China ‒ Domestic Support for Agricultural Producers: One Policy, Multiple Parameters Imply Modest Discipline
26 Pages Posted: 1 Dec 2020
Date Written: November 2020
This paper assesses key issues in the dispute over the United States’ claim that for certain grains China exceeded its limits on domestic support under the Agreement on Agriculture (AoA) during 2012-2015. The panel first determined that the base years for the reference price in calculating China’s market price support were 1996-1998, rather than 1986-1988 as stipulated in the AoA, and that production in the geographic regions where the support programs operated, not the smaller quantities purchased at administered prices, constituted eligible production. The panel then found China exceeded its limits in each of the four years for wheat, Indica rice and Japonica rice. The possibility was left open that a government can determine eligible production by setting maximum purchases at support prices in its regulatory framework. China used this option to claim that its programs for 2020 implemented the recommendations and rulings of the DSB. We argue that use of outdated fixed external reference prices to measure the price gap, and defining eligible production by limits on purchases, distance calculation under the AoA from economic support measurement. The measurement issues compound the discord among Members over levels of agricultural support.
Keywords: Agreement on Agriculture, WTO US-China dispute, market price support, fixed external reference price, eligible production, wheat, rice, India
JEL Classification: F53, K33, Q17, Q18
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