What to do about excessive imports of agricultural products? Adopt trade remedy measures in a timely manner
In recent years, as the world macroeconomic situation has shifted and the price gap between domestic and foreign agricultural products has widened, China's imports of agricultural products have expanded in successive tiers. Large volumes of imported agricultural products have played a positive role in safeguarding effective domestic supply, promoting industrial restructuring, and easing pressure on domestic resources and the environment. However, the rapid growth of imports of some important agricultural products has brought severe challenges to the healthy and sustainable development of domestic industries, causing domestic bulk agricultural products to pile up unsold and be difficult to sell, severe inventory backlogs, relatively large losses to the interests of producers and processing enterprises, and obstruction of the industrial integration process. In response to the situation of surging imports and damaged industries, the space for trade policy and domestic price support policy is currently limited, and domestically there is a lack of effective and powerful policy instruments to cope with import shocks, making innovative measures urgently needed to address excessive imports. In addition to honing internal capabilities and gradually cultivating one's own competitiveness, it is even more necessary to address industrial injury in agriculture in a coordinated way, strengthen trade remedies, and make safeguard measures routine and institutionalized. Past research on industrial injury mainly focused on the trade level, especially industrial injury caused by dumping and subsidies. But judging from the shocks caused by China's bulk agricultural product imports over the past two years, the large imports of some agricultural products were not caused by dumping or subsidy policies of the main producing countries. For example, the domestic sugarcane industry has high costs and weak competitiveness; the cost of sugar refining is 2.2, 2, and 2.3 times that of Brazil, Thailand, and Australia, making it unable to resist large inflows of foreign sugar. For the normal, fair imports from some countries, it is very difficult to invoke anti-dumping and countervailing measures. Therefore, the issue of industrial injury should be examined from a broad perspective, treating industrial injury as "a state and a result." Regardless of whether unfair trade practices exist, as long as the healthy and sustainable development of an industry is affected by import shocks, a determination can be initiated. The "injury" here does not involve the inevitable link between trade and industrial injury, but rather emphasizes a state and a result. Under the WTO system, safeguards, anti-dumping, and countervailing measures are the three trade remedy methods most used by members to protect domestic industries. Because the conditions for applying safeguard measures are stricter than those for anti-dumping and countervailing measures, among the three major trade remedy measures of anti-dumping, countervailing, and safeguards, safeguards are the least used trade remedy instrument. According to WTO "Finddisputescases" statistics, from 1997 to 2015 there were cumulatively 46 cases involving the use of safeguard measures. In terms of product categories involved, steel industrial products were the majority, of which 14 cases involved agricultural products, mainly dairy products and sugar products. Judging from the shock brought by excessive sugar imports, domestic sugar refining enterprises suffered widespread losses, and the scope of losses tended to worsen. In 2014, sugar enterprise profits fell to 1.84 billion yuan, less than one-fifth of 2011 (13.28 billion yuan), and the number of loss-making enterprises reached 211. Sugarcane farmers' net income in the 2013/14 crushing season decreased by 4.2 billion yuan because of the downward adjustment of sugarcane prices (compared with 500 yuan/ton). Given that the industry has suffered damage for consecutive years, safeguard measures should be adopted as soon as possible to curb the scale of sugar imports, and a compensation mechanism for industrial damage should be established.
Adopting trade remedy measures is a right granted by WTO rules and also a legal means granted by China's "two anti-dumping and one safeguard" regulations. WTO rules include specialized agreements on anti-dumping, countervailing, and safeguard measures. After China joined the World Trade Organization in 2001, it promulgated the "Safeguard Measures Regulations" on January 1, 2002. Adopting safeguard measures is the simplest, most feasible, and most effective means of mitigating trade damage and ensuring industrial security. The core content is to impose additional tariffs on imports on top of existing tariffs or to impose quantitative restrictions on imports. As long as the additional tariff rate is high enough, after the additional tariff is levied, the price at which imported sugar enters the domestic market will rise as it should, which can effectively mitigate the current impact of imports on and damage to the sugar industry.
When adopting safeguard measures, a quantity trigger mechanism is relatively appropriate. According to WTO special safeguard measures and corresponding bilateral trade agreements, the trigger mechanisms for safeguard measures are divided into quantity triggers and price triggers. From a policy perspective, the quantity trigger mechanism is very intuitive and easy to operate; it can be activated as soon as customs statistics reach the trigger standard. The sufficient and necessary conditions for the trigger conditions of the safeguard measure mechanism can be simply described as: international prices fall, the domestic-foreign price ratio becomes unbalanced, and the scale of imports spirals out of control. Together, these three constitute the sufficient and necessary conditions for the trigger conditions, and none can be missing.
The problems caused by surging imports involve not only sugar but have also spread to other bulk agricultural products. From the perspective of industrial development, and especially given that the livelihoods of a very large number of small farmers are involved, an early-warning system for industrial security should be established as soon as possible. As for the current handling approach, agricultural departments at all levels rely more on administrative orders or measures taken only after trouble has already occurred, and at the operational level they pin their hopes on processing enterprises fulfilling more social responsibility. But for the competent industry authorities, it is recommended that an early-warning system for industrial security be established as soon as possible and that early-warning indicators for the security of agricultural product imports be constructed, so that when these security early-warning indicators are triggered, a timely response can be made. It is recommended that relevant institutions establish a consultation mechanism, and after the early warning is triggered, give relevant enterprises a certain amount of financial subsidies or tax preferences, while strengthening border management and the inspection and quarantine of imported goods. Strategically, the safety net should proceed from the needs of industrial risk management and build an industrial support policy system with clear orientation, prominent priorities, and coordinated supporting measures, so that farmers' normal production and farmers' incomes are no longer further harmed, and can at least maintain or restore the status quo in which the industry was not affected by shocks. Operationally, the U.S. agricultural safety net can be used as a model, while fully considering the specific circumstances of Chinese agriculture and comprehensively applying policy tools such as monitoring systems, negotiation strategies, income subsidies, insurance, and credit, to actively and steadily advance the formulation and implementation of relevant policies and provide all-round, multi-level, three-dimensional safety net protection. In addition, for compensation and assistance to domestic industries, considering the reality of small-scale domestic production and dispersed operations, it is relatively difficult to provide compensation and assistance directly to each individual household of farmers. It may be considered to start from key support to the industry itself, including capital and equipment investment and technical assistance, to be used for consolidating infrastructure, introducing fine varieties, and adopting advanced production technologies, among other aspects.