China takes action against US DDGS, ethanol imports

By Erin Voegele | January 11, 2017

On Jan. 11, China’s Ministry of Commerce announced it will subject U.S. distillers grains with solubles (DDGS) to anti-dumping and countervailing duties. According to information released by the ministry, the duties will be levied beginning Jan. 12. 

Documents published by the Chinese government indicate the country’s DDGS industry requested an anti-dumping and countervailing investigation in late 2015. The investigation began in January 2016. A preliminary ruling was made in September. 

In a statement, U.S. Grains Council President and CEO Tom Sleight said China’s announcement “is the latest in a rash of measures taken by the Chinese government to restrict access to that market for U.S. feed grains and related products, specifically corn, distillers dried grains (DDGS) and ethanol.”

Sleight noted the DDGS announcement came only 10 days after China to action to dramatically increase tariffs on imported U.S. ethanol from 5 to 30 percent, effectively stopping a growth market for U.S. farmers and ethanol producers. Sleight noted U.S. farmers also continue to wait for China’s approvals of biotech corn events, which last happened in 2014.

"The U.S. Grains Council is deeply disappointed in this series of events that is a severe departure from our industry's three decades of broad, cooperative work with China's government and livestock industry and that follows a year of extensive cooperation on the part of the U.S. DDGS and ethanol industry with MOFCOM investigations,” Sleight continued.

"The decisions in the anti-dumping and countervailing duties investigations are not supported by the evidence and raise serious questions regarding the ministry's compliance with standard AD/CVD procedures and with China's international obligations,” he said. “While painful and damaging to the U.S. DDGS industry, their biggest negative impact will ultimately be on China's feed and livestock industries, which risk losing access to an important and cost-effective feed ingredient, and on millions of Chinese households that will likely face greater food price inflation and less access to affordable, wholesome pork, poultry and dairy products.”

"The decisions to raise tariffs on ethanol and to delay further the approval of helpful plant technology that enhances food safety and environmental protection are short-sighted trade barriers that also, ultimately, most hurt the Chinese people, who deserve cleaner air and increased food security through both production and trade,” Sleight said.

"This new year marks the 35th anniversary of U.S. Grains Council programs in China,” he continued. “We deeply appreciate the opportunities we have had over this time to partner with a broad cross section of members of local industries and government who are working to make their production more efficient, safer and more environmentally-friendly. The implication of these recent moves is clearly that we are less than welcome in their market, and this will challenge the extent of our engagement with China.”

"Protectionist trade restrictions based on false allegations do not benefit either China or the United States and represent a threat to a global trading system that has promoted consumer welfare and jobs around the world while lifting millions of families out of poverty,” Sleight said. “We look forward to and will continue to work toward the day when U.S.-China trade relations are back on a better and more sensible course that results in benefits for both countries, their farmers and their consumers. Thirty-five years of solid work and cooperation have showed this is possible."

A statement released by Marquis Energy, an ethanol producer based in Hennepin, Illinois, states Chinese tariffs on ethanol and DDGS are expected to cost U.S. agriculture at least $2 billion per year. “These tariffs are the poster child of bad trade deals,” said Mark Marquis, CEO of Marquis Energy. “It is our opinion that the Chinese calculations are not in line with WTO trade rules.”

Marquis Energy said it, along with U.S. farmers, are hopeful the new Trump administration will immediately take up the issue of these tariffs directly with China, rather than waiting several years that a WTO challenge would take whole the tariffs remain in place, harming U.S. trade.

According to the U.S. Energy Information Administration, the U.S. exported nearly 1.76 million barrels of ethanol to China in 2015, or an average of 5,000 barrels per day. In 2014, the U.S. imported only 81,000 barrels of ethanol to China, down slightly from the 86,000 barrels exported to China in 2013. During the first 10 months of 2016, the U.S. exported nearly 3.8 million barrels of ethanol to China.

USGC data shows 3.37 million tons of DDGS were exported to China during the 2015-’16 marketing year, down from 5.37 million tons during the 2014-’15 marketing year and 6.18 million tons during the 2013-’14 marketing year.