Reallocation of agricultural product import tariff quotas imminent, experts say the focus is on regulation
Workers conduct trial production in the production workshop of the Helan Park of the Ningxia Ecological Textile Park. Photo by Xinhua News Agency reporter Wang Peng
In recent years, the costs of cotton and other agricultural products in China have continued to rise rapidly, facing the impact of imported products, and using the tariff quota system to appropriately regulate imports has become an effective choice. To make better use of import quotas, the National Development and Reform Commission allows eligible enterprises to submit applications for the reallocation of agricultural product import tariff quotas. Experts say efforts should be focused on how to regulate the distribution of tariff quotas in a fair, just and transparent manner
According to the "2014 Announcement on the Reallocation of Agricultural Product Import Tariff Quotas" issued by the National Development and Reform Commission, import tariff quotas unused by enterprises in 2014 must be returned before September 15, and eligible enterprises may submit applications for the reallocation of agricultural product import tariff quotas.
Upon hearing this news, Wang Sishe, vice chairman of Shandong Hengfeng Group, was very happy. “The enterprise did not obtain a cotton tariff quota this year. If there is a chance for reallocation, of course we will continue to apply.” In recent years, applying for foreign cotton quotas has always been a major matter for cotton enterprises. “Foreign cotton is cheaper than domestic cotton. At its highest, the price difference between domestic and foreign cotton reached 5,000 yuan per ton, and under normal circumstances it is also 2,000 yuan to 3,000 yuan.” Wang Sishe said.
The price difference between domestic and foreign cotton, often amounting to several thousand yuan, has drawn the starting line for competition among cotton enterprises. For cotton textile enterprises, where raw materials account for 70% to 80% of costs, it can be said that whoever obtains a quota gains the lead. “If you do not obtain a tariff quota, then to import cotton you have to pay high tariffs.” said Huang Weixin, chairman of Hunan Yintai Textile Group.
Lan Haitao, director of the Rural Affairs Office of the Institute of Industrial Economics and Technical Economics of the National Development and Reform Commission, told the "Economic Daily" reporter that the higher the domestic agricultural product market price is above the international market price, the more valuable the tariff quota is. The domestic market price of cotton is significantly higher than the international price, so cotton tariff quotas are scarce. In years when tariff quotas are scarce, agricultural product processing enterprises or trading enterprises that obtain tariff quotas can reduce the cost of imported products, which is equivalent to indirectly increasing enterprise profits and cost competitiveness.
However, not all enterprises that need quotas can obtain them. Many cotton enterprises report that no matter how strong their desire is, even if they meet the conditions for applying for quotas, it is still very difficult to obtain a quota.
According to the "Interim Measures for the Administration of Agricultural Product Import Tariff Quotas": agricultural product import tariff quotas “shall be allocated according to the applicant's applied quantity and past import performance, production capacity, other relevant commercial standards, or on a first-come, first-served basis.” The minimum allocation quantity shall be determined by the commercially viable shipment volume of each type of agricultural product. The relevant provisions in the "2014 Quantity, Application Conditions and Allocation Principles for Grain and Cotton Import Tariff Quotas" are also similar. Therefore, under normal circumstances, enterprises with more historical import performance and stronger production capacity may find it easier to obtain quotas.
“If there are too many eligible enterprises and too few quotas, the administrative department will select the best among the best, and some enterprises with weaker conditions may be unable to obtain quotas. If they fail to obtain a quota, when they apply again the next year, if tariff quota indicators are in short supply, those who previously had quotas and actual import performance will be given priority, which can also lead to another failed quota application.” Lan Haitao said that there are still some problems in import quotas, such as covert operations and reselling quotas at marked-up prices, and these are very difficult to monitor.
As the costs of labor, land and other factors in China continue to rise, the costs of cotton and other agricultural products continue to rise rapidly, facing the impact of imported products. Therefore, in line with international practice, using the tariff quota system permitted by the WTO to appropriately regulate imports has become an effective choice, and it is also a common practice in many developed countries. Experts say the key to creating an environment of fair competition is not to abolish quotas, but to focus efforts on how to regulate the distribution of tariff quotas in a fair, just and transparent manner.
Lan Haitao suggested that improving the quota management system should focus on three aspects: First, further clarify in detail the tariff quota allocation standards and allocation methods. For example, relevant departments can list exactly what the “other relevant commercial standards” are and how to rank and allocate tariff quotas to applying enterprises according to these standards. Second, regularly publish to society each year by announcement the detailed situation of tariff quota applications and use. Establish an online advance public notice system for the qualification conditions of enterprises applying for tariff quotas, and accept social supervision and reporting. After each year's tariff quotas are completed, the following year must publish information such as the enterprises that applied for tariff quotas the previous year and their qualification conditions, quota quantities, usage amounts and returned amounts. Third, clarify punishment measures for directly reselling tariff quotas in violation of laws and regulations.