China argues its financial support to farmers is less than what WTO allows, document from trade body says
(Beijing) – Beijing has dismissed criticism from the United States over its subsidies for the cotton industry, saying they are lower than an allowed level set by the World Trade Organization.
A document released by the WTO's agricultural committee on September 22 details China's response to a WTO survey of policies covering cotton subsidies, market access and exports in member countries that was performed in late May. Seventeen WTO members, including the European Union, United States, Russia and Australia, participated in the survey.
Beijing said in the document that its support for cotton output is less than the WTO-allowed level of 8.5 percent of the value of sales and lower than the levels in developing countries, which range from 8.5 percent to 10 percent.
In 2011, Beijing introduced a reserve program in which governments promised to buy cotton from farmers when prices fell below a certain level. The measure was aimed at protecting the domestic industry, but resulted in excessive stockpiles, prompting regulators to cancel the program last year.
That approach was replaced by a subsidy that came into effect last year, but this has annoyed the United States. The National Cotton Council of America has urged American trade officials to investigate China's cotton policies.
In testimony to the U.S. Trade Representative in October 2014, the National Cotton Council of America said China's subsidies exceeded the allowed 8.5 percent level and called on U.S. regulators to further investigate.
However, China argued in the document that its cotton production is based on small-scale subsistence farming in remote, underdeveloped regions, and China "has no choice" but to subsidize its cotton farmers to safeguard their livelihoods.
"They will be forced out of jobs if the government does not take the necessary actions," it said.
In the WTO document, China also denied the accusation that the country exports its cotton reserves. Instead, it says the reserve is intended to protect its textile industry from volatility in international market caused by subsidies in developed countries.
Since China joined the WTO in 2001, its imports of cotton have increased from 113,000 tons to 4.2 million tons in 2013, the document said. It added that as the world's top importer of cotton, China buys more than half of the world's cotton.
(Rewritten by Chen Na)
