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Implications for China of the December 2008 Draft Agricultural Modalities

Report by Zhihong, Tian/ICTSD, 2009

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With nearly 900 million people dependent on agriculture for income, China produces more wheat and paddy than any other country, yet it is a country dependent upon trade to both employ and feed its people. Moreover, China has some of the lowest agricultural tariffs of any WTO Member and yet subsidies that rival the EU’s in total. The ongoing Doha Round of trade negotiations at the WTO may significantly alter the relationship of Chinese agriculture with the world. This study explores the latest draft WTO agreement on agriculture and what it means for China.

implications for China of
the december 2008
draft agricultural Modalities


June 2009 l ICTSD Programme on Agricultural Trade and Sustainable Development


By Tian Zhihong
Professor, Department of International Trade,
China Agricultural University






June 2009 l ICTSD Programme on Agricultural Trade and Sustainable Development


Implications for China of the December 2008
Draft Agricultural Modalities


By Tian Zhihong
Professor, Department of International Trade,
China Agricultural University




ii Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


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International Centre for Trade and Sustainable Development (ICTSD)
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Chief Executive: Ricardo Meléndez-Ortiz
Programmes Director: Christophe Bellman
Programme Team: Jonathan Hepburn, Marie Chamay and Ammad Bahalim


This paper has been produced under the ICTSD Programme on Agricultural Trade and Sustainable
Development. The activities of this programme have benefited from support from the UK Department
for International Development (DFID), the Dutch Ministry of Foreign Affairs (DGIS), and the Hewlett
Foundation. The author of the paper wishes gratefully to acknowledge CHENG Fuzhi for his paper
“China: Shadow WTO Agricultural Domestic Support Notifications,” and David Laborde for his support of
this research project. He would also like to thank, for their comments and help: NI Hongxing, Director-
General of the Agricultural Trade Promotion Center (ATPC); XIE Jianmin, Counsellor at the Permanent
Mission of China to the WTO; XU Hongyuan, Director of the Agricultural Trade Division of the Chinese
Ministry of Agriculture; and WANG Donghui, QIN Tianfang and ZHANG Yongxia, in the WTO Division of
the ATPC. He would also like to thank participants at the ‘Asia-Pacific Agriculture Reform and Trade
Liberalization Forum’ and the ‘Forum on Market Opening under the FTA Framework and Agriculture
Development in China’ in February 2009. WANG Qi, GUO Linan and YUAN Ruiling have taken part in
this research project, and the author would like to thank them for their efforts and hard work. The
author would also like to thank two peer reviewers, Professor TIAN Weiming from the China Agricultural
University and Professor ZHONG Funing from Nanjing Agricultural University.


For more information about ICTSD’s Programme on Agricultural Trade and Sustainable Development, visit
our website at http://ictsd.net/programmes/agriculture/


ICTSD welcomes feedback and comments on this document. These can be forwarded to Jonathan Hepburn
at jhepburn[at]ictsd.ch


Citation: TIAN Zhihong (2009), “Implications for China of the December 2008 Draft Agricultural Modalities”,
ICTSD Programme on Agricultural Trade and Sustainable Development, International Centre for Trade and
Sustainable Development, Geneva, Switzerland.


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ISSN 1994-6856




iiiICTSD Programme on Agricultural Trade and Sustainable Development


ConTenTs


1. InTroDUCTIon


2. ChInese negoTIATIng PosITIon


3. DoMesTIC sUPPorT


3.1 Analysis of Past and Projected ‘Shadow’ WTO Notifications


3.2 The Draft Modalities on Domestic Support


3.3 Impact of the Domestic Support Modalities


4. MArKeT ACCess


4.1 Market Access Measures


4.2 Tiered Formula, Sensitive Products and Special Products


4.3 Impact of the Formulas on China’s Tariffs


4.4 Tariff Escalation and Tropical and Diversification Products


4.5 Implications of Draft Market Access Modalities for China’s Exports


5. sUMMAry AnD ConClUsIons


6. referenCes


7. Annex


1


4


6
6
7
7


10


10


11


12


13


14


16


19


21




iv Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


LisT of TabLes and figures (annex)
Figure 1: China’s Domestic Support Levels and Value of Production in 1996-2005


Table 1: China’s Official WTO Domestic Support Notifications, 1996-2001


Table 2: China’s Green Box Notifications, 1996-2001


Table 3: China’s Shadow Domestic Support Notification


Table 4: Main Domestic Support Provisions of the Draft Modalities and China’s Commitments


Table 5: Projection of China’s Notifications under Current WTO Commitments, 2006-2013


Table 6: China’s Bound Tariffs on Agricultural Products


Table 7: China’s Agricultural Imports and Tariffs by HS Chapter


Table 8: China’s TRQs and Imports


Table 9: Tiered Formula for Agricultural Tariff Cuts


Table 10: Key Factors Concerning the Tariff Cuts Used in the Analysis


Table 11: Distribution of Sensitive and Special Products


Table 12: The Distribution of Products Across the Bands of the Tiered Formula


Table 13A: Implications of the Tiered Formula for China’s Tariffs: Average Tariff


Table 13B: Implications of the Tiered Formula for China’s Tariffs: Standard Deviation


Table 14: Implications of the Tiered Formula for Different Bands


Table 15: Impact of Tariff Cuts on China’s Exports


Table 16: Impact of Tariff Cuts on China’s Exports by HS Chapters




vICTSD Programme on Agricultural Trade and Sustainable Development


abbreViaTions and aCronYMs
AMS — Aggregate Measure of Support


AoA — Agreement on Agriculture


ASEAN — Association of Southeast Asian Nations


EU — European Union


HS-6 — Products identified at the six-digit coding level of the World Customs Organization’s
harmonized system


NPS — Non-product specific support


OTDS — Overall trade distorting support


PS — Product-specific support


RAMs — Recently Acceded Members


SPs — Special products


SSM — Special Safeguard Mechanism


SVE — Small, vulnerable economies


TAMS — Total AMS


TE — Tariff escalation


TP — Tropical and diversification products


TRQs — tariff rate quotas


WTO — World Trade Organization




vi Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


exeCuTiVe suMMarY


The December 2008 draft modalities (WTO, 2008) are an attempt to capture the progress has
been made since July, which is the result of seven years of hard negotiations. As China does not
have export subsidies, we mainly examine the implications of the modalities for China’s domestic
support and market access in this study.


With respect to domestic support, China did not have a total aggregate measure of support (AMS)
mainly because the managed price was below the reference price during 1996-2005. Green box
support has increased year by year. China has not historically had any blue box measures. In addition,
as a developing country, China is not duty bound to include the special and differential treatment
(Article 6.2 of AoA) in the AMS. China’s domestic support policies have changed greatly in recent
years, from taxing agriculture to supporting it. It has recently been reiterated that increasing
farmers’ income is at the top of the government’s agenda. A series of subsidies have therefore been
provided recently, including direct payments to farmers, improved quality seed subsidies, price
subsidies on farm machines, fertiliser, electricity, irrigation, fuels, agricultural tax elimination and
minimum support prices.


The domestic support issue in the World Trade Organization (WTO) revised Draft Modalities will
place substantial restrictions on China’s domestic agricultural policies. The support to certain key
products may exceed the limits in high-price (wheat and cotton) and medium-price (cotton) scenarios
according to the projection results. The non-product specific (NPS) support is far below the limits
level when recent subsidies are ignored, but may be close to the limits level if included. The new
Blue Box limits are RMB 108 billion (5 percent of the average production value) overall. However,
the effective and applicable space for product-specific (PS) Blue Box limits is only 30 percent of
the overall Blue Box limit, which is 1.5 percent of the average production value. The space left
for China is quite narrow. The rapid growth of agricultural expenditure and the de minimis level
of 8.5 percent (lower than for other developing Members) will gradually narrow the gap between
the bound level and actual outlays. Therefore, WTO regulations will be important factors affecting
China’s agricultural policy-making.


In the case of market access, all of China’s bound tariffs are of the simple ad valorem type.
The simple average of bound tariffs is 15.76 percent, while the trade-weighted average is 15.33
percent1, which is only one fourth of the world bound tariffs. Chinese agricultural tariffs are
relatively low on average, which means that about 94.7 percent of the products identified at the
six-digit coding level of the World Customs Organization’s harmonized system (HS-6) fall within the
first band of the proposed tariff reduction formula in the Draft Modalities, and hence are subject to
the lowest proposed reductions. Our analysis focuses on the tiered tariff reduction formula as well
as the special and differential treatment afforded to developing countries. We assume that China
will designate 5.3 percent of its HS-6 tariff lines as sensitive products, and 2 categories of special
products (SPs) (about 5 percent of the HS-6 lines) face no tariff cut. An additional 8 percent of the
HS-6 lines will face a tariff cut of 16.6 percent.


Application of the proposed tariff reduction formula will result in an overall cut of 34.1 percent—
from 15.76 percent to 10.38 percent—in the average tariffs, and 36.4 percent in the average
trade-weighted bound tariffs—from 15.33 percent to 9.75 percent. The application of the recently
acceded Members (RAMs) treatment would increase the rate to 12.34 percent. Flexibilities for
sensitive products and special products would also have strong impacts on China’s market access,
increasing the country’s bound rates to 13.30 percent: this net reduction of 15.60 percent is
well below the maximum cut of 36 percent proposed for developing countries. Although the
formula reduces tariff heterogeneity, measured by the standard deviation, flexibilities restore




viiICTSD Programme on Agricultural Trade and Sustainable Development


heterogeneity to initial levels in key products, thereby sustaining potential distortions in Chinese
agriculture. The average applied rate would fall to 7.19 percent from an initial 11.44 percent
after the formula cut, but flexibilities almost eliminate the reduction, bringing it back to 10.39
percent. In general, the overall effect of the tiered formula appears to be neutralized, because
the tariffs are distributed in only two bands, and they face similar cuts. The flexibility increases
heterogeneity in the protection pattern compared with the result after the formula cut. As a RAM
of the WTO, China has already made substantial improvements in agricultural market access.


The limited tariff rates and the tariff quota system have become the most important trade
measures that China uses to protect the domestic market. The absence of flexibility in the
ability to adjust tariffs will create significant pressure on further tariff reductions in China. The
simulation results show that the requirements on tariff escalation have limited effects at the
aggregate level. Additional liberalization of tropical and diversification products would, however,
have a noticeable impact on the overall average tariff. The impacts of the tariff reduction will
be substantial. China calls for larger reductions for developed country Members and moderate
cuts for developing country Members. It also calls for enough flexibilities to protect Chinese
agriculture and for restraint in making significant tariff reductions.







1ICTSD Programme on Agricultural Trade and Sustainable Development


The December 2008 agricultural modalities
are the result of collective efforts to further
promote progress in the WTO negotiations. In
order to enable negotiators and policymakers
to evaluate how the proposed modalities
correspond with the objectives set forth in
the Doha Development Agenda mandate, this
paper examines the implications of the Draft
Modalities for China, particularly with respect
to domestic support and market access. For this
purpose, we use data from the China Statistical
Yearbook, China Agricultural Statistics Yearbook
and information from the China Ministry of
Agriculture. Some results on domestic support
are from Fuzhi Cheng (2008).


Agricultural issues are special and sensitive in the
Doha Round negotiations. China observes WTO
regulations and implements its commitments.
The impact this has had on agricultural policies so
far has affected Chinese agriculture profoundly.
On the one hand, the export market environment
has greatly improved, and agricultural exports
have increased to a significant extent. On
the other hand, WTO accession has had some
negative effects, such as difficult structural
adjustment in the agriculture sector and
challenges faced by some vulnerable agricultural
regions and farmers. The Chinese government has
consistently attached importance to agriculture.
Due to the characteristics of Chinese agriculture,
China has taken both an offensive and defensive
stance in each of the three pillars at the WTO
negotiation. On domestic support, China
favours strict standards on Green and Blue Box
provisions, as well as the substantial reduction
of overall trade distorting domestic support
(OTDS) for developed Members. In the case of
market access, China has simultaneously argued
in favour of reductions in tariffs and expansion
of the quotas for advanced economies, so as
to reduce imbalances in tariff levels and tariff
structures. China has also called for effective
flexibilities for developing countries.


