Opportunities and challenges for China s external cooperation of agriculture after the entry into the WTO

Opportunities and challenges for China's external cooperation of agriculture after the entry into the WTO

Having joined the WTO, China's agricultural market will be opened further and the levels of marketing and internationalization in China's agriculture will be increasingly enhanced. As a result, China's agriculture will face unprecedented opportunities and challenges in its external cooperation.

• China's entry into the WTO signals a new stage in China's opening up of agriculture. In the first place, China's entry into the WTO reflects the inherent requirements for deepening reform, expanding the opening up and establishing a socialist market economic system. It is also a natural selection process in China's effort to utilize markets and resources both at home and abroad in its participation in the global economy. Indeed, it is another important milestone in China's opening up. For a long time, China had been scheduling its opening up according to its own timetable. However, after accession to the WTO, China's opening up will experience several changes, for example from the past opening to a limited extent in certain areas to an all-round opening up, or from policy-driven opening characterized by pilot programmes to predictable opening under the framework of the law, and lastly, from unilateral and voluntary opening to a mutual opening up between China and other members of WTO. In other words, China's economy will be integrated into the world economic system at a higher level and in greater depth. Thus the depth and width of China's opening up will increase, expanding the scope and areas for external cooperation, and external cooperation will be more stable.

• Second, China's entry into the WTO will help to improve the environment of agricultural cooperation. As the governance of the WTO has extended from the traditional areas of tariff and non- tariff measures regarding trade in goods to new areas such as investment measures, service trades and intellectual property. In this connection, international trade is not limited to traditional commodity trade but also includes trade in the factors of production. China's membership in the WTO will be conducive to establishing stable relations in trade, economic and technological cooperation with other countries . It will also greatly improve transparency and consistency in China's trade and investment policies. In the area of agriculture, China's entry into the WTO will improve the environment for the introduction of investment and technologies into agriculture, provide impetus for the optimal allocation of agricultural resources over a larger field and enhance the overall quality and efficiency of China's agricultural economy. Therefore, China's accession to the WTO will bring unprecedented opportunities for external cooperation in agriculture.

• New challenges for external cooperation in agriculture are arising with China's entry into the WTO.

China's entry into the WTO will mean an increasing integration of China into the global economy and liberalization of trade, particularly in agricultural products. As a result, the market for agricultural products will have to be gradually opened up and China will apply the international division of labour to the principle of comparative advantage, and allocate domestic resources accordingly . However, there are a number of factors that will pose grave challenges to China's agricultural industry under the WTO framework. One factor is that there still exists a considerable gap between the current agricultural regime and structure of industry in China and WTO requirements and the qualifications necessary to participate in international competition. The general quality of agricultural products, quality and safety standards are not compatible with the requirements of the international market. Another factor is that the farmers' entry into the market has been poorly organized and the marketing capabilities of agricultural enterprises have been inferior. Moreover, China's agricultural products have limited market channels outside China. All of these factors have combined to become constraints on China's agricultural products really benefiting from their comparative advantages, thereby circumscribing China's ability to utilize the opportunities that the WTO brings for China's near term agricultural development. In addition, the relatively high-level of openness in China's agricultural markets to which China has committed in the WTO negotiations is contrasted with the limited role of the WTO Agreement on Agriculture in opening up world agricultural markets, which in effect have a high level of protection. Therefore, substantial increases in the import of resource-intensive agricultural bulk goods such as grains, cotton and oils in which China does not have advantages will be seen in the immediate term following China's accession to the WTO, whereas the export of labour- intensive products in which China enjoys comparative advantages, such as small category cereals, livestock and horticultural products, will increase only to a limited extent. These developments will bring grave challenges to China's agriculture in the immediate term. There is important work to be done in further strengthening the international cooperation in agriculture to adapt to this new situation by expanding the opening up of agriculture to solve the problems that occur. As a part of this effort, the opportunities that the WTO brings to China, such as foreign investment in agriculture, introduction of technologies, agricultural varieties and management expertise, as well as the opportunity to optimize structurally and upgrade, will be fully exploited to boost the overall competitiveness of China's agricultural industry, on the one hand, and, on the other to actively implement the 'Going Out' strategy encouraging Chinese companies to operate outside China in agriculture and agricultural products. Clearly, this has raised the requirements and brought new challenges for China's external cooperation in agriculture.

Firstly, after China's entry into the WTO and with the progressive opening up of China's agricultural markets, together with the increased internationalization of agriculture, the relations between China's and the world's agriculture will become closer and closer. At the same time, international friction and disputes will also increase. International treaties , agreements and codes of conduct, combined with the agricultural policies of individual countries will have more and more important impacts on the development of China's agriculture. All of these will require China to strengthen the function of international cooperation in agriculture, in order to strive for a better and more favourable international environment for China's agriculture. Second, following accession to the WTO, China will have to compete internationally according to the principle of comparative advantage. In order to utilize markets and resources both at home and abroad to best effect, China will have to make efforts to improve comprehensive competitive strength in its agriculture and quicken the pace of 'going out'. To this end, the content and scope of China's external cooperation in agriculture will have to be expanded, shifting the objectives from enhancement of agricultural production capabilities to enhancement of comprehensive competitiveness of agriculture. Meanwhile, the previous priority of 'bringing in' (ie introducing foreign investment, technologies, management expertise, etc into China) will be shifted to giving equal weight to both 'bringing in' and 'going out'. Third, China's efforts to learn from foreign experiences, participate in international multilateral negotiations and consultations on agriculture, settle agricultural disputes and provide information services for Chinese agriculture and agricultural products to 'go out' will all demand strengthened research into foreign agriculture and the construction of an information system. The level of investment in the construction of an international agricultural information system will have to be increased to integrate the international agricultural information resources with relevant domestic capabilities. Current multilateral and bilateral information sharing and rapid feedback mechanisms will be reinforced and substantiated. Direct channels for collecting international agricultural information will need to be established. Information analysis and publication efforts will be intensified.