Major findings and recommendationsof

TRADE LIBERALIZATION IN THE AGRICULTURE SECTOR AND THE

ENVIRONMENTWith Specific Focus on the Rice Sector in China

HU, Tao

Policy Research Center for Environment and Economy(PRCEE)State Environmental Protection Administration (SEPA) of China

Associated with Center for Chinese Agriculture Policy, Chinese Academy of China

School of Environmental Studies, Beijing Normal University

Outline Review of study Major findings Major recommendations

Project Background China

How to adapt after WTO accession China’s rapid industrialization and industrial policy

adjustment EIA on trade policy WTO New round negotiation

UNEP One of the six rice country studies One of the series of trade liberalization and the

environment studies

Project Objectives Enhance China's understanding of the environmental, as

well as social and economic implications of implementing the WTO AoA, with specific focus on the rice sector.

Assess the positive and negative environmental, social and economic impacts of trade liberalization policies and multilateral trade rule, especially the AoA, taking into account social and economic impacts.

To provide policy recommendations to the government in regards to how to enhance positive impacts while at the same time how to minimize the negative impacts in order to achieve a sustainable development, which would be helpful for China’s new round WTO negotiations.

Logic Chain of Study

Rice Trading

Production Structure Change

The State of Environment

Chinese Government

Policy

The State ofSociety

The State of Economy

WTO accession and trade

liberalization

Research Team Dr. Hu Tao’s team, PRCEE of SEPA

Coordination Integration Policy recommendations

Prof. Huang Jikun’s team, CCAP CAPSiM Model Economic Impacts Poverty Chemical fertilizer and pesticide

Prof. Mao Xianqiang’s team, BNU Spatial and Regional Analysis Case study in Hubei, Indicia Rice and Heilongjiang, Japonica Rice Environmental Impacts

Chemical fertilizer Pesticide GHGs

Key components of the report Background of the project Trade liberalization policies of China’s Agriculture Rice Production and Trade in China Integrated Assessment of Direct and Follow-up

Impacts of Trade Liberalization on the Rice Sector Economic Social Environmental

Recommended Policies

Major findings Economic aspect

Generally, there will be no big significant changes by 2010

China’s comparative advantage of Indica rice is decreasing slightly As a great importer in the future from ASEAN in CAFTA Challenging national food self-sufficiency policy

China’s comparative advantage of Japonica rice is increasing As a great exporter in the future to Korea and Japan in C-K-

J Economic integration

Major findings

China’s rice growing regions and zones

Major findings Social aspect

Income changes A little bit negative income impacts of indica rice

farmers by partial equilibrium model Positive income impacts of Japonica rice farmers

However, by CGE model, all would gain benefits of rice sector liberalization

Rice production takes only small proportion of income for farmers

Non-farming income becoming major income source Taxes, levies and fees in rural areas

Major findings Environmental aspect

Chemical fertilizers and pesticide, especially water resources using, are increasing with sown area in Japonica rice regions

Chemical fertilizers and pesticide and water resources are depending on sown area and price changes in Indica rice regions

Major policy recommendations Enlarge Green Food and Organic Food production

Improve existing China’s Environmental labeled Product and green food, organic food

Overcome trade barriers of exporting organic food and green food products Agriculture negotiation of WTO, required by China’s

Permanent Mission to WTO CTE negotiation of WTO, myself is one of the members of

Chinese delegation Bilateral negotiations

Major policy recommendations Strengthen rural environmental management

to internalize environmental costs Enhancing rural environmental governance

system Capacity building for rural environmental

management As a policy recommendation, the proposal

above has been submitted to Primer Minister already as part of CCICED proposal last year

Major policy recommendations Gradually loosening food self-sufficiency

policy from the perspective of environmental protection and economics Food self-sufficiency considerations

Social, political, national security and sector economic aspects

but lack of considerations of macro-economic and environmental aspects

Major policy recommendations What would happen if China is gradually loosening food

self-sufficiency policy Economic:

Market would driving rice farmers moving from rice farming towards manufacture and services industries

Better human resources allocation at macro-level Social

More income for farmers and reduction of rural poverty Traditional rural culture changing

Environmental Reduction of chemicals and water resources Reduction of CH4 emission as GHGs

Major policy recommendations What would happen if China is gradually

loosening food self-sufficiency policy National security

Should be concerned by Defense Ministry but Agriculture Ministry

How much, 95%? 85%? or even lower

Agriculture sector interest Subsidies to farmers Investments for agriculture infrastructure Agriculture Ministry boasting China is able to feed

itself as we launched spaceship, but is it necessary?

Major policy recommendations A proposal has been sent to Research Office of

State Council this spring to let PM balance the aspects of economic, social, environmental, security etc

A new proposal is being prepared to submit to next CPPCC session, similar function of Senate.

Major policy recommendations A proposal being sent to Research Office of

State Council this spring to let them considering the balance between economic, social, environmental, security etc

A new proposal is being prepared to submit to CPPCC, similar function of Senate

Major policy recommendations Further study

Methodology Partial Equilibrium Vs General Equilibrium To measure impacts quantitatively by CGE model

Economic, social and environmental impacts on other importing and exporting countries along the product chain of rice

Major policy recommendations To promote EIA on trade policy

To put it into new revised EIA Act by NPC To prepare a technical guideline for SEPA to

do EIA on trade policy as one of the series of EIA guidelines

MANY THANKS!!!