China is a country characterised by mountainous
areas which account for 69.2 percent of the


total land area, and in which the population
engaged in agricultural production represents
63.7 percent of the total. There are nearly 0.9
billion peasants, who own roughly 0.17 hectares
per person. This is equivalent to about 1/6 of
that in Japan, 1/30 of that in the European
Union (EU15) and 1/200 of that in the United
States of America. The growing scarcity of
water resources is also a major constraint on
agricultural productivity in China. The reform
of the water resource allocation mechanism
will have a notable impact on crop production
costs and international competitiveness. China’s
inadequate resources and low level of labour
productivity place it at a disadvantage in
international competition.


Chinese agriculture has some unique characteristics
from the perspective of global trade, primarily
because China is a large agricultural developing
country. Agriculture has traditionally been the
foundation of China’s national economy. Chinese
agriculture has to meet the food requirements
of over 1.3 billion people, as well as provide
a living wage and income for nearly 0.9 billion
employees. China’s agricultural GDP was
$383.42 billion in 2005, more than twice that
of either the United States or the European
Union (EU25), which ranked as the largest in the
world2. In 2006, China was the world’s largest
producer of wheat and paddy, the second largest
producer of corn, and the third largest producer
of soybeans, cotton, beef, and milk. Agriculture
plays a significant role in social development,
farmers’ employment, poverty elimination, and
food security in China.


China made some concessions in its WTO
accession negotiations. These included the
expansion of market access, the elimination
of export subsidies and reductions in domestic
support. Specifically, China reduced the
average tariff rate to 15.76 percent in 2006,
implemented tariff quota administration on
wheat, corn, rice and cotton rather than planned
management of foreign trade, and expanded
the share of quotas distributed to non-state


1. inTroduCTion




2 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


trading enterprises. China also committed to
ensuring that no single agricultural product
benefited from export subsidies. Since there
was no aggregate measure of support (AMS)
commitment and China abandoned the special
and differential treatment provisions given
to developing country Members under the
Agreement on Agriculture (AoA), the Chinese
government concentrated on Green Box support
and limited ‘de minimis’ Amber Box support.


Chinese agriculture has changed greatly as a
result of these commitments. The country’s
agricultural trade has grown rapidly since China’s
accession to the WTO. As the fifth and fourth
largest exporter and importer in the world,
respectively, the quantity and value of trade is
tremendous. In 2007, China’s agricultural imports
were worth US$ 36 billion, and its exports were
worth US$ 27 billion3. However, the opening up
of China’s agricultural market is quite recent
compared with developed countries as well
as with some other developing countries. The
complete liberalization of trade would decrease
employment by 6.6 percent and farmers’ incomes
by 3.1 percent by 2015, which would represent
the largest loss in the world (Aksoy, 2005).


The pattern of Chinese agricultural trade has
changed significantly over the past decade.
Agricultural products like fruits, vegetables,
animal products, and aquatic products have
taken up dominant status in agricultural trade,
while cotton, vegetable oil, and oil seed have
become the main import products. China’s
trade is focused on a limited number of trading
partners: imports mainly come from Argentina,
Brazil, the United States, and Members of the
Association of Southeast Asian Nations (ASEAN),
while exports are primarily to the European Union
(EU), Japan, Korea, the United States and ASEAN
countries. The structure of products and markets
keeps improving, and products are exported at
an increasingly advanced stage of processing.
However, trade protectionism is still critical
for China because of its increasingly important
status internationally and in world trade. Trade
barriers and conflicts are widespread in China’s
export markets. Developing countries compete
fiercely with China, and the costs of domestic
agriculture production keep rising. China has


become a net importer of agricultural products
since 2004, with a US$ 4.7 billion deficit . The
trade deficit has grown rapidly, owing to higher
costs in international markets and increased
imports of raw materials. The financial crisis
that began in 2008 has also affected Chinese
agricultural trade. T he trade deficit reached
US$ 18.2 billion in 2008 - 4.45 times larger than
the level in 2007.


To meet the requirements of WTO accession
and changing market conditions, the Chinese
government has adopted some positive policy
measures to support producers and enterprises
and improve the international competitiveness
of agricultural products in terms of price, quality,
and reputation. China modified its laws and
regulations in accordance with WTO rules and
strengthened the transparency of technological
measures. China also enhanced government
services to create an excellent environment for
international trade and domestic policies. Free
public information and food security monitoring
have received particular attention. Infrastructure
development, regional poverty alleviation, and
pollution control have also been given priority
by the government.


Recent developments in agriculture mark a significant
change from the past. The Chinese government has
adopted a series of new policy measures aimed at
achieving harmonized urban-rural development. As
reported by the national government, the overall
level of appropriations from the fiscal budget of
the national government for agricultural and rural
development rose from RMB 214.4 billion in 2003
to RMB 595.5 billion in 2008, of which about RMB
103 billion represented direct payments to grain
growers and price subsidies for improved seeds,
farm machinery, and other inputs.


The degree of opening of the Chinese agriculture
market is relatively high among WTO Members.
In setting up agricultural trade policies, China
takes into account the domestic and foreign
market as a whole. Adjusting foreign trade of
agriculture products and ensuring a balance of
supply and demand in the domestic market are
China’s main priorities. In 2007, the Chinese
government adjusted the tariff rate and
took other measures in accordance with WTO




3ICTSD Programme on Agricultural Trade and Sustainable Development


provisions and international conventions in
order to assure the supply of soybeans. With
respect to the promotion of agricultural exports,
China has reinforced quality administration
for agricultural products, and utilizes the
fund for agricultural trade development to
support the quality traceability system and
improve agricultural production technology.
For example, it has put in place measures to
optimise the structure of export commodities
and to improve the environment for Chinese
agricultural trade.


China has paid more attention to agricultural
development over recent years. The priorities
of Chinese agricultural policies change with
domestic and international conditions. However,
the overall goal of agricultural policy is still
to supply sufficient food at stable prices and
improve farmers’ incomes. China therefore
places high priority on ensuring a sufficient
grain supply and increasing farmers’ incomes.
Food security, environmental protection and the
improvement of agriculture productivity are also
areas of particular concern. In general, the trend
with respect to agricultural policy has been to
coordinate economic and social development in
urban and rural areas, secure the stable supply of
food, enhance the functioning of the agriculture
market, and increase income and employment.


The paper seeks to provide provisional answers to a
number of important questions. Does the modalities
text imply any changes to applied domestic support
levels in China? What are the likely constraints on
domestic support? How much ‘water’ will be cut
between bound and applied rates, and how much
actual market access will be provided by applying
the general tariff cut formula? What would be the
impact of sensitive products and special products
on Chinese exports? How would China be affected
by special flexibilities for RAMs? The paper attempts
to address these issues as a way of exploring the
domestic and international implications of an
eventual agreement on modalities.


The first two sections of the paper give an
overview of the current state of Chinese
agriculture, agricultural policies, and China’s
negotiating positions in this Round. The third
section provides an overview of China’s domestic
support policies and a discussion on binding
provisions and the potential impact of the WTO
Draft Modalities for China. We then provide an
analysis of the impact of the Draft Modalities
on market access in China. The impact analysis
focuses on tariffs with and without flexibilities.
Finally, we provide an overall assessment of
the impact of the Draft Modalities on China
and conclude with some insights concerning the
future of Chinese agricultural policies.




4 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


The Doha Round negotiation is an important
means for China to take part in developing
international trade regulations and ensuring
the sustainable development of agriculture.
China has sought to play a positive role in
contributing to the WTO negotiations.


China is recognized as one of the most
important countries in the Doha Round
negotiations. China is not only in the most
influential negotiating coalitions, the G-20 and
G-33, but also has been active in all spheres
of the negotiations, both formal and informal.
China has the full conviction that all WTO
Members will benefit from a fair and market-
oriented agricultural trade system. China
supports the long-term goals of the Doha Round
negotiation. However, trade distortions, high
tariff protection, and unbalanced rules are
problems that continue to be especially evident.
Therefore, the Chinese negotiating position has
been both offensive and defensive.


With respect to domestic support, China
supports strict standards on Green and Blue
Box provisions for developed country Members,
which might be beneficial for developing country
Members. China also calls for substantive cuts in
the OTDS and AMS of developed Members. China
supports the G-20 on the use of an AMS tiered
formula and the total AMS (TAMS) proposal, which
stipulates that developed country Members should
make larger reductions if their AMS is higher. China
holds the view that larger reductions in developed
countries’ support would improve developing
countries’ share of agricultural trade. China’s
defensive position on domestic support policies
relates to flexibilities and exceptions. The key
objective of the Chinese position is to maintain
and if possible improve special and differential
treatment for developing countries, so as to assist
low income and resource poor farmers. China also
claims that developing country Members should
not be subject to limits on Blue Box subsidies, and
the requirements for Green Box spending should
take into account developing country Members’
special circumstances.


As regards the balance between developed
and developing countries’ interests within the
domestic support pillar, it should be noted that
developed countries will not be forced to reduce
overall domestic support, since they have the
financial resources to shift support from non-
Green Box to Green Box, while developing
countries will have considerable policy flexibility
to increase non-Green Box support as well as
Green Box support as their economic situations
improve (Gifford and Montemayor, 2008). The
de minimis exemptions served as AMS limits
in China, and these limits are below the level
of other developing country Members and far
below the current AMS in developed country
Members. This leaves little room for further
support. At the same time, other WTO Members,
especially developed country Members, have
ample room to provide considerable subsidies
and support.


With respect to market access, China has
simultaneously argued for tariff reduction and
quota expansion in developed country Members
in order to eliminate high tariff rates and tariff
peaks. China has also called for effective special
and differential treatment for developing
countries. Unlike in many developed country
Members, tariffs are the only effective means
to protect agriculture since China cannot afford
to provide too much support in the form of
subsidies. The average tariff rate for Chinese
agriculture products is only 15.76 percent, less
than one fourth of the world average level.
According to the G-20, China has cut tariffs by
up to 72 percent since 1992, which is larger
than the reduction made by developed country
Members (70 percent) as well as that made by
other developing country Members (53 percent)
in the Uruguay and Doha Rounds. Reductions in
China’s tariffs would affect applied tariff levels,
while other Members still have significant room
for tariff reductions. These concerns need to be
effectively addressed, because accession to the
WTO and the unfair trade liberalization that has
taken place has substantive negative effects on
Chinese agriculture and farmers. China considers


2. CHinese negoTiaTing PosiTion




5ICTSD Programme on Agricultural Trade and Sustainable Development


it a priority for developed countries to eliminate
trade distortions and unequal rules, such as the
unequal tariff structure and differences in the
rights and obligations between developed and
developing country Members. On the defensive
side, China’s position on developing countries’
market access includes moderate tariff
reductions accompanied by flexible exceptions
and safeguards. Specifically, the tariff reduction
formula and implications of the flexibilities
including for special products, sensitive products,
the special safeguard mechanism (SSM) and RAMs
treatment, will be fully utilized. The defensive
stance aims at minimizing the impact of external
forces on Chinese agriculture.


China is a developing country Member as well as
a RAM. China and other RAMs have made great
contributions to the WTO multilateral trading
system, although agriculture is vulnerable in these
countries. Therefore, the concerns of RAMs should
be effectively addressed, particularly with respect
to the special and differential treatment of special
products (SPs) and the special safeguard mechanism
SSM. China merits the most flexible possible
provisions to reduce the pressure on producers and
ensure rural development and farmers’ benefits.
These flexibilities include a lower reduction
margin, exemption of certain sensitive products
and a longer implementation period.


China holds the view that developed country
Members should take the lead in opening their
agriculture markets, cutting domestic support that
creates trade distortions, and giving special and
differential treatment to developing Members.
Specifically, the tiered tariff formula approach
should ensure that developed Members with the
highest tariffs implement the deepest cuts. It is
proposed that developing countries use a tiered
tariff reduction formula leading to cuts one-third
smaller than those made by developed countries,
and using higher tier breakpoints. The draft
carries the concept of special and differential
treatment one step further by also providing two
special provisions that are specifically designed
for and only available to developing countries.
These include provisions for special products and
a special safeguard mechanism. For sensitive
products, developing countries would be able
to designate up to one-third more tariff lines
as compared with developed country Members,
and would be subject to a tariff quota expansion
one third smaller than that of developed
countries. China has set the pace in promoting
the liberalization of trade among WTO Members.
There is therefore relatively little room left
for further substantive concessions on special
products that are important for food security,
farmers’ livelihoods and rural development in
the new round of negotiations.




