China farm support capped at 8.5 percent

By CNN's Alex Frew McMillan in Hong Kong

BEIJING, China (CNN) -- China's farm subsidies will be capped at 8.5 percent under a deal that frees up its 14-year bid to join the World Trade Organization (WTO).

That process should move ahead at talks in Geneva later this month.

China and the United States reached an agreement on the subsidies last week, during a meeting of Asia-Pacific trade ministers in Shanghai.

China's trade minister Shi Guangsheng said the two countries had reached "full consensus" on all the sticking points.

But details hadn't been announced until Chinese officials signed off on the agreement.

'A win-win result'

China will limit support for its farmers at 8.5 percent of production, U.S. Trade Representative Robert Zoellick's office said Thursday.

China had argued it should join the WTO as a developing nation, which would have meant it could subsidize its farmers up to 10 percent. The United States wanted it to join as a developed country, for which a 5 percent limit would apply.

The United States also negotiated greater access to China's insurance and retail markets, the other main sticking points.

That could mean China joins the WTO this year. Its 14-year quest to join the 141-member WTO had stalled, against a backdrop of political tensions.

"This understanding is a win-win result for China and the U.S.," Zoellick said. "It should help us and the other members of the WTO to try to complete China's accession this year."

A $2 billion boost

Getting access to China's 1.3 billion population will mean a $2 billion boost to U.S. farm exports, according to the U.S. Agriculture Department. U.S. farmers sold $1.7 billion worth of food in China last year.

China only supports its farmers to the tune of 2 percent. But U.S. officials were worried about that rising in the future and on specific products such as garlic.

"We are very pleased that the United States and China have now resolved one of the last remaining bilateral issues in China's bid to join the World Trade Organization," U.S. Agriculture Secretary Ann Veneman said.

A key working group starts five days of meetings to settle China's bid at WTO headquarters in Geneva on June 28.

China is keen to join before WTO free-trade talks resume in Doha, Qatar in November.

Mexico, the loan holdout on endorsing a WTO accord, has also promised a more flexible stance.

Even if China's bid moves ahead, though, WTO Director General Mike Moore said the large amount of paperwork involved would likely push its joining into 2002.