Agriculture Reference
In-Depth Information
The impact on agricultural production and food security of
WTO accession
Chna's WTO accesson commtments n agrculture
Chna's commtments n agrculture are more far reachng than those n
manufactured goods. They include the reduction in tariff rates, adoption
of a tariff rate quota system, limits on domestic support and on export
subsidies for agricultural products, and the elimination of some technical
trade barrers.
Chna agreed to reduce the average statutory tarff rate for agrcultural
products from 22 per cent to 15 per cent by January 2004. It also agreed
to adopt the tarff rate quota system for key agrcultural products such as
wheat, rice and corn. Within the specified import quota, which is scheduled
to increase over time, the tariff rate for these three grain products is only
1 per cent (Table 7.4). The state owned agricultural trading firms no longer
enjoy the monopoly power they previously had, as private firms have been
allowed to enter the foreign trade market and to import any unfulfilled
quota left by the state owned firms.
However, these commitments do not necessarily lead to significant
adverse mpacts on agrcultural producton as Chna already had relatvely
low protection on agriculture. For example, the nominal rates of protection
for rice, vegetables and fruits and meats are negative (Table 7.5). This
stuaton was partly due to the hstory of taxng agrculture to subsdse
ndustral development and partly due to the effort of reducng protecton
along wth the WTO accesson negotatons.
Overall mpacts of WTO accesson
Smulatons of the mpacts of WTO accesson were carred out usng the
closure of no control on the trade balance; that is, the exchange rate is
fixed and the trade balance is endogenous. The macroeconomic impacts
of Chna's WTO accesson are summarsed n Table 7.6. Several ponts can
be drawn from the smulaton results.
First, China has an overall gain from WTO accession. Real GDP,
consumption and the utility level increase, by 0.4, 1.0 and 0.8 per cent,
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