China bites U.S. apple, spits out 'if'

YAKIMA -- The United States has reached an important agreement with China on a reduction in tariffs on apples, pears and cherries by 2004, but the deal depends on China's entry into the World Trade Organization.

The agreement calls for dropping the current import tax on the fruit from 30 percent to 10 percent, said Chris Schlect, president of the Northwest Horticultural Council in Yakima.

But those cuts won't take effect unless China makes it into the WTO.

"It isn't something that will affect the marketing of this year's crop, but it is good news. We've been waiting a long time to get tariff reductions," Schlect said yesterday.

Trade talks between the Clinton administration and China hit some snags last week despite China's offer to lower a number of trade barriers in an effort to win U.S. support for entry into the World Trade Organization.

Some U.S. businesses fear China will back away from the offer to slash tariffs on thousands of products and remove a wide array of other trade barriers, which U.S. companies have said are a big part of America's $57 billion trade deficit with China.

Talks will continue, and trade representatives say a deal is possible by the end of the year.

Schlect said he doesn't expect the agricultural tariffs issue to be reopened.

"But they won't go into effect until World Trade accession is achieved by China. If that doesn't happen, all bets are off," he said.

A reduction in tariffs would be a big first step in making Washington apples competitive in China, said Jim Thomas, a spokesman for the Washington Apple Commission in Wenatchee.

Right now, the combination of tariffs and value-added taxes forces a markup of at least 56 percent on Washington apples.

"It blows you out of the water," Thomas said.

Relatively few apples -- less than 10,000 boxes a year -- are shipped directly to China.

But Hong Kong, which for marketing purposes is considered separate from the rest of China, has imported 1.4 million boxes this year, a good portion of which makes its way into southern China through unofficial channels, the "gray market," Thomas said.

China has 1.3 billion people and a growing middle-class that can afford high-quality imported fruit, he says. For comparison, Taiwan has 20 million consumers, and it is the largest market in the world for Washington apples.

"We're fairly optimistic the market would be a good one for us," Thomas said.

Also last week, the United States and China signed an agreement to open Chinese markets to wheat from the Pacific Northwest and citrus from Florida, Texas and California.

China had imposed long-standing bans on those products, citing concerns about plant diseases. U.S. producers complained the bans were not based on sound science but were hidden trade barriers.

Schlect said the wheat and citrus agreement will be important to all crops, because China has agreed to conform to international standards on sanitary issues.

That could eventually make it easier to address China's concerns about Northwest fruit and diseases, such as fire blight in pears, he said.