Tariffs

China is committing to establish a "tariff-only" import regime; all WTO-inconsistent non-tariff barriers will be eliminated. Any other measure, such as inspection, testing, and domestic taxes must be applied in a manner that is consistent with WTO rules requiring a transparent and non-discriminatory system.

Tariff concessions on key dairy products that China will phase in by 2004 include the following:

Trading Rights and Distribution

• Currently, U.S. companies' ability to do business in China is strictly limited because the right to engage in trade (importing and exporting) is restricted to a small number of companies that receive specific authorization or who import goods to be used in production. This limits U.S. exports. China has agreed that any entity will be able to import most products, including dairy products, into any part of China. This commitment is phased in over the three-year period with all entities being permitted to import and export at the end of the period.

• China -- which generally prohibits companies from distributing imported products or providing related distribution services -- will permit foreign enterprises to engage in the full range of distribution services. These rights will be phased in over a three-year period for almost all products. (See separate papers on distribution services and related services.)

Export Subsidies

• China will eliminate export subsidies for agricultural products when it joins the WTO, benefiting U.S. agricultural products competing in third-country markets.

Domestic Support

• China committed to cap and reduce trade-distorting domestic subsidies; specific levels will be determined through multilateral negotiations.

Sanitary and Phytosanitary Measures

• China committed to fully abide by the terms of the WTO Agreement on Sanitary and Phytosanitary Measures, which requires that all animal, plant, and human health import requirements be based on sound science.

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