The United States and China have failed to finalize a deal that would allow U.S. support of China's entry into the World Trade Organization.  However, several contentious agricultural trade issues were settled as part of the comprehensive agreement.  It is hoped that both sides can iron out remaining differences by the end of the year.

U.S. farm and commodity groups that stand to benefit most hailed the resolution to the ag issues.  The good news is that even if China doesn't enter the WTO, the Chinese still will eliminate prohibitions on wheat from the Pacific Northwest, citrus from California, Florida and Texas and accept USDA safety standards for beef, pork and poultry.

However, it probably won't be smooth sailing for agriculture.  U.S. ag groups are enthused now, but stumbling blocks could be looming.  Holding China's feet to the fire on compliance may not be an easy task for U.S. interests.  At some point, probably in the near future, China likely will balk on one or more of the issues: wheat, meat and citrus.

"Our markets have been open to agricultural products from around the world for years, and China has been the wild card in world grain trade, moving in and out of the grain market," said Kenneth Hobbie, president and CEO, U.S. Grains Council.  "It's been a tantalizing market, always holding out promise with its growing population and growing demand but always slightly out of reach.  Now we will be able to access the Chinese market in a transparent manner."

Under terms of the agreement, announced Thursday, China will allow the import under quota of 4.5 million tons of corn per year with a 1% duty beginning Jan. 1, 2000, contingent on China's formal accession to the WTO by that date.

The quota will increase to 7.2 million tons by 2004.  Initially 25% of the quota will be imported by the private sector with that percentage increasing to 40% by 2004.  Five categories of corn (corn, seed, flour, groats and other worked corn) are included in the quota with duties varying by category.

U.S. barley and malting barley also should benefit. China virtually has locked out those products over a decades-long dispute over TCK smut.  China has contended that TCK smut in U.S. wheat also meant it was present in U.S. barley and would not accept shipments of either grain from the Pacific Northwest despite scientific evidence of the safety of the grain.

China agreed to a TCK inspection method that the U.S. Grains Council says will allow imports of all grain from U.S. ports.  Barley and malting barley imports will be allowed with no quota and a 9% tariff, and malt imports will be allowed with no quota and a 10% tariff.

U.S. Wheat Associates, the National Association of Wheat Growers and the Wheat Export Trade Education Committee applauded the Chinese for agreeing to end the TCK restrictions on wheat.  More than 20 years have been spent trying to get the issue resolved.

The wheat groups say China will allow wheat imports that do not exceed a tolerance level of 30,000 TCK spores per 50 gram samples, "a level with can easily be met by U.S. wheat exporters."  The agreement, however, is for only one year.

All bulk grain shipments from Pacific Northwest ports were barred effectively because of the TCK restriction.  While a few wheat shipments have continued to move from Gulf ports, many traders have not been willing to take the risk of meeting a zero tolerance.

Although soybeans were not on the list of settled issues, the American Soybean Association quoted U.S. government sources saying that the ongoing WTO accession negotiations will include assurances that will formalize access to the Chinese market for U.S. soybeans and products.

The China market has been a priority for U.S. soybean producers since 1982 when ASA opened an office in Beijing.  In the last five years, China has evolved from a net exporter of soybeans and soy products to "our most important growth market," said ASA President Mike Yost, Murdock, MN.

There will be no tariff rate quota for soybeans; the duty is bound at the current applied level of 3%.  Soybean oil will be subject to a 9% duty, and the TRQ quantity will be based on average 1995-97 calendar year imports.

The National Cattlemen's Beef Association predicted the agreement on beef "will pave the way for China to become a leading importer of U.S. beef."  The agreement gives U.S. cattlemen access to China's retail and food service markets, recognizes the U.S. meat inspection system as equivalent to the Chinese system and significantly lowers China's tariffs on U.S. beef.

"This is a huge step for increased fair trade around the world and is a sound accomplishment by U.S. trade negotiators.  We appreciate the (Clinton) administration's efforts to keep agriculture at the top of the list throughout the negotiation process," said NCBA President George Swan, a Rogerson, ID, cattle producer.

While expressing a "hopeful" outlook for U.S.-China ag trade, Sen. Tom Harkin (D-IA) said China "must demonstrate that it will abide by the rules that govern the world community.  Past experience shows that China has a long way to go in reforming its unfair restrictions on U.S. agricultural exports."

Harkin said pork producers also should benefit as China's trade barriers are broken down.