6 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


China’s agriculture policy has undergone some
fundamental changes in recent years. In the
Central Committee Document One, The Chinese
Communist Party reiterated that increasing
farmers’ income is at the top of the government’s
agenda. Policies include direct payments to
farmers, subsidies for improved quality seeds and
price subsidies on machines, fertilizer, electricity,
irrigation, and fuels as well as elimination of the
agricultural tax and minimum support prices.


These policies represent obvious transitions in
the government’s policy stance, from taxing
agriculture to supporting it, and reflect the
Chinese leadership’s renewed attention to
agricultural problems. The changes in domestic
support policies have resulted in higher support for
the agricultural sector and give rise to questions
concerning whether China has complied or would
comply with its WTO commitments on domestic
support for agriculture.


3. doMesTiC suPPorT


3.1 analysis of Past and Projected ‘shadow’ WTo notifications


China submitted the document on domestic
support in 1996-1998 on 19 July 2001 (WT/ACC/
CHN/38/Rev.3) in preparation for the working
party meeting. The most recent domestic
support notification was submitted on 10 January
2006 (G/AG/N/CHN/8). Table 1 provides a
summary of China’s domestic support in 1996-
2001. According to the notifications, China’s
domestic support in this period has been well
below the limits agreed at the WTO accession.


Green Box support has increased year by year,
from RMB 112 billion in 1996 to RMB 242 billion
in 2001. Within China’s Green Box, general
services are the largest component, accounting
for more than 50 percent of the total Green Box.
China has made no payments for marketing,
income insurance, producer retirement
programs, resource retirement programs, or
investment aids. Also, China has not made
direct payments to producers that are not linked
to production decisions (decoupled income
support). During this period, China’s Green Box
policies were targeted at social development,
such as through public stockholding for food
security, infrastructure, poverty alleviation,
environmental protection and so forth.


China had a zero current total AMS during the
period examined, and so, the de minimis (8.5
percent of value of production) exemptions4


served as limits to AMS. As Table 1 shows, China
has a large, negative market price support for
specific products. For non-product specific
AMS, the main items were input subsidies


and interest subsidies5. Up until now neither
the product specific de minimis nor the non
product specific de minimis have imposed real
constraints on domestic support in China. This
may have something to do with the limited
government revenue.


The domestic support data in 2002-2005
presented in Table 3 are from the IFPRI
Discussion Paper 00793 “China: Shadow WTO
Agricultural Domestic Support Notifications”
by Fuzhi-Cheng (2008), who calculated the
support level utilizing the same methods laid
out in the existing official notifications. Because
of some differences on statistics calibers, the
Green Box support level calculated by Cheng in
2002 was below the level notified to the WTO
in 2001. Since the Green Box is exempted from
reduction, this difference has nothing to do
with analyzing the trends of the Green Box in
2002-2005, but may have some impact on the
projected Green Box support level in 2008-
2013, which is measured according to the level
of former years.


China’s Green Box support reached RMB 276
billion in 2005. Within the Green Box, general
services and public stockholding for food security
purposes were still the two largest components
in 2002-2005. Both of these items increased in
2002-2004 but appreciably declined in 2005.
The outlays for the agricultural environment
programme, regional assistance programmes
and relief from natural disasters increased,
while domestic food aid dropped sharply.




7ICTSD Programme on Agricultural Trade and Sustainable Development


From 2002 to 2005, the administered prices for
product specific support were below the fixed
reference price (1996-1998 average border
price), which resulted in negative market
price protection. The interest subsidies for
cotton were cancelled in 2001. Since 2002,
China has started to provide improved quality
seed subsidies to farmers.6 These grew from
RMB 330 million in 2003 to RMB 3870 million
in 2005. However, taking the improved quality
seed subsidies into account, the product
specific support level was still negative.


Non product specific AMS increased from RMB
10.4 billion in 2002 to RMB 58.6 billion, or nearly
1 percent of the total value of production,
in 2005. Since China has strengthened the
support for agriculture inputs, including farm
machinery, fertilizers, fuels, pesticides and
so on, the overall trend of input subsidies was
rising, though it presented a decline in 2003.
The interest subsidies had grown significantly
from 2004 (Cheng, 2008). So far only a few
studies pay attention to water prices in China.
Given that the water market is still in its
infancy, it is difficult to derive the equilibrium
price of water and/or implicit subsidies.
However, mis-allocation of water resources is


apparent, leading to underestimation of farm
production costs. It is likely to alter the picture
of domestic support substantially if water is
priced at shadow cost.


In addition to input subsidies and interest
subsidies, China introduced direct payments
to nationwide farmers in 2004. The total direct
payments reached RMB 11.6 billion and 13.2
billion in 2004 and 2005(MOF, 2006). There is
a dispute about whether the direct payments
are trade-distorting in China, because each
province could set its own method for
granting subsidies. Thus, the subsidy varied
across regions and commodities. In this paper,
we treat it as non-product specific AMS. The
total AMS (product specific support together
with non product specific support) in China in
2002-2005 was within the de minimis caps.


Figure 1 graphs the trend of support notified and
estimated under Green Box, product specific
AMS, non product specific AMS, and de minimis.
Green Box support increased gradually, while
non-product specific AMS showed a mixed
trend in 1996-2003, and continued to increase
in 2004 and 2005. Product specific AMS has
remained negative.


3.2 The draft Modalities on domestic support


The revised Draft Modalities for domestic
support (December 2008), as they would apply
to China, are summarized in Table 4. China has
no final AMS commitments and historical Blue
Box measures. In addition, as a developing
country, China is not duty bound to include
the special and differential treatment (Article
6.2 of AoA) in the AMS. According to the Draft
Modalities, developing countries without a total
AMS commitment are only required to schedule
their base OTDS, but not to undertake reduction


commitments in OTDS and total AMS. The base
OTDS for China is 22 (8.5+8.5+5) percent of the
average total value of agricultural production
in the 1996-2001 base period. China is entitled
to make Blue Box payments account for 5
percent of the average value of production. As
to product specific Blue Box limits, the total
applicable product specific Blue Box cap is 30
percent of the overall Blue Box limit, and the
maximum for any single product is 10 percent
of the overall Blue Box limit.


3.3 impact of the domestic support Modalities


To analyze the impact of the Draft Modalities on
China, there are two basic facts that need to be
emphasized. First, the average net income of
rural residents was RMB 4140, while the average
disposable income of urban residents was RMB


13786. Thus, the absolute gap between urban
and rural incomes continued to widen (MOA,
2008). Second, China had been taxing agriculture
up until 2006. Compared with other countries,
the subsidies to farmers in China are low. Based




8 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


on these two facts, the government is obliged
to strengthen support for agriculture as well as
to promote social harmony and stability.


To project the supports in 2008-2013, Cheng
(2008) used four assumptions. First, the
projection of the Green Box, non product
specific AMS support and quantity of production
is based on a linear extrapolation of historical
figures for the period of 1996-2005. Second,
because of the uncertainty of the continuous
provision of some new subsidies (e.g., improved
quality seed subsidies and farm machinery
subsidies), they were not included in the
projection. The subsidies related to irrigation,
electricity and fuel were also excluded. Third,
China will not report any Blue Box spending.
Finally, as to the market price support, given
the soaring inflation rates at the end of 2007,
Cheng assumed two possible administered
price rise trends. One is “High Price,” which
increases 20 percent in 2008-2010 and a further
20 percent in 2011-2013; the other is “Medium
Price,” which increases 10 percent in 2008-2010
and a further 10 percent in 2011-2013. At the
same time, each of the assumed administered
price increase scenarios will remain effective
for three consecutive years, i.e., 2008-2010
and 2011-2013.


Table 5 presents preliminary estimates of
China’s domestic support for 2006-2007, and
a projection of major aggregates to 2013 from
Cheng (2008). The Green Box expenditures
may increase to nearly RMB 461 billion by
2013. According to the amended Green Box
in the draft modality, China needs to clarify
the support made to farmers. Marketing and
promotional services, as well as infrastructure
services support are the two possible measures
that China would add in 2008-2013. Along with
the gradually increased expenditure allocated
to agriculture, rural areas and peasants, China
is likely to take advantage of new flexibilities
for developing countries in the Green Box.


If current commodity programmes are to be
continued, e.g. only the administered price
to wheat and rice are applied, China will
absolutely comply with its commitments under
the medium-price scenario. Under the high-


price scenario, the price support to wheat
may exceed its de minimis limit in 2011-2013.
Considering the four commodity programmes
(price support extended to cotton and corn),
the support to cotton will exceed the de
minimis from 2008 in the high-price scenario,
and exceed it from 2011 in the medium-price
scenario. The product specific support limits
will have substantial impacts for China.


The non product specific support increases
gradually. Compared with the non product
specific AMS limits (8.5 percent of total value
of production) in 2008-2013 from Table 5, the
subsidies are small, even less than 10 percent
of the limits. However, it should be emphasized
that ignoring the subsidies to farm machinery and
integrated agricultural inputs is not in line with
reality given the large scale of budget outlays
in recent years. Given the current situation, we
adjusted Cheng’s non product specific supports
projection by adding these subsidies from the
annual report of China’s Ministry of Finance, as
presented in rows in italic format in Table 5.
The budget outlays in 2006-2009 are far beyond
Cheng’s projection, at almost eight times the
amount of his calculations for 2009. Though it
is also below the de minimis level during 2006-
2009, the projection for 2010-2013 based on real
budgets may exceed the de minimis level, which
means the non product specific support limits will
have a substantial impact for China.


Although China may have ample flexibilities to
extend domestic support under the new Blue
Box provisions, measures in compliance with the
Blue Box disciplines have different impacts on
agricultural production and trade, and thus are
not equally effective with respect to achieving
the same policy objectives. This means that
measures under the Amber Box and the Blue Box
are not totally substitutable. This difference is
important in WTO negotiations since China and
many other developing countries still place a
high priority on food security, while developed
countries usually focus more on farm income .


The new Blue Box implies that China has ample
flexibilities to extend domestic support up to
RMB 108 billion overall (5 percent of total value
of production), but the actual applicable space




9ICTSD Programme on Agricultural Trade and Sustainable Development


for total product specific Blue Box support is only
30 percent of the overall Blue Box limit, that is
1.5 percent of the total value of production.
The product specific Blue Box limit is easy to
reach, because of the large production of some
key products. For example, cotton production in
2007 was RMB 101.6 billion (MOA, 2007). Once
China begins to provide Blue Box supports, the
product specific Blue Box limits will become a
severe constraint.


In general, the domestic support issue in the
WTO revised Draft Modalities for agriculture
has limited impacts on China’s current
commitments, but it will be one of the main
factors affecting China’s future policy-making.
The rapid growth of agricultural expenditure


and the limit of 8.5 percent of the value of
production for the de minimis level (lower
than other developing country Members) will
gradually narrow the gap between the bound
level and actual outlays. Market price support
for certain key commodities may exceed the
limits under high-price (wheat and cotton)
and medium-price (cotton) scenarios. The non
product specific support is far below the limit
level when recent subsidies are ignored, but
may be close to the limit level if the recent
subsidies are taken into account. The total Blue
Box limit is RMB 108 billion (5 percent of the
average value of production) overall, but the
total actual applicable space for the product
specific Blue Box is strictly constrained to only
10 percent of the total Blue Box limit.




10 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


China is a RAM of the WTO, and one of the least
protected markets for agricultural products in
the developing world. China acceded to the
WTO in 2001. It abolished non-tariff measures,
such as import licensing, quantity restrictions
and so on, and reduced the level of tariffs on
agricultural products during the process of
implementing its accession commitments.
China’s average agricultural tariffs dropped
from 21 percent in 2001 to 15.76 percent in 2005,
which represents a reduction of 67 percent
compared with the level of the base tariff in
the Uruguay Round. Some of the agricultural
products’ tariff rates (such as rapeseed) were
reduced by more than 90 percent. China
applied tariff quota administration on ten
kinds of staple agricultural products, such as
grain, cotton, oil plants, sugar and so forth.
The government also improved and perfected
the quota administration. For example, it
expanded the proportion of quota allocated
to non-state trading enterprises and increased
the quantity of quotas that were subject to
in-quota tariff rates of between 1 and 10
percent. As a RAM of the WTO, China has
made substantial improvements in agricultural
market access.


