Some support policy options for cotton in China
The Authors
William Martin, The World Bank, Development Research Group, Washington, DC, USA
Acknowledgements
JEL classification – Q17, Q18, E64. This paper reflects the views of the author alone and not those of the any other person or institution. Thanks are due to comments from participants at a seminar at the World Bank Office in Beijing, and to anonymous referees. The author is also grateful to Hong, Chang.
Abstract
Purpose – The purpose of this paper is to review the economic arguments for and against raising the tariff on imports of cotton into China.
Design/methodology/approach – The paper reviews first the possible arguments for raising the tariff, and particularly the possibility that such an increase in tariffs would have a favorable distributional effect by redistributing from those involved in the production of textiles and clothing to the producers of cotton. The core analysis of the paper examines the policies in place using descriptions of policies and interviews with policymakers. It also assembles statistics designed to assess the export status of cotton, whether in raw or processed form.
Findings – The paper reviews the situation with respect to WTO commitments and confirms that such an increase, up to 40 percent, would be permitted under WTO rules. The paper then examines other constraints on the effective use of such higher tariffs on cotton. Policies that are better than tariff increases in dealing with the serious problems of rural incomes are identified.
Research limitations/implications – The paper is unable to assess the distributional impacts of an increase in the tariff on cotton. It raises a number of cautions about the issues that need to be confronted in making such an assessment.
Originality/value – The issue of raising the tariff on cotton has been a subject of intense debate in China and this paper is intended to provide an input into this debate. The paper agrees that urgent action is clearly needed to mitigate the poverty problems in rural China, but concludes that a number of policy options appear likely to be more effective in dealing with these problems than protection of cotton.
Article Type:
General review
Keyword(s):
Cotton; Economic policy; China; International trade; Imports; Tariffs.
Journal:
China Agricultural Economic Review
Volume:
1
Number:
1
Year:
2009
pp:
23-37
Copyright ©
Emerald Group Publishing Limited
ISSN:
1756-137X
China is currently a large importer of cotton, which it imports under a tariff-quota regime. Despite the fact that imports substantially exceed the quota, the government has continued to allow imports at a rate well below the bound tariff rate. Under WTO rules, China would be permitted to impose a tariff of up to 40 percent on over-quota imports. Some argue that the tariff on imported cotton should be set above the current applied rate in order to benefit cotton farmers who are likely to be poor relative to those involved in the cotton processing sector. The purpose of this note is to consider some of the issues involved in this policy decision.
This issue is potentially quite important, since it could involve using trade policy to redistribute income domestically towards a relatively poor group, in a context where the incomes of rural people are well below those of urban people, even when allowance is made for differences in the cost of living (Ravallion and Chen, 2004; Sicular et al., 2006). If policies of this type are to be followed, cotton is a much more attractive candidate than other agricultural commodities such as staple foods because:
- cotton is a cash crop on which farmers would benefit from price increases on virtually all of their output; and
- it makes up a relatively small share of the spending of the poor in China, so there would be few direct adverse impacts on the incomes of the poor.
The cash-crop nature of cotton means that an increase in the price of cotton translates directly into an increase in the incomes of cotton farmers – an increase of ten percent in the price of cotton increases cotton farmers' revenues by ten percent. By contrast, an increase in the price of wheat or rice has a much smaller impact on the incomes of most poorer farmers since it provides them with a benefit only on the part of their output that they sell – it provides no net benefit on the (typically large) part of their output that they consume themselves. The adverse impact on the cost of living of the poor of an increase in the price of cotton is also likely to be much smaller than with staple foods, given that about three quarters of the expenditures of the poorest people are on staple foods (Cranfield et al., 2007). These factors contribute to the finding by Minot and Daniels (2002) that an increase in world cotton prices would substantially reduce the poverty rate in poor-country exporters such as Benin.
