China is paving the way for an eventual reopening of its market to U.S. dried distillers grains by announcing a list of U.S. companies that are eligible to export the product, according to documents and sources.
U.S. companies are not exporting any DDGs to China now because of high tariffs, but U.S. negotiators fought to get China to agree in the “phase one” trade pact to re-certify U.S. producers to sell to their Chinese clients in preparation for an eventual resumption in trade.
China agreed in the pact to update a long list of U.S. ethanol companies to export the DDGs, and now the country’s General Administration of Customs has done exactly that, releasing a list of 88 U.S. companies on its web site.
China was once the largest foreign market for U.S. DDGs, but trade was halted after the Chinese government levied steep anti-dumping tariffs and countervailing duties on the corn-based product used for livestock feed about three years ago. Since then, the licenses of many U.S. exporters have expired or soon will expire, according to industry sources.
The U.S. exported 6.5 million metric tons of DDGs to China in 2015, worth $1.6 billion, according to the U.S. Grains Council.
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“We had a great market and we were loading containers that were going straight to China,” says Randall Doyal, CEO of the Minnesota-based Al-Corn, which is included on the list of 88 U.S. companies. “It was great.”
The tariffs need to be removed, said one industry source, but the fact that China has agreed to the certification of U.S. suppliers is a “key part” of resuming trade. “If you can’t get the permit, it doesn’t matter if there are no tariffs or 100% tariffs, so it’s an important issue,” the source said.
Doyal confirmed the importance of China agreeing to the permits.
“If we can get this knocked out ahead of time, when they finally decide they need the feed, that’s when they’ll remove the tariffs,” he told Agri-Pulse. “And we want to make sure we’re ready to roll.”
Chinese anti-dumping and countervailing duties – as high as 96% – remain in place and continue to prevent trade. U.S. government officials tell Agri-Pulse that they are leaning on China to lift the tariffs, but have not yet been successful.
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