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Argentina protests Chinese sanitary restrictions on soy-oil imports

Tuesday, April 6th 2010 - 02:45 UTC
Full article 32 comments
Jorge Taiana summoned Chinese ambassador Gand Zeng   Jorge Taiana summoned Chinese ambassador Gand Zeng

Argentina formally protested on Monday a possible move by China to block imports of Argentine soybean oil in a trade row that threatens a key export of the country and last year involved almost 1.5 billion US dollars.

Argentine Foreign Minister Jorge Taiana summoned China's ambassador in Buenos Aires Gang Zeng to discuss the potential Chinese measure. According to Argentine diplomatic sources China “is willing to hold contacts that can help find a solution to the problem”.

Last year, Argentina, the world's leading soy-oil seller, exported to China 1.84 million tons of soy-oil worth 1.4 billion USD and a prolonged conflict could end up benefiting US or Brazilian soy oil exports, analysts said.

The Argentine response came after Chinese companies were called to an emergency meeting last week in Beijing and urged not to buy Argentine soy oil in retaliation for the country's decision to restrict imports of Chinese products, including shoes and steel pipes.

As the global economic crisis grew in late 2008 and early 2009, Argentina restricted Chinese imports to shield its industries from import competition.

A trade body under China's Ministry of Commerce told traders to cancel soy oil cargoes from Argentina because Chinese authorities planned to raise standards on the imports to levels which Argentina currently does not meet.

The disposition of the Chinese sanitary authorities established a maximum of 100 parts per million of hexane-solvent residues used in the extraction of oilseed oils in the shipments of crude soy oil.

Chicago, US soy oil futures were up in Monday afternoon trade, getting support from the trade spat although several US traders said they did not expect the row to drag on.

However, some analysts said the conflict might mean export business shifted to other leading producers such as Brazil and the United States.

”If it went on long enough, it probably would (benefit US soy oil exports) because Argentina is by far the largest exporter of soybean oil in the world and China is by far the largest importer. But that combination tells me that this situation might not last very long,“ said Anne Frick, oilseeds analyst with Prudential Bache Commodities.

”If it were to continue, it would probably benefit US soybean oil exports and possibly Brazilian exports as well,“ she said.

Soybean and soy derivative exports are a pillar of Argentina's economy and the government could lose some 600 million USD in tax revenue this year if Chinese soy oil exports are suspended, according to analysts.

Last Saturday, Argentine Industry and Tourism Minister Débora Giorgi reiterated that Argentina, through its external commerce policy, defends national production from disloyal competition, and highlighted that Argentina did not restrict imports from any country, including China.

Giorgi added that regardless of the international crisis and the decrease in world commerce, the Argentine deficit with China grew.

”Our measures look to avoid disloyal competition, which grew in consequence to the international crisis and the surplus of stock of products from last year, but we didn't prohibit Chinese imports, which continue coming in to our country in the form of healthy competition,” said Giorgi in a communiqué.

The Argentine Government says that the restriction -assuming it comes into force- would not last long, since more than 50% of soy oil imports to China come from the South American country and replacing this volume would not be easy.

Although the measure created some alarm, Argentine businessmen trust a solution will soon be found. Argentine Industrial Union (UIA) lobby Secretary, José Ignacio de Mendiguren, said he was very positive about a possible accord between the governments of Argentina and China over the conflict.

De Mendiguren downplayed the whole situation as he considered that “it's just a matter of trade negotiations between the two nations”.

The lobbyist also remarked that “China's development without the alimentary security that South American products bring to them is not possible or viable as only ten percent of China's soil is cultivable.”

De Mendiguren also believes that “being China the country that will dispute the US hegemony within the next decade, they will necessarily need Brazilian steel, Argentine soy, and South American oil and energy”.

Top Comments

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  • Rhaurie-Craughwell

    Perhaps Jorge Tainia should have kept his eye on the ball instead of being distracted by the pitifully small issue of an oil rig well within international law(or more likely using it as a distraction), when the country seems to have engaged itself in a minor trade war in which Argentina stands to lose alot.

    Call me tad traditionalist but it appears that Argentina has been caught of guard? Is the Falklands so great an foreign policy issue that it causes the government to neglect other issues?

    “Beijing urged not to buy Argentine soy oil in retaliation for the country's decision to restrict imports of Chinese products, including shoes and steel pipes”

    Oh dear I thought these were the same Chinese who many of the Malvinist Parrots said would come running up to Argentina with their knickers in their handbag, being offering the finest riches in the indus in return for their unfettered support over this most high agenda of issues for La-Parrot-Tree.

    Argentina is a young nation, sadly with the likes of the Jerkners in charge, it's going to learn the hard way that China is a tough bed fellow and makes sure it gets what it wants and gives very little in return.

    Apr 06th, 2010 - 10:05 am 0
  • jorge!

    Argentina is not only country which suffers blackmailing from China. USA is the main victim and EU follows. This is all business!!!!
    Maybe the world should put an end to extremely slow chinnese products made by slaves of XX! century.
    Nothing to do with other issues like Malvinas. Countries have many issues to look at. Only ignorants could always relate them!

    Apr 06th, 2010 - 05:40 pm 0
  • Beef

    Hey Jorge. Is it nice to have such good neighbours like Brazil that are rubbing their hands together with glee now they can sell more of their Soy-oil because China is not happy with the muck produced in Argentina. On one hand they shout their support for Argentina with regards to the Falklands ata group with no power, they however don't put this on paper and then step in to capitalise where Argentina has failed.

    Make no mistake Jorge this is a major problem for Argentina and continues to display the pathetic way your leadership manage the Argentine economy. Perhaps Christina and her cronies should have spent most of their time on dealing with real issues that directly affect Argentines rather than deflecting their own incompetance by shouting about the Islands.

    You are right, this is business and Argentina is clearly not very good at it. Perhaps your opposition could do a better job. They have already visited the UK Foreign Office to see how Argentina could benefit from a potential future oil industry in the Falkland Islands, this is business after all.

    Apr 06th, 2010 - 06:33 pm 0
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