Moreover, despite clearly being a developing country, China’s de minimis exemption for product-specific support is equivalent to only 8.5% of the total value of production of a basic agricultural product . Moreover, some measures, such as investment subsidies for all farmers and input subsidies for the poor and other resource-scarce farmers, that are generally available for policy makers to use in developing countries, are not allowed in China . Because of its Socialist background and the difficulty that the world has had in assessing the scope of the government’s intervention into business dealings of all types, China agreed to a series of measure governing the way that they will deal with the rest of the world in cases of anti-dumping and countervailing duties. Most simply, special anti-dumping provisions will remain for 15 years. According to these provisions, in cases of anti-dumping China will subject to a different set of rules that countries can use to prove their dumping allegations. In addition, the methods that countries can use against China to enforce anti-dumping claims when they have won will differ from most of the world. In essence, this set of measures makes it easier for countries to bring, prove and enforce dumping cases against China. It should be noted, however, that that although the rules differ from those governing trade among other countries, China will get the same rights in their dealings with other countries, a element that could help them in some cases with their dealings with dumping matters when they concern their partners’ exporting behavior. China’s WTO commitments and privileges associated with the measures in other parts of the agreement also will directly or indirectly affect its agriculture. For example, on agricultural chemicals, China has committed to replace quantitative import restrictions on three types of fertilizers by TRQs. Tariffs will be cut on accession and further cuts will be phased in by 2005 in almost all industrial products, . Furthermore, China will reduce significantly its non-tariff measures and eliminate all quotas, tendering and import licensing on non-farm merchandise by no later than 2005. For textiles and clothing, however, the current ‘voluntary’ export restraints will not be completely phased out until end of 2008, meaning that the expansion of exports may not expand as fast as they would under a less restrictive regime.
Substantial commitments to open up services markets in China also have been made. While substantial institutional and marketing reforms implemented in agriculture since the late 1970s will help facilitate the response of households to the changes that will arise with the implementation of WTO and, flood table more generally in China’s overall transition to the post accession WTO regime, China still requires considerable reform to meet its WTO membership commitments . In fact, the government has realized for a considerable time that it faces a real challenge. In fact, in many instances, officials are taking this challenge as an opportunity to stimulate and accelerate its on-going reforms in both international and domestic policies. Policy responses as a result of WTO accession are expected take one of two forms. One is a policy response that is required of China in order for it to be able to keep the nation’s commitments and to adjust its domestic policies to be consistent with those promulgated by the WTO’s rules. The other is a response that will consist of introducing some new set of measures that are allowed under the new framework that could help to boost China’s economy and minimize adverse shocks that arise as part of the accession. Identifying the two kinds of policy changes is essential to study how China’s WTO accession will affect the ways that policy makers respond after accession.Many of the most important changes that will occur because of WTO will be in the area of legal and legislation changes. China reserves the right to use a transitional period of one year from the date of accession to amend or repeal any institution, regulation, law or legal stipulation in its current economic policies in order to make them consistent with the spirits of nondiscrimination and transparency. The government recognizes this and has already started to make a concentrated effort to rectify existing legal rules and legislation in the late 1990s. To provide a general guidance for ministerial and local government authorities to amend or repeal the relevant regulations, laws and policies, the State Council decreed two important Regulations in January 2002: the Regulations on Formulation Process of Laws; and the Regulations on Formulation Process of Administrative Laws. Essentially, a guide for local governments and ministries, these new regulations were issued with the aim of transferring many government functions toward the market and directing the government to take a more regulatory, indirect role in commerce and trade. It tries to limit the role of government and emphasizes that the role of government is primarily one to provide social and public services. The regulations also seek to simplify administrative processes and increasing the transparency of regulations and policies.
