December 19, 2006

Brazil concerned about China's new soy import rules

The Brazilian government said Monday it will study any possible change that China may make to its import rules, with an eye to avoiding a possible disruption to Brazilian soy exports.

"Technically, concerning the new commercial agreements, we will have to do a more detailed analysis about the news that came over the weekend," said Celso Amorim, Brazil's Foreign Minister on Monday, on the possibility of a new Chinese embargo on Brazilian soy. "Certainly, we will take all the necessary measures."

A report published on Monday in local O Estado de S. Paulo newspaper suggested that China could again bar Brazilian soy imports in 2007, if the Chinese government passes a new trade rule.

The new Chinese law notes that "in case of a rapid increase in imports, a violent variation of price, or other factors affecting the stability of the market, the Trade Ministry will announce alerts or adopt other measures appropriate according to relevant regulation," according to the Estado report.

In 2004, China prohibited soy from Brazil due to alleged sanitary problems with the Brazilian product, as soy prices soared on international markets. Several Brazilian exporters were banned from the Chinese market, and the dispute was only resolved after months of intense diplomatic efforts.

"In the past, we needed high-level efforts to resolve the problem," said Amorim, adding that a similar thing could be happening right now.

In the first 11 months of this year, Brazil ramped up its soybean exports to China by 57 percent from the year-ago period to 10.7 million tonnes, even as soybean revenue jumped 50 percent to roughly USUS$2.4 billion, according to data from Brazil's Trade Ministry.

Brazil is the world's second largest soy exporter, after the US.