At present, China’s agricultural tariff rate is low,
and the average of bound tariffs is 15.76 percent,
which is only one fourth of average world bound
tariffs. All of the bound tariffs are of the simple
ad valorem kind; the tariff structure is unitary;
and there is no complex bound tariff that can
provide recessive protection against agricultural
imports. The applied tariffs are identical to the


bound tariffs, and the highest tariffs are bound
at 65 percent, hence there are no tariffs peaks.
The quantity of tariff quota in China is large
and exceeds 5 percent of products’ domestic
consumption established by the Uruguay Round.
For example, wheat is 9 percent, sugar is 20
percent, and wool is 72 percent.


Therefore, the level of protection from
agricultural imports in China cannot be a real
obstacle to trade, and can only affect imported
products’ prices. The limited tariff rates and
the tariff quota system have become the most
important trade measures: these are used
to adjust agricultural imports and exports,
to balance processing and consumption of
agricultural products, as well as to promote
agricultural development and improve farmers’
incomes. There is great pressure for further
tariff reductions in China, but the impact of any
tariff reduction will be substantial.


In the market access negotiation, China
argues that the Members with high tariff rates
should undertake larger reductions. The key
point is to reduce the tariff peaks and tariff
escalation in order to eliminate or reduce
the huge differences and unevenness among
WTO Members. China insists on effective
special and differential treatment being
granted to developing country Members
and RAMs, and ensuring that flexibilities
are provided for special products, in order
to address the problems of food security,
farmers’ livelihoods, rural development and
poverty elimination.


4. MarKeT aCCess


4.1 Market access Measures


All of China’s bound tariffs on agricultural products
are of the ad valorem kind, as are most applied
tariffs, except for those on three products: the
frozen cut and edible offal of chicken (HS 020714);
the cold or frozen gizzard of chicken (HS 05040021);
and cotton that has not been carded or combed
(HS 520100), of which the out-of-quota imports are
subject to a sliding tariff as interim duty.


Table 6 shows the bound tariff of China’s
agricultural products. The simple average of
bound tariffs is 15.76 percent (calculated on
HS-6 digit level).7 The trade-weighted average
tariff is 15.33 percent, which is a little lower
than the simple average.8 The trade value
column of Table 7 shows that the important
agricultural imports are oilseeds (chapter 12)




11ICTSD Programme on Agricultural Trade and Sustainable Development


and vegetable oil (15); cereals (10); and inputs
for the textile industry and clothing industry:
cotton (52), hides and skins (41), and wool (51).
The import value of these 6 chapters accounts
for 76 percent of the total value of agricultural
products in China.


The tariff revenue column of Table 7 reflects
the relationship between trade and tariff
rates of agricultural products and shows how
the present trade policy attaches importance
to sectional products. If the trade value in a
chapter is larger or tariffs are higher, tariff
revenue is likely to be higher, such as chapters
52, 10, 51, 15, 12 and 17. The calculated


results suggest that these six chapters account
for about 80 percent of the total incidence of
Chinese agricultural protection.


The last column of Table 7 shows the bound
tariffs for each chapter. Six chapters have an
average bound tariff rate below 10 percent: live
animals chapter (01); live trees (06); oil seeds
(12);food residues (23); hides and skins (41);
and other vegetable fibres (53). In comparison,
three chapters have an average bound rate of
more than 25 percent: milling products and
starches (11); sugar (17); and tobacco (24).
Moreover, there are 24 chapters with average
tariff rates of between 10 and 25 percent.


4.2 Tiered formula, sensitive Products, and special Products


Since the July 2004 draft WTO modalities, the
tiered tariff reduction formula has become
the focus of market access negotiations. Four
bands have been defined for both developed
and developing country Members, and RAMs
were entitled to a moderate cut. The depth of
cuts varies across bands as shown in Table 9.
The tariff reduction formula seems aggressive
relative to the Uruguay Round, with provisions
for larger proportional cuts on higher tariffs.
In accordance with the principle of special and
differential treatment, the cuts for developing
countries in each band are two thirds of those
for the developed countries, and the bands are
also wider. In addition, under the December
2008 modalities (paragraph 66) all RAMs are
entitled to exempt final bound tariffs at or
below 10 percent from reduction.


In the case of China, understanding the
implications of the formula for different
products requires taking into account both the
flexibility and the parameters of commitments.
The key elements of our analysis of the tariff
cuts that China would have to undertake are
presented in Table 10 and are based on the
December 2008 Draft Modalities. In order to
reconcile domestic political objectives with the
strict discipline of the formula, Members are
entitled to have a limited number of products
that will partially be exempt from liberalization.
In addition to the provisions concerning RAMs,


another important category of flexibility is the
provisions for sensitive products. These could be
used by developed and developing countries but
require that deviation from the formula cut be
compensated, to some extent, by the creation
or enlargement of tariff rate quotas (TRQs).
The December 2008 modalities (paragraph
78) introduce three options for developing
countries to cut tariffs by less than would
otherwise be required by the formula. The third
option is really attractive in China’s case, given
the existing large quotas and the relatively low
domestic commercial consumption. Tariffs can
be protected more easily just with a larger
deviation in the tariff cut. We assume that
China will designate 5.3 percent of its HS-6
lines as sensitive products (according to the
December 2008 Draft Modalities, paragraph 71
and 72), and the subject to one third of the
formula cut.


In addition, developing countries benefit from
‘special products’ (paragraph 129 and 131
of the December 2008 Draft Modalities) with
significantly more flexibilities than sensitive
products. There are 12 percent of tariff lines
available for self designation as SPs, of which
5 percent of lines may have no cut, and the
overall average cut shall be 11 percent. RAMs
are granted more favorable treatment: they can
designate 13 percent of tariff lines as special,
for which tariffs must be cut by an average of 10




12 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


percent. We divide SP tariff lines into two tiers:


Special products I (SP-I): 5.0 percent
of the HS-6 lines will not be subject to
tariff cuts ;


Special products II (SP-II): 8.0 percent
of the HS-6 lines with a tariff cut of 16.6
percent to realize the overall average
cut of 10 percent.


Even if sensitive and special products are
accorded different treatment, and to some
extent, respond to different motivations, they
both meet the same needs of policymakers in both
developed countries and developing countries
when the pure discipline imposed by the formula
cut may not be feasible. To be consistent with
their domestic agendas (redistribution, rural
development, food security, political factors),
some products cannot undertake the full formula
cut envisioned in the WTO Draft Modalities.
Moreover, as developing country Members
have limited resources to deal with structural
adjustment from trade liberalization, they have
additional flexibilities in the form of special
products in accordance with the principle of
special and differential treatment.


It is not clear how a developing Member would
choose its set of special and sensitive products.
There is much interesting discussion on the
issue, such as in the papers put forward by
Jean, Laborde and Martin (2008) and Gopinath
(2008). In the case of China, since the tariff
rates and the number of tariff lines in Band II
are both limited, any solution including tariff
cuts will be inferior to any other form of
flexibility, especially for some key products
that have been specified previously (Sun
Zhengcai, 2008). Therefore, we introduce
hierarchy in the use of flexibilities. Special
products with zero tariff cut are chosen first


(SP-I), followed by special products with a
tariff cut (SP-II), then, sensitive products
with as low a cut as possible.


Table 11 provides a quick overview of the results
from the above selection procedure for sensitive
and special products. The most important
products are grouped under SP-I, which accounts
for 22 percent of total imports (US$ 4825.0
million, 33 HS-6 tariff lines) and mainly includes
and Chapter 51. The remaining important
products, such as Other Animal Products (05)
and Milling Products, Starches (11), are included
in SP-II category, which includes 55 HS-6 tariff
lines. The sensitive products appear to be
very attractive and may be used to shelter the
remaining higher tariff products, which consist
of 36 HS-6 tariff lines listed in Table 11.


In the following tariff cut simulation, we use the
bound tariff and 2003-2005 import data (from
the China Customs database). Our main source
of information is IDB database and the WTO
Accession Protocol of China for bound tariffs,
and the Import Tariff of the People’s Republic
of China (various issues) for the applied tariffs.
We work at the HS-6-digit level to facilitate
international comparisons.


Table 12 presents the product distribution in each
band of the tiered formula. China’s agricultural
products could cover only the first band and the
second band. 94.6 percent of all bound tariff lines
are in the first band (tariffs below 30 percent),
representing 78.1 percent of import value. Only
5.3 percent of lines are in Band II, representing
22.0 percent of import value. The December 2008
modalities (paragraph 66) specify that all RAMs are
entitled to exempt from cuts final bound tariffs at
or below 10 percent. Therefore, we divided Band
I into two parts. The distribution characteristics
enable China to designate most products in Band
II as sensitive products and special products.


4.3 impact of the formulas for China’s Tariffs


Table 13A, 13B, and Table 14 display the
simulation results of the tiered formula. Table
13A and 13B present the average tariff and the
tariff heterogeneity (measured by the standard
deviation), Table 14 gives the trade-weighted


tariff level and the results of all bands. The
first results in these tables are those reflecting
just the tiered formula, then also the flexibility
accorded to RAMs and flexibilities for sensitive
and special products. The last five rows of







13ICTSD Programme on Agricultural Trade and Sustainable Development


Table 13A and 13B provide tariff averages for
the products belonging to different categories,
including sensitive and special products.


Applying the formula by bands in Table 14 will
result in an overall cut of 34.1 percent in the
average bound tariffs—from 15.76 percent to
10.38 percent—and a cut of 36.4 percent in
the average trade-weighted bound tariffs—
from 15.33 percent to 9.75 percent. Once
the RAMs flexibilities are also taken into
account, the cuts in average bound tariffs
are reduced to 21.7 percent while the cut
in the average trade-weighted bound tariff
becomes 22.4 percent. The bound tariffs
for sensitive products decreases to 21.7
percent from 33.6 percent, reprensenting a
decline of 35.4 percent; SP-I (with no cut)
and SP-II (with cut) fall to 28.39 percent
and 12.45 percent from 45.41 percent and
18.69 percent respectively. Following the
formula cut, the average bound tariffs of the
remaining products are down to 8.36 percent
from a previous level of 12.54 percent.


The flexibilities accorded to sensitive and
special products have strong impacts on
market access in China. The overall average
bound rate climbs back to 13.30 percent, while
the tariff cut is reduced to 15.60 percent on
average, and the average trade-weighted


bound tariff returns to 14.93 percent with
only a 2.6 percent cut. Without any flexibility,
the overall average cut appears relatively
homogenous for all chapters, from 32 percent
to 38 percent. The RAMs provision makes the
average cut for all chapters decrease quickly:
tariffs in chapter 01, 41, 50 and 53 undertake
no cut; chapters 18, 23 and 35 are cut by less
than 10 percent; and tariffs in the remaining
chapters are cut by 14 to 25 percent. Moreover,
employing flexibilities for sensitive and special
products will lead to significant further sectoral
concentration of flexibilities.


Table 13B presents the tariff heterogeneity as
measured by the standard deviation, which
is initially at 11.44 percent for the overall
average, and the coefficient of variation,
which is 72.6 percent. While application of the
tariff reduction formula reduces the standard
deviation by 34 percent, the coefficient of
variation remains almost unchanged. The
harmonizing objective of the tiered formula
appears to be neutral, because the tariffs
are distributed in only two bands and they
face similar cuts. As expected, the flexibility
increases heterogeneity in the protection
pattern compared with the pattern resulting
from the full formula cut. The standard
deviation increases to 10.39 percent and the
coefficient of variation reaches 78.1 percent.


4.4 Tariff escalation and Tropical and diversification Products


As a developing country, China is not obliged
to reduce tariff escalation (TE) nor to provide
for additional liberalisation for tropical and
diversification products (TP). Considering the latest
version of the draft modalities text, this paper
calculates the possible implications of provisions
for tariff escalation and tropical products.


At the HS-6 digit level, tariff lines on the tariff
escalation list (ANNEX D of the December 2008
Draft Modalities) represent 19.3 percent of all
agricultural products. Of these, the share of
primary products and processed products is 4.4
percent and 14.9 percent, respectively. The
share of tropical and diversification products in
ANNEX G is 19.8 percent. The import value of


tariff escalation primary products and processed
products represents 38.8 percent and 16.7
percent of all agricultural products, while the
share of tropical products is 23.5 percent.


The tariff escalation products are mostly
concentrated in vegetable preparations (chapter
20); vegetable oil (15); milling products and
starches (11); cereal preparations (19); and food
residues (23).The distribution of tariff lines is
similar to the distribution of trade value. In the
case of tropical products, tariff lines and trade
value are concentrated mainly in the following
chapters: vegetable preparations (chapter
20); oilseeds (12); edible fruit and nuts (8);
vegetables (7); and vegetable oil (15).




