BRAZIL: UNICA says WTO panel against China is a “concrete possibility”

Published: 06/08/2017, 4:31:10 PM

Brazil's sugarcane industry association UNICA sees the request of a panel against China in the World Trade Organization (WTO) as "a very concrete possibility" after the Asian country announced additional duties to sugar imports, according to Brazil's Globo Rural news website.

"We are talking with the Brazilian government and I see (the panel) as a very concrete possibility," said Elizabeth Farina, president at UNICA, in an interview with Globo Rural. "It's a long and expensive process, but we have every chance to win."

The Chinese government announced in May that it was raising the rate on sugar imports beyond the quota of 1.945 million tonnes per year from 50% to 95%. This rate will drop to 90% in the second year, and to 85% in the third. Tax on sugar imports within the quota will remain at 15%.

UNICA says that the safeguard reduces competitiveness of Brazilian sugar in the Chinese market, and that it was announced amid expectation of an increase in shipments to the Asian country. In the 2016/17 harvest, Brazil exported 2.149 million tonnes to China. During the current harvest, Brazil was expected to ship 3 million tonnes to the Asian country before China announced the safeguards.

There is a concern in the Brazilian sugarcane industry that the extra import duties could be extended from three to up to ten years, according to Farina.

She said that a country can adopt safeguards under two conditions: if there is an atypical movement of imports of a certain product, and if a harmful effect of such movement on the local market is proven. "As these conditions have not been demonstrated, the possibility of (requesting) a WTO panel is open," she said.

During the interview, she also expressed concerns about the strong increase in ethanol imports from Brazil. From January to April this year, Brazil imported 835.75 million litres of ethanol, more than the 821.57 million litres imported from January to December 2016.

Almost all of the ethanol imported by Brazil is corn ethanol from the United States.

UNICA asked Brazil's Foreign Trade Chamber (Camex) to impose a 16% tariff on imported ethanol, arguing that the Brazilian sugarcane ethanol has a reduced environmental impact in comparison with the competitors'. "It is not a tariff against the US, but against any country," she said.

"Brazil is in a process of valuing biofuels linked to commitments to reduce greenhouse gases. The increase in imports raises our (greenhouse) emissions ," she said.

Farina ruled out the possibility that any tariff on ethanol imports could be treated as protectionism. She explains that, currently, the rate is zero because ethanol is on Mercosur's list of exceptions. So the norm would already be a 20% tariff on ethanol imports.

In addition, she said that Brazil has a consolidated tariff of 35% at the WTO, and is able to raise the barrier up to this level without violating rules.