Despite this, protection that is effective in raising the prices of cotton would have costs that need to be offset against its potential advantages. If protection is able to raise the domestic price of cotton, it can be expected to increase the domestic cotton output by transferring land and other resources into cotton production and out of production of other land-intensive commodities. It would also be expected to reduce the demand for cotton in the processing sector, either by causing substitution towards other fibers such as synthetics, or through a shut-down in the activities of domestic processing plants. Whether processing firms adjust or shut down would depend in turn on whether they are able to substitute between cotton and other fibers, and on whether they are able to pass on the added costs imposed by protection to cotton on to their buyers.
Another key question is whether the redistribution of income from processors to farmers created by higher cotton prices would lower poverty in the recipient regions more than it would raise it in the areas and activities disadvantaged by the policy change. This question deserves further consideration given that key cotton-producing areas of China, such as Xinjiang, Henan and Shandong are not generally the lowest income areas.
Perhaps, the usual approach to assessing the answer to this question would be to assess the impact of the tariff on the domestic price, and then to assess the impacts on households, and particularly poor households. In doing this, a key question that needs to be addressed is how effective a higher tariff on cotton would actually be in raising the price of raw cotton in China. One of the constraints on using tariffs to redistribute income is that they can only be effective in raising the prices of imported goods. If a standardized commodity like cotton is an exportable, then a tariff is unlikely to be successful in raising its domestic price since prices paid for an exportable good are determined by returns in export markets, rather than by the cost of imported goods. While it is clear that China is a net importer of raw cotton, it is not as clear that this is the case for cotton in total, including cotton processed into textiles and apparel.
Another constraint on the effectiveness of tariff policy is the possibility that tariff increases on one product will cause importers to substitute away from the product with the increased tariff, towards imports of related goods. These might be goods that are substitutes in consumption, such as synthetic fibers, or goods that are closely linked through vertical production linkages – such as cotton yarns and fabrics.
In this short note, we first consider China's production and trade in raw cotton. We then consider the situation once trade in cotton and cotton products is taken into account. In light of that analysis, we consider the possible role of trade policy. Finally, we consider a wider range of policy options that might be used to deal with the problems giving rise to the proposal for increases in the tariff on cotton.
Developments in China's cotton production and trade
China is an extremely important participant in world raw cotton production, utilization and trade. China alone produces around a quarter of world cotton, much more than any other country. Table I presents some key figures on China's production, mill consumption and trade in cotton since marketing year 1980-1981. A key feature of the table is that production has grown quite strongly over the period, a period that corresponds roughly with the reform period in China. Most of the increase in production has resulted from a near doubling of cotton yields – the officially-reported area planted in 2005-2006 was virtually the same as in 1981-1982, and considerably below the peak area of 6.9 million hectares in 1984-1985. However, many analysts believe that the numbers reported for recent years substantially understate the area planted and cotton production, with some land actually being used for cotton being reported as used for grain, for which a grain subsidy is payable.
A dramatic change in China's net trade position in raw cotton has occurred since 1998-1999, driven largely by rapid growth in mill consumption of cotton. Cotton mill consumption had been relatively stable in the 15 years leading up to 1999, at around its 1999 level of 4.3 million tonnes. Since then, however, mill consumption of cotton in China has more than doubled, rising to 9.6 million tones in 2005-2006, probably as a consequence of expansion in textile production following the abolition of the export quotas on textiles and clothing formerly imposed under the agreement on textiles and clothing. The impact on China's trade position in cotton has been quite dramatic, turning China from a net exporter in the three years to 2000/2001 into a large net importer of raw cotton.
The abolition of the export quotas on textiles and clothing eliminated a formidable burden on the textile and clothing sectors. World Bank (2004) estimates the average export tax equivalent on textile exports from China to the USA in 2002 to have been 20.5 percent and the burden on the clothing sector to have been 36 percent. However, the burden of these quotas was very uneven between products, with yarn export quotas being available without cost, except for yarns prepared for retail sale, while products such as sheets faced export tax equivalents of over 130 percent. The abolition of the quotas on important products appears to have been extremely important in stimulating exports of cotton products overall, but has increased the competition in export markets for these products by reducing the barriers facing suppliers from other competitive suppliers. Despite the abolition of these barriers, the textile industry in China is reported to be suffering from very low profitability ( People's Daily, 2008).
