USTR Promises Tougher Stance on China, U.S. Rice Industry Wants Assurances on Ag

B/W cartoon with a devil carrying a pitchfork saying, "I
Pleased to meet you
Oct 04, 2021
WASHINGTON, DC – Earlier today, U.S. Trade Representative Ambassador Katherine Tai announced the Biden Administration’s plans for a new approach to the U.S.-China relationship, including enforcement of the U.S.-China Phase One Agreement that was signed in January 2020.  A series of upcoming bilateral discussions amongst trade negotiators will be scheduled.

The announcement was made as part of a speech to the Center for Strategic and International Studies and was positioned by the Office of the U.S. Trade Representative (USTR) as the Administration’s big reveal following the Ambassador’s nearly seven-month review of the U.S.-China relationship since her confirmation.  Within the first few minutes, Tai said, “China made commitments that benefit certain American industries, including agriculture, that we must enforce.”

One of those commitments was purchases of U.S. agricultural commodities, including rice.  To date, only 40 metric tons – two containers – have been sold and shipped to China since the Phase One Agreement was signed.  In addition, the Agreement called for China to come into compliance with their commitments regarding the tariff rate quota administration and domestic support cases for rice and other grains that they lost at the World Trade Organization (WTO) in 2019.

USA Rice participated in an informational call for industry and reporters yesterday, providing a preview of today’s announcements.  “Our objective is not to escalate trade tensions,” a senior administration official said.  “At the same time, where China continues to pursue its unfair and coercive practices, we will use the full range of our tools to ensure that U.S.-China relationship works for American workers.”

U.S. officials also acknowledged that there are no plans in the works for a second phase of negotiations.

While the two rice-related cases have continued to work through the WTO channels, progress is currently stalled as the U.S. and China have agreed to ‘pause’ compliance panels that were assigned to determine whether China has made the necessary policy changes associated with the 2019 rulings.

“We are encouraged by Ambassador Tai’s remarks, but want to see the Biden Administration take the next steps in the WTO litigation process to hold China accountable with the compliance requirements of both the tariff rate quota and domestic support cases,” said USA Rice President and CEO Betsy Ward.  “It is important that we see these wins at the WTO through to the finish and use them as a precedent for the other bad actors out there, like India, that continue to over-subsidize their rice industries and tilt the playing field in their favor.  Enforcement of the Phase One Agreement could mean a lot of things, so the devil will be in the details.”

Towards the end of Tai’s speech this morning, she acknowledged that, “U.S. agriculture has not been spared either.  While we have seen more exports to China in recent years, market share is shrinking and agriculture remains an unpredictable sector for U.S. farmers and ranchers who have come to rely heavily on this market.”

“China has significant demand for rice,” added Ward.  “A sizeable rice purchase from us would be just a drop in the bucket compared to what they’re buying in corn, soybeans, and wheat and would be an olive branch for our industry that is growing increasingly frustrated with the lack of progress on non-compliance in these WTO cases.”