China has become a frontline player on the economic, political and strategic international stage, and now in the agricultural arena as well. As highlighted by Jo Cadilhon, Céline Laisney and Catherine Rivola, at the French Ministry of Agriculture Center for Studies and Strategic Foresight, in a recent paper we are excerpting below1
, China has established itself as a major agricultural powerhouse over the past decade, and is increasingly shaping market fluctuations as well as international negotiations on agriculture. More generally, this momentum shows the emergence of new powers in global agricultural governance, both on the economical and political framework––following the example of Russia that currently conducts an aggressive strategy to regain control of grain markets––or Brazil, which is well set to become one of the “world’s farms” and the home country of the current FAO head. Since the issue of governance represents, as stated by the June 2011 G20 Summit under French presidency2
, a key factor for global stability and food security, it must be carefully monitored. In the coming years, this rise of emerging economies, for which agriculture represents a key economic sector and the foundation of power strategies, may go hand in hand with a new balance of power at the regional and international level, and generate major turmoil in already highly volatile markets. The implementation of an effective world organization for agriculture is therefore now more pressing than ever.
momagri Editorial Board
China’s accession to the WTO in December 2001, about the same time as the launch of the Doha talks, was a fundamental step for the country and for international trade. While at first taking a backseat in the talks, China is now not only very present but has also become a frontline player in the international organization. In 2008, the country was involved in the G20, and is now to be reckoned with in the WTO various negotiating groups with reduced scope and strong decision-making authority.
This accession, however, imposed on China a commitment to transparency. The newly admitted country must provide other WTO members with economic data, information on economic policies and their impact on trade of goods and services, and with issues of intellectual property rights regarding trade (TRIPs). Yet, as soon as 2002, gaps in information were reported in various areas, such as agriculture. In addition, while at first China fully played the game of alliances with other developing nations, certain countries––such as India and Brazil––also viewed it as a strong competitor in international trade negotiations, and among others, in agricultural and agro-food markets.
Within the WTO body in charge of settling disputes, China, which was until then challenged on trade issues, became the attacker as well. Thus in September 2010, WTO agreed with China regarding its complaint against an American law limiting Chinese poultry imports. In March 2011, China lodged a complaint with the WTO against American anti-dumping measures on Chinese imports of frozen tropical shrimps.
China’s WTO strategy is a somewhat classic and defensive one. Its representatives regularly invoke the special safeguard clause (SSG) for agriculture that enables one nation to raise tariffs in case of a massive rise in import volumes, or in cases of significant price declines, and this to protect some productions from significant pressure from foreign competition. Combined with a domestic support policy de minimis––regarding cotton for instance––this strategy enables China to protect its domestic market and to safeguard some flexibility in its national agricultural policy on imports. At the same time, the Chinese government fosters the integration of other developing countries in the process of market liberalization by contributing a total of $621,000 to the Doha Development Agenda Global Trust Fund (DDAGTF) in the framework of the WTO Aid for Trade initiative.
China is also increasingly active at the FAO through the rising participation of Chinese agronomists, or even Chinese farmers, to the FAO many regional or national food security programs; the agricultural cooperation agreements with several African nations leading to the creation of 14 experimental pilot farms; and making available to the FAO of a trust fund with a $10 million annual budget.
Lastly, China plays an escalating role in international food aid. Even if they are incomplete, the statistics compiled by the World Food Program (WFP) noted in 2005––as soon as China put an end to its past of deficit grain-producer––the delivery of a subsidy of 577,000 tons of grain. The contribution allowed the country to rank third worldwide in this area, right behind the United States and the European Union. Since then, its contribution in value to the WFP has declined, and it ranks in 34th place on average over four years.
Nonetheless, the country is standing out on issues of food security in the region. In 2009, China announced an in-kind contribution of 300,000 tons of rice to build up an emergency rice reserve in East Asia that would be used in case of emergency by the Association of Southeast Asian Nations (ASEAN), South Korea and Japan.
China carries a valuable economic weight in the Asian region. China’s growth certainly pulled the economies of other countries in the region during the 2008 economic crisis, thanks to its raw product imports from nations with which it maintains trade agreements.
As a result, the free trade agreement between ASEAN and China (CAFTA) provides reduced tariffs for agricultural products between ASEAN’s emerging countries and China. China is also developing economic cooperation with its other neighbors. The group ASEAN+3––including Southeast Asian nations, China, South Korea and Japan––is launching a closer cooperation regarding food issues, such as the food security information system AFSIS. The Shanghai-based organization for cooperation with Russia and Central Asian nations on one hand, and the Asia-Pacific Economic Cooperation (APEC) that includes all nations facing the Pacific Ocean on the other, are placing China at the heart of increasingly meaningful systems 0f regional economic governance.
1 The complete article is available from the website of the Center for Studies and Strategic Foresight of the French Ministry of Agriculture at: http://agriculture.gouv.fr/IMG/pdf/Document_de_travail_CEP_Essor_de_la_Chine_dans_le_commerce_international_agricole.pdf
2 Please see the Action Plan on Volatility and Food Security and on Agriculture at: http://agriculture.gouv.fr/IMG/pdf/2011-06-23_-_Plan_d_action_-_VFinale.pdf