By KEVIN WALKER
Michigan Correspondent

WASHINGTON, D.C. — Last week, the U.S. Grains Council (USGC) reacted to an announcement from China late last month that the country was starting an anti-dumping investigation into distillers dried grains (DDG) with and without solubles.

At a teleconference last week, USGC President Thomas Dorr expressed confidence that the investigation would not cause any long-term harm to the trade relationship between the USGC and China.

“These kinds of trade challenges are always challenges, but we believe trade is good, and we believe this too can be resolved in a way that ultimately bears minimally on the relationships that exist between our two countries,” Dorr said.
He also said they’d begun a process of “pulling together the necessary information to decide how and what’s the best way to respond.”

Dorr said that the Grains Council has been doing business in China for at least the past 25 years and has been in existence for the past 50 years. Rebecca Bratter, the USGC’s director of trade development, emphasized the importance of the Chinese market to American exporters.

“We’ve been doing capacity building work in China for 25 years, and we consider it to be a very important market, a very strategic market and we place a very high importance on our trade relationship with China,” she said. “It is our intention to remain in that market for the long haul.”

Bratter said China gave only 20 days from the date of its announced investigation, on Dec. 28, for interested parties to register.

“That time frame is short and puts a lot of pressure on the industry to respond,” Bratter said.

Whether or not an entity registers as an interested party could make a big difference as to the size of any duty China might impose on a company’s export of DDG to the country.

The size of the duty could be very large, Bratter said. For those who register, the duty could be 40 to 50 percent, while for those that don’t the duty “could be upwards of 100 percent.”

Currently the duty on DDG exported into China from the United States is 5 percent. “The Chinese government has the ability to impose duties at any time during the investigation,” she said. “That is something we are obviously very concerned about.”

Exports of DDG into China have grown from about zero three years ago to 1.5 million metric tons over the past year. According to Bratter, some are projecting a doubling of that amount for 2011.

“We see this as a normal flow, but it is a sizable jump,” she said.
It’s unclear what impact this latest investigation might have on trade relations between the United States and China.

“This case against U.S. DDGS probably isn’t an isolated incident and must be observed in the context of the two sides’ trade relations,” said Li Quiang, president of Shanghai JC Intelligence Company in a previously published report. “The investigation outcome may not support the charge because prices of imported DDGS have been higher, so it’ll be difficult to establish damages based on price.”

For more on the case, go to www.grains.org