The regulations also seek to simplify administrative processes and increasing the transparency of regulations and policies.For example, during the last stage of WTO negotiation, each ministry formed its leading group or committee to work on all of the laws and regulations under its jurisdiction. These committees typically were comprised of decision makers and experts who had the mandate of cleaning up all existing regulations and preparing a proposal for amending or repealing those laws and regulations that are not consistent with the WTO rules and China’s commitments to its WTO accession. Local governments also had similar committees. Ministries and provincial government are also working closely with its corresponding law and regulation committee under the Standing Committee of the National People’s Congress for those laws and regulations to be amended or repealed by the People’s Congress. Several recent experiences involving amending laws and regulations and creating new institutions related to agriculture demonstrate the effectiveness of these committees and China’s overall commitment to its WTO obligations. For example, China’s Patent Law was re-amended on July 1, 2001. Many of the associated regulations also were redone. Moreover, a new set of regulations on Plant Variety Protection was put into effect in 1999 when China became the 39th member country of UPOV. Soon after passage, government agencies quickly proposed and implemented detailed regulations facilitating the implementation of PVP. The MOA and State Forest Bureau also created a new set of institutions,how to make a vertical garden a series of Plant New Variety Protection Offices. Finally, China’s Seed Law was issued in 2000. Hence, the rights of new plant varieties are now protected by both the PVP and Seed Law. To assist in the initial implementation of these laws the government has set up an IPR Affairs Center under the Ministry of Science and Technology.

In order to fulfill its legal obligations related to agriculture, MOA also has repealed several regulations since 2000 that sought to subsidize certain types of enterprises and apply different rules in agricultural input industries to different economic actors. Officials have eliminated the Regulations on the Development of Integrated Agricultural, Industrial and Commercial Enterprises under State Farms and the Regulations on the Development of Rural Township and Village Owned Enterprises . Seed Management Regulations that gave monopoly powers to local seed companies and Pesticide Field Trial Rules that discriminated against foreign companies were abolished. Despite the above substantial efforts, China still requires considerable institutional reform. There are still a number of laws and rules that treat domestic and foreign companies and individuals differently. These changes still need to be changed to allow China to fulfill the legal obligations that they are committed in its Protocol of Accession to WTO. It may be even a greater challenge to build up the nation’s capacity for effective implementation of the amended and new laws. Reforms and liberalization in China’s trade laws and regulations are perhaps the most advanced, in part, because of its strategic role in the economy . Through nearly 20 years reform, China’s foreign trade regime has gradually changed from a highly centralized, planned and import substitution regime to a more decentralized, market-oriented and export promotion one . These changes in trade and other policies have significantly affected the total and composition of China’s trade in favor of the products in which China has a comparative advantage. On the other hand, as argued by Martin , while China’s trade policies in most areas have been transformed in the reform era, trade in many agricultural goods remains under relatively non-transparent state trading arrangements. Accession to the WTO will be a critical time for China to push its trade reform in agricultural sector, including both tariff and non-tariff measures. Changes in tariff policy are more straightforward and simpler than non-tariff policy reforms. China followed its tariff reduction schedule specified in the Protocol on the first day of 2002. Average tariff rate was reduced from 15.3% in 2001 to 12%. For agricultural products the tariff reduction was from 21% to 15.8%. China has also started to implement its three years of transition of progressively liberalize the scope and availability of trading rights for agricultural products as discussed in the last section. Export subsidies have been ordered to be completely phased out on the first day of 2002.

Compared to the trend of tariff reduction in the past decade, the tariff changes due to China’s WTO accession should present relatively few problems. Significant reforms will,however, be required in the area of non-tariff measures. Among various aspects of non-tariff barriers, state trading could be a particular important area to consider when reforming China’s agricultural trade policy. China has agreed to phase out restrictions on trading rights for all products except those under TRQ trade regime that will implement a more gradual approach in phasing out the state-trading regime . After three years of WTO accession, the private sector is supposed to dominate the trade of almost all agricultural products. There are provisions to keep the state involved in three commodities, however: wheat, maize and tobacco. The measures for Technical barriers to trade and sanitary and phy-sanitary as well as institutional arrangements to fulfill the agreement on Trade-Related Intellectual Property Rights are the other important issues which China has to deal with. The Agreements on TBT and SPS focus on using internationally accepted standards to discipline the use of standards as protectionist devices. This rules-based approach can be valuable in improving policy formulation, but is likely to require investment in strengthening standards related institutions. Comprehensive adoption of these measures should lead to improved policies and, by basing policies on a scientific approach, move away from the time-consuming and inefficient approach of resolving these issues on a political basis. China will undoubtedly struggle in its effort to create a fully transparent and open trade regime with respect to non-tariff barriers. The case of labeling requirements for GMO imports, most conspicuously soybeans, shows how frustrating and protracted the creation of any set of regulations and institutions can be. In June 2001, the government suddenly announced that in response to concerns about the presences of GMO foods in the nation’s import basket, it would require that all goods contained GMOs from there on out would require labeling. Unfortunately, no one in the world who was shipping to China had a system in place to do so. China did not tell any one what was the process to apply for a permit for importing labeled commodities or the place to learn about the process. Initially, trade in soybeans was thrown into disarray. China’s traders lost money, soybean users faced tremendous losses, and prices threatened to rise sharply. Even when facing such a crisis, there was no way that any agency could clarify the matter or announce a plan. Instead, the government postponed any decision to an unspecified future date and trade has since continued.

