June 17, 2004

Brazil Presents New Soybean Export Rules To China

In a bid to persuade China to lift an effective ban on the soybean trade, Brazilian officials presented the main points of new tight rules to stop contamination of soybean exports to Chinese quarantine officials on Tuesday, Agriculture Ministry officials said.

Brazil's Ambassador to China Afonso Celso Ouro Preto reaffirmed that the new rules are even stricter than international standards during a meeting in Beijing, according to a Ministry statement. He said China's Sanitary Control and Quarantine Deputy Minister Ge Zhirong was satisfied by the rule changes.

"(He assured Chinese officials that) the Agriculture Ministry will rigorously implement the rules," said Agriculture Ministry Sanitary Secretary Macao Tadano.

A Chinese policy of banning Brazilian soybean imports from various trading companies, which now number 23, after finding small quantities of fungicide-tainted seeds in shipments has effectively paralyzed trade in recent weeks, traders say. The news negatively affects Brazil as China is its main bean customer, importing 6.1 million metric tons in 2003.

Tadano has had to delay a visit to China to explain the new rules more thoroughly, and attempt to persuade Chinese authorities to lift the ban as he must wait for his visa to be issued. The impasse has already cost exporters up to $1 billion, the Ministry estimates.

China informed the Brazilian government this week that it had refused entry to two more shipments of 60,000 tons of Brazilian soybeans because of seed contamination. The shipments, the Bunga Saga Lapan and the Oriental Sun which left from Rio Grande port, took the total of Brazilian soy turned away from Chinese ports to 359,000 tons since April 18.

However, Brazilian government officials rejected a proposal from local soybean exporters to contest the Chinese embargo at the World Trade Organization. According to Trade and Development Minister Luiz Fernando Furlan, this is a temporary problem, which should be resolved soon, not a permanent trade barrier to be addressed at the WTO.

On Tuesday, Brazilian Vegetable Oil Industries Association President Carlo Lovatelli said Brazilian soy exporters have contacted their Argentine and U.S. counterparts about the possibility of contesting the legality of China's ban.