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China's Cotton Policy and the Impact of China's WTO Accession and Bt Cotton Adoption on the Chinese and U.S. Cotton Sectors

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  • Cheng Fang
  • Bruce A. Babcock

Abstract

In this paper we provide an analysis of China's cotton policy and develop a framework to quantify the impact of both China's World Trade Organization (WTO) accession and Bt (Bacillus thuringiensis) cotton adoption on Chinese and U.S. cotton sectors. We use a Chinese cotton sector model consisting of supply, demand, price linkages, and textiles output equations. A two-stage framework model provides gross cropping area and total area for cotton and major subsitute crops from nine cotton-producing regions in China. Cotton demand, total fiber demand, and cotton share are estimated for each end user. The estimated parameters from the Chinese model are then used with the Food and Agricultural Policy Research Institute (FAPRI) modeling system to simulate various scenarios of China's WTO accession and Bt cotton adoption. The results suggest China's accession to the WTO would increase Chinese cotton imports on average by 455 to 676 thousand metric tons (tmt) during the 2002-2011 projection period. With the adoption of Bt cotton-the WTO accession factor notwithstanding-China would increase its cotton imports by 427 to 648 tmt. In these scenarios, U.S. cotton exports increased by 76 to 109 tmt and 71 to 104 tmt, respectively.

Suggested Citation

  • Cheng Fang & Bruce A. Babcock, 2003. "China's Cotton Policy and the Impact of China's WTO Accession and Bt Cotton Adoption on the Chinese and U.S. Cotton Sectors," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 03-wp322, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:fpaper:03-wp322
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    1. Fernandez-Cornejo, Jorge & McBride, William D., 2000. "Genetically Engineered Crops For Pest Management In U.S. Agriculture," Agricultural Economic Reports 33931, United States Department of Agriculture, Economic Research Service.
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    1. MacDonald, Stephen & Pan, Suwen & Hudson, Darren & Tuan, Francis C., 2012. "Chinese Domestic Textiel Demand: Where Tehy Buy Does Matter," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126354, International Association of Agricultural Economists.
    2. MacDonald, Stephen & Pan, Suwen & Somwaru, Agapi & Tuan, Francis C., 2004. "China'S Role In World Cotton And Textile Markets," 2004 Annual meeting, August 1-4, Denver, CO 20054, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Xia, Doris Yan, 2005. "Impacts of Multi-Fiber Arrangement Removal on Global Textile and Cotton Trade," 2005 Annual meeting, July 24-27, Providence, RI 19453, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Jia, Xiangping & Piotrowski, Stephan, 2006. "Land property, tenure security and credit access: a historical perspective of change processes in China," Research in Development Economics and Policy (Discussion Paper Series) 9083, Universitaet Hohenheim, Department of Agricultural Economics and Social Sciences in the Tropics and Subtropics.
    5. Suwen Pan & Mark Welch & Samarendu Mohanty & Xiurong He, 2007. "Distortions of Sino‐US and Sino‐EU Safeguard Agreements: Effects on World Textile Markets," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(4), pages 78-88, July.
    6. Pan, Suwen & Welch, Mark & Mohanty, Samarendu & Fadiga, Mohamadou L., 2006. "Sino-U.S. and Sino-E.U. Textile Safeguard Agreements: Comparing the Effects to Free Market Conditions," 2006 Annual meeting, July 23-26, Long Beach, CA 21117, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Suwen Pan & Jaime Malaga & Xiurong He, 2010. "Market liberalization and crop planting decision: a case of China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 2(3), pages 240-250, September.
    8. Pan, Suwen & Welch, Mark & Mohanty, Samarendu & Fadiga, Mohamadou L. & Ethridge, Don E., 2005. "Assessing the Impacts of the Chinese TRQ System and U.S. Subsidies on the World Cotton Market," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 6(2), pages 1-16.
    9. Unknown, 2005. "Articles from Volume 1, Issue 1, 2005, Journal of International Agricultural Trade and Development," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 1(1), pages 1-95.
    10. Muhammad, Andrew & McPhail, Lihong Lu & Kiawu, James, 2012. "Do U.S. Cotton Subsidies Affect Competing Exporters? An Analysis of Import Demand in China," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(2), pages 1-15, May.
    11. John Malcolm Dowling & Ganeshan Wignaraja, 2005. "Central Asia: Mapping Future Prospects," Working Papers 05-2006, Singapore Management University, School of Economics, revised Feb 2006.

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