14 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


If the effect of the tariff escalation and
tropical product modalities is taken into
account, processed products should also
take the cut in the next highest band,
bearing in mind however that China’s
agricultural products are only distributed
in the first and second band. The rate of
reduction for the processed product should
be moderated to ensure that the final bound
rate of the processed product equates to,
but does not fall below, the final bound
rate for the primary product. Sensitive and
special products are exempt from the tariff
escalation treatment. As regards tropical and
diversification products, where the tariff is
less than 10 percent, it shall be reduced to
zero. If the tariff is greater than or equal
to 10 percent, it shall be reduced by 38.7


percent, which is the tariff cut that RAMs
must apply to tariffs in the top band.


The average tariff rate will be reduced from
13.30 percent (the rate for RAMs, taking into
account flexibilities for sensitive and special
products) to 13.25 percent and 12.68 percent
once requirements for tariff escalation and
tropical products have been factored in. The
initial average tariff will be reduced by 15.90
percent by the tariff escalation requirements,
and by 19.50 percent by the tropical product
requirements. From the different components of
the tariff reduction simulation, we see that tariff
escalation has small effects at the aggregate
level. Additional liberalization of tropical and
diversification products would, however, have a
noticeable impact on the overall average tariff.


4.5 implications of draft Market access Modalities for China’s exports


China is a big agricultural exporter, with US$
27,250 million in agricultural products exports
in 2007. This analysis will therefore also
consider China’s offensive interests. Japan is
one of the main markets for China’s agricultural
exports, representing 22.6 percent of market
share, followed by the EU (14.6 percent); the
US(12.0 percent); ASEAN (10.7 percent); and
the Republic of Korea (9.7 percent).


To assess the effects of the Draft Modalities
in creating new market access for Chinese
exporters, we apply the tariff reduction formula
to all WTO Members, taking into consideration
the special treatment for RAMs, for small,
vulnerable economies (SVE) and for LDCs. We also
calculate the impacts by applying flexibilities
like sensitive products for all WTO Members and
special products for other developing country
Members. Moreover, developed economies are
subject to additional cuts on tropical products
and products facing tariff escalation (Blandford,
Laborde, and Martin, 2008).


Table 15 and Table 16 calculate the impact of
tariff cuts facing China’s exports overall and by
chapter, which are provided by Dr. David Laborde
of IFPRI. As regards the impact on developed
country Members, the pure formula will cut the


applied tariffs faced by China by 49.4 percent,
bringing it to 8.2 percent from the initial 16.2
percent (Table 15). However, flexibilities for
developed countries will increase the applied
protection to 10.8 percent, a net reduction
of 33 percent. The impact of flexibilities on
developing countries is more profound, with a
net reduction of only 1.1 percent. SVE markets,
the most protected initially (13.9 percent) will
not grant any new market access opportunities
to China, owing to the special and differential
treatment accorded to SVEs. For the RAM group,
whose results are driven by China, applied tariff
reduction is very limited, at 0.9 percentage
points. A similar pattern appears for developing
countries (including South Korea), where the
initial average protection of 17.7 percent is cut
by 1.1 percent. Applying the tiered formula for
developing countries (non SVE, non RAM and non
LDC) would deliver a cut of 32 percent, which
brings down their tariffs to 12.0 percent.


Finally, significant liberalization will take
place only on 30 percent of China’s exports.
In the developed country markets that are
China’s main export targets (Table 15), applied
protection will be cut by 33.3 percent (5.4




15ICTSD Programme on Agricultural Trade and Sustainable Development


percentage points) from 16.2 percent to 10.8
percent. Looking at the different components
of the tariff reduction, we can see that tariff
escalation and tropical and diversification
products have small effects at the aggregate
level. The sensitive products option granted
to developed economies reduces the average
cut from 55 percent to 33.3 percent.


The sector level results in Table 16 show that
chapter 10 (cereals), which represents one fourth
of total agricultural exports, receives minimal
new market access opportunities because the
tariff cereals face only fall from 30.3 percent
to 20.1 percent. Two main factors can explain
this result. The low tariff cut for developing
countries (due to the special and differential


treatment provided and the ‘water’ in bound
tariffs) does not allow the formula to achieve
real tariff reduction. Then, flexibilities take away
any meaningful tariff reductions, since rice will
probably be regarded as a sensitive product in
developed country importers (EU, Japan) and a
special product or sensitive product in developing
countries. The other three most important
chapters (07- vegetables, 12- oilseeds, 20-
vegetable preparations) face initial protection
(16.8 percent, 26.0 percent, and 15.7 percent,
respectively), while the tariff reduction range
is 32.7 percent, 2.7 percent, and 35.0 percent.
Therefore, the tariff reduction of China’s main
export products may gain significant new market
access opportunities, which might benefit China
to some extent.




16 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


In this study, we examined the implications of
the December 2008 WTO Draft Modalities for
China. China’s overall objective is to reduce
trade distortions and open up the agricultural
market among WTO Members, as well as
ensure the tariff protection level and domestic
support space needed for the development
of Chinese agriculture. China no longer has
the policy option of promoting exports by
using export subsidies. In the future, as other
Members remove their export subsidies, China
may gain additional export opportunities, and
the competitive pressure on China’s imports
may ease. Therefore, our focus has been on
the likely impact of proposed agricultural
modalities on China’s domestic support and
market access policies.


China’s domestic support policies have changed
greatly in recent years as obvious transitions
have taken place in China’s policy stance. The
domestic support within the period we examined
shows that the modalities will have limited
impacts on China’s current commitments. The
domestic support of China has been well below
the WTO limits. Specifically, during 1996-2005,
China’s Green Box support kept increasing, but
the expenditure level is not high. China did not
have a total AMS within the period examined,
so the de minimis exemptions served as limits
to AMS. China’s product specific support is
characterised by a large, negative figure for
market price support. Input subsidies and
interest subsidies are the main items for non
product specific support. However, neither
the product specific de minimis nor the non
product specific de minimis have imposed real
constraints on China’s domestic support, owing
to the country’s limited financial resources.
China has no historical Blue Box measures.


Projections from 2008 to 2013 suggest that
the December 2008 WTO Modalities will
have substantial impacts on China’s future
commitments. Based on the assumptions used
by Cheng (2008), it is estimated that China’s
Green Box support may increase to nearly RMB


461 billion by 2013. Expenditure on general
services and public stockholding for food
security purposes will still represent the main
components. If current commodity programmes
are continued and the four commodity
programmes are taken into consideration, the
support to certain key commodities may exceed
the limits in high-price (wheat and cotton)
and medium-price (cotton) scenarios. The
non product specific support is far below the
limits level when recent subsidies are ignored,
but may be close to the limits level if they are
considered. The new Blue Box implies that
China has ample flexibilities to extend domestic
support up to RMB 108 billion overall, but the
actual applicable space is only 30 percent of
the overall Blue Box limits. Considering the
substantial production of some key products,
the product specific Blue Box limits will have a
significant impact once China begins to provide
Blue Box support. China should take WTO
regulations into consideration and be cautious
when developing agricultural policies.


China is one of the least protected markets for
agricultural products in the developing world.
The simple average of bound tariffs is 15.76
percent, while the trade-weighted average
is 15.33 percent, roughly equivalent to only
one fourth of the world bound tariffs. China’s
average tariff rate for agricultural products
dropped from 21 percent in 2001 to 15.76
percent in 2005. All of China’s bound tariffs are
of the simple ad valorem kind, and the tariff
structure is unitary. The quantity of tariff quota
in China is large, exceeding the benchmark of 5
percent of the product’s domestic consumption
that was established in the Uruguay Round.


Our analysis focused on the tiered tariff
reduction formula and on the special and
differential treatment afforded to developing
countries in the form of sensitive and special
products as well as RAMs treatment. We assumed
that China will designate 5.3 percent of its HS-6
tariff lines as sensitive products; two categories
of special products are also considered. About


5. ConCLusion




17ICTSD Programme on Agricultural Trade and Sustainable Development


5 percent of the HS-6 lines will not face tariff
reduction, and an additional 8 percent of the
HS-6 lines are subject to a tariff cut of 16.6
percent. To better understand policymakers’
preference for protecting agriculture industry,
especially their willingness to define higher and
more costly tariffs on certain products, we draw
on a related study, which leads to a selection
approach that helps us to identify potential
special and sensitive products.


Application of the proposed tariff reduction
formula will result in an overall cut from 15.76
percent to 10.38 percent in average tariffs,
while application of the RAMs treatment would
increase the rate to 12.34 percent. Flexibilities
increase the bound rates to 13.30 percent,
resulting in a net reduction of 15.60 percent, well
below the maximum cut of 36 percent proposed
for developing countries. Although the formula
reduces tariff heterogeneity, flexibilities
restore heterogeneity to initial levels in key
products that maintain tariff protection. The


standard deviation of the average applied rate
would fall to 7.19 percent from an initial 11.44
percent after the formula cut, but flexibilities
almost eliminate the reduction, bringing it
back up to 10.39 percent. All in all, the overall
average cut appears relatively homogenous
for all chapters; the RAMs provision leads to a
substantial reduction in the cut, and employing
flexibilities for sensitive and special products
weaken its impact further. The simulation
results show that the requirements on tariff
escalation have limited effects at the aggregate
level. Additional liberalization of tropical
and diversification products would, however,
have a noticeable impact on the overall
average tariff. The conclusions are consistent
with China’s offensive position in calling for
larger reductions for developed Members and
moderate cuts for developing Members. The
findings also support the defensive position
that China has taken, seeking enough flexibility
to protect Chinese agriculture and restraint in
making significant tariff reductions.




18 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


endnoTes:
1.The results are calculated on HS-6 digit level. As a recently acceded Member, the tariff


reduction committed by China was mostly fulfilled between 2001 and 2005.


2.The data are from FAO Statistical Database.


3.The trade value comes from China Customs Database.


4.In the WTO accession agreements, China agreed a de minimis exemption level of 8.5 percent
of the value of production, while for other developing countries the de minimis was 10
percent of the value of production.


5.Interest subsidies are provided to agricultural producers in poor areas through loans with
preferential interest rates.


6.The seed subsidy support level of specific commodities was not available.


7.The result calculated at HS-6 digit level is different from the result calculated at HS-8 digit
tariffs. The simple average of bound tariffs calculated at HS-8 digit level is 15.10 percent.
The difference is due to the fact that the average calculated from the HS-8 digit tariffs was
used to estimate the tariff rate of the HS-6 digit lines.


8.The trade-weighted average tariff calculated at HS-8 digit level is 15.50 percent which is
little higher than the simple average.




19ICTSD Programme on Agricultural Trade and Sustainable Development


referenCes


Aksoy, M. A. and Beghin, J. C. (2005). “Global Agricultural Trade and Developing Countries.” The
World Bank.


Agricultural Trade Office of China Agricultural Ministry and ATPC of China Agricultural Ministry eds.
(2008). China Agricultural Trade Development Report. China Agriculture Press. Beijing.China.


Cheng Fuzhi (2008) China: Shadow WTO Agricultural Domestic Support Notifications”. IFPRI Discussion
Paper 00793.


Blandford D., Laborde D. and Martin W (2008). “Implications of the February 2008 WTO Draft
Agricultural Modalities for the United States.” International Centre for Trade and Sustainable
Development (ICTSD), June 2008, Geneva.


Gifford M and Montemayor R. (2008). “An Overview Assessment of the Revised Draft WTO Modalities
for Agriculture,” ICTSD, IPC and IFPRI.


Jean, S. Laborde, D, and Martin W. (2008). “Formulas and Flexibilities in Trade Negotiations: the
Case of Sensitive Agricultural Products in the WTO,” Mimeo, IFPRI, INRA and the World Bank.


Kazuhito Yamashita.(2008). “Implications for Japan of the July 2008 Draft Agricultural Modalities.”
International Centre for Trade and Sustainable Development (ICTSD), June 2008, Geneva.


MOA (Ministry of Agriculture) (2007). China Agricultural Yearbook. China Agricultural Press. Beijing.
China.


MOA (Ministry of Agriculture) (2008). China Agricultural Development Report. China Agricultural
Press. Beijing. China.


MOF (Ministry of Finance). “Improved varieties of crops subsidies” <http://www.mof.gov.cn/
nongyesi/zhengfuxinxi/zcjd/200807/t20080730_59660.html> Accessed January 5, 2008.


