The U.S. -- China WTO Accession Deal: A Strong Deal in the Best Interests of U.S. Agriculture February 10, 2000
China's Entry To The World Trade Organization Will Slash Barriers To The Sale Of American Agricultural Products In The World's Most Populous Country. China's entry into the WTO will dramatically cut import barriers currently imposed on American agricultural products. This agreement locks in and expands our access to a market of over one billion people. China's economy is already among the world's largest and over the past 20 years has expanded at a phenomenal rate of nearly 10 percent per year. During this period, U.S. total exports to China have grown from negligible levels to about $14 billion a year. Agricultural exports in fiscal year 1999 were $1.1 billion and should increase dramatically as a result of this Agreement.
China Made One-Way, Market-Opening Concessions. For The United States, Granting Permanent Normal Trade Relations Would Simply Maintain The Market Access We Currently Apply To China. China made significant, one-way market-opening concessions across the board in agriculture.
China Will Cut Agriculture Tariffs By More Than Half On Priority Products. The overall average duty for agricultural products will fall from 22% to 17.5%. On U.S. priority agricultural products, tariffs will drop from an average of 31% to 14% by January 2004, with even sharper drops for beef, poultry, pork, cheese, and other commodities.
Tariff Reductions on Priority Products
China Will End Its System Of Discriminatory Licensing And Import Bans For Bulk Commodities, And Will Create Market Access Opportunities By Establishing A WTO-Consistent Tariff-Rate Quota System. China will establish significant and growing TRQs for state-traded commodities such as wheat, corn, cotton, rice, and soybean oil. China has also committed to low, within-quota tariffs of 1-3 percent, which will help American farmers take full advantage of the TRQs. In addition, China committed to allow a share of the TRQs for each commodity to be imported by entities other than state-trading entities and agreed to specific rules for the administration of these TRQs. The introduction of private trade -- combined with increased transparency in the process -- will ensure increased opportunities for American agricultural exports.
China Will Eliminate Export Subsidies. China has committed not to use export subsidies for agricultural products when it joins the WTO. This commitment would level the playing field in third-country markets for U.S. exports of corn, rice, and cotton -- which in the past have been displaced by unfairly traded Chinese exports.
China Will Cap And Then Reduce Domestic Support. China committed first to cap and then to reduce trade-distorting domestic subsidies. China also committed to provide greater transparency to make its domestic support measures more predictable.
China Will Eliminate Scientifically Unjustified Restrictions On U.S. Agricultural Products. China has committed to fully abide by the terms of the WTO Agreement on Sanitary and Phytosanitary Measures, which requires that all animal, plant, and human health import requirements be based on sound science -- not political agendas or protectionist concerns. Additionally, China and the United States agreed bilaterally on the terms for the removal of scientifically unjustified restrictions on imports of U.S. wheat, citrus, and meat.
The Agreement Contains Strong Provisions Against Unfair Trade And Import Surges. The Agreement explicitly permits the U.S. to continue to use its anti-dumping methodology for 15 years after China's accession to the WTO. China also has committed to a strong product-specific safeguard that allows the United States for 12 years after accession to restrain increasing imports from China that cause or threaten market disruption. After that, current U.S. safeguard provisions -- Section 201 -- will remain available to address increasing imports.
American Farmers Will Benefit From Expanded Trading Rights. Currently, only companies that receive specific authorization from the Chinese government are allowed to import into China. Under the Agreement, China has committed to allow any entity to import most products into any part of the country within three years of accession. A select list of products will be partially exempt from this rule and some trade will be channeled through China's state-trading enterprises (including wheat, corn, rice, and cotton; state trading will be phased out for soybean oil). However, specific commitments to end monopoly import status have also been established. China has also committed to liberalize distribution services for all agricultural products, except tobacco, allowing U.S. companies to distribute and market their products in China.
American Farmers Will Benefit From Dramatically Expanded Market Access Opportunities. American farmers will realize enormous benefits in virtually every agricultural sector, including:
Grains. China's offer for corn, wheat, and rice will lock in important and long-term market access opportunities for American farmers. China has also agreed to remove its import ban on wheat and other grains from the Pacific Northwest.
Oilseeds. The WTO Agreement promises to bind tariffs at a low rate for soybeans (3%) and soybean meal (5%), and to eliminate quota limits, which will significantly increase future opportunities for U.S. producers. Export prospects for soybean oil are also bright, as China phases out quantitative restrictions and liberalizes trade completely by 2006.
Pork. China is the world's largest consumer of pork, but import barriers have effectively denied access to American pork products. Under the Agreement, China will reduce its tariffs on frozen pork and offal from 20% to 12% by 2004. This reduction in tariffs, along with China's agreement to eliminate unscientific barriers, will result in substantial marketing opportunities for high-quality and competitively priced U.S. pork.
Beef. By 2004, China will reduce its tariffs from 45% to 12% on frozen beef, and from 45% to 25% on fresh/chilled beef. While China currently imports a small quantity of beef, income growth and increased consumption among the urban populations should significantly increase demand for U.S. beef.
Poultry. China is already the second-leading market for U.S. poultry exports. Under the Agreement, China will reduce tariffs from 20% to 10% -- which should create a significant, immediate impact on U.S. exports.
Cotton. China is the world's largest producer and consumer of cotton, accounting for 20-25% percent of the world's total in both categories. Under the Agreement, China will establish a large, low-duty TRQ for cotton with a substantial share reserved for private importers, which should lead to expanded U.S. cotton sales.
Fruits. China will cut tariffs on a number of fruits and fruit products exported by the United States, including citrus, apples, and grapes, and will be obliged to remove unjustified import bans. While China is a major producer of citrus and other fruits, U.S. producers will benefit from access to major markets that are not adequately served by China's producers. China also made a bilateral commitment to lift its ban on imports of citrus fruit from California, Arizona, Texas, and Florida.
Others. Agricultural commodities as diverse as wine, solid wood products, fishery products, tree nuts (including almonds), dairy items (especially cheese), snack foods, and other consumer-ready items, can all expect to benefit from China's WTO accession.