Soybean imports under squeeze
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China's soybeans imports are expected to decrease as a result of the nation's World Trade Organization (WTO) entry and the supply decline will likely lead to a rise in domestic prices, sources from the Ministry of Agriculture said. The new rules released in June on genetically modified organisms (GMO) and stricter quarantine checks in China have slashed imports of soybeans over the past few months. China's WTO entry will not instantly bring down soybeans tariffs since they are already at a low level. The nation is expected to continue its existing policies in the soybean sector after China's WTO accession although the entry might bring vast changes to other agricultural sectors.
China's soybean market has opened to global traders even before China joins the WTO next month. According to sources from the Information Centre under the Ministry of Agriculture, the nation will implement a tariff rate of 3 per cent on soybeans after WTO accession. This compares with a reduction of the average duty for imported commodities from 22 per cent to 17.5 per cent, and the duty for agricultural products from 45 per cent to 14.5-15 per cent after entry.
Soybean imports are not currently subject to quota constraints. It is a different matter for the soybean oil sector in which the nation currently adopts a within-quota rate of 13 per cent, an over-quota rate of 121.6 per cent, and value-added tax of 13 per cent. After China gains WTO membership, it will establish a WTO-consistent tariff-rate quota (TRQ) system to allow in a specific quantity of imports at low duty (10 per cent or less), while imports above the set quantity will face a higher duty.
China has also committed to low, within-quota tariffs, which are expected to have a significant impact on soybean oil imports. The country is to raise the quotas for soybean oil imports to 2.59 million tons in 2005, with a within-quota rate of 9 per cent and an over-quota rate of 9 per cent. Non-tariff trade barriers will be eliminated, including a phasing out of State control over soybean oil trading. The private sector will be initially granted a 50-per cent stake in the domestic soybean oil business, and the share will gradually increase to 90 per cent.
The domestic market for soybeans is also expected to be affected by rising imports and the associated declining price of soybean oil. China has pledged to first cap and then reduce domestic support for agriculture. The country has agreed to limit the use of "trade-distorting" domestic agricultural subsidies to 8.5 per cent of the total value of its agricultural production, below the 10 per cent level the WTO allows for developing countries.
The Chinese Government has given little domestic support to soybean trade. Experts from the Ministry of Agriculture have called for more spending to encourage soybean trade, citing the sector's impact on the price of consumer goods and the costs for animal husbandry and related sectors. They said price support for the US soybean sector from the US Government's Commodity Credit Corporation since 1992 had contributed to the increase in soybean farming across the United States. Subsidies on soybeans surpassed US$2.5 billion in the United States last year. China has committed not to use export subsidies on agricultural products when it joins the WTO. The export subsidies for soybeans have already been eliminated.
With its commitment to fully abide by the terms of the WTO Agreement on Sanitary and Phytosanitary Measures, China requires all animal, plant, and human health import requirements to be based on sound science, not political or protectionist concerns. China is presently the largest soybean importer in the world. Its soybeans plantations have decreased by 10 per cent over the past four decades, now accounting for 12 per cent of the global acreage. |
