Baucus, Grassley Seek ITC Investigation of Chinese Market Access Barriers to U.S. Agricultural Products

Finance leaders say findings could help lower barriers to key U.S. exports

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Chuck Grassley (R-Iowa) today requested a study of the market for agricultural products in China, including the effects of tariff and non-tariff barriers on U.S. agricultural exports.  In their letter to Chairman Shara L. Aranoff of the U.S. International Trade Commission (ITC), the Senators asked the ITC to cover a five-year period from 2004-2009 in its report, and to submit the report within eleven months of receipt of their letter.

“China is already the fourth largest market for U.S. agricultural products, but there is room for substantial growth if we can reduce trade barriers to our exports.  The United States is a top exporter of wheat and beef, but we face unjustified restrictions in the Chinese market,” said Baucus.  “The report Senator Grassley and I commissioned today will investigate restrictions on these and other agricultural products, so we can begin to remove barriers and send more of our Montana and American-made goods to China and create jobs here at home.”

“China has become a major market for American agricultural exports.  But the potential is there for China to become an even bigger market for these products,” Grassley said.  “We need a better understanding of the tariff and non-tariff barriers that U.S. agricultural producers face in trying to export to China.  The study that Chairman Baucus and I have requested today will help.  Specifically, beef and pork producers in Iowa and across the United States stand to benefit from the elimination of non-tariff trade barriers that have no basis in science.  This investigation will shed more light on those barriers.”

The text of the Senators’ letter follows below:

April 1, 2010

The Honorable Shara L. Aranoff

Chairman

U.S. International Trade Commission

500 E Street, S.W.

Washington, DC 20436

Dear Chairman Aranoff,

We are writing to request that the U.S. International Trade Commission conduct an investigation under section 332(g) of the Tariff Act of 1930 (19 U.S.C. 1332(g)) regarding competitive factors affecting agricultural trade between China and the United States.

Since it joined the World Trade Organization in 2001, China’s imports of U.S. agricultural products have grown substantially. China is now the fourth largest market for U.S. agricultural exports.  Yet sales are highly concentrated in a few products—soybeans, cotton, poultry, and hides and skins accounted for more than 85 percent of Chinese imports of U.S. agricultural products in 2009.  Chinese imports of several globally competitive U.S. agricultural products, such as certain meat, feedgrains, and processed food, are limited.  With rapidly rising per capita income and resource constraints on domestic production growth, China has the potential to provide greater opportunities for expanding U.S. agricultural exports.

At the same time, several factors threaten the ability of U.S. agricultural exporters to realize these opportunities.  Chinese government policies aimed at boosting domestic production and curbing imports, non-tariff measures, including sanitary/phytosanitary measures and technical trade barriers, and increased competition from third-country suppliers, especially those with which China has negotiated trade agreements, are important factors that could weaken the competitive position of U.S. agricultural products in the Chinese market.

The Commission’s report should cover the period 2005-2009, or the period 2005 to the latest year for which data are available.  In addition, to the extent possible, the report should include the following:

• an overview of China’s agricultural market, including recent trends in production, consumption, and trade;

• a description of the competitive factors affecting the agricultural sector in China, in such areas as costs of production, technology, domestic support and government programs related to agricultural markets, foreign direct investment policies, and pricing and marketing regimes;

• an overview of China’s participation in global agricultural export markets, particularly in the Asia-Pacific region and in those markets with which China has negotiated trade agreements;

• a description of the principal measures affecting China’s agricultural imports, including tariffs and non-tariff measures such as sanitary and phytosanitary measures and technical barriers to trade; and

• a quantitative analysis of the economic effects of China’s MFN tariffs, preferential tariffs negotiated under China’s free trade agreements, and China’s non-tariff measures on U.S. agricultural exports to China and on imports from the rest of the world.

The Commission should submit its final report no later than eleven months from the receipt of this request.  As we intend to make the report available to the public, we request that it not contain confidential business information.

Sincerely,

Max Baucus                                                                Charles E. Grassley

Chairman                                                                     Ranking Member

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