As part of her WTO commitments, China agreed to a Tariff rate Quota on raw cotton of 894 thousand tonnes. Imports under the quota are subject to a 1 percent tariff, while over-quota imports are subject to a bound tariff of 40 percent. Since 2004, China's imports of cotton have substantially exceeded the quota level, permitting China to impose a tariff of up to 40 percent.
If cotton were traded only as a final good, then the figures in Table I would indicate clearly that China is a net importer of cotton. Under these circumstances, China would be able to raise the domestic price of cotton simply by imposing a tariff. However, the fact that cotton is a raw material for the tradeable textile and clothing sectors means that China's net trade position in cotton cannot be inferred from Table I alone. If net exports of cotton in the form of textiles and clothing are factored in, China may still be a next exporter of cotton. Based on detailed calculations by MacDonald (2007), it appears that this remains the case, despite quite rapid growth in domestic final consumption of cotton in China. He estimates that net exports of cotton were roughly 15 million bales of cotton out of total mill use of 55 million bales in 2006. As is evident from Table II, most of the exports of processed cotton are in the form of apparel.
More detailed data on production and net trade in cotton are available for the August-July marketing years from 1995/1996 to 2005/2006. These data are based on estimates of the cotton contained in textile and apparel exports from China
The numbers presented in Table III show a dramatic increase in China's net imports of raw cotton since 2004-2005 consistent with the ICAC numbers presented in Table I. In addition, they show a quadrupling of China's exports of cotton in the form of textiles (including garments) during the decade. The final column of the table indicates that net exports of cotton in raw and processed form have risen quite substantially. The domestic disappearance figures in the second last column of the table show something of a decline after 1996-1997, with an increase in the last two years. These figures are estimates of purchases of cotton for final consumption in China, as distinct from mill use, and take account of changes in stocks of raw cotton, but not changes in stocks of intermediate products. The omission of these stocks would be expected to significantly affect year-to-year estimates, but not the longer-term level of utilization.
The numbers on domestic final disappearance Table III are consistent with a level of cotton consumption of just under 2 kg per person. This is substantially above the estimate of 1.5 kg per person implied by the cross-sectional relationship between income levels and cotton consumption in the large international sample compiled by MacDonald (2007). If, as is widely believed, China's national statistics under-report cotton production, then actual consumption levels would be higher again. While official estimates put China's cotton production in 2006/2007 at 6.7 million tones, industry sources suggest that it may be around 12 percent higher, at 7.5 million tonnes (Shi, 2007), a view that appears to be broadly supported by NBS officials. Such a difference in output levels would have a large impact on estimated domestic consumption. If we assumed that production in 2005/2006 was higher by the same 12 percent, and the numbers for net exports and for stock changes underlying Table IV are correct, then estimated per capita consumption in 2005/2006 would be 25 percent higher, at 2.5 kg per person.
Except in 2005/2006, the data in Table III suggest that exports of cotton in all forms were substantially greater than domestic final consumption. If correct, these numbers would have important implications for the effectiveness of tariff policy for cotton in China. As long as China remains a net exporter of cotton, including processed cotton, the effectiveness of a tariff on cotton in raising domestic prices is likely to be subject to serious question. If, for instance, a tariff were imposed on imports of cotton destined for domestic final consumption, processors would substitute domestic cotton for imported cotton in these uses. However, in this situation, the domestic market would not be large enough to absorb all production of cotton. Under these circumstances, the price of cotton would be determined not by the tariff-inclusive price of cotton, but by the returns obtainable on export markets. Attempts to sell cotton at a price based on the tariff-inclusive price of imported cotton would encounter the fundamental problem that it would not be possible to sell all of the domestically-produced cotton in the domestic market at this price.
