CHINA

1
CHINAS IMPLEMENTATION OF ITS WTO COMMITMENTS IN
THE AREAS OF AGRICULTURE AND FOOD

• Ruth Jin
• (This is part of my S.J.D research in the
  University of Tokyo)

2
INTRODUCTION WTO AGREEMENT ON AGRICULTURAL TRADE

• Rules and Commitments
• I. Market Access
• II. Domestic Support
• III. Export Competition

3
I. Market Access

• Three Parts
• Tariff Tariffication of all non-tariff measures
  mirrored in the GATT Schedule
• Tariff-Rate Quota
• Non Tariff Measures

4
I. Market Access -Tariff Concessions

• a. Developed Countries
• (i)Average cut of all agricultural products
  over 6-year period (1995-2000) -36
• (ii) Minimum cut per product -15
• b. Developing Countries
• (i)Average cut of all agricultural products
  over 10-year period (1995-2004) -24
• (ii) minimum cut per product -10
• c. China see the schedules omitted from the
  presentation.
• (Source WTO, http// www.wto.org)

5
Market Access Tariff-Rate Quota Commitments
(TRQ) -

• In General
• Lower tariff rate for specified quantities,
  higher rates for quantities that exceed the
  quota.
• To be expanded to 5 of domestic consumption
  (it was 3 in 1995) on a most-favored-nation
  basis in the year of 2000 (developed countries)
  or 2004 (developing countries).
• (Source WTO, http// www.wto.org)

6
Market AccessTariff-Rate Quota Commitments (TRQ)
- China

• Uses a TRQ system and state trading for certain
  sensitive commodities (wheat, corn, rice, cotton,
  soybean oil).
• If TRQs are not utilized by the quota-holders,
  they are redistributed to other end uses who have
  an interest in importing.
• A specific share of the TRQ is reserved for
  importation through state trading enterprises
  (e.g., COFCO, Chinatex) A specific share is
  reserved for importation by non-state trading
  entities.
• If a TRQ share reserved for a state trade is not
  contracted for by October for any given year, it
  will be reallocated to non-state trading
  entities.
• (Source China Gateway, http// www.mac. doc.gov)

7
I. Market AccessTariff-Rate Quota Commitments
(TRQ) - China

• Chinas WTO Commitment Fix quota allocation for
  designated agricultural products Implemented.
• Example Cotton
• Initial TRQ 743,000 metric ton (1 in-quota
  duty 76 out-quota duty )
• 2004 TRQ 894.000 metric ton (1 in-quota
  duty 40 out-quota duty )
• 33 of TRQ reserved for state trading
  enterprises
• 67 of TRQ private share (non-state trading
  enterprises)
• Example Wheat
• Initial TRQ 7,300,000 metric ton (76
  out-quota duty )
• 2004 TRQ 9, 636.000 metric ton (65
  out-quota duty )
• 90 of TRQ reserved for state trading
  enterprises
• 10 of TRQ private share (non-state trading
  enterprises
• Issues Any allocation of the STE portion to the
  end users? Actual dates and amounts
  transparent?
• (Source China Gateway, http// www.mac. doc.gov)

8
I. Market AccessNon-Tariff Measures - In General

• Art. 4.2 of the Agreement on Agriculture
  prohibits the uses of agriculture-specific
  non-tariff measures.
• Examples Quantitative import restrictions,
  variable import levies, minimum import prices,
  discretional import licensing procedure,
  voluntary export restraint agreements, non-tariff
  measures maintained through state-trading
  enterprises, etc.
• Exceptions non-tariff import restrictions
  consistent with provisions of the GATT and other
  WTO agreements including Art. XII and Art. XVIII
  of GATT (balance of payment), Art. XX of GATT
  (general exceptions), the Agreement on the
  Application of Sanitary and Phytosanitary
  Measures, the Agreement on Technical Barriers to
  Trade, etc.
• (Source WTO, http// www.wto.org)

9
I. Market AccessNon-Tariff Measures - China

• a. Trading Rights
• b. Distribution
• c. Transparency
• (i) Laws, regulations, administrative guidance
• (ii) Judicial and administrative tribunals and
  procedures
• d. Standards and Testing

