Advantages of U.S.-China Trade Deal Detailed

December 14, 1999

The United States and China have reached agreement on trade that allows for U.S. wheat from the Pacific Northwest to enter China. But USDA says it will be a longer term benefit; China's current wheat import needs are historically low following three of its largest wheat crops in history.

"In the past, the United States often supplied one-third or more of china's total wheat imports, even with the ban on West Coast wheat," the report says. Imports from the United States peaked at 7.3 million tons in 1988-89 when China imported 15.4 million tons from all sources.

"Although prospects for Chinese wheat imports over the next 10 years are not as high as they were 8-10 years ago, USDA does project average imports to rise," the report adds.

China had banned imports from the Northwest for more than 26 years due to TCK smut. In signing the agreement, says the report, China "has acknowledged that TCK smut does not pose a risk to its domestic wheat production and will allow the import of U.S. wheat and other grains that meet specific tolerance for TCK."

Implementing the agreement depends on China's accession to the World Trade Organization. When China gains membership, market access for U.S. products will increase significantly and be effective immediately upon accession. Tariff reductions will go into effect immediately with further phased-in reductions to favorable levels. All tariff reductions will be implemented by 2004, the time frame in which all other WTO members will have implemented their Uruguay Round tariff reductions.

China also agreed not to provide export subsidies for agricultural products. The USDA report says this is "particularly important for addressing potential exports of corn and rice which in the past have displaced U.S. product from third-country markets." China also will abide fully by the terms of the WTO agreement on sanitary and phytosanitary measures which require that all animal, plant and human health import requirements be based on sound science, not political agendas or protectionist concerns.

The article is part of USDA's publication Grain: World Markets and Trade, December 1999, and is available on the Internet at http://www.fas.usda.gov/grain/circular/1999/99-12/graintoc.htm