MOF (Ministry of Finance) (2006, 2007, 2008, 2009). “The Report about the Central and Local
Government Budgets Implementation and Draft Budgets.” China.


Gopinath M., Laborde D. (2008). “Implications for India of the May 2008 Draft Agricultural Modalities.”
International Centre for Trade and Sustainable Development (ICTSD), June 2008, Geneva.


Guo Linan, Wang Qi. (2009). “Research on Tariff Escalation in Multilateral Agriculture Negotiation.”
Forthcoming in Journal of International Trade. China.


Jean S., Josling T. and Laborde D. (2008). “Implications for the European Union of the May 2008
Draft Agricultural Modalities.” International Centre for Trade and Sustainable Development (ICTSD),
June 2008, Geneva.


NBS (National Bureau of Statistics)(2008). “2007 National Economic and Social Development
Statistical Bulletin.”


OECD (2005). “OECD Review of Agricultural Policies:China”. Paris.




20 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Sun Zhengcai eds (2008). “Multilateral Trade Negotiation and China’s Agricultural Development.”
China Agriculture Press.


Tian Xiaojing, Tian Zhihong (2009). “Analysis on Tropical and Diversification Products in Multilateral
Trade Negotiation.” Forthcoming in Journal of International Trade. China.


Wang Qi, Sun Yonghua, Tian Zhihong(2007). “On the Research of Statistical Scope of International
Agricultural Trade.” Fourth International Conference on Agricultural Statistics (ICAS-IV).


World Trade Organization (2008). “Revised Draft Modalities for Agriculture.” WTO Committee on
Agriculture, TN/AG/W/4/Rev.4. Geneva.


World Trade Organization (2008). “Revised Draft Modalities for Agriculture.” WTO Committee on
Agriculture, TN/AG/W/4/Rev.3. Geneva.


World Trade Organization (2008). “Revised Draft Modalities for Agriculture.” WTO Committee on
Agriculture, TN/AG/W/4/Rev.2. Geneva.


World Trade Organization (2008). “Revised Draft Modalities for Agriculture.” WTO Committee on
Agriculture, TN/AG/W/4/Rev.1. Geneva.


Yao Lei, Tian Zhihong. “Understanding and Analysis on SP and SSM in New Round Agricultural
Negotiation. eds: Guo Pei.” Globalization and China’s Agriculture. China Agriculture Press. 2006:
463-467.




21ICTSD Programme on Agricultural Trade and Sustainable Development


Figure 1. China’s Domestic Support levels and Value of Production in 1996-2005


ANNEX: TABLES AND FIGURES




22 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Ta
bl


e
1.


C
hi


na
’s


O
ffi


ci
al


W
TO


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om


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99


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(


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ill


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19
96


19
97


19
98


19
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21


78
13


12
54


16
93


51
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78


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24


23
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CH
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v.


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&


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23ICTSD Programme on Agricultural Trade and Sustainable Development


Ta
bl


e
2.


C
hi


na
’s


G
re


en
B


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N


ot
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ti


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d


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s


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Pa


ym
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ts
f


or
r


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ie


f
fr


om
n


at
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as


te
rs


37
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40
42


54
53


50
23


53
17


59
56


7)
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al


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dj


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pr
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ct


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St


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ct


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al


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st
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st
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ds


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nv
ir


on
m


en
ta


l p
ro


gr
am


s
49


54
54


60
56


20
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12


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io


na
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ss
is


ta
nc


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pr


og
ra


m
s


60
00


10
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0
11


00
0


12
86


9
12


49
3


13
48


7


To
ta


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11


21
78


13
12


54
16


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51


18
43


35
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99


24
23


32


So
ur


ce
:


W
T/


AC
C/


CH
N


/3
8/


Re
v.


3
&


G
/A


G
/N


/C
H


N
/8


.




24 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Table 3. China’s Shadow Domestic Support Notification (Million RMB)


Measure Type 2002 2003 2004 2005


Green Box


a) General services 115284 124829 140616 137021


b) Public stockholding for food
security purposes 48172 52264 62079 53746


c) Domestic food aid 160 128 128 93


d) Decoupled income support 0 0 0 0


e) Income insurance and income
safety-net programs 0 0 0 0


f) Payments for relief from natural
disasters 5808 7216 7725 9276


i) Structural adjustment assistance
provided through investment aids 0 0 0 0


j) Environmental programs 33346 46862 51994 55386


k) Regional assistance programs 12926 16062 17195 20646


Total 215696 247361 279737 276168


AMS


Product-Specific AMS -65152 -49878 -40136 -53146


Wheat -28275 -20973 -7193 -11902


Rice -25126 -18831 -26919 -32385


Corn -11751 -10404 -8874 -12729


Other non-exempt PS Support 0 330 2850 3870


Non-Product-Specific AMS 10391 6370 27314 58554


Input Subsidies 9871 6051 14952 43096


Interest Subsidies 520 319 787 2268


Direct payment to farmers 0 0 11575 13190


Total (before de minimis) -54761 -43508 -12822 5408


Total (after de minimis) 0 0 0 0


8.5% of Total Value of Production 198783 207476 257653 279855


Source : Fuzhi Cheng (2008).
Note: 1. In calculating the market price support, reference prices are fixed, 1996-1998 average border prices.
2. Other non-exempt product specific support included improved quality seed subsidies.
3. Input subsidies were primarily price subsidies for means of production provided to agricultural input
manufacturers, including fertilizer, pesticide and mulching film firms.
4. Interest subsidies are provided to agricultural producers through loans with preferential interest rates.
5. Cheng (2008) assumed direct payments to farmers were Green Box. However, to follow the mainstream
method, this paper considers the direct payments to farmers as non-product specific support.




25ICTSD Programme on Agricultural Trade and Sustainable Development


Table 4. Main Domestic Support Provisions of the Draft Modalities and China’s
Commitments


Categories Draft Modalities China’s Commitments


OTDS


Base Level
Final bound total AMS +10 percent (or
20 percent) VOP + higher of average
blue box payment or 5 percent VOP


22 percent of VOP


Reduction Tiered reduction No reduction


Total AMS


Base Level Final bound values in 2000 0


Reduction Tiered reduction No reduction


PS AMS


Cap Base period average PS AMS de minimis


De Minimis


Reduction 50% or 60% No reduction


Blue Box


Overall Cap 2.5% or 5% VOP 5% VOP


PS Cap Base period average PS support


No more than 30 percent of the
overall blue box limit for the
total applicable PS blue box cap
and no more than 10 percent for
any single product


Cotton


AMS Formula reduction No reduction


Blue Box 1/3 of PS Blue Box cap 1/3 of PS Blue Box cap


VOP


Base Period 1995-2000 average 1996-2001 average


Source: Fuzhi Cheng (2008) and TN/AG/W/4.
Notes: VOP is the abbreviation of the average total value of agricultural production.




26 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Table 5. Projection of China’s Notifications under Current WTO Commitments
2006-2013 (Million RMB)


Policy Category 2006 2007 2008 2009 2010 2011 2012 2013


Green box 317235 337809 358383 378957 399531 420105 440679 461253


PS Support


High Price


A: Total (before de
minimis)


-62665 -62802 -21486 -20793 -20099 33331 35022 36713


Total (after de minimis) 0 0 7874 8107 8341 40099 41134 42168


B: Total (before de
minimis)


-42294 -43778 -24504 -23875 -23246 296 1060 1823


Total (after de minimis) 0 0 0 0 0 13832 14152 14472


Medium Price


A: Total (before de
minimis)


-62665 -62802 -42213 -41935 -41657 -17208 -16473 -15738


Total (after de minimis) 0 0 0 0 0 9311 9564 9818


B: Total (before de
minimis)


-44294 -43778 -33882 -33310 -32737 -21662 -21028 -20393


Total (after de minimis) 0 0 0 0 0 0 0 0


NPS Support


Total (before de minimis) 10,751 10,373 10,355 13,624 13,350 13,816 13,803 13,420


Omitted Subsidies Items 14,349 33,527 56,945 93,976


Adjusted Total NPS
Support


25,100 43,900 67,300 107,600


Total (after de minimis) 0 0 0 0 0 0 0 0


8.5% of Value of
Production


261,635 272,525 283,416 294,306 305,197 316,087 326,977 337,868


Current Total AMS


High Price:A 0 0 7,874 8,107 8,341 40,099 41,134 42,168


High Price:B 0 0 0 0 0 13,832 14,152 14,472


Medium Price:A 0 0 0 0 0 9,311 9,564 9,818


Medium Price:B 0 0 0 0 0 0 0 0


OTDS ( High Price:A) -51,914 -52,429 -11,131 -7,169 -6,749 47,147 48,825 50,133


Source: Fuzhi Cheng (2008). The rows “Omitted Subsidies Items” and “Adjusted Total NPS Support” are added
by the authors. The omitted subsidies items are farm machinery subsidies, direct payments to farmers and
integrated agricultural input subsidies, which are assumed to be zero by Cheng when projecting .The data are
from MOF (2006, 2007, 2008, 2009).
Note: 1. To project the market price support, reference prices are fixed, 1996-1998 average border prices.


2. High price: administered price increases 20 percent in 2008-2010 and 2011-2013, respectively. Medium price:
administer price increases 10 percent in 2008-2010 and 2011-2013, respectively.
3. A: program covered commodities include wheat, rice, corn and cotton. B: program covered commodities include
wheat and rice.
4. PS support only includes market price support.


5. Projection of Green Box, NPS support and production is based on linear regression.v




27ICTSD Programme on Agricultural Trade and Sustainable Development


Table 6. China’s Bound Tariffs on Agricultural Products


Simple average(%) Trade-weighted average(%)


All products 15.76 15.33


Note: The import value (2003-2005 average) are used for calculating weights of the products.




28 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Table 7. China’s Agricultural Imports and Tariffs by HS Chapter


HS2 Chapter Title Trade(Million USD)
Tariff Revenue


(Million USD)
Bound


Tariff(%)
01 Live Animals 148.7 1.8 5.9


02 Meat and Offal 606.7 66.9 18.0


04 Dairy Products 420.1 37.9 15.0


05 Other Animal Products 227.8 34.1 12.6


06 Live Trees 55.1 2.0 7.9


07 Vegetables 390.1 31.1 10.7


08 Edible Fruit and Nuts 590.6 95.5 18.7


09 Coffee, Tea and Spices 34.0 4.3 13.9


10 Cereals 1352.2 663.6 24.9


11 Milling Products, Starches 170.1 25.1 25.4


12 Oil Seeds 7064.3 184.1 8.6


13 Gums and Resins 57.4 6.5 10.1


14 Vegetable Planting 76.1 5.7 11.1


15 Animal/Vegetable Fats/Oils 3465.0 317.3 12.9


16 Prepared Meat 4.3 0.6 14.6


17 Sugar 334.5 146.7 29.9


18 Cocoa and Preparations 143.1 14.7 11.0


19 Cereal Preparations 194.3 28.7 18.8


20 Vegetable Preparations 144.3 18.5 21.0


21 Miscellaneous Food 364.1 72.5 22.0


22 Beverages and Spirits 285.7 32.1 21.8


23 Food Residues 181.5 10.1 5.6


24 Tobacco 328.1 44.1 29.1


29 Organic Chemicals 13.3 1.8 12.0


33 Essential Oils/Perfumery 60.1 11.0 19.3


35 Albuminoids 171.8 18.3 10.6


38 Misc Chemicals 11.7 1.3 14.4


41 Hides and Skins 1211.7 69.7 7.0


43 Furs 131.2 21.4 19.5


50 Silk 11.1 1.0 8.4


51 wool 1044.4 388.3 20.9


52 Cotton 2534.7 1007.7 22.0


53 Other Vegetable Fibers 204.4 12.3 6.0


all all 22032.6 3376.7 15.8


Note: The tariff revenue column does not display actual duty collection, it is a substitute computed by multiplying
the tariffs and import value (2003-2005 average).




29ICTSD Programme on Agricultural Trade and Sustainable Development


Table 8. China’s TRQs and Imports


Products Quota(1000 ton)
Import under TRQ (1000 ton)


2002 2003 2004 2005 2006


Wheat 9636 632 450 7260 3540 610


Corn 7200 10 <5 <5 <5 70


Rice 5320 237 260 770 520 729


Soya-bean oil 3587.1 870 1880 2520 1690


Palm oil 3168 1695 2330 2390 2840


Rape-seed oil 1243 78 150 350 180


Sugar 1945 1183 780 1210 1390 1370


Wool 287 191 170 220 250 280


Cotton 894 177 870 1910 2570 894


Note: The details of the products description are listed in WTO files G/AG/N/CHN/*.