10
I. Market AccessNon-Tariff Measures - China

• a. Trading Rights
• Before Accession The right to engage in trade
  (importing and exporting) was restricted to
  companies who (a) received specific authorization
  or (b) imported goods to be used in production.
• Chinas Commitment Lift the restrictions and
  allow all entities, including foreign-invested
  enterprises (FIEs) to obtain full trading rights
  for almost all products over a three-year
  phase-in period.
• Implementation Status Implemented only need to
  register
• Relevant law
• i. Foreign Trade Law of Peoples Republic of
  China
• ii. Rules on Registration for Trading Rights
• (Sources Ministry of Commerce,
  http//www.mofcom.gov.cn China Gateway, http//
  www.mac. doc.gov US-China Business Council,
  http//www.uschina.org)

11
I. Market AccessNon-Tariff Measures - China

• b. Distribution Rights
• Before Accession
• - FIEs could only distribute and provide
  after-sales services for products they
  manufactured in China
• - Only companies with specific distribution
  license could distribute imported goods or goods
  manufactured by other companies
• - Foreign service suppliers could provide
  retail services (except for tobacco) through
  joint ventures, subject to geographic
  restrictions
• - National treatment restrictions on
  Franchising.
• (Sources Ministry of Commerce,
  http//www.mofcom.gov.cn China Gateway, http//
  www.mac. doc.gov US-China Business Council,
  http//www.uschina.org)

12
I. Market AccessNon-Tariff Measures - China

• b. Distribution Rights
• Chinas Commitments and Implementations
• (i) Allow Franchising Implemented. FIEs can
  expand there scope of business to include
  franchising.
• - Relevant law Administrative Rules on
  Commercial Franchising
• (ii) Allow Direct Sale Implementation delayed.
  Relevant regulation is on the process of drafting
  and discussion.
• (iii) Allow wholly foreign-owned enterprises in
  wholesale, retail, and commission agents
  service. Implemented.
• Relevant law Measures for the Administration of
  Foreign Investment in the Commercial Sector
• (Sources Ministry of Commerce,
  http//www.mofcom.gov.cn China Gateway, http//
  www.mac. doc.gov US-China Business Council,
  http//www.uschina.org)

13
I. Market AccessNon-Tariff Measures - China

• c. Transparency
• (i) Laws, regulations, administrative guidance
  The Chinese Government agreed to publish a
  regular and prompt basis all laws, regulations,
  rules, decrees, administrative guidance and
  policies, etc.
• (ii) Judicial and administrative tribunals and
  procedures The Chinese Government agreed to make
  them transparent and to maintain prompt review
  process, etc.

14
I. Market AccessNon-Tariff Measures - China

• Transparency The Structure and System
• Constitution
• Legislative National Peoples Congress
  (Parliament)
• Executive
• - Central Government
• - President of the Peoples Republic of China
• - Ministries of the State Council
• MOFCOM (Ministry of Commerce)
• SFDA (State Food and Drug Administration)
• Ministry of Agriculture
• NEPA (National Environmental Protection
  Agency)
• SAFE (State Administration of Foreign
  Exchange)
• - Local Government
• Judiciary

15
I. Market AccessNon-Tariff Measures - China

• To establish foreign invested food and
  agriculture related companies Administrative
  Registrations, Permits and Licenses
• MOFCOM (Ministry of Commerce)
• SFDA (State Food and Drug Administration)
• Ministry of Agriculture
• NEPA (National Environmental Protection
  Agency)
• SAFE (State Administration of Foreign
  Exchange)
• The Ministry of Land and Resource
• AQSIQ (General Administration of Quality
  Supervision, Inspection and Quarantine), etc.
• These reflect governments intervention to the
  market,
• but transparent? Yes
• Application process listed online
• Applicable laws listed online (with full
  contents)
• Can apply online in some ministries
• Take short time to get the permits (usually
  5 days in Ministry of Agriculture).