With a tariff applying to cotton used to produce goods for the domestic market, producers of textiles that would switch away from using imported to domestic cotton. Processors who need types of cotton not readily available on the domestic market might be disadvantaged by having to switch to less suitable domestically-produced cotton in some cases. But, there would be unlikely to be a significant positive impact on the price of domestically-produced cotton from a tariff alone, simply because the price would be determined by the demand for cotton for use in exports.
The trade impact of a higher tariff might also depend on whether the tariff applied to cotton destined for the export market. As long as the general duty exemption arrangements for export processing apply, there would probably be relatively little impact on trade. If domestic production of cotton exceeds domestic final demand, some domestic cotton would also have to be used for export production. Additional cotton for export production could be brought in under the duty exemption arrangements. If imports for export-processing pay no duties
China's duty exemptions for inputs used in the production of exports have typically accounted for approximately half of China's total imports, including raw materials, intermediates and final goods. For a good like cotton, which is rarely consumed as a final good, one might expect a higher than average fraction to be imported for use in exports. China customs data reported in Table IV show that the fraction of China's cotton imports entering China under processing trade arrangements has been around 75 percent in most years since 1997, except in years of very low imports, when it has been higher, and in years of very large imports such as 2004-2005, when it was considerably lower.
If the usual duty exemption arrangements did not apply for cotton, the situation would be slightly different. Processors would still substitute domestic cotton for imported cotton in goods destined for the domestic market. Assuming the domestic market does not absorb all domestically-produced cotton, however, some would need to be sold through incorporation in exported products, and the need to allow these exports to be profitable would drive domestic cotton prices down to something close to the levels obtainable from export markets. Gross import levels of raw cotton would, however, fall substantially, since China's efficient processing sector would no longer be able to access international markets for cotton being produced for export. This policy approach would have the disadvantage of reducing output and employment in early-stage cotton processing in China, while the benefits to cotton farmers would be subject to question, and textile and garment producers would be forced to use more imported yarn than they would otherwise prefer.
Since, the price of cotton contributes an estimated 70 percent of the costs of yarn producers, they are likely to be very vulnerable to increases in the price of cotton (China Cotton Textile Association, 2007). Later stage processing of textiles containing cotton would potentially be insulated from the adverse impacts of a tariff on cotton. This insulation could come either from duty exemption arrangements for intermediate inputs used in the production of exports or low, bound tariffs on cotton-based intermediates such as yarn. The applied tariffs and the tariff bindings applying on some key cotton-containing products, and competing products, are given in Table V. If, for instance, a high-cotton tariff were imposed, producers of textiles could continue to import cotton yarn, or competing yarns such as polyesters, at tariff rates of 5 percent that could not be raised without renegotiation of these tariff bindings at the WTO.
The tariff bindings presented in Table V also highlight another important feature of the situation. The use of a tariff of more than around 5 percent on cotton creates a strongly adverse incentive situation for yarn spinners. A tariff of 5 percent on cotton would neutralize any potential advantage to yarn spinners allowed by the tariff binding of 5 percent on cotton yarn. A slightly higher tariff might allow domestic yarn spinners to survive, albeit with reduced margins. If the estimate that cotton contributes 70 percent of the costs of yarn producers is correct, then a tariff in the 40 percent range would mean that cotton alone absorbed 98 percent of their total returns, allowing them virtually nothing to pay other costs such as those for capital, labor and other materials
As MacDonald (2007) has pointed out, China's consumption of cotton is increasing rapidly, and it seems likely that China may become a net importer of cotton at some point, even though the extremely rapid growth in China's exports of textiles and clothing following the abolition of the textile quotas is probably a one-off, transitional success associated with abolition of the export quotas on textiles and apparel. Even if this were the case, however, the relatively low-tariff bindings presented in Table V would continue to impose major constraints on the use of higher tariff binding on cotton. Given the 5 percent tariff binding on cotton yarn imports, there would appear to be a serious risk of destroying the cotton spinning industry at the expense of cotton yarn imports, without significantly improving the well being of cotton farmers, or altering the balance of profitability between cotton farmers and the textile industry downstream from the cotton spinners.
