Feb. 6 (NBD) -- China's Ministry of Commerce (MoC) has decided to launch an anti-dumping and anti-subsidy investigation into grain sorghum imports from the U.S., according to the regulator's two announcements released Sunday.
Unlike previous investigations, the probe this time was initiated by the ministry on its own, rather than complaints from related industries or companies.
Preliminary evidences found that the U.S. government provided subsidies to grain sorghum exporters, according to Wang Hejun, head of the Trade Remedy and Investigation Bureau of the MoC. Meanwhile, U.S. grain sorghum exports to China have been increasing dramatically but prices have been declining since 2013, dealing a heavy blow to China's grain sorghum industry.
China's investigation into U.S. grain sorghum exports will be carried out for the period from November 1, 2016 to October 31, 2017, while an investigation of industrial injury will be from January 1, 2013 until October 31, 2017, the ministry's statements show.
The investigations should be completed by February 4, 2019, but can be extended until August 4, 2019.
Domestic corn market largely affected
The MoC said in its announcements that there is an inevitable connection between the grain sorghum dumping of the U.S. and substantial damage or similar threats to China's farm industries.
Preliminary information obtained by the ministry shows that more than half of annual grain sorghum yield of the U.S. have been exported to China since 2013.
With regard to the damage caused by the surging amount of grain sorghum imports from the U.S., Han Jun, director of the Office of Central Rural Work Leading Group, stated at a press conference on Monday that grain prices in China were significantly higher than those in international markets in recent years. The scenario was much more severe in the corn segment. China's corn prices have been much higher than the duty-paid value of imported corn within the quota limits since 2013. As out-of-quota corn imports were not cost-effective, the imports of substitutes for corn saw a steep increase in the past few years, Han said.
From 2013 and 2016, the imports of substitutes for corn, mostly grain sorghum, barley, DDGS, and cassava, reached up to 113.9 billion kilograms, greatly harming the domestic corn market and causing a huge backlog of corn.
According to a research report by an investment arm of COFCO Futures, the imports of grain sorghum and barley came in at 5.056 million tonnes and 8.863 million tonnes respectively last year, far higher than the corn imports (2.825 million tonnes). Barley was mainly imported from Australia, while grain sorghum was largely from the U.S.
Han stressed that the MoC's investigation is a necessary measure taken to protect the interests of Chinese farmers.
Possible counterattacks to be launched if the U.S. goes too far in trade protectionism
China is the top buyer of U.S. grain sorghum as well as soybeans.
However, in August 2017, the U.S. requested a WTO panel be set up to investigate China's use of tariff-rate quota for agricultural products.
The United States Trade Representative said global prices for the rice, wheat, and corn were lower than China’s domestic prices, yet the country did not maximize its use of TRQs, which offer lower duties on a certain volume of imported grains every year.
One expert said that the MoC's newly announced decision was made based on collected evidences and facts.
Bai Ming, deputy director of the international market research institute of the Chinese Academy of International Trade and Economic Cooperation under the MoC, echoed the expert's statement, saying that it is a kind of protective measures against the subsidizing behaviors of the U.S. , rather than a counterattack. He also underscored the importance of fair competition in agricultural trade.
Moreover, he stated that the bulk of U.S. grain sorghum, soybeans, and corn are exported to the Chinese market. If China hits back against the U.S. in the agriculture area, it will be a serious thing for the U.S.
The expert expressed similar views, noting that if the U.S. went too far in trade protectionism and kept encroaching on legal rights of Chinese companies, China will likely launch a strong counterattack against the U.S. in the agriculture sector.