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Playing by WTO rules … China defends grain subsidies against US allegations

China’s rice, wheat and corn subsidies are in line with WTO rules, Beijing’s commerce ministry said after Washington launched legal action against what it says are “unfair” trade incentives worth US$100 billion.

The United States alleges that China, the world’s largest producer of wheat and rice, doled out “market price support” for the grains above levels agreed at the Geneva-based World Trade Organisation, making Chinese farmers more globally competitive.

Playing by WTO rules … China defends grain subsidies against US allegations

Beijing’s commerce ministry said it had received the US request for consultations under the WTO dispute settlement mechanism but insisted its policy was legal.

“Agriculture is a fundamental industry in any country and is key to the economic interests of the mass of agricultural producers,” an unnamed commerce ministry official said in a statement posted late on Tuesday.

Government support for the sector was a “common international practice”, the official said.

US officials say China has been paying higher subsidy levels than the internationally agreed 8.5 per cent above reference prices for grain commodities.

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US Agriculture Secretary Tom Vilsack said that “if China is willing to operate a WTO-consistent trade regime”, US farm exports to China could rise above their current US$20 billion a year level, accounting for 200,000 US jobs.

Many of those jobs are in states like Iowa and Kansas which, due to peculiarities of the US electoral system, have an outsized role in deciding presidential elections.

The 2016 election race has seen Republican and Democratic presidential candidates take a much more protectionist line on trade and China has been the target of particularly tough campaign rhetoric.

US, China clash over market economy status at WTO

The latest dispute marked the 14th WTO case launched against China since US President Barack Obama took office, and Washington has won every case that has been decided.

“China has always respected WTO rules, consistently supported Chinese agricultural production and development in ways in line with the rules and maintained the international trading system of farm products,” the official added quoted in the commerce ministry statement said.