Applied tariff policy for cotton in China
China's actual tariff policy in recent years has been consistent with, but quite distinct from tariff bindings. In December 2006, the ministry of finance announced a sliding scale of the cotton import duty for over-quota cotton (Cotlook, 2006). This import duty is determined by the formula: Equation 1 where R i is the duty rate, with a maximum of 40 percent; P t is a constant 8.8 yuan per kilo; P i is the cif price in US$ per kilo; E is the exchange rate relative to the US$; and a is a constant of 2.526 percent. If the cif price is at or above a reference price of 11.397 yuan per kilo (around 66 cents per lb), the tariff is 6 percent. As the cif price falls below the reference price, the tariff rises to a maximum of 40 percent. Examination of the cif import values for China's cotton imports reveals that the price of imported cotton rarely fell below the reference price on a country-wide basis during the period 1995-2005.
Had the tariff formula in equation (1) applied during the past decade, and had imports exceeded the quota in all of those years, the tariffs that would have been generated by equation (1) are given in Table VI. From the table, it is clear that the minimum out-of-quota tariff of 6 percent would have applied in eight of the 11 years considered. In the lower priced years of 1999, 2001 and 2002, a higher tariff would have applied.
It is interesting to compare this tariff with the actual patterns of delivered protection estimated using price comparisons. These take into account the impact of the different forms of protection provided by any trade policy instrument, including not only tariffs, but the state trading system that dominated China's cotton trade in earlier years. A comparison between China's domestic prices and the unit value of imports is presented in Figure 1 as a nominal rate of assistance (NRA).
A striking feature of Figure 1 is the extent to which protection was negative in the early years of the reform process. At that point, the interests of the processors appear to have dominated those of the farmers. During this period, the protection was provided by a nontransparent state trading regime, and relatively few people would even have been aware of the extent of the taxation of cotton producers. After 1995, the trade regime became much nearer to neutrality, with protection rates frequently close to zero, although they were negative in a number of years. In the 11 year period covered by Table VI, the NRA averaged 6.5 percent. The formula in 2005 was very similar to that used from 2006, with a tariff rate of approximately 5 percent. The protection rate implied by the NRA for 2005 appears to have been somewhat above the tariff in that year. A key question for future analysis will be the relationship between the tariff and the ratio of domestic to import prices in subsequent marketing years, when the sliding-scale tariff was fully in place.
Possible alternative policy instruments
The concern that rural people are falling behind urban people are real and important, and policy action is urgently needed to address them. However, it is generally the case that trade policy measures are not the best for addressing problems of the distribution of incom
Despite the inherently inefficient and frequently inequitable impacts of policies involving price and trade distortions, many countries have historically used price and trade policies to assist particular sectors. Export sectors can potentially be assisted using an export subsidy, which raises the domestic price by creating incentives for cotton marketers to reduce their sales to the domestic market. In the case of cotton, such a policy is made more difficult by the adverse impacts of such a policy on the processing sector. The USA has used a policy, officially described as a domestic support measure, to provide protection to its export-oriented cotton industry. Its Step 2 program (Oxfam, 2002) provided subsidies both for exports and for domestic use of cotton in an attempt to offset the cost-raising impact of the export subsidy on domestic users of cotton. This approach has always been expensive, because it involves payment on all cotton, not just on the export component. Further, the recent Brazilian cotton case has resulted in it being found an illegal export subsidy.
