February 9, 2000
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. Under the agreement, China will permit imports of 743 thousand
metric tons of cotton at a duty of 1% (1998 imports equaled 200 thousand
metric tons). This volume will grow to 894 thousand metric tons by 2004.
Imports above these levels will face a higher duty of 76%, which will be
reduced to 40% by the year 2004. China made specific commitments to
administer these TRQs so as to maximize the potential that they will be
filled. Specifically, if TRQs are not utilized they will be redistributed to
other end users who have an interest in importing. Moreover, 33% of the TRQ
will be reserved for importation through state trading enterprises (such as
Chinatex) and 67% will be reserved for 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.
- In summary, China has committed to establish a TRQ on the following terms:
2004 TRQ In-quota Duty
Private Share 1998 Total Imports
Trading Rights and Distribution
- Currently, U.S. companiesí 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, including cotton, 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. Under the cotton TRQ, China has
reserved a percentage of trade in cotton for importation through state
trading enterprises, but China will also permit other enterprises to import
under the TRQ.
- 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 cotton. (See separate papers on distribution services and related
- China will eliminate export subsidies for agricultural products when it
joins the WTO, benefiting U.S. agricultural products competing in
- China committed to cap and reduce trade-distorting domestic subsidies;
specific levels will be determined through multilateral negotiations.
Sanitary and Phytosanitary Measures
- China 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.
Thursday, October 14, 2004 PM