16
I. Market AccessNon-Tariff Measures - China

• Judicial and administrative tribunals and
  procedures
• China made commitments in this area meanly to the
  U.S. under Market Access Memorandum of
  Understanding between the U.S. and China.
• No specific timeline for implementation.
• Brief Introduction of Court system Omitted from
  the presentation
• CIETAC (China International Economic and Trade
  Arbitration Commission)

17
I. Market AccessNon-Tariff Measures - China

• d. Standards and Testing
• Commitment All sanitary and Phytosanitary
  (SPS) standards and testing requirements must
  be based on sound science.
• Plant products remove any scientifically
  unjustifiable Phytosanitary restriction on citrus
  fruits, stone fruit, apples, grapes, wheat and
  tobacco (China-US).
• Animal breeding stock import of U.S. animal
  genetic materials (live animals, bovine semen and
  embryos) veterinary protocol.
• Wood products policies related to conservation
  apply only to domestic wood products not to
  imported wood products.
• Bio-safety (GMO products) Regulations on
  management and labeling of GMOs
• Food safety (next slide)
• (Sources Ministry of Commerce,
  http//www.mofcom.gov.cn China Gateway, http//
  www.mac. doc.gov US-China Business Council,
  http//www.uschina.org)

18
I. Market AccessNon-Tariff Measures - China

• Food safety
• Food safety licensing system being set up.
• Chinas General Administration of Quality
  Supervision, Inspection and Quarantine in
  addition to 15 different segments of the food
  industry (rice, flour, edible oils, meat, dairy,
  instant noodles, biscuits and beverages),
  producers of 13 different food products (tea,
  confectionery) will also required to apply for
  licenses.
• (Sources China Daily, http//english, com.cn
  Food Quality News, http//www.foodqualitynews.com)

19
I. Market AccessNon-Tariff Measures - China

• Food Safety Recent SPS Regulations
• Regulation of Inspection and Quarantine on
  Imported Meat and its Product, (2004-8-6)
  G/SPS/N/CHN/79
• Administrative Rules of Inspection, Quarantine
  and Supervision on Entry of Fresh Fruit
  (2004-8-6) G/SPS/N/CHN/80
• Hygienic standard for dried fruits (2004-4-21)
  G/SPS/N/CHN/74
• Hygienic standard for nuts (2004-4-21)G/SPS/N/CHN
  /75
• Hygienic standard for cream and sparse cream,
  (2004-4-21) G/SPS/N/CHN/76
• Hygienic standard for edible animal
  fats(2004-4-21)G/SPS/N/CHN/78
• (Source WTO, http// www.wto.org)

20
I. Market AccessNon-Tariff Measures - China

• Food Safety Recent SPS Regulations
• a. Regulation of Inspection and Quarantine on
  Imported Meat and its Product, G/SPS/N/CHN/79,
  2004-8-6
• - Agency responsibleGeneral Administration of
  Quality Supervision, Inspection and Quarantine of
  the Peoples Republic of China.
• - Products coveredmeat and its product
  (includes viscera) for human consumption.
• - Regions or countries likely to be
  affected all countries and regions that export
  meat and its product (includes viscera) for human
  consumption to China.
• - Standard international standards not used.
• (Source WTO, http// www.wto.org)

21
I. Market AccessNon-Tariff Measures - China

• Food Safety Recent SPS Regulations
• b. Administrative Rules of Inspection, Quarantine
  and Supervision on Entry of Fresh Fruit
  (2004-8-6) G/SPS/N/CHN/80
• - Agency responsibleGeneral Administration of
  Quality Supervision, Inspection and Quarantine of
  the Peoples Republic of China.
• - Products covered fresh fruit.
• - Regions or countries likely to be
  affected all countries and regions that export
  fresh fruit to China.
• - Standard used International Plant
  Protection Convention
• (Source WTO, http// www.wto.org)

22
I. Market AccessNon-Tariff Measures - China

• Food Safety Recent SPS Regulations
• c. Hygienic standard for dried fruits
• (2004-4-21) G/SPS/N/CHN/74
• - Agency responsibleMinistry of Health and
  Standardization Administration of China.
• - Products covered dried fruit.
• - Regions or countries likely to be
  affected all countries and regions
• - Standard used International Standard not
  used.
• (Source WTO, http// www.wto.org)
• .

