Import Tariff on out of quota sugar declines 06-06-2019

China started to launch trade remedies for out-of-quota imported sugar in May 22, 2017. This policy is valid in the following three years, ranging from May 22, 2017 to May 21, 2020. During this time, the safeguard measures towards imported sugar become more flexible. According to the safeguard measures of tariffs, the one regarding imported sugar that is out of quota keeps reducing to 95%, 90% and 85% during the three years respectively.

However, there is a condition for products imported from developing countries or regions. If these imports account for no more than 3% of all national imports, and if the total imports from these countries account for no more than 9% of all national imports, then these safeguard measures will not be applied. Importers should provide the certificate of origin from those countries and regions in which the safeguard measures cannot be applied.

The safeguard tariff rate is 35% from May 22, 2019 to May 21, 2020, down from 45% from May 22, 2017 to May 21, 2018 and 40% from May 22, 2018 to May 21, 2019. Since China joined the World Trade Organization, the in-quota and out-quota rates of the tariff on imported sugar for the most-favored-nation treatment have been steady at 25% and 50% respectively. The safeguard policy issued in 2017 is the first adjustment of the tariff on imported sugar since then. The import tariff on out-of-quota sugar has declined to 85% after May 22, 2019. Compared to Brazil and Thailand, where it is 90%, the cost of import has reduced to about RMB 100-150 per ton.

Concerns from Brazil regarding China’s sugar trade policy probably the reason for reducing tariff

The decline in tariff on imported sugar that is out-of-quota is probably related to news from Brazil. According to news agency Reuters in Brazil, MAPA indicates that Brazil will ask the WTO to revoke the investigation into the trade policy towards China after reaching an agreement on the tariff on sugar. Brazil will not seek help from the WTO to investigate China’s trade policy on sugar in order to moderate the commercial relation between China and Brazil. Even though China has not yet clarified its own position, it is obvious that China will make a concession in that it is necessary to become an international partner with more countries, considering the current tense situation with America.

Analysts of the sugar stock market think that the trade protection between China, India, Thailand as well as other countries might become one of the reasons why the price of sugar may drop globally. Earlier, Brazil raised some questions on trade policies in the WTO. The price of sugar stays at the lowest level within ten years. The increase in the number of productions in India and Thailand leads to the growth in global supply. Brazil reduced nearly 10 million tons of sugar production from last quarter, losing the title of the largest sugar-producing country in the world to India, which takes its place.

For more information about China’s food market, please have a look at our monthly newsletter Sweeteners China News.

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