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NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

23/11/2004

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

NEWS SOURCE

Dow Jones

CATEGORY

HEADLINE

Argentina, China to discuss soy oil trade rules
BUENOS AIRES, Nov 19, 2004 (ODJ)-- Argentine trade officials will meetwith their Chinese counterparts in Beijing next month to discuss possiblechanges in the way China regulates soyoil imports, an Argentine officialfamiliar with the issue said Thursday.

News of the Beijing talks comes on the heels of a two-day visit by ChinesePresident Hu Jintao to Argentina earlier this week. During Hu's visit,Argentina and China signed a number of trade and investment accords. Asfor trade, China agreed to open its market to Argentine beef, fruit andpoultry products, among other items.

But the vast bulk of Argentina's exports to China comprise either soybeansor soyoil, according to Argentina's Foreign Ministry. Easily the topimporter of these goods, China has become crucially important to therecent explosion of growth in Argentina's farm sector.

"We agreed with the Chinese to put together a working group to discuss thesoyoil norms," the official told Dow Jones Newswires late Thursday. "We'llbe sending a team of people to Beijing next month to try and get theChinese to change the rules."

Argentine officials had hoped to get China to ease the soyoil import rulesduring Hu's visit. This didn't happen.

"They are the hardest negotiators I have ever dealt with, and I have dealtwith many," said the official. "They are very, very demanding and don'twant to give an inch."

In return for better access to China's domestic food market, Chinademanded that Argentina recognize it as a "market economy." In theory,granting this status means Argentina must renounce some trade rights toprevent the Asian giant from "dumping" its exports on the local market.

Eager to boost sales to China, Argentina's fourth-ranked export destiny,Argentina granted China's wish, as about two dozen other countries havedone. But this did not make things any easier for Argentine negotiators.

"It cost us a great deal to achieve this accord," the official said,referring to the beef-import deal. "This was an extremely hard accordprocess. And they waited until the very last minute to make concessions.Moreover, the market economy issue wasn't even relevant to our efforts onthe soyoil regulations."

On Oct. 1, China began upholding new standards for imported soyoil,requiring that crude soyoil meet the same sanitary standards as refinedsoyoil.

Argentina's ambassador to China recently told Dow Jones Newswires that thenew standards would not hurt exports to the Asian nation. But some localexporters fear the rules might raise costs or even block exports.

Because of this, Argentines want the rules eliminated.

"The Chinese told us that we will have preferential status, but we wouldprefer not to face any new rules at all," the official said. "This soyoilnorm is a Chinese rule and we can't change it on our own."

In the first nine months of 2004, China imported 2,044,025 tons of soyoil,up 71% from the same period last year, according to Chinese customs data.Of this, Argentina accounted for 1,354,663 tons, up 65% from a yearearlier.

As reported earlier by Dow Jones Newswires, analysts at the China NationalGrain and Oils Information Center, a research unit affiliated with theState Grain Bureau, said the new standards will have an impact on theindustry.

The center estimates that Chinese soyoil imports in the 2004-05 marketingyear will slow to 2.0 million tons from 2.72 million tons in 2003-04.

Between January and September of this year, Argentina exported $2.2billion worth of goods and services to China, up 11% from a year earlier,according to Argentina's Foreign Ministry. Soybean exports accounted for51% of this while soyoil made up 31%.