The agreement with China will significantly reduce the border restrictions that have kept U.S. farmers from fully benefiting from our comparative advantage in agricultural production. China agreed to cut tariffs by more than half on priority agricultural products and to end its system of discriminatory licensing and import bans for bulk commodities. The commitment to rely on imports for a small portion of the country's food security signals real reform in the Chinese grain sector. As a corn and soybean farmer, I expect to benefit from the entire trade agreement - increased exports of meat, poultry, and dairy products will translate into increased domestic demand for grains and oilseeds. Since other witnesses can better describe the opportunities for their sectors, I will focus on the implications for corn and soybeans.
China allows corn imports when supplies are short, but at other times China blocks corn imports.
Consequently, China is a very sporadic customer. U.S corn exports to China spiked during the 1994 marketing year at 130 million bushels. During the 1996 marketing year China did not import any U.S. corn. Over the last five years, China has imported an average of less than 50 million bushels of U.S. corn. Imports within the quota will be subject to a minimal one percent duty.