HU, Tao Policy Research Center for Environment and Economy(PRCEE)

1. Major findings and recommendationsofTRADE LIBERALIZATION IN THE AGRICULTURE SECTOR AND THE ENVIRONMENTWith Specific Focus on the Rice Sector in China HU, Tao Policy Research Center for Environment and Economy(PRCEE) State Environmental Protection Administration (SEPA) of China Associated with Center for Chinese Agriculture Policy, Chinese Academy of China School of Environmental Studies, Beijing Normal University

2. Outline • Review of study • Major findings • Major recommendations

3. Project Background • China • How to adapt after WTO accession • China’s rapid industrialization and industrial policy adjustment • EIA on trade policy • WTO New round negotiation • UNEP • One of the six rice country studies • One of the series of trade liberalization and the environment studies

4. Project Objectives • Enhance China's understanding of the environmental, as well as social and economic implications of implementing the WTO AoA, with specific focus on the rice sector. • Assess the positive and negative environmental, social and economic impacts of trade liberalization policies and multilateral trade rule, especially the AoA, taking into account social and economic impacts. • To provide policy recommendations to the government in regards to how to enhance positive impacts while at the same time how to minimize the negative impacts in order to achieve a sustainable development, which would be helpful for China’s new round WTO negotiations.

5. Logic Chain of Study WTO accession and trade liberalization Rice Trading Chinese Government Policy Production Structure Change The State of Environment The State of Society The State of Economy

6. Research Team • Dr. Hu Tao’s team, PRCEE of SEPA • Coordination • Integration • Policy recommendations • Prof. Huang Jikun’s team, CCAP • CAPSiM Model • Economic Impacts • Poverty • Chemical fertilizer and pesticide • Prof. Mao Xianqiang’s team, BNU • Spatial and Regional Analysis • Case study in Hubei, Indicia Rice and Heilongjiang, Japonica Rice • Environmental Impacts • Chemical fertilizer • Pesticide • GHGs

7. Key components of the report • Background of the project • Trade liberalization policies of China’s Agriculture • Rice Production and Trade in China • Integrated Assessment of Direct and Follow-up Impacts of Trade Liberalization on the Rice Sector • Economic • Social • Environmental • Recommended Policies

8. Major findings • Economic aspect • Generally, there will be no big significant changes by 2010 • China’s comparative advantage of Indica rice is decreasing slightly • As a great importer in the future from ASEAN in CAFTA • Challenging national food self-sufficiency policy • China’s comparative advantage of Japonica rice is increasing • As a great exporter in the future to Korea and Japan in C-K-J Economic integration

9. Major findings China’s rice growing regions and zones

10. Major findings • Social aspect • Income changes • A little bit negative income impacts of indica rice farmers by partial equilibrium model • Positive income impacts of Japonica rice farmers • However, by CGE model, all would gain benefits of rice sector liberalization • Rice production takes only small proportion of income for farmers • Non-farming income becoming major income source • Taxes, levies and fees in rural areas

11. Major findings • Environmental aspect • Chemical fertilizers and pesticide, especially water resources using, are increasing with sown area in Japonica rice regions • Chemical fertilizers and pesticide and water resources are depending on sown area and price changes in Indica rice regions

12. Major policy recommendations • Enlarge Green Food and Organic Food production • Improve existing China’s Environmental labeled Product and green food, organic food • Overcome trade barriers of exporting organic food and green food products • Agriculture negotiation of WTO, required by China’s Permanent Mission to WTO • CTE negotiation of WTO, myself is one of the members of Chinese delegation • Bilateral negotiations

13. Major policy recommendations • Strengthen rural environmental management to internalize environmental costs • Enhancing rural environmental governance system • Capacity building for rural environmental management • As a policy recommendation, the proposal above has been submitted to Primer Minister already as part of CCICED proposal last year

14. Major policy recommendations • Gradually loosening food self-sufficiency policy from the perspective of environmental protection and economics • Food self-sufficiency considerations • Social, political, national security and sector economic aspects • but lack of considerations of macro-economic and environmental aspects

15. Major policy recommendations • What would happen if China is gradually loosening food self-sufficiency policy • Economic: • Market would driving rice farmers moving from rice farming towards manufacture and services industries • Better human resources allocation at macro-level • Social • More income for farmers and reduction of rural poverty • Traditional rural culture changing • Environmental • Reduction of chemicals and water resources • Reduction of CH4 emission as GHGs

16. Major policy recommendations • What would happen if China is gradually loosening food self-sufficiency policy • National security • Should be concerned by Defense Ministry but Agriculture Ministry • How much, 95%? 85%? or even lower • Agriculture sector interest • Subsidies to farmers • Investments for agriculture infrastructure • Agriculture Ministry boasting China is able to feed itself as we launched spaceship, but is it necessary?

17. Major policy recommendations • A proposal has been sent to Research Office of State Council this spring to let PM balance the aspects of economic, social, environmental, security etc • A new proposal is being prepared to submit to next CPPCC session, similar function of Senate.

18. Major policy recommendations • A proposal being sent to Research Office of State Council this spring to let them considering the balance between economic, social, environmental, security etc • A new proposal is being prepared to submit to CPPCC, similar function of Senate

19. Major policy recommendations • Further study • Methodology • Partial Equilibrium Vs General Equilibrium • To measure impacts quantitatively by CGE model • Economic, social and environmental impacts on other importing and exporting countries along the product chain of rice

20. Major policy recommendations • To promote EIA on trade policy • To put it into new revised EIA Act by NPC • To prepare a technical guideline for SEPA to do EIA on trade policy as one of the series of EIA guidelines

21. MANY THANKS!!!