China strike backs, bans Argentine soybean oil on quality standards

By Carlos Burgueño.- China is curbing the Argentine soybean oil imports because the oil 'is bad and fails to meet quality standards.'

Immutable, Chinese Ambassador to Argentina Gang Zeng gave Argentine Foreign Minister Jorge Taiana and Foreign Ministry Trade and International Economic Affairs Secretary Alfredo Chiaradia a version of events on the trade dispute among both nations.

Vaguely, Mr. Zeng explained the dispute was not about any commercial or political retaliation, but about the Argentine low-quality soybean oil. In other words, and according to Mr. Zeng, 'it is not a matter of state, but of private actors.'

Mr. Zeng was very informed on this trade dispute. The Chinese official showed reports mentioning that Argentine soybean oil shipments contained 36 percent of residual solvents. The Ambassador also said there are no traded retaliations, since the amount of shipments has increased in the last three years. Mr. Zeng added they might keep on rising during the current year if the Argentine quality standards issue was solved. Likewise, Zeng made reference to this persistent issue, which could have begun in 2005. The Chinese government would have been flexible on this matter, but now it had decided to force Argentina to solve it.

Even worse, and according to Chinese sources, four transnational corporations would have been involved in this trade dispute: Nidera, Bunge & Born, Dreyfus and Cargill. These multinational companies would have also been warned about this matter. Grossly, during the last fiscal year, 214 lots would have reported excess of solvents (hexane, a hydrocarbon used in milling) in the crude soybean oil shipments, which represent 36 percent of 1.8 million tones Argentina exported to China in 2009.

Zeng also asserted that if the quality standard problem is solved, the Chine imports would resume and return to pre-crisis levels. In total, China's soybean oil imports - currently halted- were predicted to reach US$ 2 billion in 2010. Argentina is the biggest soybean oil exporter in the world; while China is its single biggest customer, and ranks third among global soybean oil producer and exporters, after Brazil and United States.

In fact, Argentina exports 77 percent of the soybean in that market; and according to local data, it would be impossible for China to replace the Argentine shipments in the short term.

Foreign Minister Jorge Taiana yesterday asked Ambassador Zeng to communicate Hu Jintao the Argentine concern, as well as the local request for the Chinese government to urgently lift the ban. Zeng "took note" about this -according to his own words- and vowed to inform his government on Tuesday morning and give the Argentine authorities an official Chinese answer on Tuesday afternoon.

The meeting lasted for about one hour. China's Ambassador to Argentina was summoned on Monday at 1 p.m. The Chinese official arrived on time. He was kind, but also harsh and straightforward. He let the Argentine officials talked first and vowed to give them a response on Tuesday. However, Mr. Zeng later showed his data on the Argentine soybean oil quality. Zeng even had information regarding the exact lot numbers and the companies involved in the issue. Some minutes before 8 p.m., the Chinese Ambassador left Taiana's office.

Today, the Argentine government is expected to contact those private soybean oil producers accused by China in order to confirm or disprove the information released by Ambassador Zeng. A subsequent Pekingese response is also expected. Then, the Argentine government would eventually issue an official statement on the matter.

However, the official mood after the meeting indicates that China has enough reasons to claim this is not a 'trade war' or a retaliation policy following antidumping measures against Chinese imports (even if this is not really truth), but mere trade conditions imposed by a purchaser.


Chinese imports increased from 5.2 percent in 2003 to 12.5 percent in 2009, whereas the bilateral trade shows a deficit of US$ 2 billion between 2008 and 2009 in the Argentine economy.




Translation by Jimena Gibert