Administered support prices based on all output produced are distortionary in that they create incentives for producers to raise their output. Further, they are unsustainable without an accompanying trade barrier. If an administered price is set out of line with world prices, any government agency responsible for making sure this price is maintained will inevitably accumulate stocks that cannot be sold at the administered price. Within the WTO, such administered prices are subject to two sets of disciplines – the disciplines imposed on trade barriers such as tariffs or export subsidies; and the inclusion of support provided using an administered price in the Amber box measures of the aggregate measure of support.
An alternative policy approach, still potentially focused on the particular commodity, would involve decoupled payments to producers. To be consistent with (WTO, 1995, p. 59) rules, such payments must be based on clearly defined criteria such as income or production levels in a defined and fixed base period; must not be based on volumes of output or on prices in any year after the base year; and no production must be required in order to receive such payments. Even minor deviations from these principles have been found to result in substantial distortions to output levels in the United States, where the number of farmers appears to be very strongly responsive to payments that involve any continuing requirement to undertake farming activities (de Gorter et al., 2008).
A wide range of other policies appear to be both strongly welfare increasing and consistent with WTO commitments. Many of the policies that focus on challenges not fully met by markets have high rates of return. These include research and development, which is typically under-provided by private markets; improvements in transport, electrification and other infrastructure in rural areas; improving the availability and lowering the cost of education in rural areas. Many of these investments have been shown to have extremely high rates of return in rural areas (World Bank, 2008). The marginal return on rural research and development appears to be extremely high
A key challenge in China, as it has been in other rapidly developing economies, is a substantial gap in incomes between urban and rural areas, and between farm and non-farm families. This problem, frequently called the “farm problem” is frequently used to justify protection to import-competing farming activities. However, as we have seen, these policies have little or no able to help export oriented sectors such as cotton production, even if these are the ones in which the income gap is most serious.
One important way to address the problem of large gaps in incomes between rural and urban incomes is through investments in public goods in rural areas, including in infrastructure, rural education and health services. On infrastructure, Huang et al. (2008) point to very substantial progress at the village level both in the volume of investments, and their reorientation from commercial activities towards public goods that can only be supplied by governments. In rural education, China has made enormous progress in recent years, both in the provision of improved education, and in reducing the costs to households of accessing these services. The paper by Zhai and Hertel (2006) has highlighted a particularly major, long-term role for rural education in making this transition. They show that not only does education raise the productivity of the new generation of workers in rural areas, but it reduces their resistance to moving out of agriculture, and into activities with higher income-earning potential.
Policy reforms in recent years have sharply reduced the costs imposed on households by taxation. The phase-out of the procurement quotas in the early 1990s, with their lower procurement prices, greatly reduced the financial burden imposed by policy on farmers (Huang et al., 2007). The unification of agricultural taxes and fees in 2001 and 2002, and the subsequent abolition of these fees also substantially reduced the burden of taxation on farmers. While important, it must be recognized that the benefits of such reforms are one-off in nature, increasing incomes in a manner analogous to the productivity reforms associated with the introduction of the household responsibility system (Lin, 1992) but not overcoming the long-term downward pressures on farm incomes associated with the continuing adjustment of labor out of agriculture in a rapidly growing economy.
The fundamental cause of the farm problem is the resistance to mobility of farm labor into non-farm activities. Zhao (1999) shows that the nature of agricultural land ownership in China, which provides land use rights, but not the right to sell land, creates stronger resistance than in other countries to the voluntary migration of labor out of labor essential for land consolidation and raising the incomes of the farmers that remain. A key to dealing with the farm problem is to reduce these barriers and to encourage the inevitable transition from a low-income economy in which over half the population works in agriculture, into a well-off economy in which only a few percent of the labor force is in agriculture.
Conclusions
China has become an extremely large importer of raw cotton in recent years. Under these circumstances, China is entitled to raise the tariff on over-quota cotton from the 1 percent that applies within the tariff-rate-Quota up to 40 percent. Such a tariff increase would clearly impose burdens on users of cotton. On the other hand, an increase in the price of cotton could provide important benefits to farmers, without risking the livelihoods of the poor by raising the prices of staple foods that are important to the poor.