For example, during the last stage of WTO negotiation, each ministry formed its leading group or committee to work on all of the laws and regulations under its jurisdiction. These committees typically were comprised of decision makers and experts who had the mandate of cleaning up all existing regulations and preparing a proposal for amending or repealing those laws and regulations that are not consistent with the WTO rules and China’s commitments to its WTO accession. Local governments also had similar committees. Ministries and provincial government are also working closely with its corresponding law and regulation committee under the Standing Committee of the National People’s Congress for those laws and regulations to be amended or repealed by the People’s Congress. Several recent experiences involving amending laws and regulations and creating new institutions related to agriculture demonstrate the effectiveness of these committees and China’s overall commitment to its WTO obligations. For example, China’s Patent Law was re-amended on July 1, 2001. Many of the associated regulations also were redone. Moreover, a new set of regulations on Plant Variety Protection was put into effect in 1999 when China became the 39th member country of UPOV. Soon after passage, government agencies quickly proposed and implemented detailed regulations facilitating the implementation of PVP. The MOA and State Forest Bureau also created a new set of institutions, a series of Plant New Variety Protection Offices. Finally, China’s Seed Law was issued in 2000. Hence, the rights of new plant varieties are now protected by both the PVP and Seed Law. To assist in the initial implementation of these laws the government has set up an IPR Affairs Center under the Ministry of Science and Technology. In order to fulfill its legal obligations related to agriculture, MOA also has repealed several regulations since 2000 that sought to subsidize certain types of enterprises and apply different rules in agricultural input industries to different economic actors. Officials have eliminated the Regulations on the Development of Integrated Agricultural, Industrial and Commercial Enterprises under State Farms and the Regulations on the Development of Rural Township and Village Owned Enterprises . Seed Management Regulations that gave monopoly powers to local seed companies and Pesticide Field Trial Rules that discriminated against foreign companies were abolished. Despite the above substantial efforts, China still requires considerable institutional reform. There are still a number of laws and rules that treat domestic and foreign companies and individuals differently. These changes still need to be changed to allow China to fulfill the legal obligations that they are committed in its Protocol of Accession to WTO. It may be even a greater challenge to build up the nation’s capacity for effective implementation of the amended and new laws.
Reforms and liberalization in China’s trade laws and regulations are perhaps the most advanced, in part, because of its strategic role in the economy . Through nearly 20 years reform, China’s foreign trade regime has gradually changed from a highly centralized, planned and import substitution regime to a more decentralized, market-oriented and export promotion one . These changes in trade and other policies have significantly affected the total and composition of China’s trade in favor of the products in which China has a comparative advantage. On the other hand, as argued by Martin , while China’s trade policies in most areas have been transformed in the reform era, trade in many agricultural goods remains under relatively non-transparent state trading arrangements. Accession to the WTO will be a critical time for China to push its trade reform in agricultural sector, including both tariff and non-tariff measures. Changes in tariff policy are more straightforward and simpler than non-tariff policy reforms. China followed its tariff reduction schedule specified in the Protocol on the first day of 2002. Average tariff rate was reduced from 15.3% in 2001 to 12%. For agricultural products the tariff reduction was from 21% to 15.8%. China has also started to implement its three years of transition of progressively liberalize the scope and availability of trading rights for agricultural products as discussed in the last section. Export subsidies have been ordered to be completely phased out on the first day of 2002. Compared to the trend of tariff reduction in the past decade, the tariff changes due to China’s WTO accession should present relatively few problems. Significant reforms will,however,rolling benches be required in the area of non-tariff measures. Among various aspects of non-tariff barriers, state trading could be a particular important area to consider when reforming China’s agricultural trade policy. China has agreed to phase out restrictions on trading rights for all products except those under TRQ trade regime that will implement a more gradual approach in phasing out the state-trading regime . After three years of WTO accession, the private sector is supposed to dominate the trade of almost all agricultural products. There are provisions to keep the state involved in three commodities, however: wheat, maize and tobacco. The measures for Technical barriers to trade and sanitary and phy-sanitary as well as institutional arrangements to fulfill the agreement on Trade-Related Intellectual Property Rights are the other important issues which China has to deal with. The Agreements on TBT and SPS focus on using internationally accepted standards to discipline the use of standards as protectionist devices. This rules-based approach can be valuable in improving policy formulation, but is likely to require investment in strengthening standards related institutions. Comprehensive adoption of these measures should lead to improved policies and, by basing policies on a scientific approach, move away from the time-consuming and inefficient approach of resolving these issues on a political basis. China will undoubtedly struggle in its effort to create a fully transparent and open trade regime with respect to non-tariff barriers. The case of labeling requirements for GMO imports, most conspicuously soybeans, shows how frustrating and protracted the creation of any set of regulations and institutions can be. In June 2001, the government suddenly announced that in response to concerns about the presences of GMO foods in the nation’s import basket, it would require that all goods contained GMOs from there on out would require labeling. Unfortunately, no one in the world who was shipping to China had a system in place to do so. China did not tell any one what was the process to apply for a permit for importing labeled commodities or the place to learn about the process. Initially, trade in soybeans was thrown into disarray. China’s traders lost money, soybean users faced tremendous losses, and prices threatened to rise sharply. Even when facing such a crisis, there was no way that any agency could clarify the matter or announce a plan. Instead, the government postponed any decision to an unspecified future date and trade has since continued.2 The point of this is, however, that even when there is a crisis facing the external sector is often is difficult to rapidly come up with effective and transparent regulations and implementing processes. After 20 years of reform, China’s agriculture has become much more market-oriented . Traders moved products around the country with increasingly regularity and factors adjusted more rapidly. By the late 1990s, only grain, cotton, and to some extent silkworm cocoon and tobacco, were subjected to price interventions. But even in these cases, their markets, especially those for grain, have been shown to have become increasingly competitive, integrated and efficient overtime .