Apparently borrowing a page from the Trump playbook, the outgoing Obama administration filed a new trade enforcement action with the World Trade Organization against China earlier this month, alleging that the country has not met its market access commitments to the WTO for rice, wheat and corn.

The challenge at the WTO is the second such complaint by the Obama administration on behalf of the US farmers and marks “…the 15th time that the Obama administration has launched a trade enforcement challenge against the Chinese government at the WTO since 2009,” says a statement posted on the Office of the United States Trade Representative.

Specifically, the United States is challenging the tariff-rate quotas (TRQs) for rice, corn and wheat enforced by the Chinese government, adding that China’s “market price support” for these products is almost $100 billion in excess of China’s committed levels during its accession to the WTO. A TRQ is a trade policy tool that is used by a government to protect a domestically produced commodity or product from competitive imports.

China’s drive for food self-sufficiency

China has a policy of supporting its farmers through price floor subsidies for commodities like corn, wheat and rice. The price support policy evolved more than a decade ago, as the Chinese government’s response to increased demand for food and grains from its own population, which caused China to import oil and grains in record quantities.

As the Chinese government sought to improve its food security, the subsidies boosted prices of domestically produced grains way above international price levels, and dramatically expanded acreage dedicated to the cultivation of the subsidized grains.

As an example, wheat production in China improved by 35.7% to 95 million mt in a span of 10 years since 2006.

The minimum support price for domestic wheat purchases commenced in 2006 and the TRQ for wheat in 2016 remains unchanged from 2015 at around 9.63 million mt. As with other grains, the bulk of this wheat, around 90%, is purchased by the state players, COFCO and Sinograin, while only about 10% goes to private buyers.

The minimum support price for wheat is set at Yuan 2,360($339.52)/mt, and has been unchanged for the past four years.

Chinese traders claim that only 30% of the TRQ for wheat has been utilized, but the country has also...