World-Trade Group may be Lever to Open China's Far

BRIDGE NEWS

March 31, 2000

CHURCHVILLE, Va.--China has taken another important step toward becoming the world's largest food importer, eliminating regulations that have prevented U.S. citrus and meat exports and severely hampered wheat exports for over 25 years.

China has decided American fruit flies don't threaten Chinese citrus trees and American slaughter plants can produce sanitary meat after all.

Within hours of the announcement, cargoes of U.S. citrus and wheat were headed for Chinese ports to celebrate the trade opening.

China has made even more important pledges. When it joins the World Trade Organization, it will shift from government farm import controls to tariffs and cut the tariffs, stop farm export subsidies and cap internal subsidies.

These moves would signal the end of China's food self-sufficiency policy, and ultimately expand world farm trade by many billions of dollars a year.

China's tariff on cheese, for example, would drop from 50 percent to 12 percent. The frozen beef levy would fall from 45 percent to 12 percent, frozen pork from 20 percent to 12 percent and frozen poultry from 20 percent to 10 percent.

Among fruit and vegetable tariffs, apples and cherries would fall from 30 percent to 10 percent and grapes from 40 percent to 13 percent. It's all part of China's campaign to gain WTO membership.

The Asian giant needs to get in so that its huge export potential can flow to other nations without punitive tariffs. The 120 member nations look forward to Chinese membership. China already has over 1 billion consumers and some of the world's fastest-rising incomes.

America's top trade negotiator, Charlene Barshefsky, raised the issue of Chinese accession to the World Trade Organization to an even loftier plane, making it part of a global mission to integrate former Communist countries into the world economy under the rule of law.

The Chinese moves feed hope toward the long-sought goal of the world's farmers--to be able to export food to the world's largest, most densely populated country.

China's population of nearly 1.3 billion has virtually stopped growing, but China's economy is growing at more than 7 percent annually, and its per capita incomes are rising nearly as fast.

China has long been considered a rice-eating culture, but in the 1990s rising incomes have boosted meat consumption by as much as 5 million tons per year.

Dairy product consumption has more than doubled as milk, cheese and ice cream have become popular in the cities. Fruit and vegetable consumption has soared since the days when Chairman Mao Tse-tung's military trucks dumped piles of cabbage in city squares after harvest, for consumers to store on apartment balconies in the winter.

Shanghai, China's most trade-oriented big city, already features night clubs, a youth culture and a full line of the Western fast-food restaurants that play an important part in diversifying food tastes in many other countries.

China's past food problems are legendary. The country reportedly has had 1,000 famines in the past 2,000 years. The western two-thirds of its land area gets virtually no rain at all, while the eastern third gets erratic rainfall, based on tropical monsoon storms, which too often mean drought or flood instead of good harvests.

In the 1950s, communal farming and Soviet farming techniques were tragic failures, leading to the starvation of some 30 million Chinese between 1959 and 1961.

After Mao's death in 1977, the communal farms were dismantled into family farms. Chemical fertilizer and high-yield seeds helped to double farm output within a decade.

Recently, however, Chinese food gains have come at high cost. The Yangtze River has had the worst floods in recent history, signaling that China cleared too many steep slopes for additional food production. Irrigation pumping is drawing down water tables in northern China.

Claims that Chinese farmers will lose their jobs must be balanced by the country's potential to export labor-intensive commodities such as apples and deboned poultry.

Food imports, in fact, could further fuel the Chinese economy. High recent food costs have been a labor cost disadvantage for Chinese exports. WTO entry would also be a strong lever for reformers trying to modernize the old state-owned factories that still employ millions of Chinese workers in

money-losing production.

The exact terms of Chinese membership in the WTO are still under intense negotiation, but the world's farmers are eagerly awaiting the day when Chinese farm imports stimulate higher prices for larger volumes of farm exports around the world.