The accession of China

1. The accession of China Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

2. History • China was one of the 23 original signatories of GATT (1948) • 1949: Chinese revolution • Gov in Taiwan announced that China would leave the GATT system • Gov of People’s republic of China never recognized that • 1986: China notified the GATT of its wish to resume its status of GATT contractory party • 1987: Establishment of the Working party • 1995: Become a WTO Working party • Sept. 2001: End of the negotiations • Nov. 2001: Doha Ministerial Conference agreed for the China’s membership. China became the 143rd WTO member Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

3. Why a so long process ? • China’s weight in international trade of goods • 7th leading exporter • 8th larger importer • China’s weight in international trade in services • 10th leading exporter • 12th larger importer • Legal text of accession: 900 pages long Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

4. The results:The China’s commitments Focus on agriculture Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

5. Transparency • Only laws and measures published and available to WTO members shall be enforced • Official journal dedicated to publication of laws, on a regular basis • Establishment of an enquiry point Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

6. Judicial review • Establishment or maintain of tribunals for all administrative actions • Tribunals are impartial and independent from agency entrusted in the administration of trade and economic policies Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

7. Non discrimination • Foreign enterprises/individuals: treatment not less favoured that domestic ones in respect of: • Procurement of inputs/goods/services • Conditions of sale of their goods/services • Prices and availability of goods/services supplied by national authorities or State enterprises (transportation, energy, …) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

8. Right to trade • Within 3 years after accession • All enterprises in China shall have the right to trade in all goods within China customs territory • Exception for products submit to state trading • Imports • Grain, vegetal oil, sugar, tobacco, chemical fertilisers, cotton • Exports • Tea, rice, corn, soybean, silk, cotton Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

9. State trading • Import purchasing procedures of State trading enterprises (STEs) are fully transparent; • Provide full information in the pricing mechanisms of STEs for export. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

10. Phased elimination of non tariff measures • Elimination of import quotas and import licenses: • Upon accession • Sugar, tobacco and cigarettes, urea, fertiliser containing N-P-K, cotton, wool • In 2002: • Some fertilisers (ammonium, superphosphates, N-P, P-K) • Elimination of import license, upon accession: • Durum wheat, wheat and meslin, maize, rice, edible oil (soybean, ground-nut, palm, sunflower, rape, maize, sesame) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

11. Import and export licenses • Publication on a regular basis in the Official journal • By products, list of organisation responsible for authorizing imports or exports • Procedures and criteria for obtaining import license • List of all products subject to tendering requirements • List of all goods and technologies whose imports or exports are restricted/prohibited • And any change • Minimum duration of import license: 6 months Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

12. Price controls • Shall be eliminated : price to be determined by market forces • Exception • Tobacco and pharmaceuticals • Impossible to enlarge the list, and China shall make best efforts to reduce and eliminate these controls • Subject to Gov guidance pricing: • Grains (durum wheat, wheat and meslin, rice, maize, soybeans) • Crude oil (soybean, rape, mustard) • Fertiliser (urea) • Silkworm cocoons and cotton (non carded) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

13. Agriculture • No maintain or introduce export subsidies, upon accession • Domestic support to farmers not exceed 8.5% of the value of the production (de minimis provision) • To notify fiscal transfers between/among STEs in agricultural sector • Market access : • Tariffs rate quotas • Tariffs Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

14. Tariffs rate quotas Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

15. Decrease of tariffs Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

16. Transitional product-specific safeguard mechanism • In force during 12 years after accession • If Chinese products are increasingly imported by a WTO member, creating a market disruption for domestic producers • Consultation with WTO • China shall remedy to the market disruption • If no agreement : WTO member may limit imports • Il the limit stay in place more than 2 years : China can suspend application of equivalent concession • If delay would cause damage, WTO member may take a provisional safeguard measure, no more than 200 days. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

17. Reservation by WTO members • Possibility to maintain quantitative restriction on Chinese imports, to be phased out, on a case by case basis. • Argentina, EU, Hungary, Mexico, Poland, Slovak Republic, Turkey. • Mostly for footwear • Ex: Slovak import quotas on foot wear • Each year, increase on 15 % (from 2001 to 2004) • 2005 : removal Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

18. Notification of subsidies with trade effects • Loans provides by the Agriculture Development Bank of China • Purchase and storage of agricultural products • Subsidies for poverty alleviation • Loans by the Agric.dvpt Bk; to poorest regions • Funds for construction of irrigation infrastructure • Tax and tariff refund for export products: • Tariff refund for imported contents of export products • VAT refund for exports • Agricultural products : VAT = 10% refund = 3% • Industrial product using agricultural products as raw material : VAT = 17% refund = 6% Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

19. What impact on Chinese agriculture Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

20. Challenges • More than 100 million people living below the poverty line (1 US$/day) • Vulnerability of large parts of rural economy • Main challenge: how to increase farmers’ income ? Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

21. Policy reforms • WTO accession is not the beginning of a reform process, but the achievement. • Under the WTO framework: policy reforms = extension of past efforts, but acceleration • As consequences of past policy reforms • Nominal protection rate of rice, maize and wheat decrease; • Stable for soybeans • Decrease in grains exports, but increase for labour intensive products (horticulture, animal production) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

22. Policy reforms (cont’d) • Measures existing prior accession, to be removed • VAT on imported soybeans, no on local ones • Exports subsidies for maize and cotton (mainly) • Still existing possibilities for the use of some agricultural policies instruments: • Domestic support to farmers; • Tariffs; • STEs Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

23. Economic assessment of accession (2001 – 2007) Source : Anderson, Huang and Ianchovichina in China and the WTO, World Bank, 2004 Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

24. Sectoral impacts Source : Anderson, Huang and Ianchovichina in China and the WTO, World Bank, 2004 Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

25. Policy implications • Farm households worse off if: • No possibility to send family workers to jobs out off agriculture; • Infrastructures in the region are too weak to attract new activities; • Unability to diversify into other farm goods • Risk of increasing poverty in hinterland provinces: • Long way from markets • Poor Infrastructures Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

26. Policy implications (cont’d) • Investments in basic education and health • Boost farm productivity • Ability to move to other jobs • Improvement in rural infrastructures • Better link farm – markets • Expanding new activities • Agricultural research and development • Boost farm productivity Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

27. Policy implications (cont’d) • Improve quality and competitiveness of agriculture • Standards • Market information systems • Accelerate innovation • Establishment of a domestic agricultural policy conforms to WTO rules Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005