June 23, 2004

Sino-Brazil Soybean Trade Dispute Far From Settled

Despite Brazilian claims overnight that a visiting official delegation convinced China to lift its ban on soybean imports from Brazil, it is not clear how long it will take to resume normal trade, industry watchers said Tuesday.
 
Officials of blacklisted companies said they had yet to hear from China's quarantine authorities whether they could resume shipments of Brazilian soybeans to China.
 
Chinese officials lifted a ban on Brazilian soybean exports following a four-and-a-half-hour meeting in Beijing late Monday, Brazil's Agriculture Minister Roberto Rodrigues said in Sao Polo.
 
Rodrigues said the agreement will end an impasse, which had effectively suspended the billion-dollar Sino-Brazilian soybean trade since May.
 
Even after a day, however, the Chinese quarantine authority had yet to match the statement from the Brazilian side.
 
A short statement on the Web site of China's General Administration of Quality Supervision, Inspection and Quarantine said the head of the agency met a Brazilian Agriculture Ministry delegation Monday and "exchanged views on issues concerning both parties, including fungicide-tainted seeds mixed in soybean imports".
 
The statement stopped short of saying a consensus had been reached or that a decision has been taken to lift the ban.
 
AQSIQ officials were not available for comment.
 
Jim Liu, an official at the commercial section of the Brazilian Embassy in Beijing, maintained China has indeed agreed to lift the ban, according to the minutes of the meeting Monday.
 
"I think China's quarantine bureau will make the announcement, but it might take them a while to put out a formal statement," said Liu.
 
China has banned 23 companies, including large multinational trading firms such as Cargill Inc. and Archer-Daniels-Midland Co., from importing Brazilian soybeans to the mainland on charges that many of their shipments were found to be contaminated with small amounts of fungicide-tainted seeds.
 
BLACKLISTED SUPPLIERS HOLD OFF SHIPPING CARGOES
 
Meanwhile, soybeans traders attached to the blacklisted companies said they are hesitant to resume trade before the situation becomes clear.
 
"We don't know what's going on yet. We are (checking) the Chinese government Web site every other minute to follow the news, if there's any," said a Beijing-based soybean trader at one of the blacklisted trading houses.
 
A trader at Cargill International's Shanghai office said the company has not been notified by the Chinese government about whether its name has been taken off the list of blacklisted suppliers.
 
As far as the Brazilian government is concerned, it has done its part, and "the most important thing is that the suppliers get the message and then it's up to them to decide whether to resume trade by starting to ship cargoes from Brazil," said Liu of Brazilian Embassy.
 
Brazil's Agriculture Ministry said the Chinese quarantine authority has compromised by agreeing to accept soybean cargoes with up to one fungicide-tainted seed per kilogram, a stipulation already being enforced by the Brazilian government to tighten inspection at home.
 
China had recently moved to a stringent zero-tolerance policy for fungicide residue in soybeans imports before starting to ban foreign suppliers from selling any Brazilian beans to the country on grounds of cargo contamination. The internationally accepted standard is 3 tainted grains per kilogram.
 
No matter how eager Brazil is to end the dispute, industry watchers say the dust from the festering sanitary issue is far from settled.
 
"It's not very likely for China to scrap its new quarantine rules and requirements issued only a week ago," said an analyst in Beijing who has been following the dispute closely. He noted the latest stipulation by China on June 17 asks all soybean suppliers to print their names in full on new import permits for inspection.
 
TALK OF TAINTED ARGENTINE CARGO ADDS TO UNCERTAINTY
 
Just as the dispute over Brazilian supplies was being addressed, news emerged that an Argentine soybean cargo was stuck at Shenzhen port in southern China for failing to meet Chinese quarantine requirements.
 
An official at AQSIQ contacted said the agency was trying to verify the incident, but refused to say anything further.
 
Argentine embassy officials in Beijing, when contacted, said they had not been informed by the Chinese quarantine bureau of any tainted soy cargo.
 
However, analysts in China saw it as further indication that the government is tightening control on soybean imports by extending tougher inspection procedures to other suppliers.
 
Blacklisted Brazilian soybean suppliers have long accused the Chinese government of colluding with soy crushers to renegotiate soybean shipments booked when international prices were substantially higher than current levels.
 
"It's hard to fathom what might have gone wrong with the problematic Argentine cargo, but every soybean producing country may have its unique set of sanitary problems," said a Beijing-based industry watcher.
 
Argentina competes with the U.S. and Brazil in exporting soybeans to China, the world's largest soybean importer, taking in a record-high of more than 20 million metric tons in 2003. Argentina exported around 6 million tons of soybeans last year, almost all of it to China.