USTR demands China drop soybean trade barrier

WASHINGTON - Hoping to avert the possible loss this year of a leading export market for soybeans, U.S. Trade Representative Robert Zoellick has called on China to \"immediately\" lift \"obstacles\" to exporters, a U.S. trade official said. Zoellick has \"raised concerns\" with senior Chinese officials in Beijing and Washington about \"difficulties U.S. exporters of soybeans are having getting product into China,\" a U.S. trade official said Tuesday night. \"Soybeans is one of the largest U.S. export products to China and we look to China to take steps immediately to remove these obstacles,\" said the U.S. trade official, who asked not to be identified. The official did not comment on China\'s reaction to Zoellick\'s conversations. Hoping to build on those discussions, a high-ranking U.S. Agriculture Department trade official will travel to Beijing next week, accompanied by USDA experts on genetically modified organisms. Nearly 70 percent of U.S. soybeans are grown from bio-engineered seeds. In June, China put in place broad new rules governing the import of GMO foods. But since then, it hasn\'t provided USDA or the U.S. industry the details they need to facilitate shipments of soybeans. The result has been that China\'s bookings of U.S. soybeans have nearly ground to a halt at the exact time contracts on the newly harvested crop normally would be booming. Zoellick, according to the U.S. official, \"has told the Chinese of uncertainties raised by soybean exporters and importers\" due to the GMO regulations. After the European Union, China is the leading export market for U.S.-grown soybeans, according to Peter Thornton, Asia marketing manager for the American Soybean Association. In the 2000/01 marketing year (Sept.-Aug.), the United States shipped 5.72 million tonnes of soybeans to China, representing more than a third of China\'s import needs, Thornton said citing USDA statistics. The current dismal Chinese import situation, coupled with seasonal factors, has contributed to a significant drop in soybean prices. Chicago Board of Trade new-crop November soybeans futures prices have trended lower since late July\'s 10-month high of $5.38 per bushel, trading this week at $4.52-1/2 per bushel. \"Our concern is that we are losing sales now. The harvest is underway. This is our window for selling a billion dollars worth of soybeans to China,\" said one U.S. industry official who asked not to be identified. AN APPEAL TO BUSH The U.S. industry official added that a coalition of U.S. food industry groups are preparing a letter for President George W. Bush that\'s intended to be delivered this week. The letter, the industry official said, would be an appeal for the president to raise the soybean trade problem with Chinese leaders when he meets them later this month in Shanghai at an annual Asia-Pacific economic summit. U.S. Agriculture Secretary Ann Veneman expressed those concerns in early September to the Chinese ambassador here, as did Secretary of State Colin Powell earlier this year during a visit to China. Despite those efforts, the U.S. industry complains it still has no guidance from Beijing on how to comply with new import rules. Besides the clarifications, the industry also wants China to grant a several-month transition period for the new rules to take effect. But recently, the U.S. soybean industry has begun wondering whether the China trade problem has less to do with GMO concerns and more to do with Beijing trying to gauge the size of the next domestic soybean crop before letting in any more foreign beans. With China expected to join the World Trade Organization in coming months, \"Everyone is concerned about the precedent being set if the Chinese pursue a policy path that could not be described as anything other than a non-tariff trade barrier,\" the U.S. industry official said. Those concerns are exacerbated by the fact that the United States is looking at its second consecutive record-breaking year for soybean production. USDA forecasts this year\'s crop will be slightly more than 77 million tonnes. Meanwhile, Brazil, the world\'s number-two soybean producer, also is forecasting record production, 41.7 million tonnes, for the crop now being planted. Story by Richard Cowan REUTERS NEWS SERVICE