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UPDATE 2-Soy dumping claim fizzles in U.S.-China trade row

Published 09/17/2009, 08:47 AM
Updated 09/17/2009, 08:51 AM

* U.S. farm subsidies amount to "dumping", NDRC scholar says

* Soy tariffs unlikely but U.S. guilty of double standards

(Adds COFCO quote)

By Alfred Cang and David Stanway

SHANGHAI/BEIJING, Sept 17 (Reuters) - A U.S.-Chinese trade row threatened to spill over into soybeans on Thursday when a government researcher said U.S. beans were being dumped in China.

But those in the industry said China was very ulikely to restrict shipments of its main agricultural import from its top supplier.

"The U.S. government gives large amounts of subsidies to its farmers and dumps soybeans in China," Chen Dongqi, vice-head of the macroeconomic institute of the National Development and Reform Commission, told a conference.

He suggested the United States was guilty of double standards after slapping a 35 percent punitive tariff on China-produced tyres this week. China hit back by saying it will investigate U.S. shipments of auto parts and chicken meat.

China imported a record 29.9 million tonnes of soybeans in the first eight months of the year, around 40 percent of which originated in the United States.

A senior manager at COFCO, China's top food importer and exporter, confirmed that China had already looked into taking action on U.S. subsidies for soybeans shipped to China.

"This proposal was raised earlier in the year. China's government is quite rational on the issue. The government doesn't want to have a trade war. It's keeping calm over the issue," said Li Ming, COFCO's assistant president and general manager of COFCO Agri Trading and Logistics.

TARIFFS UNLIKELY

China has attracted record import volumes this year thanks to the government's stockpiling campaign, in which it offers to buy local crops to shore up farmers' incomes. That in turn sets a minimum price, opening the door to a flood of imports when global prices are lower.

But tariffs on U.S. soy are unlikely. China was already dependent on cheap and plentiful foreign supplies even before a long drought hit its major growing regions in the northeast.

"There is no other source of cheap soybeans except the United States until at least March or April," said Nobuyuki Chino, president of Tokyo-based grains trading company Unipac Grain. In later months, beans from Brazil and Argentina make up the bulk of imports.

"Even if the U.S. government has imposed duties on Chinese tyres, I don't think they will take such an action," he added.

China might be keen to retaliate against Washington, but hitting the soybean sector would not be the right way to go about it, a Chinese analyst said.

"The soybean trade volume has reached around $10 billion now, while tyre exports amounted to $2.2 billion, so China won't choose soybeans to protest against the United States," said Qin Pei at Guangtong Futures.

China's concerns are not new. Beijing conducted a study into U.S. farm subsidies last year but concluded that safeguard tariffs on soy imports would be impossible. It has since issued subsidies to its own soybean growers and crushers.

China remains uneasy about what it sees as a growing willingness on the part of the United States to resort to trade barriers.

Premier Wen Jiabao vowed in a speech at the World Economic Forum in Dalian last week that China would "fight resolutely" against all kinds of protectionism.

However the risk of tit-for-tat measures remains, with China already launching new anti-dumping investigations against U.S. poultry and auto product imports.

China has filed just five complaints to the WTO, three of which have taken place in the last year. It has been the respondent in 16 complaints.

Amid concerns that growing protectionism could scupper economic recovery, trade ministers gathered in India earlier this month as part of an effort to "re-energise" Doha trade talks, now in their eighth year. (Reporting by Alfred Cang, Niu Shuping, Naveen Thukral and David Stanway, editing by William Hardy)

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