Exclusive: Chinese sugar industry will pressure government to extend high tariffs on imports – sources

BEIJING (Reuters) – Chinese sugar factories plan to ask the country’s trade ministry to extend high tariffs on sugar imports that Beijing imposed in 2017 to protect China’s struggling domestic sector, two sources and one project say document viewed by Reuters.

The plan to request a tariff extension was discussed Thursday at a meeting hosted by the China Sugar Association.

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

The Chinese sugar industry has struggled to compete with its overseas competitors due to higher production costs. Chinese white sugar price CSRc1 also plunged in 2018, against a backdrop of excess global supply, pushing many producers into the red.

The Guangxi Sugar Association, China’s largest sweetener-producing region, will submit the tariff extension request on behalf of the entire domestic sugar industry, according to the document.

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

It is unclear 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.

“Safeguard measures are a very complicated issue. The app is still just a plan. It is not easy to expand (the measures), ”said one of the sources who was briefed on the plan.

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

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

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

In May 2017, China hit major exporting countries with high tariffs on sugar shipments after years of lobbying from domestic factories. Beijing began levying additional tariffs on imports of out-of-quota sugar from all origins last August.

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

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

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

Rachel J. Bradford