November 15, 2004

Brazil, China To Resolve With Soy Trade Dispute
 
Brazilian and Chinese officials will set up a working group to resolve health issues dogging the multi-billion-dollar soy trade between the two countries, Brazil Agriculture Minister Roberto Rodrigues said Friday.
 
Speaking after meetings with a top-level Chinese delegation in Brasilia, the minister said the Chinese government had given undertakings that no Brazilian soy shipments would be barred while discussions were being held.
 
The main issue is tough new Chinese rules on contamination of soyoil imports, which were imposed in October and threaten to disrupt trade.
 
Earlier in the week, Rodrigues announced that Chinese officials had agreed shipments from the world's No. 2 soy exporter would not have to comply with a stringent demand that unrefined soyoil shipments contain less than 100 parts per million of hexane.
 
However, later discussions revealed that this exemption would be only temporary. Exporters say the rules could halt shipments as the new level is much more stringent than the industry standard threshold of 600 parts. Hexane is a derivative of petroleum used to extract soyoil.
 
"We will have to work through the issues point by point," said Rodrigues during a press conference.
 
China has become a key export market for Brazilian soyoil in recent years. Brazil will export 900,000 tons of soyoil to China this year, some 76% higher than the year before, according to industry estimates. Unrefined exports account for approximately 90% of these shipments.
 
On a more positive note, Chinese officials said their country has accepted Brazilian rules governing the contamination of soybean cargoes and that shipments should not be rejected in 2005, as they were this year.
 
Between April and June, China rejected a number of soybean shipments because they contained small quantities of fungicide-tainted seeds and banned Brazilian soy imports from most major companies. Brazil's soy industry estimated the ban cost the trade $1 billion.
 
Speaking during an official accord-signing ceremony, China's Quarantine Minister, Li Chiangjiang, said that out of Brazilian soybean shipments of 6.16 million metric tons, Chinese authorities found problems with 1.6 million tons. But rather than turning these ships away, authorities picked out the offending seeds in a gesture that emphasizes the preferential treatment given to Brazil, he added.
 
Rodrigues said just five shipments had been rejected, carrying a total of 300,000 tons.
 
China is Brazil's biggest market for soybean, importing 36% of all shipments in the January-September period.