WTO Deal Could Sow a Rich Harvest for China's Farmers, Former Cargill Head Says

(Virtual China -- Oct. 11, 1999) John Holden, the former chairman of American grain giant Cargill, says China's acceptance into the World Trade Organization (WTO) is as inevitable as pate in Paris.

"China exports lots of goose livers to France," Holden said in an interview in the New York office of the National Committee on U.S.-China Relations, a non-profit organization where he is president.

Goose livers might not sound like a weighty trade issue at first, but Holden is dead serious. He sees a true connecting thread -- and an important lesson in global trade for China -- running from the WTO, to foie gras, to China's development of self-sustaining agriculture.

Lower tariffs on agricultural imports to China, which will be set by the WTO if China does join, would unleash a flood of agricultural imports into China, including many of China's staple foods like rice, barley, and wheat. Yet Chinese farmers needn't worry that Kansas wheat will put them out of work, Holden says.

Wine and Truffles

Instead, he urges Chinese farmers to take the intitiative immediately by adopting new value-added agricultural and marketing practices, i.e., by planting and producing the foods that typically accompany foie gras such as mushrooms, wine, even truffles.

In that way, Chinese farmers who are typically crowded onto small plots of land, and thus could never compete with Kansan farmers anyway, could avoid competition and farm profitably. Not every country has to grow wheat, Holden said.

When it comes to the export of American textiles into China, however, Holden turns the tables. He does not support the American Textile Manufacturers Association's attempts to force China to accept import quotas for American textiles well into the next century.

Rather, he urges American textile manufacturers to climb up the value-added manufacturing chain and let China import the amount of textiles it wishes.

"There is no reason why every country has to have a textiles industry," Holden said. The question is, of course, can American textile makers find their own equivalent to "Chinese foie gras" in sufficient quantity to keep all the workers in the textile industry employed?

Dispel Rumors

April's round of US-China talks on China's admission to the WTO left a bitter taste in the mouths of both sides when the White House sent back Prime Minister Zhu Rongji's offer of concessions.

Holden thinks the challenge for Chinese Trade Minister Shi Guangsheng and U.S. Trade Representative Charlene Barshefsky is to dispel rumors about the weakened position of Prime Minister Zhu. Zhu's reforms have moved the two nations closer to a trade balance than ever before, he said.

Does the fact that Zhu has been out of sight since he left Washington empty-handed in April portend his political demise? No, Holden said.

"Zhu is firmly in place. Even after his failed sojourn at the White House, he didn't sound like a man who was too worried."

But when the Chinese Minister of Information Industry, Wu Jichuan, who is clearly anti-WTO, announced on September 13 that he was banning foreign investment in Chinese information technology (IT), some read his move as a way of avenging himself against Zhu for embarrassing him.

Win-Win Situation

In April, Zhu unveiled a plan for a massive expansion of the IT industry in China without consulting Wu.

If partisan infighting sets the mood of the U.S.-China trade debate in China, Congress is no better. The barrier to an agreement in the U.S. will disappear only when "the xenophobic, labor, and anti-Clinton factions in Congress realize the ultimate benefit of China accession to the WTO," said Holden. "The Chinese economy will become more transparent and predictable a player if it abides by the same rules of most other U.S. trading partners," he said. "It's a win-win situation." China's WTO fate -- for now - will be determined at a WTO ministerial meeting in Seattle in November. But the U.S. position, however it is decided, faces a heavy schedule in Congress.

What would happen if the U.S. simply turned its back on China as a trading partner, once and for all?

Forget foie gras: "It would be the trade equivalent of a nuclear war."