WORLD TRADE  
ORGANIZATION  G/AG/W/72 
14 September 2009 
 
 (09-4311) 
Committee on Agriculture Original:   English 
  
 
CHINA'S TRANSITIONAL REVIEW MECHANISM 
 
Questions to China from the United States in the c ontext of the Transitional Review Mechanism under 
Paragraph 18 of the Protocol of Accessi on of the People's Republic of China  
 
  The following communication, dated 9 September 2009, has been received from the Delegation of the United States, with the request that  it be circulated to Members, for the purposes of 
the Eighth Transitional Review to take place at the forthcoming meeting of the Committee. 
 
_______________ 
 
 
Government’s Role in Agriculture Sector 
 1. China has stated its interest in developing a modern and competitive agriculture sector, but 
does not utilize international standards and practices th at would help achieve th is goal.  In addition, 
steps have been taken in recent years to increase th e government’s role in China’s agriculture sector, 
rather than reduce it. 
(a) China has indicated that it plans to incr ease direct subsidies for planting grain and 
oilseed crops and to increase stockpile buyi ng.  Please provide an update on the status 
of this effort. 
(b) The United States understands that China pl ans to nationalize wholesale agricultural 
markets.  Please describe the rationale behind these plans. 
(c) The United States understands that th e Chinese government is encouraging 
consolidation in the agriculture sector in Ch ina.  Please describe the extent of the 
consolidation that has taken place to date. 
Investment Restrictions in Agriculture Sector 
 
2. Foreign investment can greatly improve the pr oductivity of China’s agriculture sector, yet 
China has limited the areas in which foreign investor s can participate in its market.  What plans does 
China have to open its investment environment and eliminate equity caps for foreign investors? 
Seeds 
 
3. China appears to have a variety of regulati ons and rules in place that restrict foreign 
companies’ participation in its seed market. 
(a) Please describe the current state of the seed  business, including biotechnology, in 
China, and explain whether China will allow foreign companies to participate in this 
sector in the future. G/AG/W/72 
Page 2  
 
  (b) Currently, China does not allow majority ownership in seed joint ventures.  Does 
China have any plans to change th is restriction?  Please explain. 
(c) What is the status of China’s ban on corn  seed exports from China?  What is China’s 
justification for this ban?  Does China have any plans to lift it? 
(d) Please describe China’s seed review and registration process. 
Domestic Support for China’s Pork Industry 
 
4. In connection with last year’s transitional re view before this Committee, the United States 
sought information from China about a program in which pork producers in China can receive a payment for every sow.  China confirmed that prior to 2008 pork producer s received RMB 50 per sow 
and total nationwide support (appare ntly in 2007) was US$353 million.  China further confirmed that 
pork producers received RMB 100 per sow in 2008.   Please provide total nationwide support under 
this program for 2008. 
5. In connection with last year’s transitional re view before this Committee, the United States 
sought information from China about the China Insu rance Regulatory Commission oversight of a sow 
insurance program.  At that meeting, the United States explained its unders tanding that total annual 
premiums for this program are US$2.9 billion, with the Chinese government paying for 76 percent of the total annual premiums.  The United States asked China if it was correct to conclude that the 
Chinese government is paying US$2.2 billion in pr emiums annually under this insurance program, 
while pork producers pay the remaining US$700 million a nd, if not, to identify the correct amounts.  
China responded that the amounts identified by the United States were incorrect, but did not provide 
the correct amounts.  Please provi de the correct amounts for the most recent year that data is 
available. 
6. In connection with last year’s transitional re view before this Committee, the United States 
sought information from China about payments made  to large-scale pork breeding farms, based on 
farm size.  China explained that farms with 500- 999 heads receive RMB 200,000, farms with 1,000-
1,999 heads receive RMB 400,000, farms with 2, 000-2,999 heads receive  RMB 600,000 and farms 
with 3,000 or more heads receive RMB 800,000. 
(a) Are the RMB payment amounts previously identified by China annual payments? 
(b) What was the total annual value of paym ents made under this program in 2008? 
7. Please identify the total value of China’s pork production in 2008. 
Discriminatory VAT Exemptions 
 
8. In connection with last year’s transitional re view before this Committee, the United States 
explained its understanding that many domestic ag ricultural products are exempted from China's 
13 per cent value-added tax (VAT) normally applicab le to imported agricultural products and that 
these VAT exemptions raised concerns under Artic le III of the General Agreement on Tariffs and 
Trade 1994.  In its response, China stated that th e proliferation of highly scattered, small-scale farms 
made the costs for assessing taxes much higher and not  cost-effective.  As a result, China stated, it 
exempted agricultural products produced and sold dir ectly by farmers in order to lower the costs of 
taxation and increase efficiency.  The United States does not see how lowering the costs of taxation and increasing efficiency can justify an exempti on from taxes on domestic products but not imported 
products.  Can China provide any additional e xplanation that would address this concern?
  G/AG/W/72 
 Page 3 
 
 
  Tariff-rate quotas 
 
9. US companies continue to be concerned about  the transparency in the administration of 
China’s tariff-rate quota (TRQ) regi me for bulk agricultural commoditi es.  It appears that licenses 
both for the initial quota and for any above-quota qua ntities continue to be issued without public 
announcement of specific information about the quota allocations, such as the type and volume of 
quota being allocated to particular entities and the a pplicable duty rates.  When the United States has 
raised this concern in connection with prior tran sitional reviews before this Committee, China has 
explained that it limits the public disclosure of this  information because it is commercially sensitive.  
Please explain why the information in question c ould be commercially sensitive.  Isn’t it in the 
interests of the entities holding quota licenses to public ize information about their licenses so that they 
can fill their quota allocations? 
 
__________