By joining the WTO, China is committing to establish a
"tariff-only" import regime; all non-tariff barriers will be
eliminated. Any other measure, such as inspection, testing, and domestic
taxes must be applied in a manner that is consistent with WTO rules
requiring a transparent and non-discriminatory system and all health
measures must be based on sound science. The tariff on agricultural products
will decline from an overall average of 22% to 17.5%, while the average duty
on agricultural products of U.S. priority interest will fall from 31% to
14%. Specific commitments to lower tariffs, to be phased-in by the year 2004
in equal annual installments, are elaborated in the specific fact sheets.
Tariff-Rate Quota Administration
China, like many WTO Members, including the United States, will use a
tariff-rate quota (TRQ) system and state trading for certain sensitive
commodities (including wheat, corn, rice, cotton, and soybean oil). Under
this system, a specific quantity of imports will be allowed in at a low duty
(10 percent or less) while imports above that level will face a higher duty.
China made specific commitments to administer these TRQs based on economic
rather than political criteria. These commitments are designed to ensure a
transparent and consistent system for allocating shares of the TRQ to end
users and creating provisions to ensure that quota-holders are not impeded
in utilizing their quotas. If TRQs are not utilized they are redistributed
to other end users who have an interest in importing. Moreover, a specific
share of the TRQ will be reserved for importation through state trading
enterprises (such as COFCO and Chinatex) and a specific share will be
reserved for importation by non-state trading entities. Finally, if a TRQ
share that was reserved to be imported by a state trader is not contracted
for by October for any given year, it will be reallocated to non-state
trading entities.
Trading Rights and Distribution
Currently, U.S. companies’ ability to do business in China is strictly
limited because the right to engage in trade (importing and exporting) is
restricted to a small number of companies that receive specific
authorization or who import goods to be used in production. This limits U.S.
exports. China has agreed that any entity will be able to import most
products into any part of China. This commitment is phased in over the
three-year period with all entities being permitted to import and export at
the end of the period. A select list of products will be partially exempt
from this rule and some trade will continue to 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. Trading rights for
these products will be phased in, gradually increasing the number of
entities allowed to import.
China -- which generally prohibits companies from distributing imported
products or providing related distribution services -- will permit foreign
enterprises to engage in the full range of distribution services. These
rights will be phased in over a three-year period for almost all products,
including grains. (See separate papers on distribution services and related
services.)
Export Subsidies
China has committed not to use export subsidies for agricultural products
when it joins the WTO. This commitment is particularly useful for addressing
potential exports of corn, rice, and cotton, which in the past have
displaced U.S. product from third-country markets.
Domestic Support
China committed to cap and reduce trade-distorting domestic subsidies. The
specific level will be determined through multilateral negotiations in
Geneva on the protocol and working party report. China also committed to
provide greater transparency to make its domestic support measures more
predictable.
Sanitary and Phytosanitary Measures
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 the terms for the removal of scientifically
unjustified restrictions on importation of U.S. wheat, citrus, and meat.
Discussions continue on removing SPS barriers to for other U.S. products,
such as tobacco, plums and potatoes.
Anti-dumping
The Agreement explicitly permits the United States to continue to use its
current non-market economy methodology for 15 years after China’s
accession to the WTO. (See specific paper on this protocol issue.)
Safeguards
China has committed to a strong product-specific safeguard that allows the
United States to address import surges. Specifically, the safeguard allows
the United States to restrain increasing imports from China that cause or
threaten to cause market disruption for 12 years after accession. After
that, current U.S. safeguard provisions -- Section 201 -- remain available
to address increasing imports. (See specific paper on this protocol issue.)
