THE United States on Tuesday launched a challenge to China’s price supports for domestic wheat, corn and rice at the World Trade Organization (WTO), charging that these far exceed limits that China committed to when it joined the WTO in 2001.

    The move opens a new front in the increasingly tense trade relations between the world’s two largest economies, with disputes ranging from Chinese overcapacity in steel and aluminum to Chinese anti-dumping duties on American broiler chickens.

    China’s Ministry of Commerce on Tuesday evening said it “regretted” the U.S. action and that its agricultural support policies were consistent with World Trade Organization regulations and international practice.

    The U.S. Trade Representative’s (USTR’s) office said China’s “market price support” for wheat, corn and rice was estimated to be nearly US$100 billion above the WTO limits and constituted an artificial government incentive for Chinese farmers to increase output, lowering prices worldwide.

    The USTR said it found that China’s domestic price supports for wheat, Indica rice, Japonica rice and corn had all exceeded the 8.5 percent “de minimis” level allowed under the WTO commitment for every year since 2012.

    The first step in its formal WTO complaint is to seek formal consultations with Chinese officials to try to resolve the dispute without litigation.

    China’s commerce ministry said that it would initiate discussions in accordance with WTO regulations.

    U.S. wheat industry trade groups estimate that the Chinese price supports guarantee Chinese farmers about US$10 per bushel, artificially boosting production and lowering world prices. They cited University of Iowa research showing this cost U.S. farmers about US$653 million in lost revenue last year.

    On Monday, the U.S. Department of Agriculture said U.S. farmers would receive an average price of US$3.30 to US$3.90 a bushel for wheat in the marketing year that started June 1.

    The action marks the Obama administration’s 23rd trade enforcement challenge lodged with the WTO since 2009, and the 14th against China. The administration is keen to show that it will vigorously enforce trade agreements as it makes a final push for Congress to pass its Trans-Pacific Partnership trade deal.(SD-Agencies)