImagesNews U.S. Trade Representative Robert Lighthizer testifies during a House Ways and Means Committee hearing on February 27, 2019 in Washington, DC. The committee heard testimony regarding U.S.- China trade.
U.S. Trade Representative Robert Lighthizer testifies during a House Ways and Means Committee hearing.
WTO will publish ruling Feb. 28 on case in which U.S. alleges Chinese subsidies exceeded the limits China agreed to when it joined the WTO.

by Bryce Baschuk

U.S. Trade Representative  Robert Lighthizer on Wednesday told lawmakers that the U.S. won a key World Trade Organization dispute against China’s agricultural policies.

The U.S. has two pending disputes at the WTO dating back to 2016 that allege Beijing deployed $100 billion worth of illegal farm subsidies and imposed unfair import quotas that harm U.S. corn, rice and wheat producers.

Lighthizer’s comments come as the Geneva-based organization prepares to publish a ruling Thursday on one of the cases that largely backs the U.S., according to trade officials familiar with the matter. In the case, the U.S. alleges that Chinese subsidies exceeded the limits Beijing agreed to when it joined the WTO in 2001.

“We have two WTO cases, one of which we have won,” Lighthizer said during a hearing of the House Ways and Means Committee. “The other has been decided but it hasn’t become public, so I won’t tell you where we are on that.”

‘Legal Limbo’

Under WTO rules, parties to dispute cases receive an interim ruling, which then undergoes a months-long process of translation and legal scrubbing before the WTO publishes it online. The WTO has circulated interim rulings on both cases to U.S. and Chinese officials and hasn’t yet published the results. A WTO spokesman declined to comment when asked about the decisions.

A victory for the U.S. could force Beijing to roll back its agricultural outlays, which would help make America’s farmers more competitive as they suffer from retaliatory tariffs China has imposed amid bilateral trade tensions. The timing of the ruling also provides the Trump administration with added leverage in negotiations aimed at reducing Beijing’s use of state-directed subsidies to benefit Chinese farmers and manufacturers.

U.S. farm groups are concerned that the Trump administration’s approach to the WTO could leave them without legal recourse to enforce the ruling against China. That’s because President Donald Trump is blocking nominations to the WTO appellate body, a seven-member panel of trade experts that serves as the final arbiter of global trade disputes.

If China appeals the U.S. claims, they “could be among the first to get stuck in legal limbo without a functioning appellate body,” Ben Conner, the vice president of policy at the Washington-based U.S. Wheat Associates, said in an interview.

In the absence of an appellate ruling, the WTO’s decision won’t be binding and the WTO cannot require China to change its subsidy programs. Lighthizer said Wednesday he’s talking to his Chinese counterparts about resolving their WTO disputes as part of the broader trade negotiations with Beijing.

To contact the reporter on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net

To contact the editors responsible for this story: Richard Bravo at rbravo5@bloomberg.net Sarah McGregor, Randall Woods

© 2019 Bloomberg L.P

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