China will be the largest importer of U.S. agricultural products this fiscal year according to estimates by the Foreign Agricultural Service of USDA. Despite imports of $20.0 مليار, exceeding Canada at $18.5 billion and Mexico at $17.0 مليار, they will be concentrated in just a few products. A recent report from the U.S. لجنة التجارة الدولية, China’s Agricultural Trade: Competitive Conditions and Effects on U.S. Exports, provides some insights on why that is true.

 

The report was requested by the U.S. Senate Finance Committee which has jurisdiction over trade policy issues. In calendar 2010, الامريكى. agricultural exports to China were $17.52 مليار, with whole soybeans at $10.82 مليار, قطن $2.22 مليار, feed grains, feed and fodders $1.02 مليار, and hides and skins $0.95 مليار, for a total of $15.01 مليار, 85.7 في المئة من الامريكى. agricultural exports to China. Members of the Committee questioned why China with a population of over 1.3 billion people and rising incomes did not import a wider range of products.

The report explains that China, like all countries, has national economic policies that influence trade policies. Nearly 40 percent of China’s labor force is employed in agriculture, and it provides about 11 percent of GDP. Agriculture has low labor productivity, averaging one-fifth the level of the rest of the economy. Increasing incomes for farmers is important because many of China’s poor live in rural areas, and farming small plots (the average is 1.5 فدان, but some are only 0.5 فدان) is the primary income. Consolidation would result in residents moving to urban areas.

China’s central government has a goal of 95 percent self sufficiency in wheat, rice and corn for food security purposes. Grain production in China is less profitable than other enterprises like growing vegetables and fruits, and incomes for wheat, corn and rice producers are supported by direct payments, price supports and import restrictions. China’s agriculture also benefits from a 13-17 percent Value Added Tax (VAT) that is imposed on agricultural imports, but primary agricultural producers in China are exemption from the VAT. The VAT also applies to import tariffs.

As part of the Chinese accession agreement to join the WTO in 2001, China lowered agricultural tariffs and transformed import quotas into tariff rate quotas (TRQs). Tariffs for corn, wheat and rice are relatively high at 65 نسبه مئويه; the tariff for cotton is 40 نسبه مئويه. Yearly tariff rate quotas were set at 9.6 million metric tons for wheat, 9 percent of domestic consumption, 7.2 MMT for corn, 5 نسبه مئويه, 5.3 MMT for rice, 4 نسبه مئويه, و 0.9 MMT for cotton, 2 نسبه مئويه. For 2004-2009, the TRQ for cotton was consistently overfilled and at 400 percent for 2007. Wheat was filled at 75 في المئة في 2004, 40 في المئة في 2005 and less than 10 percent since. Corn had only slight fills. Long grain rice had a 20-70 percent fill, while short grain rice was near zero.
USITC staff ran models assuming the removal of tariffs and TRQ for selected products from all sources of imports. The average trade weighed agricultural tariff was 12 في المئة في 2009. الامريكى. agricultural imports would have been $1.3-2.1 billion higher in 2009 without the tariffs and TRQs. الامريكى. wheat would have gained $0.5-1.2 billion in exports; poultry meat with a 13 percent tariff would have gained about $360 million in trade. Pork offal with a 13 percent tariff would have gained $51-84 مليون, while cotton would have gained $28-71 مليون.

According to the USITC analysis, some U.S. products are excluded from entry by non-tariff measures such as sanitary and phytosanitary requirements. الامريكى. beef is not allowed in because of the discovery of BSE in the U.S. in December 2003. Pork has been denied access because of concerns about H1N1 influenza (swine flu). Zero tolerance for pathogens has restricted imports of poultry. Some apples and all pears are not allowed access due to fire blight, but there is no research that shows fruit without symptoms is a risk. Some products must be labeled entirely in Chinese or must have non-Chinese characters covered with a sticker.

An analysis was done for 12 الامريكى. export products where Chinese import prices were higher than world prices and USITC staff research indicated that specific non-tariff measures were impeding exports. الامريكى. exports in 2009 for the twelve products would have been $2.6-3.1 billion higher with removal of the barriers to trade. Wheat was again the leader with export gains of $1.45-1.7 مليار, and cotton was second with gains of $524-630 million in exports. Pork offal would have gained $305-363 million and apples would have gained $15-18 million in 2009.

The USITC staff made a couple of critical conclusions from their research, “While USITC staff found little evidence of a coordinated effort across China’s government agencies to broadly restrict agricultural imports, China bans or restricts entry of a number of agricultural products, or has threatened to do so.They also observed, “China appears to link the application of NTMs, such as sanitary and phytosanitary requirements, to domestic policies by relaxing NTMs when policymakers determine that imports are needed to relieve food price inflation or shortages.” الامريكى. pork exports to China increased from $1 million in 2006 إلى $313 million in 2008 ورفض $30 million in 2010.

الولايات المتحدة. is not the only major exporter to China with trade concentrated in a few products. Brazil and Argentina, the number two and three suppliers, have over 90 percent of their trade in soybeans and products. EU trade is much more diverse, with alcoholic beverages the largest at about 25 percent of trade. Pork and animal skins are other major imports from the EU. About two-thirds of Canada’s exports to China is canola. The primary exports from Australia are inputs to textiles, but it is also the number two exporter of wine to China after France. From 2005 إلى 2010, Chinese agricultural imports from all suppliers grew about 25 percent per year.

China has come a long way in agricultural imports from the U.S. growing from $2.1 مليار في 2002, the first year of China in the WTO, to the forecast of $20 billion this year. As consumer incomes continue to increase, China’s population becomes more urban (43 في المئة في 2008 and increasing) and domestic production pushes against internal constraints, Chinese trade policy should open markets to the U.S. and other exporters to provide consumers with more varied diets at reasonable prices.