how much is it cost?

China joined the World Trade Organization (WTO) in December of 2001. A PDF report is available for
download at: http://fpc.state.gov/documents/organization/23371.pdf. One of the requirements for China joining
the WTO was to, “Limit subsidies for agricultural production to 8.5% of the value of farm output and will not
maintain export subsidies on agricultural exports.” Why do you think the WTO requires this to China?
Solution
China became the member of World Trade Organization on December 11, 2001. Before 2001, China’s
trade policies were very restrictive. The import quotas and tariffs were very high. Large export subsidies were
provided on primary products. We all know that globalization and liberalization play very cruitial role in the
growth prospects of an economy. Earlier China’s restrictive policies such as high tariff rates, quotas, distortionary
Government policies on export subsidization started impacting the economy negatively.
Export subsidies are basically incentives provided to the export oriented units to boost their exports. Export
subsidies increase the price of the product in home country and reduce the price in foreign countries where that
good is exported....