U.S. Exports to China to Increase With WTO Accession

September 14, 1999

A U.S. International Trade Commission study finds that U.S. exports to China and U.S. foreign investment in China would increase with the removal of non-tariff barriers as part of China's accession to World Trade Organization membership. For agriculture, if tariff rate quotas replace existing barriers, U.S. market access increases: the proposed TRQs are greater than current import volumes.

The agriculture products involved in China's April offer have been subject to "a number of barriers, including tariffs, quotas, licensing requirements and state trading," notes ITC. "While export potential exists for U.S. industry, the extent of opportunity may be limited by the reserving of a share of imports and exports for state trading enterprises as well as China's actions on its domestic support policies and third country exports."

Exports of cotton, beverages and tobacco and vegetable oils to China should increase significantly as a result of tariff reductions proposed by china. Wheat and other grain exports, where tariff reductions are not as large, would increase as well.

"In terms of value of sales to China, the largest increase is estimated to be in machinery and equipment, although competition from other countries would limit U.S. exports to China in most industrial goods," the report says.

The study also assesses the effects of WTO accession on China. China's economy could expand by 4% as a result of China's April tariff offer, taking into account the growth effects of such liberalization. "This reflects the efficiency gains from liberalization that would induce further investment in China's economy, thereby expanding production," the report says.

China would benefit from increased imports of capital goods which would improve productivity. Overall, China's exports would increase by 12%, taking growth effects into account, while imports would increase by 14%.

The entire report is available on the Internet at ftp://ftp.usitc.gov/pub/reports/studies/ES3228.pdf

THE WALL STREET JOURNAL, meanwhile, reported that U.S. and Chinese negotiators have yet to reach a breakthrough in their continued talks. The current summit meeting of Asia and Pacific Rim leaders in New Zealand has provided the venue for renewed discussions.