China has said it is likely to follow the United States in increasing farm subsidies. Chinese officials are saying they need to protect farmers during trade reform.
China Vice-Minister of Foreign Trade Long Yongtu said it is difficult to enforce World Trade Organization-related reforms when the United States has increased farmer subsidies and imposed hefty tariffs on steel imports.
Mr. Long told a conference in Beijing that recent protectionist measures by the United States are an embarrassment. He said they have a negative impact on China's efforts to win domestic support for trade liberalization. Mr. Long, the chief negotiator for China's WTO entry, said the Chinese government has taken notice of the move by Congress to boost crop and dairy subsidies.
Mr. Long said China is likely to provide more support for its farmers. He said China's WTO agreements allow farm subsidies to be increased significantly.
Beijing currently subsidizes about two percent of agricultural production. Under WTO rules subsidies are capped at 8.5 percent.
Mr. Long said the U.S. farm aid and steel tariffs have a limited effect on Sino-American trade. He stressed that China will continue to honor its WTO commitments, which include cutting tariffs on thousands of products and opening the country's markets to more foreign competition.
Speaking at the same forum in Beijing, former U.S. Trade Representative Charlene Barshefsky blames high European farm subsidies for Washington's recent move. Ms. Barshefsky said that Europe's agricultural subsidies are capped at $7 billion a year, compared with an American limit of just $300 million.
"Because the U.S. export subsidies are capped at this low level, and Europe's in the Uruguay Round were capped at a very high level, many members of Congress have decided that perhaps the way to try to equalize conditions of competition between the U.S. and Europe is to provide greater domestic support," Ms. Barshefsky said.
Ms. Barshefsky predicts that over the long term, Washington will reduce agricultural subsidies.