23
I. Market AccessNon-Tariff Measures - China

• Food Safety Recent SPS Regulations
• d. Hygienic standard for nuts (2004-4-21)G/SPS/N/
  CHN/75
• - Agency responsibleMinistry of Health and
  Standardization Administration of China.
• - Products covered nuts.
• - Regions or countries likely to be
  affected all countries and regions
• - Standard used International Standard not
  used.
• .
• (Source WTO, http// www.wto.org)

24
I. Market AccessNon-Tariff Measures - China

• Food Safety Recent SPS Regulations
• e. Hygienic standard for cream and sparse cream,
  (2004-4-21) G/SPS/N/CHN/76
• - Agency responsibleMinistry of Health and
  Standardization Administration of China.
• - Products covered . Cream and sparse cream
• - Regions or countries likely to be
  affected all countries and regions
• - Standard used Codex Alimentarius Commission
  
• (International Standard).
• (Source WTO, http// www.wto.org)

25
I. Market AccessNon-Tariff Measures - China

• Food Safety Recent SPS Regulations
• f. Hygienic standard for edible animal
  fats(2004-4-21)G/SPS/N/CHN/78
• - Agency responsibleMinistry of Health and
  Standardization Administration of China.
• - Products covered . Cream and sparse cream
• - Regions or countries likely to be
  affected all countries and regions
• - Standard used Codex Alimentarius Commission
  
• (International Standard).
• (Source WTO, http// www.wto.org)

26
II. Domestic SupportIn General

• A a. Green Box measures minimal impact on
  trade excluded from reduction commitments.
  General government services (a) Research,
  disease control, infrastructure and food safety
  (b) Direct payments to producers, structural
  adjustment assistance, direct payments under
  environmental programs and under regional
  assistance programs.
• b. Blue Box measures (a) Direct payments under
  production-limiting programs (b) Certain
  government assistance measures to encourage
  agricultural and rural development in developing
  countries, etc.
• c. Amber Box measures Total AMS Reduction
  Commitments covers all support provided on a
  product-specific or non-product-specific basis
  that does not qualify for exemption to be
  reduced by 20 (13.3 for developing countries)
  during the implementation period.
• (Source WTO, http// www.wto.org)

27
II. Domestic SupportChina

• China committed to cap and reduce
  trade-distorting domestic subsides.
• China committed to provide better transparency
  regarding domestic support.
• The amount of Art. 6.2 domestic support would be
  included in Chinas AMS calculation.
• Recourse to a de minimis exemption for
  product-specific support equivalent to 8.5 of
  the total value of production of a basic
  agricultural product during the relevant year.
• Recourse to a de minimis exemption for
  non-product-specific support equivalent to 8.5
  of the total value of production of total
  agricultural product during the relevant year.
• (Source WTO, http// www.wto.org)

28
III. Export CompetitionIn General

• Export subsidies on agricultural products are
  prohibited unless specified in a members lists
  of commitments
• a.       Direct export subsidies to be reduced
  to a level of 36 below the 1986-90 base period
  level over 6 year implementation period
• b.      Quantity of subsidized exports to be
  reduced by 21 over the same period.
• c.       Developing countries 2/3 of developed
  countries over 10 year period No commitments on
  subsidies to reduce the costs of marketing
  exports of agricultural products or internal
  transport and freight charges on export
  shipments.
• d.      Peace Clause 9 year period
• i. Certain actions available under the Subsidies
  Agreement will not be applied with respect to
  green box policies, domestic support, and export
  subsidies maintained in conformity with
  commitments
• ii. Due restraint will be used in the
  application of countervailing duty rights under
  the General Agreement
• iii. Setting out limits in terms of the
  applicability of nullification or impairment
  actions.
• (Source WTO, http// www.wto.org)

29
III. Export CompetitionChina

• Issue State-trading enterprises purchase
  agricultural products (grain, cotton) from
  farmers at higher prices and export these
  products at lower prices.
• Is it export subsidy?
• - China agreed not to provide funds to offset
  domestic companies losses accrued through
  exports.
• - China agreed not to maintain or introduce any
  export subsidies on agricultural products.
• (Source WTO, http// www.wto.org)

30
Sources Chinese Governments

• MOFCOM (Ministry of Commerce) http//www.mofcom.g
  ov.cn
• SFDA (State Food and Drug Administration)
  http//www.sfda.gov.cn
• Ministry of Agriculture http//www.agri.gov.cn
• Ministry of Health http//www.moh.gov.cn
• Standardization Administration of China
  http//www.sac.gov.cn
• General Administration of Quality Supervision,
  Inspection and Quarantine of the Peoples
  Republic of China http//www.aqsiq.gov.cn
• SEPA (State Environmental Protection
  Administration of China) http//www.zhb.gov.cn
• SAFE (State Administration of Foreign Exchange)
  http//www.safe.gov.cn
• China Bio-Safety Net http//www.stee.agri.gov.cn/
  biosafety
• END
• QUESTIONS?