June 23, 2004

 

 

China To Accept 20 Incoming Brazil Soy Cargoes

 

China will accept 20 shipments of soybeans that left Brazil before the June 11 implementation of stringent new export standards that prompted China to lift a quarantine embargo on Brazilian soybeans, a senior Brazilian Ministry of Agriculture official said Tuesday.

 

According to the Brazilian MOA's Secretariat of Animal and Plant Health and Inspection Secretary Macao Tadano, that acceptance is part of a preliminary agreement sealed Monday in Beijing to lift a freeze on the billion-dollar Sino-Brazilian soybean trade since May.

 

Brazilian authorities expect China will publish a final version of the agreement by the end of this week.

 

"We understand that 20 ships are on their way to China...that left before the (the new standards), so we can't guarantee they are the same (quality) standard as shipments that left after (June 11)," Tadano said.

 

China's General Administration of Quality Supervision, Inspection and Quarantine, or AQSIQ, banned Brazilian soybean imports from 23 companies, including large multinational trading firms such as Cargill Inc. and Archer-Daniels-Midland Co. (ADM), since last month after a number of shipments were found to be contaminated with small amounts of fungicide-tainted seeds.

 

Tadano led a Brazilian government team Monday that convinced AQSIQ that Brazil's June 11 move to tighten soybean export quality standards to one fungicide-tainted seed per kilogram was adequate to allow trade to safely resume.

 

That team included agricultural and medical experts as well as the governor of Rio Grande do Sul, Brazil's largest soybean-producing region.

 

Brazil's new soybean export quality standard compares with the internationally accepted threshold of three contaminated seeds per kilogram.

 

Tadano said Brazil-based exporters will have to pay the necessary costs to remove excess contaminated seeds from any of the incoming 20 shipments of Brazilian soybeans that do not meet the new import standard.

 

China's AQSIQ Welcomes Import Agreement

 

AQSIQ's handling of soybean imports has been a persistent irritant to trade relations between China and exporters such as Brazil and the U.S., who have accused the quarantine authority of implementing non-transparent and unpredictable import rules designed to regulate trade.

 

China-based analysts and Brazil's Minister of Agriculture Roberto Rodrigues have described the recent import embargo as a ploy by Chinese importers to renegotiate contracts at a lower price.

 

That echoes the situation in August 2003 when AQSIQ verbally warned trade officials from Brazil, Argentina and the U.S. that some of their suppliers would face an import ban for allegedly providing contaminated soybean cargoes.

 

Diplomats and observers said AQSIQ's move, never followed up with a formal written notice, was aimed to curb imports during China's soybean harvest period to boost prices of the domestic crop.

 

Tadano stressed that Brazil had gone the extra mile to reassure AQSIQ that Brazil was serious in addressing China's soybean import quality concerns.

 

"It's stricter than any similar regulation found in other countries," Tadano said of the new contamination tolerance regime.

 

"If authorities find shipments that don't comply, the (exporter) will be given a period of time to clean it up and if it's not done properly it will be confiscated."

 

AQSIQ Administrator Li Changjiang Tuesday denied that Brazil's new regime for soybean exports to China exceeds international standards, without elaborating.

 

But Li described Monday's agreement as a key plank in getting the Sino-Brazilian soybean trade back on track.

 

"Both sides found a sound solution by relying on respect for science and technology, facing up to reality and adopting a forward-looking attitude," Li said.

 

"After this (contamination) problem is solved, we will, according to the requirement of Brazil's agricultural ministry, lift the ban on 23 companies whose imports have been suspended."

 

The road to sealing the deal to resume Brazilian soybean imports hinged on satisfying AQSIQ's concerns about the original source of the contamination.

 

Tadano said the fungicide-contaminated seeds that ended up in China-bound Brazilian soybean cargoes were part of a massive amount of nongenetically modified seeds discarded by growers due to recent regulatory loosening on the use of genetically modified soybean strains.

 

"Because of this choice, a bigger amount of seeds were discarded and by accident or mismanagement they ended up in cargoes to China," he said.