The U.S.-China Joint Commission on Commerce and Trade (JCCT) meeting in Beijing on December 19-20 was the main annual event for addressing bilateral trade issues and promoting commercial opportunities between the two countries.
This year’s meeting took on heightened relevance for agriculture because Chinese regulators have recently rejected about 600,000 metric tons of U.S. corn because of the presence of an unapproved biotech event MIR 162, commercially known as Syngenta Agrisure Viptera. No progress was made on the issue at the meeting.
Established in 1983, the JCCT reviews progress made by working groups on trade issues such as agriculture, intellectual property rights and regulatory barriers. China was the number one export destination for U.S. agricultural products for fiscal year (FY) 2013 that ended September 30 at $23.5 billion and is projected by USDA to be the second largest market in FY 2014 at $21.5 billion.
The rejection of corn was not an isolated incident; it involves 12 shipments arriving at six different ports. The event was approved in the U.S. in November 2010 and has been approved in about a dozen countries, including exporters Brazil and Argentina and importers Japan and the EU. China’s regulatory process does not begin its internal work until an event has been approved in a producing country. Approval for import was expected in early 2012, but has still not been granted, despite Syngenta providing additional information as requested by Chinese officials.
The issue is particularly important because China has a zero tolerance for unapproved events, even when they have been approved in other countries. That is not a workable policy in the world corn market that is based on the bulk handling of grain. A tolerance of a small percentage for biotech events approved in other countries, but not in China, would allow trade to continue.
According to a Reuters’ article before the meeting, the U.S. Trade Representative’s (USTR) office was closely following the biotech corn issue and had raised concerns regarding increasing delays in China’s approval process for biotech events. The Chinese government’s goal is to have approval in 270 days. The USTR expects approval to be handled in a timely and predictable manner, through a transparent, science-based process. Those are also the same expectations the U.S. has for other countries; none of those expectations are now being met in China. USDA Secretary Vilsack was also at the meeting and anticipated a potential agreement for a pilot program to synchronize U.S. and Chinese regulatory review of new event by starting the approval process simultaneously.
USTR Froman and Commerce Secretary Pritzker released a JCCT fact sheet after the meeting listing the outcomes achieved. The biotech crop approval process in general and the MIR 162 case specifically were not on the list. Inside U.S. Trade reported that a business source expressed frustration that issues of importance to U.S. industry like the slow pace at which Chinese regulators are approving agricultural biotechnology traits were not addressed at the JCCT.
Ignoring critical issues like this at international meetings is a common occurrence for all countries. All changes in government policies require the spending of political capital internally and externally. There are internal disagreements in China’s government over importing corn in general and biotech and U.S. corn in particular. USDA projects that the 2013 Chinese corn crop is record large at 211 million metric tons (MMT). China’s imports of 7.0 MMT for the 2012/13 marketing year will be only a little over 6 percent of world imports. Its list of approved suppliers has expanded to include Argentina, Brazil and Ukraine. China can afford to reject some U.S. corn supplies and rely on other suppliers.
This should not be seen as a rejection of all biotechnology by China. Biotech cotton and papaya are grown in China. Their corn suppliers, the U.S., Brazil and Argentina, have biotech corn on 90 percent, 75 percent, 95 percent, respectively, of their acreage. Ukraine officially has no biotech corn, but industry estimates are about 20 percent biotech. Chinese soybean imports this marketing year are projected by USDA at 69 MMT. The three main sources of soybean imports, the U.S., Brazil and Argentina have, respectively, 93 percent biotech soybeans, 88 percent and 100 percent. In June of this year, China approved biotech events developed specifically for pest control by South American producers. China cannot avoid importing biotech corn and soybeans.
China has not claimed publically that there is a deficiency of some type with the MIR 162 event. That is an example of the lack of a transparent, science-based process that the U.S. has raised concerns about in the past.
U.S. agriculture fared only marginally better on another lingering issue – imports of U.S. beef. Chinese officials stopped imports of all U.S. beef after the discovery of BSE in December 2003. Repeated attempts have been made by U.S. officials to restart trade, but there have been repeated stumbling blocks. Beef made it to Froman’s and Pritzker’s fact sheet list, but the words were less than assuring. “Both sides will strive for the resumption of U.S. beef access by July 2014 on the basis of mutually agreed conditions. Both sides will strive for effective solutions to common concerns regarding U.S. beef trade and promote U.S. beef exports to China.” That sounds like more of the same language used in recent years that did not result in market openings.
The good news is that the JCCT meeting once a year is not at the heart of trade relations for biotech corn and beef. The working groups must also address political/policy questions requiring discussion with relevant Chinese decision makers at both the senior policy and administrative levels. The issues are not just technical in nature; they often deal more with general consumer perceptions and attitudes about the safety of biotechnology.