WASHINGTON – The Office of the U.S. Trade Representative and the U.S. Department of Agriculture received assurances today from China’s Government that new Chinese import regulations will not interfere with trade in U.S. soybeans and other commodities.

USTR Chief Agriculture Negotiator Allen F. Johnson and USDA Under Secretary for Farm and Foreign Agricultural Services J.B. Penn received the assurances from Beijing during a meeting with Charge d’Affaires (acting Ambassador) Lan Lijun in Washington today.

During the meeting, the U.S. officials expressed concern regarding a new agricultural import regulation that is inhibiting trade in soybeans.

China’s acting Ambassador, on advice from his capital, assured Ambassador Johnson and Under Secretary Penn of his government’s strong commitment to maintaining the “win-win” U.S.-China trade in soybeans.  He indicated that the purpose of the new regulation was to extend the validity of quarantine inspection permits from three to six months and would not interfere with U.S. exports of soybeans to China.

“Providing predictable market conditions for U.S. shipments of soybeans and other key agricultural commodities to China is critical to American farmers,” Ambassador Johnson said.  “The assurances provided by the Government of China today should help alleviate the concerns of farmers and exporters as they prepare for the fall harvest and shipping season.”

“Soybeans are America’s largest export crop, and China is the largest soybean export market,” said Under Secretary Penn.  “Continued access to the Chinese market is a high priority for American agriculture, and this Administration is working to ensure that China continues to abide by its market access commitments.”

Ambassador Johnson and Under Secretary Penn also made clear that while the assurances of China’s Government are welcome, the United States has reiterated a request that China suspend or rescind Decree 73 until China has properly notified a revised measure to the World Trade Organization (WTO) and considers the comments of its trading partners.  The acting Ambassador agreed that it was important to have a continuing U.S.-China dialogue on Decree 73.

Background

In late June, China’s quarantine and inspection agency, the State General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) released Decree 73, Items on Handling the Review and Approval for Animal and Plant Entry Quarantine.  The Decree extended the validity of China’s quarantine inspection permits from three to six months, a policy change that was agreed to by China during April 2004 meeting of the U.S.-China Joint Commission on Commerce and Trade.  However, the Decree also raised concerns by requiring that all contracts for the importation of soybeans, as well as other products subject to the quarantine entry process, include Chinese quarantine requirements as a contract term. 

U.S. traders are concerned that this requirement results in a shift to the exporter of all of the economic risk associated with complying with Chinese quarantine and food safety requirements.  This is inconsistent with standard international practice for commercial contracts.  In addition, before implementing the measure, China did not notify Decree 73 to the World Trade Organization (WTO) and allow an opportunity for comment by Members, as required by WTO rules.

Senior U.S. officials have raised their concerns with their Chinese counterparts since Decree 73 was issued in late June.  The U.S. Ambassador to Beijing had earlier raised the issue with senior Chinese officials. Ambassador Zoellick and Secretary Veneman had also recently contacted their counterparts regarding this issue.

The United States exported $2.9 billion worth of soybeans to China in 2003.