US claim on farm goods morally un­ten­able

China Daily (USA) - - VIEW -

On Sept 13, theUnited States ini­ti­at­edWTO dis­pute pro­ceed­ings against China, claim­ing that Bei­jing had pro­vided sup­port for farm­ers in ex­cess of its com­mit­ment to the­World Trade Or­ga­ni­za­tion. Among the crops in con­tention are wheat, Indica rice, Japon­ica rice, and corn.

TheUS is the largest ex­porter of agri­cul­tural prod­ucts and grows many of these mainly for ex­ports. In con­trast, China is the largest im­porter of farm prod­ucts, with its agri­cul­ture char­ac­ter­ized by smallscale pro­duc­tion and sub­sis­tence farm­ing. In other words, the con­flict is be­tween theUS’ large com­mer­cial farm­ers and China’s small­hold­ing farm­ers.

Af­ter China opened up its agri­cul­tural mar­ket fol­low­ing its en­try into theWTO, theUS flooded it with its ex­ports, harm­ing small farm­ers. The in­crease in the ex­ports ofUS farm prod­ucts to China— from less than $2.8 bil­lion to $28.8 bil­lion at its peak— gives an idea of the harm caused. China’s av­er­age trade deficit in re­la­tion toUS farm prod­ucts is $20 bil­lion a year, and it is the largest ex­port mar­ket forUS farm prod­ucts.

More­over, China’s av­er­age pro­duc­tion scale is 0.66 hectare per house­hold, 1/400 of theUS’. Even Hei­longjiang prov­ince, with the rich­est land re­source in China, has an av­er­age pro­duc­tion scale of only 3.04 hectares per house­hold.

The most im­por­tant task of China’s farm sec­tor is to en­sure food se­cu­rity and se­cure the liveli­hoods of mil­lions of small farm­ers. So given the dev­as­tat­ing im­pact of ex­ces­sive im­ports, the gov­ern­ment had to of­fer sup­port to the agri­cul­ture sec­tor, es­pe­cially be­cause its tar­iff plays lit­tle role in pro­tect­ing do­mes­tic pro­duc­tion. TheUS gov­ern­ment claims China’s sup­port to its farm sec­tor was about $100 bil­lion. Even if we ac­cept the fig­ure, on av­er­age a Chi­nese farmer re­ceived only $161 in gov­ern­ment sup­port, nowhere near the sup­port given by theUS gov­ern­ment to its farm­ers.

The mea­sures taken by the Chi­nese gov­ern­ment are nec­es­sary for en­sur­ing the coun­try’s food se­cu­rity and pro­tect­ing the liveli­hoods of farm­ers, as well as a pre­req­ui­site for honor­ing its com­mit­ments to the UNMil­len­nium De­vel­op­ment Goals. With­out such mea­sures, China could not have lifted 600 mil­lion peo­ple, or 90 per­cent of the world’s to­tal, out of poverty. The­World Bank has spo­ken highly of China’s achieve­ment, call­ing it “the fastest largescale poverty al­le­vi­a­tion in hu­man his­tory”. But China still has 70 mil­lion im­pov­er­ished peo­ple ac­cord­ing to its own stan­dard and 200 mil­lion ac­cord­ing to the­World Bank stan­dard, and they can­not be lifted out of poverty with­out gov­ern­ment sup­port.

China’s grain pro­duc­tion has in­creased in re­cent years. But judg­ing by its real mar­ket share, China’s self-suf­fi­ciency level in farm prod­ucts fell to be­low 87 per­cent. This shows China has not overly stim­u­lated grain pro­duc­tion and its sup­port to agri­cul­ture poses no threat to nor­mal in­ter­na­tional trade orUS farm ex­ports to China.

TheUS claims China’s sup­port to agri­cul­ture ex­ceed­edWTO ac­ces­sion com­mit­ments in 2012-15. But it was dur­ing that pe­riod that the ex­ports ofUS farm prod­ucts to China reached a record high of $108.97 bil­lion, up 55 per­cent from $70.44 bil­lion in 2008-11. De­spite slight fluc­tu­a­tions in 2015, im­ports from theUS ac­counted for 21 per­cent of China’s to­tal.

The US’ claim is a re­flec­tion of the con­flict be­tween trade lib­er­al­iza­tion and the real need of de­vel­op­ing coun­tries to en­sure food se­cu­rity. Global ce­real trade ac­counts for less than 15 per­cent of the world’s to­tal out­put, so coun­tries have to meet more than 85 per­cent of their de­mand through do­mes­tic sup­ply. And the only way they can do that is to in­crease their spend­ing on agri­cul­ture and sup­port small farm­ers. That’s why de­vel­op­ing coun­tries re­it­er­ated at the Doha De­vel­op­ment Round that food se­cu­rity is not ne­go­tiable.

TheWTO, too, says food se­cu­rity must be fully taken into ac­count dur­ing the process of trade lib­er­al­iza­tion, com­mer­cial gains can­not be made at the cost of small farm­ers’ liveli­hoods and ru­ral de­vel­op­ment needs.

Elim­i­nat­ing poverty, and en­sur­ing food se­cu­rity and small farm­ers’ liveli­hoods are the com­mon goals of all na­tions, but they are par­tic­u­larly im­por­tant for China, a de­vel­op­ing coun­try with a huge pop­u­la­tion. So any trade lib­er­al­iza­tion that ig­nores China’s de­vel­op­ment needs is morally un­ten­able. And any trade growth that ig­nores the food se­cu­rity of 1.3 bil­lion peo­ple and liveli­hoods of 620 mil­lion farm­ers is nei­ther healthy nor sus­tain­able. The au­thor is dean of the School of Agri­cul­tural Eco­nom­ics and Ru­ral De­vel­op­ment, Ren­min Univer­sity of China.

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