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China Provides Market Increase Opportunities in WTO Negotiations

China's role in world trade has come under fire from several U.S. industries including textiles. Now soybean producers are joining in on the cry to encourage China to live up to its World Trade Organization commitments.

According to testimony given by American Soybean Association Vice President Gary Joachim, China will account for between 35-40% of total world agricultural trade gains from a new WTO agreement.

According to the preliminary Farm Bureau analysis, China will play a significant role in the final economic impact of a WTO agreement on global agricultural trade. Assuming that China is subject to whatever market access commitments are required of developing countries, the analysis indicates that China would account for 35-40% of total world agricultural trade gains from a new WTO agreement.

This amount includes 85-90% of increased global trade in soybeans and soybean oil, and 40-45% of the trade gain for soybean meal. China would also account for a substantial amount of the increase in world trade for other agricultural commodities: wheat (85-90%), corn (60-65%), barley (50-55%), poultry (45-50%), and beef (35-40%).

Joachim presented findings of the analysis prepared by the American Farm Bureau Federation at a Senate Finance Committee hearing Wednesday on U.S. China Economic Relations. "Unless China is a full participant in the market access negotiations, it is doubtful there can be enough expansion in trade to justify the concessions the United States has offered on reducing trade-distorting domestic support," he says.

Noting concerns of some members of Congress with China's $200 billion trade surplus with the United States, Joachim encouraged the Committee "to ensure that China undertakes full market access commitments in the Doha negotiations, and that the number of agricultural commodities that can be designated as 'sensitive' or 'special products' be extremely limited."

As an alternative to imposing punitive tariffs on Chinese imports and facing potential retaliation on U.S. exports to China, Joachim added, "this course of action would increase U.S. agricultural exports to China, rather than causing them to be further restricted. It is impossible to overstate the importance of China as a market for U.S. soybeans, and prospects for continued growth are excellent," Joachim says.

In 1996, the United States sold $414 million worth of soybeans to China - a significant market at that time. Last year, the value of U.S. soybean exports reached a record of nearly $3 billion - a seven-fold increase in a decade in which China emerged as the largest foreign buyer of U.S. soybeans. The 405 million bushels of U.S. soybeans exported to China in 2005 represented 40% of total U.S. soybean exports, and 13.5% of last year's U.S. soybean harvest.