A Major Step toward Increased Market Access for U.S. Soybean Producers

The American Soybean Association (ASA) is extremely pleased that the United States and the People’s Republic of China have successfully completed bilateral talks on China’s accession to the World Trade Organization (WTO). Today’s announcement by the United States Trade Representative (USTR) is welcome news for U.S. soybean producers. According to U.S. government sources, the ongoing WTO accession negotiations include assurances that will formalize access to the Chinese market—the largest growth market for soy in the 21st century—and includes commitments to expand access over the next few years.

ASA President Marc Curtis, a soybean, corn, rice, wheat and milo producer from Leland, Miss., said, "ASA has been working for many years to develop the Chinese market for U.S. soybeans and soybean products. This agreement is very important to U.S. soybean producers because it paves the way for expanded access to the Chinese market, our most important growth market of the future."

The China market has been a priority for U.S. soybean producers since 1982 when ASA opened an office in Beijing. China continues to be a long-term investment for funding from the soybean producer checkoff and USDA’s Foreign Agricultural Service, through which ASA promotes U.S. soybean and product exports.

Based on the WTO Accession Terms for Agriculture announced earlier this year, there will be no tariff rate quota (TRQ) for soybeans, and the duty is bound at the current applied level of three percent. That agreement stated that soybean oil will be subject to a nine percent duty, and the TRQ quantity will be based on average 1995-97 calendar year imports calculated on the basis of data from Oil World, an international authority on oilseeds supply and demand. Soybean oil also will be designated a "most-favored-oil" –meaning that any permanent or temporary duty reduction provided to other oils also will be extended to soy oil.

Beginning Jan. 1, 2000, the import level of soybean oil will be 1.719 million tons, growing to 3.261 million tons by Jan. 1, 2005. The TRQ for soybean oil will be eliminated as of Jan. 1, 2006. Private sector share of trade will be increased from 50 percent to 100 percent by Jan. 1, 2006. Unused state trading shares will be reallocated to the private sector. Today’s USTR announcement confirmed that state trading for soy oil will be phased out altogether.

For soybean meal, ASA understands that China has agreed to bind the current applied tariff of five percent and to not apply any quantitative restrictions.

In total, China in 1998 was almost an $850 million market for U.S. soybean growers and the soy industry. The value of U.S. soybean exports to China has increased from zero in 1995 to more than $389 million in 1998. China became the largest buyer of U.S. soybean oil in 1995, and imported $296 million worth of U.S. soybean oil in 1998. The value of China’s U.S. soybean meal imports has grown from $29 million in 1994 to $161 million in 1998, making China the second largest buyer of U.S. soybean meal.

"ASA appreciates the efforts of Ambassador Barshefsky and her team who have worked diligently to see this agreement succeed," Curtis said. "ASA also thanks the Chinese negotiators for their willingness to make reforms that will benefit both of our countries."

ASA will urge Congress to approve permanent Normal Trade Relations status for China when China joins the WTO.