| Since WTO negotiation included agricultural products trade. Market access for agricultural products has become an important part of the negotiations. In order to protect the cotton industry. China promised tariff rate quotas (TRQ) policy on the market access of cotton after joining WTO. But in the implementation of TRQ, China relaxed the management of cotton imports from2004. Because the Cotton-related industries include the cotton industry and the textile&garment industry, in the open economic environment, the textile and garment industry has a comparative advantage, while the cotton industry is lack of international competitiveness. Therefore, the influx of large number of low-priced foreign cotton promoted the production of textile and garment industry, but limited the development of the domestic cotton industry. In2005, In order to balance the interests of cotton farmers and textile&garment enterprises, the government issued a sliding tax policy. The implementation of sliding tax got active support of cotton grower representatives and some scholars. They thought it is beneficial to the stability of cotton grower income and guarantee of cotton cultivation. The textile industry representatives thought the sliding tax increases the textile enterprise cost, thus strongly requested to cancel it. Even some scholars put forward cotton tariff rate quotas policy was the product of a certain environment and should be thoroughly cancelled. At the same time, The United States, controlling the international cotton pricing, as China’s imported cotton main suppliers and textile clothing exports main market, on the one hand, restricts China’s textile and apparel to its market, on the other hand, continues to put pressure on China to further liberalization of the cotton market. The case of soybean industry gave us expensive lessons. If China’s cotton trade policy repeated mistakes, the next shocks would be the cotton industry. In further deepening reforms and expanding agricultural opening in China, how to help cotton-related industries benefit from globalization, but also avoiding or buffering the impact of external shocks would pose a challenge to improve the foreign trade policy of China’s cotton.Based on the analysis of the comparative advantage of the cotton industry and the textile&garment industry, This paper comprehensively evaluated the effects on domestic cotton industry and the textile&garment industry of cotton import policy relaxation in2004and the implementation of the slipping tax policy since2005from the perspective of industrial chain by using the model of Global Trade Analysis Project (GTAP). Finally, this paper made a simulation analysis of the influence of Chinese cotton trade policy to further open combined with current agricultural domestic support policies in China. The main contents and results are as follows:China’s cotton is planted mainly by small-scale farmers, the level of mechanization is low and the cost of production inputs is high, which makes it difficult to compete with the United States and other cotton-producing countries. GTAP simulation results show that China’s cotton industry was shocked in2005largely due to the excessive openness the cotton market in2004. That brought great damage on cotton farmers’ interests, if China opened its cotton market strictly according to the WTO commitments in2004, it would actively promote the development of the cotton industry; This would be conducive to increasing employment and income of farmers. And according to WTO commitments? China’s cotton industry from the quantity can completely satisfy the demand of the textile and garment industry’s development after the abolition of the agreement on textiles and clothing (ATC). But strict implementations of WTO commitments have limitations, that is the higher over-quota tariff may lead to the phenomenon of "yarn substitute cotton", which is not conducive to the development of the cotton industry and the textile&garment industry. In order to balance the interests of farmers and textile enterprises, it requires the government to open cotton market moderately.Secondly, this paper assesses the effect of Cotton slipping tax on cotton industry and textile&garment industry since2005. The results show that the implementation of the slipping tax really helps to increase the income of cotton farmers, and promote the development of the cotton industry, although this policy reduces the output and export of textile and garment industry by increasing the cost of production. Because the sliding tax on clothing industry’s negative effect is weak, but the influence on textile industry is large, and the textile industry belongs to the excess capacity industry, the state has started to rectify the industry from2006; The slipping tax is beneficial to promote the textile industry upgrading. Considering the event that the United States and the European Union and other countries re-imposing restrictions on China’s textile garment exports in2005, the implementation of the sliding tax is also conducive to promoting the settlement of the trade frictions between China and the United States and Central Europe, furthermore, sliding tax will not impact China’s food security strategy.In order to solve the quantitative restrictions of imports of agricultural products and non-tariff barriers, the tariff rate quotas system are adopted as a transitional measure in the Uruguay Round negotiations, the final goal of the WTO agricultural negotiations is to abolish the quotas policy and take a single, transparent tariff system. This paper applies the GTAP model to simulate the cotton trade liberalization on China’s cotton industry and textile&garment industry by reducing the over-quota tariff of cotton and expanding the import quotas in the context of the implementation of sliding tax, considering the conditions of China and the United States cotton subsidies. The results show that the cotton imports would substantially increase if China completely abandons the tariff quota policy, because China’s cotton industry has been in the more vulnerable edges, A large number of imports of cotton will impact China’s cotton industry. If China abandons the tariff rate quotas policy, at the same time, to increase cotton production subsidies, it would alleviate the negative impact of market opening. When the subsidies increased to90Yuan per mu, which will fully offset the loss of China’s cotton market open on the cotton industry. In the long run, all countries have abolished the cotton subsidies, the international cotton industry would compete on a fair market, China’s cotton industry would suffer a smaller negative impact of market opening, and China’s textile&garment industry would also benefit from this. At the same time, simulation also shows that, in the current cotton subsidy policy, when the enlarged quota reached2.95millions tons, the policy of import tariff rate quotas has no longer restriction on cotton imports. Of course, if the United States and other countries would not restrict China’s textile and apparel exports anymore, China would import more cotton.Based on the above conclusions, This paper argues that China still does not have such conditions through high subsidies to replace tariff rate quotas policy on cotton industry protection, and suggests that China should carefully open the cotton market and should further improve the sliding tax distribution policy, adjust the sliding tax formula, Add cotton grade coefficient in the formula to determine the sliding rate from cotton prices and grade; Establish Automatic mechanism for adjusting the threshold price with the international cotton price fluctuations; Determine the base quota of sliding tax. Meanwhile, this paper puts forward that china should appropriately increase the inputs subsidies and income subsidies for cotton farmers to increase the international competitiveness of the cotton industry to prepare for the further opening of cotton market according to the Trace license subsidies of WTO. Another possible approach is to combine cotton import and textile export in future cotton trade negotiations, to emphases that China cotton market’ further opening should be linked to textile clothing market’s opening in US and other countnes. |
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