Two fundamental problems arise when considering raising this tariff. The first is that China remains a net exporter of cotton when exports of cotton in the form of fibers, yarns, textiles and apparel are compared with imports of cotton in all forms. Under these circumstances, an increase in the tariff on cotton is unlikely to be successful in substantially raising the price of domestic cotton. An increase in the tariff alone would certainly discourage imports of cotton for use in products destined for the domestic market. However, the duty exemption arrangements for cotton used in the production of exports would continue to allow cotton imports for production of exports at a zero tariff. These imports would free up domestic cotton for use on the domestic market. Since domestic final demand does not require all of the cotton produced in China, domestic prices would need to remain at a low level to allow domestic cotton to be competitive with zero-duty imported cotton in the production o f exports.
Whether or not China remains a net importer of cotton, the ability to import cotton products at low duties, such as 5 percent for yarns, under a duty bound at the WTO, means that the tariff on cotton is unable to have more than a small impact on the domestic price of cotton. The fact that these tariffs are bound at such low-levels means that the tariff on cotton appears to have had only a very limited impact on the domestic price of cotton. The combination of a high tariff on cotton and a low tariff on yarn would, however, have a sharply adverse impact on early stage processing activities such as spinning of cotton yarn, for which raw cotton inputs account for a large share of total costs. This adverse impact arises with any duty over 5 percent, and would increase sharply because cotton is such a large share (reportedly 70 percent) of the cost of yarn production.
Another commodity price policy option that might have been considered as a means to raise the price of cotton is something like the USA Step 2 program under which a subsidy is paid both on exports and on domestic consumption of cotton. A key difficulty with this approach is that it would be extremely costly in budgetary terms. Another is that it was recently found to contravene WTO rules.
The problem of farm incomes falling behind urban incomes is very serious. It is, in fact, a manifestation of a problem seen in all high-growth economies during the transition from a poor economy with a large share of the workforce in agriculture into a well-off economy with only a very small share of the workforce in agriculture. Policies that address this problem directly, by improving productivity in agriculture, or reducing the barriers to mobility out of agriculture are much more likely to be successful in dealing with this problem than policies that attempt to work indirectly through the prices of particular commodities, such as cotton.
Equation 1
Figure 1Nominal rates of assistance to cotton in China (percent)
Table IKey statistics on cotton production and trade in China, marketing years
Table IIChina's net exports of processed cotton, 2006, million bales
Table IIIChina: cotton production, trade and disappearance, '000 tonnes
Table IVExports, imports and processing imports of cotton
Table VTariff bindings on selected cotton products and substitutes (percent)
Table VIApplied over-quota tariff generated by the 2007 formula
Table AIChina's textile trade in mill-use cotton equivalents
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Further Reading
Baffes, J. (2003), "Cotton and developing countries: a case study in policy incoherence", World Bank Trade Note 10, Washington, DC, .
MacDonald, S., Vollrath, T. (2005), "The forces shaping world cotton consumption after the multifiber arrangement", Electronic Outlook Report from the Economic Research Service, USDA, CWS-05c-01, Washington, DC, .
Appendix. Estimated cotton equivalent of trade in textiles and apparel
About the author
William Martin is a Lead Economist in Development Research Group, The World Bank Group. He specializes in analysis of trade policy reforms in developing countries, with an emphasis on reforms related to the WTO, and a regional focus on East and South Asia. He has written extensively on policy reforms in agricultural trade, textiles and clothing, and non-agricultural trade generally. He has a particular interest in using detailed data on trade barriers to build up a complete picture of the effects of trade barriers on trade and welfare. He has published widely in journals, and books, including recent studies of global trade reform, implications of food prices for poverty, and of China's accession to the WTO. William Martin can be contacted at: wmartin1@worldbank.org