Major findings and recommendations of TRADE LIBERALIZATION IN THE AGRICULTURE SECTOR AND THE ENVIRONMENT With Specific Focus on the Rice Sector in China HU, Tao Policy Research Center for Environment and Economy(PRCEE) State Environmental Protection Administration (SEPA) of China Associated with Center for Chinese Agriculture Policy, Chinese Academy of China School of Environmental Studies, Beijing Normal University

Outline Review of study Major findings Major recommendations

Project Background China How to adapt after WTO accession China’s rapid industrialization and industrial policy adjustment EIA on trade policy WTO New round negotiation UNEP One of the six rice country studies One of the series of trade liberalization and the environment studies

Project Objectives Enhance China's understanding of the environmental, as well as social and economic implications of implementing the WTO AoA, with specific focus on the rice sector. Assess the positive and negative environmental, social and economic impacts of trade liberalization policies and multilateral trade rule, especially the AoA, taking into account social and economic impacts. To provide policy recommendations to the government in regards to how to enhance positive impacts while at the same time how to minimize the negative impacts in order to achieve a sustainable development, which would be helpful for China’s new round WTO negotiations.

Logic Chain of Study Rice Trading Production Structure Change The State of Environment Chinese Government Policy The State of Society The State of Economy WTO accession and trade liberalization

Research Team Dr. Hu Tao’s team, PRCEE of SEPA Coordination Integration Policy recommendations Prof. Huang Jikun’s team, CCAP CAPSiM Model Economic Impacts Poverty Chemical fertilizer and pesticide Prof. Mao Xianqiang’s team, BNU Spatial and Regional Analysis Case study in Hubei, Indicia Rice and Heilongjiang, Japonica Rice Environmental Impacts Chemical fertilizer Pesticide GHGs

Key components of the report Background of the project Trade liberalization policies of China’s Agriculture Rice Production and Trade in China Integrated Assessment of Direct and Follow-up Impacts of Trade Liberalization on the Rice Sector Economic Social Environmental Recommended Policies

Major findings Economic aspect Generally, there will be no big significant changes by 2010 China’s comparative advantage of Indica rice is decreasing slightly As a great importer in the future from ASEAN in CAFTA Challenging national food self-sufficiency policy China’s comparative advantage of Japonica rice is increasing As a great exporter in the future to Korea and Japan in C-K-J Economic integration

Major findings China’s rice growing regions and zones

Major findings Social aspect Income changes A little bit negative income impacts of indica rice farmers by partial equilibrium model Positive income impacts of Japonica rice farmers However, by CGE model, all would gain benefits of rice sector liberalization Rice production takes only small proportion of income for farmers Non-farming income becoming major income source Taxes, levies and fees in rural areas

Major findings Environmental aspect Chemical fertilizers and pesticide, especially water resources using, are increasing with sown area in Japonica rice regions Chemical fertilizers and pesticide and water resources are depending on sown area and price changes in Indica rice regions

Major policy recommendations Enlarge Green Food and Organic Food production Improve existing China’s Environmental labeled Product and green food, organic food Overcome trade barriers of exporting organic food and green food products Agriculture negotiation of WTO, required by China’s Permanent Mission to WTO CTE negotiation of WTO, myself is one of the members of Chinese delegation Bilateral negotiations

Major policy recommendations Strengthen rural environmental management to internalize environmental costs Enhancing rural environmental governance system Capacity building for rural environmental management As a policy recommendation, the proposal above has been submitted to Primer Minister already as part of CCICED proposal last year

Major policy recommendations Gradually loosening food self-sufficiency policy from the perspective of environmental protection and economics Food self-sufficiency considerations Social, political, national security and sector economic aspects but lack of considerations of macro-economic and environmental aspects

Major policy recommendations What would happen if China is gradually loosening food self-sufficiency policy Economic: Market would driving rice farmers moving from rice farming towards manufacture and services industries Better human resources allocation at macro-level Social More income for farmers and reduction of rural poverty Traditional rural culture changing Environmental Reduction of chemicals and water resources Reduction of CH4 emission as GHGs

Major policy recommendations What would happen if China is gradually loosening food self-sufficiency policy National security Should be concerned by Defense Ministry but Agriculture Ministry How much, 95%? 85%? or even lower Agriculture sector interest Subsidies to farmers Investments for agriculture infrastructure Agriculture Ministry boasting China is able to feed itself as we launched spaceship, but is it necessary?

Major policy recommendations A proposal has been sent to Research Office of State Council this spring to let PM balance the aspects of economic, social, environmental, security etc A new proposal is being prepared to submit to next CPPCC session, similar function of Senate.

Major policy recommendations A proposal being sent to Research Office of State Council this spring to let them considering the balance between economic, social, environmental, security etc A new proposal is being prepared to submit to CPPCC, similar function of Senate

Major policy recommendations Further study Methodology Partial Equilibrium Vs General Equilibrium To measure impacts quantitatively by CGE model Economic, social and environmental impacts on other importing and exporting countries along the product chain of rice

Major policy recommendations To promote EIA on trade policy To put it into new revised EIA Act by NPC To prepare a technical guideline for SEPA to do EIA on trade policy as one of the series of EIA guidelines

MANY THANKS!!!