Agriculture Reference
In-Depth Information
dstrbuton of agrcultural nputs such as fertlser and seeds also results
in efficiency losses. It is widely expected that WTO accession will advance
the reform agenda in these areas. Although it is difficult to forecast the
institutional impacts, the strong interaction between institutional reform
and economc performance n the Chnese economy over the past 20 years
or so ndcates the potental mportance of these effects.
The second potential benefit of WTO accession is its export-promoting
effect. WTO accesson and future agrcultural trade lberalsaton wll
reduce trade barrers both n Chna and n the rest of the world. Ths wll
help Chna further expand exports of the agrcultural products n whch t
has comparatve advantage. On the bass of observaton of the hstorcal
pattern of China's agricultural trade, exports of aquatic and meat products
are lkely to ncrease as a result of trade lberalsaton. Abandonment of
the grain self-sufficiency policy will be a crucial factor in achieving this
export expanson because lberalsaton of the gran trade wll reduce feed
gran costs and ncrease the compettveness of anmal producton usng
feed gran nputs. Exports of hortcultural products such as vegetables and
fruits may increase, as their production is relatively more labour intensive
than bulk agrcultural products. Exports of tradtonal specaltes such as
honey and tea may also ncrease as foregn trade barrers are reduced. As
the value of labour-ntensve agrcultural products usually has a relatvely
larger labour element, growth of these exports may produce favourable
ncome effects n the rural economy.
The third potential benefit of accession is its welfare effect. Domestic
prces for most agrcultural products are lkely to declne as a result
WTO accession. A partial equilibrium model, China's Agricultural Policy
Analysis and Simulation Model (CAPSiM), developed by the China Centre
for Agricultural Policy (CCAP) at the China Academy of Sciences (CAS),
compared a WTO accesson scenaro wth a base scenaro wthout WTO
accesson. The results ndcate that the prces of bulk agrcultural products
such as corn, wheat and soybean will reduce by about 20 per cent (Huang
2000). Although the projected price reduction is hypothetical, it is
generally agreed that trade lberalsaton tends to reduce market prces
for the products n queston. Wth the prce declne for food and other
agricultural products, the purchasing power of a given income will increase
and consumers' welfare wll be mproved.
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