August 27, 2008

 

After manufacturing, US targets China's agriculture in WTO talks
    
 

The US has now expanded its litany of trade complaints against China to include agricultural issues weeks after disagreements between the US and emerging economies such as China and India caused the failure of the Doha Round of trade talks.

 

So far, most trade disputes between Washington and Beijing have focused on manufacturing and services, but the US has now included agriculture among its list of complaints to the World Trade Organization. 

 

In a letter to the WTO, the US charged that China's business law, which exempts livestock producers from the payment of enterprise income taxes also exempts processors of pork from the tax. 

 

The US also wanted to know how much revenue China's pork producers and processors are generating each year.

 

The US also questioned a subsidy of RMB 100 for every sow given by China's government, double the previous rate. The US also questioned a Chinese government valuation of US$886 million for the subsidy, but asked for new figures and clearer details of the programme.

 

Washington also suggested China was handing out US$2.2 billion annually in premiums under an insurance programme for Chinese pork producers, paid sizable sums of money to subsidise large-scale pork breeding farms for weather-related losses.

 

China will have a chance to respond at a WTO meeting in mid-September at a transitional review of the country's WTO status.

 

Although the WTO allows agricultural subsidies, they must comply with a set of rules specific for each country. The payments can be challenged if they fail to meet these guidelines and posed unfair competition to industries in other countries.

 

One target for the US may be China's Value Added Tax on agricultural products which currently exempts produce such as wheat, cotton and corn. The US also suggested that Chinese sales of farm inputs such as seed, pesticide, herbicide, fertilisers and machinery were exempt from the tax.

 

If true, these would constitute discriminatory practices against imports of these products, which are required to pay the VAT, the US said.

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