The point of this is, however, that even when there is a crisis facing the external sector is often is difficult to rapidly come up with effective and transparent regulations and implementing processes.After 20 years of reform, China’s agriculture has become much more market-oriented . Traders moved products around the country with increasingly regularity and factors adjusted more rapidly. By the late 1990s, only grain, cotton, and to some extent silkworm cocoon and tobacco, were subjected to price interventions. But even in these cases, their markets, especially those for grain, have been shown to have become increasingly competitive, integrated and efficient overtime . Despite the gains in market performance in recent years, WTO makes demands on China’s domestic agricultural markets. Domestic marketing policy response to the nation’s impending WTO accession has been substantial and will continue. Major changes are aimed at improving the efficiency of domestic market performance and minimizing the adverse shocks that may arise from external trade liberalization. Perhaps more than in any other sector,vertical planters for vegetables the reforms in cotton and grain markets that China agreed to in the final stages of China’s WTO negotiation clearly show that its leaders are using this opportunity to develop its health domestic agricultural market. The case of cotton presents a good example. In 1999, officials began experimenting in the North China Plain with marketing reforms for cotton, frequently considered the second most important strategic agricultural commodity . The reforms were aimed at improving cotton market performance by reducing market transaction costs, creating a market-oriented pricing mechanism, and integrating regional markets. The main policy measure sought to eliminate the current monopolized state-own cotton procurement and distribution system. In part reflecting the fact that informal markets had already been working for many years, the disruption to cotton markets after liberalization were almost non-existent. With a successful performance of this experimental reform, the liberalization policy was expanded substantially in 2000 and fully implemented in 2001. Recent initiatives in grain market reform also appear to be particularly encouraging. Domestically, over the past two decades state-owned grain traders have chronically performed poorly due to imperfect incentives and a number of taxing policy burdens. Although many companies have received considerable marketing subsidies, the losses of these firms have always been a burden on the national leaders.

Moreover, although it had appeared reformers had solved this problem in the mid-1990s, retrenchments in agricultural policy created a situation in which many state-owned grain companies were still losing money in the late 1990s. Internationally, there were also concerns over several commonly executed policies that are now being addressed. For example, WTO negotiators expressed their opinion that China’s traditional ways of pricing agriculture were distorting. Others believe that the rights of state owned grain trading enterprises to procure commodities from farmers under special access rights give certain domestic firms unfair access and violates national treatment principles of WTO. Facing these pressures and concerns, China has launched a new set of reforms in the area of state grain marketing system in 2000. Building on past efforts to liberalize markets and continuing with the tradition of moving gradually, many believe that the measures included in this round are ultimately expected to have a defining influence on China’s grain markets in the years to come. As part of the first step, the restrictions on grain procurement for lower quality grains such as the early indica rice and maize in southern China, spring wheat in northern China, and all wheat in southern China were phased out in 2000. After the policy was set in place, any trader was allowed to buy or sell grain from any farmer or other trader at any time. Almost immediately this policy resulted in an adjustment in the structure of the cropping patterns in some regions. In the last several years, producers have begun planting varieties to improve grain quality. Many of these improvement will mean that to some extent China’s farmers are in a more competitive position to produce and sell varieties that might otherwise come in from foreign sources, for example, high quality rice from Thailand or high quality wheat from Canada or the US. With successful performance of grain “varietal” reform in 2000, leaders are now going to officially liberalize grain markets. Depending on the deregulation of all grain-related procurement and sales, leaders are first implementing their policies in a subset of grain-deficit, coastal provinces, Zhejiang, Jiangsu, Shanghai, Fujian, Guangdong, and Hainan. Currently, the government is planning to extend the implementation of the policies in all grain deficit provinces in 2002. As seen in the past, given such close ties between traders in surplus and deficit areas, such policies in deficit areas will almost certainly naturally envelope all of China. In response to WTO accession, the government also have ambitious plans to increase investment in market infrastructure. Leaders see a need to establish an effective national marketing information network. Officials in the ministry of agriculture are attempting to standardize agricultural product quality and promote farm marketing. Some also have advocated the creation of agricultural technology associations. More generally, all of these moves are part of an effort by leaders to shift fiscal resources that used to be used to support China’s expensive price subsidization schemes to productivity-enhancing investments and marketing infrastructure improvements. The magnitude of this policy response is highlighted by the fact that the total subsidies for price and market interventions reached 40.3 billion in 2000, about 4 percent of national fiscal budget, more than any components of government expenditure in agricultural and rural area of bureaucrats that manage China’s agricultural policies, 93 billion on integrated agricultural development program, and 12.3 billion on poverty alleviation–CNSB, 2001.