Table 9. Tiered Formula for Agricultural Tariff Cuts


Band
Developed Members Developing Members


Range
(%)


Cut
(%)


Range
(%)


Cut
(%)


Cut (for RAMs)
(%)


I 0-20 50 0-30 33.3 0 (range 0-10)25.3 (range10-30)


II 20-50 57 30-80 38.0 30.0


II 50-75 64 80-130 42.7 34.7


IV >75 70 >130 46.7 38.7


Average Cut Min 54 Max 36


Table 10. Key Factors Concerning the Tariff Cuts Used in the Analysis


Bands 0/30/80/130


Proportional cut 25.3 (no cut when tariffs at or below 10 percent)/30.0/-/-


Average cut limited to 36%


Sensitive Products 5.3% of HS6 tariff lines with one third of the formula cut


Special Products I 5% of HS6 tariff lines with no cut


Special Products II 8% of HS6 tariff lines with a 16.6% cut




30 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Table 11. Distribution of Sensitive and Special Products


HS2 Chapter Title SE SP I SP IINumber Million USD Number Million USD Number Million USD


02 Meat and Offal 0 4 0.1 38 8.7


04 Dairy Products 0 2 0.5 4 4.0


05 Other Animal Products 0 0 1 127.5


08 Edible Fruit and Nuts 8 28.0 0 0


10 Cereals 0 7 1004.9 0


11 Milling Products, Starches 0 8 11.8 10 19.8


15 Animal/Vegetable Fats/Oils 1 6.7 0 0


17 Sugar 0 4 277.7 0


20 Vegetable Preparations 9 11.6 0 1 0.4


21 Miscellaneous Food 5 237.1 0 0


22 Beverages and Spirits 9 60.6 0 0


24 Tobacco 4 54.6 0 0


51 Wool 0 6 1016.1 1 0.1


52 Cotton 0 2 2514.1 0


all all 36 398.5 33 4825.0 55 160.5


Table 12. The Distribution of Products Across the Bands of the Tiered Formula


BandⅠa


(%)
BandⅠb


(%)
BandⅡ
(%)


BandⅢ
(%)


BandⅣ
(%)


Number of HS6 lines 39.1 55.5 5.3 0 0


Import Trade Value 68.2 9.9 22.0 0 0


Note: a - The products that have tariff rates less than or equal to 10 percent and are free of reduction for the
RAMs; b - Other products in the first level of the tiered formula.




31ICTSD Programme on Agricultural Trade and Sustainable Development


Table 13A. Implications of the Tiered Formula for China’s Tariffs: Average Tariff


HS2 Chapter Title
Average Tariff(%)


Initial
Developing


Member
Developing


Member+RAMs
Formula+SE+SP


01 Live Animals 2.5 1.7 2.5 2.5
02 Meat and Offal 13.0 8.6 9.8 11.0
04 Dairy Products 10.1 6.8 8.2 8.7
05 Other Animal Products 4.5 3.0 3.6 3.7
06 Live Trees 6.2 4.1 5.4 5.4
07 Vegetables 6.7 4.5 5.3 5.3
08 Edible Fruit and Nuts 13.1 8.8 10.2 10.5
09 Coffee, Tea and Spices 10.3 6.9 8.0 8.0
10 Cereals 18.9 11.8 13.6 18.9
11 Milling Products, Starches 25.4 16.3 18.8 23.5


12 Oil Seeds 3.5 2.3 2.9 2.9
13 Gums and Resins 7.0 4.7 5.8 5.8
14 Vegetable Planting 8.8 5.8 7.3 7.3
15 Animal/Vegetable Fats/Oils 12.2 8.1 10.4 10.5
16 Prepared Meat 10.1 6.8 7.6 7.6
17 Sugar 24.3 15.7 18.3 21.6
18 Cocoa and Preparations 11.0 7.3 10.1 10.1
19 Cereal Preparations 16.5 11.0 12.4 12.4
20 Vegetable Preparations 11.4 7.6 8.7 9.0
21 Miscellaneous Food 17.2 11.2 12.7 13.4
22 Beverages and Spirits 20.5 13.2 15.7 17.2
23 Food Residues 4.4 2.9 4.3 4.3
24 Tobacco 27.3 17.4 20.2 22.4
29 Organic Chemicals 12.0 8.0 9.6 9.6
33 Essential Oils/Perfumery 11.9 7.9 8.9 8.9
35 Albuminoids 9.1 6.1 8.2 8.2
38 Misc Chemicals 14.4 9.6 11.1 11.1


41 Hides and Skins 5.7 3.8 5.7 5.7
43 Furs 17.5 11.7 13.1 13.1
50 Silk 3.3 2.2 3.3 3.3
51 Wool 16.8 10.6 12.4 16.7
52 Cotton 22.0 13.9 17.2 22.0
53 Other Vegetable Fibres 6.0 4.0 6.0 6.0
all all 15.76 10.38 12.34 13.30
all No_SE and Non-SP 12.54 8.36 10.22 10.22
all SE 33.60 21.70 24.39 27.65
all SP with cut 18.67 12.45 13.94 15.64
all SP with no cut 45.41 28.39 32.02 45.41




32 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Table 13B. Implications of the Tiered Formula for China’s Tariffs: Standard Deviation


HS2 Chapter Title
Standard Deviation (%)


Initial
Developing


Member
Developing


Member+RAMs
Formula+SE+SP


01 Live Animals 3.4 2.2 3.4 3.4
02 Meat and Offal 4.6 3.0 3.3 4.3
04 Dairy Products 4.3 2.9 2.4 3.3
05 Other Animal Products 5.7 3.8 4.0 4.1
06 Live Trees 7.3 4.9 5.3 5.3
07 Vegetables 3.6 2.4 2.4 2.4
08 Edible Fruit and Nuts 7.5 5.0 5.0 5.7
09 Coffee, Tea and Spices 5.0 3.3 3.3 3.3
10 Cereals 30.7 18.9 21.1 30.7
11 Milling Products, Starches 20.2 12.3 13.5 20.9


12 Oil Seeds 6.8 4.5 5.1 5.1
13 Gums and Resins 5.4 3.6 3.9 3.9
14 Vegetable Planting 4.3 2.9 2.7 2.7
15 Animal/Vegetable Fats/Oils 5.9 3.9 3.5 3.7
16 Prepared Meat 0.9 0.6 0.7 0.7
17 Sugar 16.3 10.0 10.5 16.4
18 Cocoa and Preparations 4.1 2.7 2.3 2.3
19 Cereal Preparations 5.8 3.9 4.1 4.1
20 Vegetable Preparations 7.0 4.7 4.8 5.3
21 Miscellaneous Food 7.1 4.4 4.6 5.8
22 Beverages and Spirits 17.5 10.7 11.5 13.8
23 Food Residues 2.1 1.4 1.4 1.4
24 Tobacco 24.6 15.0 16.0 19.4
29 Organic Chemicals 3.5 2.3 1.4 1.4
33 Essential Oils/Perfumery 1.4 0.9 1.0 1.0
35 Albuminoids 3.6 2.4 2.3 2.3
38 Misc Chemicals 2.3 1.5 1.0 1.0


41 Hides and Skins 1.9 1.2 1.9 1.9
43 Furs 1.7 1.1 1.2 1.2
50 Silk 1.5 1.0 1.5 1.5
51 Wool 14.2 8.6 8.8 14.4
52 Cotton 16.4 9.9 9.9 16.4
53 Other Vegetable Fibres 0.0 0.0 0.0 0.0
all all 11.44 7.19 7.70 10.39
all No_SE and Non-SP 6.65 4.43 4.54 4.54
all SE 13.95 8.30 9.42 11.12
all SP with cut 3.57 2.38 2.67 2.99
all SP with no cut 17.55 10.54 11.95 17.55




33ICTSD Programme on Agricultural Trade and Sustainable Development


Table 14. Implications of the Tiered Formula for Different Bands


Initial Developing Member
Developing


Member+RAMs Formula+SE+SP


Average Tariff


BandⅠa 7.08 4.72 - -
BandⅠb 18.42 12.28 13.75 14.27
BandⅡ 51.83 32.14 36.28 49.00


All 15.76 10.38 12.34 13.30


Weighted-Average


BandⅠa 3.64 2.42 - -
BandⅠb 1.71 1.14 1.28 1.32
BandⅡ 9.98 6.19 6.98 9.97


All 15.33 9.75 11.90 14.93


Standard Deviation


BandⅠa 3.22 2.15 - -
BandⅠb 5.16 3.44 3.85 4.36
BandⅡ 13.33 8.27 9.33 13.78


All 11.44 7.19 7.70 10.39


Note: a - The products with tariff rates less than or equal to 10 percent and free of reduction for the RAMs;
b - Other products in the first level of the tiered formula.


Table 15. Impact of Tariff Cuts on China’s Exports


(Trade-Weighted Average of Faced Tariffs)


Importer Initial Tiered Formula
TF + TP


+ TE
With


Flexibility
WTO Developed Countries 16.2% 8.2% 7.3% 10.8%


WTO Developing Countries
(non SVE, non RAMs, non LDCs) 17.7% 12.0% 12.0% 17.5%


SVE 14.2% 13.9% 13.9% 14.2%


RAMs 12.4% 10.0% 10.0% 11.5%


LDCs 13.4% 13.4% 13.4% 13.4%


Note: Thanks to Dr. David Laborde from IFPRI for providing this table. TF means tiered formula, TE denotes
tariff escalation, and TP denotes the fullest liberalization of trade in tropical and diversification products.




34 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Table 16. Impact of Tariff Cuts on China’s Exports by HS Chapters


(Trade-Weighted Average of Faced Tariffs)


HS2 Chapter Title Export(mil. USD) Initial
Tiered


Formula
TF + TP


+ TE
With


Flexibility
01 Live Animals 328.5 0.3% 0.3% 0.3% 0.3%
02 Meat and Offal 698.6 8.4% 5.5% 5.5% 6.2%
04 Dairy Products 241.1 10.9% 5.8% 5.8% 6.5%
05 Other Animal Products 907.4 1.0% 0.9% 0.9% 0.9%
06 Live Trees 63.6 2.4% 2.0% 1.1% 1.2%
07 Vegetables 2590.0 16.8% 9.4% 8.9% 11.3%
08 Edible Fruit and Nuts 911.8 11.4% 8.7% 8.3% 9.6%
09 Coffee, Tea and Spices 805.4 18.2% 11.8% 11.5% 17.3%
10 Cereals 1580.5 30.3% 19.6% 17.1% 29.1%
11 Milling Products, Starches 170.6 79.6% 45.7% 42.6% 77.0%


12 Oil Seeds 1234.9 26.0% 14.9% 14.4% 25.3%
13 Gums and Resins 86.4 10.7% 6.6% 6.1% 9.8%
14 Vegetable Planting 46.2 1.4% 1.3% 1.2% 1.3%
15 Animal/Vegetable Fats/Oils 187.5 4.6% 4.1% 3.9% 3.9%
16 Prepared Meat 940.8 19.9% 8.5% 8.5% 11.2%
17 Sugar 289.0 16.2% 10.9% 10.5% 12.5%
18 Cocoa and Preparations 78.0 15.3% 9.7% 7.2% 11.8%
19 Cereal Preparations 646.5 14.9% 9.0% 8.9% 11.4%
20 Vegetable Preparations 2613.5 15.7% 8.9% 8.8% 10.2%
21 Miscellaneous Food 624.2 11.5% 8.4% 8.4% 9.8%
22 Beverages and Spirits 695.6 9.9% 6.5% 6.5% 8.8%
23 Food Residues 450.0 5.7% 3.9% 3.9% 4.4%
24 Tobacco 514.6 30.5% 21.8% 21.8% 29.5%
29 Organic Chemicals 5.7 13.2% 9.8% 9.8% 9.9%
33 Essential Oils/Perfumery 74.9 3.4% 2.9% 2.9% 3.0%
35 Albuminoids 193.1 9.2% 6.2% 6.2% 8.3%
38 Misc Chemicals 2.3 5.4% 4.6% 4.6% 4.7%


41 Hides and Skins 2.7 0.2% 0.2% 0.2% 0.2%
43 Furs 7.1 0.2% 0.2% 0.2% 0.2%
50 Silk 250.1 31.3% 20.4% 20.4% 24.8%
51 Wool 48.3 1.5% 1.4% 1.4% 1.4%
52 Cotton 53.7 1.8% 1.5% 1.5% 1.8%
53 Other Vegetable Fibers 2.8 1.6% 1.6% 1.6% 1.6%
all all 17345.4 16.7% 10.2% 9.7% 13.7%


Note: Thanks to Dr. David Laborde from IFPRI for providing the tariff data in this table.
The export data are the average value from 2003 to 2005, calculated by the author.




