Brazil has filed a complaint with the World Trade Organization against China’s imposition of a set of supplemental tariffs on sugar imports, a recent filing published by the WTO showed.
Brazil’s recourse to the WTO, supported by its foreign trade chamber CAMEX comes after a stumble in Brazilian sugar exports since China levied an additional sugar tariff as high as 45 percent last year.
The duty was cut to 40 percent in May this year and will be lowered to 35 percent next year. It comes on top of the regular sugar tariff which is 15 percent on an annul quota of 1.945 million tonnes and 50 percent on any imports beyond the limit, according to the complaint.
As allowed by the WTO’s Safeguards Agreement, such tariffs can be applied as a temporary measure to ease a sudden and unforeseen surge in imports, which would threaten to damage national producers.
But the rules ask for reasonable conditions to take effect, and Brazil claimed China violated relevant WTO rules in terms of its safeguard measures on foreign sugar, the administration of its tariff-rate quotas and licensing system in imports, adding that the country’s automatic import licensing (AIL) system, which is set for sugar imports outside the quota, was not “automatic”.
“Approval is granted only up to the maximum level approved by MOFCOM,” Brazil said, referring to China’s Ministry of Commerce.
“Furthermore, under the AIL System, if imports increase too rapidly, MOFCOM can reduce or stop the issuance of licenses to import sugar at any time. China is thus restricting the importation of out-of-quota sugar.”
The ministry made it clear in a statement in response to Brazil’s complaint that its safeguard measures on sugar imports were in line with the WTO rules.
Rising sugar imports have caused serious damage to China’s domestic sugar industry, leading the government to adopt safeguard measures following the law, according to the statement.
The tariff-rate quotas on foreign sugar products were among trade measures that China clearly acknowledged to keep when it joined the WTO, and China’s automatic import licensing system for commodities acted as an effective way to monitor commodity imports, the ministry said.
“The management measures China has adopted on sugar imports comply with China’s WTO commitments and are in line with the WTO rules,” the statement read.
Brazil, by starting a dispute, has left a 60-day window for China to try to settle the complaint in talks and it could request adjudication by a WTO dispute panel after the window is closed.
That would result in proceedings possibly lasting for years, though it may lead to China having obligations to remove its sugar restrictions or facing potential trade sanctions, if its sugar policies are found to disobey the rules.