The group, which includes the US Grains Council (USGC), the Renewable Fuels Association and Growth Energy, sent an open letter to the Trump administration asking that both dried distillers grains and ethanol be prioritized in upcoming trade efforts with China.
“We respectfully request that your administration, and specifically the incoming US trade representative, place the Chinese government’s injurious trade barriers against US ethanol and DDGS near the top your China trade agenda,” they wrote.
The parties are urging the US authorities to act following China's decision to impose multiple duties on the feed ingredient following an anti-dumping and countervailing duty investigation.
Final duties established by the Chinese included anti-dumping rates of 42.2 to 53.7% and countervailing duty rates of 11.2 to 12%.
“These duties were implemented despite the fact that China’s investigation did not find any evidence of dumping or injury to domestic industries,” they said. “China’s imposition of duties on DDGS raises important questions about whether the country violated its obligations under World Trade Organization (WTO) rules and ignored accepted protocols for investigations of alleged dumping.
"China’s recent actions are significantly injuring US ethanol producers and farmers, and undermining the substantial investments our industries have made in developing a cooperative and mutually beneficial trade relationship with China.”
The Council is currently working to maintain communication on this issue with China, said Tom Sleight, president and CEO with the USGC. “What we’re trying to do is ensure we continue talking,” he told FeedNavigator. “There’s not a whole lot we can do right now.”
Getting down to business with Trump team
The group reached out to the new administration as a way to seek recognition for the importance of the Chinese market when it comes to export of DDGS and coarse grains, said Sleight.
The Trump administration has since publically offered support for ethanol development through the Renewable Fuel Standard, he said.
“We’ve discussed this informally with the administration and they understand,” he said. “Once the various officials are appointed, that’s what everyone in Washington is waiting for, then we’ll get down to business.”
Chinese import decline tracked
From 2006 to 2010, China shift from from not importing any DDGS from the US to becoming the top export market for the feedstuff, the group said. By 2015, China imported about 6.5m metric tons or about 51% of US exports of DDGS.
Before the anti-dumping probe began, China imported an average of 538,522 metric tons of DDGs per month - as of November 2016 that amount had fallen 89% to about 61,575 metric tons, said the trade representatives. They expect that US DDGS exports to China are expected to be further curtailed in 2017 and prices have dropped by about 40%.
“We put up a strong defense, but it was not taken into consideration at the end of the day,” said Sleight. The tariff penalties have been put in place for five years, he added.
In addition to the anti-dumping and countervailing duties that have been added to the imports of US DDGs, a value added tax is also being included, he said. “When you add up all of the tariffs on US DDGS it could be over 90% – it’s quite a package,” he added.
Alternative market developments
Sleight noted that in terms of alternative export markets for US DDGS, challenges remain, particularly in relation to Vietnam.
Discussions are underway between phyto-sanitary experts in Vietnam and the US Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS), he said. “It’s slowly grinding to some sort of reasonable resolution, but there is much more work to be done,” he added.
One growing market, though, has been Mexico, said Sleight. The feed ingredient has also been gaining popularity in Korea and Columbia.
Other countries in Southeast Asia also offer promise as developing markets, as does northern Africa, he said. “It’s always been that if we can get into a market and promote it, we can develop interest in it,” he added.