[WTO Case Review Series No.33] China – Domestic Support for Agricultural Producers (DS511): Calculation of Market Price Support

So far, only a limited number of disputes relating to "domestic support," a technical term used under the Agreement on Agriculture (AoA) to describe the domestic subsidies for agricultural products, has been referred to the WTO dispute settlement mechanism. The reason for such can be attributed to the fact that most WTO Members were, for various reasons, able to comply with the reduction commitments made under the AoA. China was no exception. However, since around 2010, its market price support (MPS) began to gradually increase and eventually, the US decided to bring the case to the WTO when such price seemed to overshoot the level tolerable under the AoA. The significance of this case (DS511) is that the Panel decided to use the period of 1996-1998, which is listed in China's accession document (schedule), as a base period for the calculation of the fixed external reference price (FERP) in estimating the MPS. This conclusion, for newly acceded WTO Members, substantially signifies an amendment to the AoA under which the base period for the FERP is prescribed as 1986-1988. In addition to the substantial issues, the case also includes some important procedural matters such as the partial opening of the proceedings which may have some important implications on future disputes.