There’s some good news today for the U.S. ethanol industry and exporters of the ethanol co-product known as distillers dried grains.
China is removing its 11 percent value added tax on DDGS, a nutrient-rich animal feed ingredient, government officials said today following talks in Beijing between President Trump and his Chinese counterpart, Xi Jinping. Tom Sleight, the president and CEO of the U.S. Grains Council, said the action is effective immediately.
Sleight said punitive anti-dumping and countervailing duties China imposed in January on U.S. DDGS imports and ethanol remain in place, but he said the removal of the VAT on DDGS by the world’s most populous nation is “very significant.”
“I’m not sure if it’s going to be a gamechanger in terms of exports, but at least we have 11 percent off of this onerous tax that DDGS face going into China, and that’s progress,” Sleight said in an interview with Agri-Pulse at the National Association of Farm Broadcasting convention in Kansas City, Missouri.
According to USGC, the Asian nation imported 6.5 million metric tons of the product in 2015, worth $1.6 billion and accounting for 51 percent of total U.S. exports of DDGS.
Sleight said that before China imposed the duties on DDGS, the country was the number-one market for DDGS from the United States. Afterwards, U.S. exports dropped to a “trickle.” The market, he said, “disappeared overnight, more or less.”
“Now, with one action, we’re more competitive in a key market,” he said.
Sleight said its efforts to have China remove the anti-dumping and countervailing duties “are still on the plate,” but the removal of the VAT is “great news… and we’ll take good news wherever we can get it.”
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