September 6, 2019 / 5:41 PM / 2 months ago

Exclusive: China sugar industry to lobby government for extension of hefty tariffs on imports: sources

BEIJING (Reuters) - Chinese sugar mills plan to ask the nation’s Ministry of Commerce to extend hefty tariffs on sugar imports that Beijing imposed in 2017 to protect China’s struggling domestic sector, according to two sources and a draft document viewed by Reuters.

FILE PHOTO: A farmer prepares to spray pesticides at a sugar cane field at a village of Menghai county in Xishuangbanna Dai Autonomous Prefecture, Yunnan Province, China, July 12, 2019. REUTERS/Aly Song/File Photo

The plan to request an extension of the tariffs was discussed at a meeting organised by the China Sugar Association on Thursday.

Beijing’s trade measures on sugar imports, set to expire on May 21, 2020, “have played an effective role in safeguarding the interest of the domestic industry, and promoting healthy and stable development of the sector,” said the draft document that was dated Sept. 5.

China’s domestic sugar sector has struggled to compete with foreign rivals due to higher production costs. Chinese white sugar prices also plunged in 2018, amid a global supply surplus, pushing many producers into the red.

The Guangxi Sugar Association, in China’s top producing region for the sweetener, will submit the application for the extension of the tariffs on behalf of the entire domestic sugar industry, according to the document.

A source familiar with the matter confirmed that the industry group is consulting lawyers and experts, and drafting the application to be submitted to the government.

It is not clear when the Guangxi association will submit the plan or what Beijing’s response will be, as other major sugar exporters continue to pressure China to drop the trade measure to curb imports.

“The safeguard measures are a very complicated issue. Application is still only an plan. It is not easy to extend (the measures),” said one of the sources who was briefed on the plan.

Separately, China Sugar Association will also look into the possibility of an anti-dumping and anti-subsidy investigation into imported sugar products, according to a second draft document discussed at the Thursday meeting.

Some sugar exporting countries and regions have exported sugar products at below cost prices, or with subsidies, which has damaged China’s domestic sugar industry, the document said.

The draft does not outline proposed tariff rates if the safeguard measures are extended.

China in May 2017 hit major exporting nations with hefty tariffs on sugar shipments after years of lobbying by domestic mills. Beijing started to levy extra tariffs on out-of-quota sugar imports from all origins last August.

China allows 1.94 million tonnes of sugar imports a year at a tariff of 15% as part of its commitments to the World Trade Organization. Out-of-quota imports are charged a higher tariff and need special permits.

Imports beyond 1.94 million tonnes attract a 50% levy. The 2017 ruling added an extra 45% duty to these imports in that fiscal year, taking the total to 95%. The rate fell to 90% 2018-2019 and 85% in 2019-2020.

Reporting by Hallie Gu and Dominique Patton; Editing by Tom Hogue and Louise Heavens

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