35ICTSD Programme on Agricultural Trade and Sustainable Development


seLeCTed iCTsd issue PaPers


Agricultural Trade and Sustainable Development


Biofuel Production, Trade and Sustainable Development, Policy Discussion, 2009


The Implications for Burkina Faso of the July 2008 Draft Agricultural Modalities
By Abdoulaye Zonon, 2008. (Also available in French)


Implications for Mauritius of the July 2008 Draft Agricultural Modalities
By Gowreeshankursing Rajpati, 2008


Implications for Japan of the July 2008 Draft Agricultural Modalities
By Kazuhito Yamashita, 2008


Implications for Brazil of the July 2008 Draft Agricultural Modalities
By Andre Nassar, Cinthia Cabral da Costa and Luciane Chiodi, 2008


Implications for India of the May 2008 Draft Agricultural Modalities
By Munisamy Gopinath and David Laborde, 2008


Implications for the European Union of the May 2008 Draft Agricultural Modalities
By Sébastien Jean, Tim Josling and David Laborde, 2008


Implications for the United States of the May 2008 Draft Agricultural Modalities
By David Blandford, David Laborde and Will Martin, 2008


An Overview Assessment of the Revised Draft WTO Modalities for Agriculture
By Mike Gifford and Raul Montemayor, 2008


Implications of the July 2008 Draft Agricultural Modalities for Sensitive Products
Issue Paper No. 16 by Ariel Ibañez, María Marta Rebizo and Agustín Tejeda, 2008


How will the May 2008 “Modalities” Text Affect Access to the Special Safeguard Mechanism, and the
Effectiveness of Additional Safeguard Duties?
Issue Paper No. 15 by Raul Montemayor, 2008


Treatment of Special Products: Implications of the Chair’s May 2008 draft modalities text
Issue Paper No. 14 by Riza Bernabe, 2008


Value Chains and Tropical Products in a Changing Global Trade Regime
Issue Paper No. 13 by Charles Mather, 2008


Trade Effects of SPS and TBT Measures on Tropical and Diversification Products
Issue Paper No. 12 by Anne-Célia Disdier, Belay Fekadu, Carlos Murillo and Sara A. Wong, 2008


Tropical and Diversification Products Strategic Options for Developing Countries
Issue Paper No. 11 by Santiago Perry, 2008


Implications of Proposed Modalities for the Special Safeguard Mechanism: A Simulation Exercise
Issue Paper No. 10 by Raul Montemayor, 2007




36 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Trade and Sustainable Land Management in Drylands
Selected Issue Briefs, 2007


A Comparison of the Barriers Faced by Latin American and ACP Countries’ Exports of Tropical
Products
Issue Paper No. 9 by Jean-Christophe Bureau, Anne-Celia Disdier and Priscila Ramos, 2007


South-South Trade in Special Products
Issue Paper No. 8 by Christopher Stevens, Jane Kennan and Mareike Meyn, 2007


The ACP Experience of Preference Erosion in the Banana and Sugar Sectors: Possible Policy Responses
to Assist in Adjusting to Trade Changes
Issue Paper No. 7 by Paul Goodison, 2007


Special Products and the Special Safeguard Mechanism: Strategic Options for Developing Countries
Issue Paper No. 6 by ICTSD, 2005


Methodology for the Identification of Special Products (SP) and Products for Eligibility Under Special
Safeguard Mechanism (SSM) by Developing Countries
Issue Paper No. 4 by Luisa Bernal, 2005


Special Products: Options for Negotiating Modalities
Issue Paper No. 3 by Anwarul Hoda, 2005


Tariff Reduction, Special Products and Special Safeguards: An Analysis of the Agricultural Tariff
Structures of G-33 Countries
Issue Paper No. 2 by Mario Jales, 2005


The New SSM: A Price Floor Mechanism for Developing Countries
Issue Paper No. 1 by Alberto Valdés and William Foster, 2005


Competitiveness and Sustainable Development


Looking for a meaningful Duty Free Quota Free Market Access Initiative in the Doha Development
Agenda. By David Laborde. Issue Paper No.4, 2007


Impact of Origin Rules for Textiles and Clothing on Developing Countries. By Munir Ahmad. Issue
Paper No.3, 2007


Special and Differential Treatment for Small and Vulnerable Countries Based on the Situational
Approach.
Issue Paper No. 2 by Werner Corrales-Leal, Felipe Baritto, and Sarah A. Mohan, 2007.


Basic Concepts and Proposals on the use of Policy Spaces in Trade-supported Strategies for Sustainable
Development.
Issue Paper No. 1 by Werner Corrales-Leal, 2007.


Dispute Settlement and Legal Aspects of International Trade


Burden of Proof in WTO Dispute Settlement: Contemplating Preponderance of Evidence
Issue Paper No. 9 by James Headen Pfitzer and Sheila Sabune, 2009.




37ICTSD Programme on Agricultural Trade and Sustainable Development


Cross-Retaliation in TRIPS: Options for Developing Countries.
Issue Paper No. 8 by Frederick. M Abbott, 2009.


Suspension of Concessions in the Services Sector: Legal, Technical and Economic Problems.
Issue Paper No. 7 by Arthur E. Appelton, JD, 2009.


Trading Profiles and Developing Country Participation in the WTO Dispute Settlement System.
Issue Paper No. 6 by Joseph Francois and Henrik Horn, 2008.


Developing Countries, Countermeasures and WTO Law: Reinterpreting the DSU against the Background
of International Law
Issue Paper No. 5 by Andrea Bianchi and Lorenzo Gradoni, 2008.


Does Legal Capacity Matter? Explaining Dispute Initiation and Antidumping actions in the WTO.
Issue Paper No. 4 by Marc L. Busch, Eric Reinhardt and Gregory Shaffer, 2008.


Fisheries, International Trade and Sustainable Development


Fisheries, Aspects of ACP-EU Interim Economic Partnership Agreements: Trade and Sustainable
Development Implications
Issue Paper No.6, by Liam Campling, 2008


Fisheries, International Trade and Sustainable Development.
Policy Discussion Paper, by ICTSD, 2006.


Aquaculture: Issues and Opportunities for Sustainable Production and Trade.
Issue Paper No. 5 by Frank Asche and Fahmida Khatun, 2006.


Market Access and Trade Liberalisation in Fisheries.
Issue Paper No. 4 by Mahfuz Ahmed, 2006.


Trade and Marketplace Measures to Promote Sustainable Fishing Practices.
Issue Paper No. 3 by Cathy Roheim and Jon G. Sutinen, 2006.


Fisheries Access Agreements: Trade and Development Issues.
Issue Paper No. 2 by Stephen Mbithi Mwikya, 2006.


Intellectual Property Rights and Sustainable Development


Technologies Transfer in the TRIPS Age: The Need for New Types of Partnerships between the Least
Developed and Most Advanced Economies
Issue Paper No.23, by Dominique Foray. 2009


The Global Debate on the Enforcement of Intellectual Property Rights and Developing Countries.
Issue Paper No.22, by Carsten Fink and Carlos M. Correa. 2009
Intellectual Property and Competition Law
Issue Paper No.21, by Carlos M. Correa, 2007.


Intellectual Property Provisions in European Union Trade Agreements: Implications for Developing
Countries.
Issue Paper No. 20 by Maximiliano Santa Cruz S., 2007.




38 Tian Zhihong- Implications for China of the December 2008 Draft Agricultural Modalities


Maintaining Policy Space for Development: A Case Study on IP Technical Assistance in FTAs.
Issue Paper No. 19 by Pedro Roffe and David Vivas with Gina Vea, 2007.
New Trends in Technology Transfer: Implications for National and International Policy.
Issue Paper No. 18 by John H. Barton, 2007.


Trade in Services and Sustainable Development


Maritime Transport and Related Logistics Services in Egypt, by Ahmed F. Ghoneim, and Omneia A.
Helmy, Issue Paper No 8, December 2007


Opportunities and Risks of Liberalising Trade in Services in Pakistan, By Abid A. Burki, Issue Paper
No 7, December 2007


Regulatory Principles for Environmental Services and the General Agreement on Trade in Services,
by Massimo Geloso Grosso, Issue Paper No 6, December 2007


Opportunities and Risks of Liberalising Trade in Services in Mozambique, by Alberto Teodoro Bila,
Eduardo Mondlane, Hélder Chambal and Viriato Tamele, Issue Paper No 5, December 2007


Opportunities and Risks of Liberalizing Trade in Services in Tanzania, by Daima Associates Limited,
National Consultant, Issue Paper No.4, December 2007


Trade and Sustainable Energy


Climate Change and Trade on the Road to Copenhagen
Policy Discussion Paper, 2009.


Trade, Climate Change and Global Competitiveness: Opportunities and Challenge for Sustainable
Development in China and Beyond,
Selected Issue Briefs No.3 by ICTSD, 2008.


Intellectual Property and Access to Clean Energy Technologies in Developing Countries:
An Analysis of Solar Photovoltaic, Biofuel and Wind Technologies.
Issue Paper No. 2 by John H. Barton, 2007.


Climate, Equity, and Global Trade.
Selected Issue Briefs No. 2, 2007.


The WTO and Energy: WTO Rules and Agreements of Relevance to the Energy Sector.
Issue Paper No. 1 by Julia Selivanova, 2007.


Linking Trade, Climate and Sustainable Energy.
Selected Issue Briefs, 2006.


These and other ICTSD resources are available at: http://www.ictsd.org






ICTSD’s Programme on Agricultural Trade and Sustainable Development aims to promote food
security, equity and environmental sustainability in agricultural trade. Publications include:


ICTSD Project: Composite Index of Market Access (CIMA), Pilot Project on Market Access for Three Rice
Exporting Countries: Country Study Guise. By Tim Josling.


Comparing safeguard measures in regional and bilateral agreements.
By Paul Kruger, Willemien Denner and JB Cronje, Issue Paper No.22


How would a WTO agreement on bananas affect exporting and importing countries?
By Giovanni Anania, Issue Paper No.21


Biofuels Subsidies and the Law of the World Trade Organisation,
by Toni Harmer, Issue Paper No.20


Biofuels Certification and the Law of the World Trade Organisation,
by Professor Marsha A. Echols, Issue Paper No.19


US Trade Policies on Biofuels and Sustainable Development,
by Jane Earley, Issue Paper No.18


EU Support for Biofuels and Bioenergy, ‘’Environmental Sustainability’’ Criteria, and Trade Policy,
by Prof Alan Swinbank, Issue Paper No.17


The Implications for Burkina Faso of the July 2008 Draft Agricultural Modalities
By Abdoulaye Zonon, 2008. (Also available in French)


Implications for Mauritius of the July 2008 Draft Agricultural Modalities
By Gowreeshankursing Rajpati, 2008


Implications for Japan of the July 2008 Draft Agricultural Modalities
By Kazuhito Yamashita, 2008


Implications for Brazil of the July 2008 Draft Agricultural Modalities
By Andre Nassar, Cinthia Cabral da Costa and Luciane Chiodi, 2008


Implications for India of the May 2008 Draft Agricultural Modalities
By Munisamy Gopinath and David Laborde, 2008


Implications for the European Union of the May 2008 Draft Agricultural Modalities
By Sébastien Jean, Tim Josling and David Laborde, 2008


Implications for the United States of the May 2008 Draft Agricultural Modalities
By David Blandford, David Laborde and Will Martin, 2008


An Overview Assessment of the Revised Draft WTO Modalities for Agriculture
By Mike Gifford and Raul Montemayor, 2008


For further information, visit www.ictsd.org


ABOUT ICTSD


Founded in 1996, the International Centre for Trade and Sustainable Development (ICTSD) is
an independent non-profit and non-governmental organization based in Geneva. By empowering
stakeholders in trade policy through information, networking, dialogue, well-targeted research
and capacity building, the centre aims to influence the international trade system such that it
advances the goal of sustainable development.




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