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US skeptical of China GMO import regulations

(Wednesday, Jan. 22, 2003 -- CropChoice news) Dow Jones: China's assurances Tuesday that controversial new import regulations for genetically modified agricultural products, or GMOs, won't disrupt soybean imports were met with skepticism by industry and diplomatic sources.

State General Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) Administrator Li Changjiang told a news conference that the regulations will help standardize soybean trade rather than block it.

The new import inspection regime is due to begin in September.

However, China Country Director of the American Soybean Association, Phil Laney, remains unconvinced by Li's assurances.

"Different (officials) have said things like that even when they were doing things that weren't very constructive ... I think he's probably underestimating the problems (AQSIQ) is causing," Laney told Dow Jones Newswires.

AQSIQ has drawn fire from exporting countries since the January introduction of the new import rules which the administration formulated with the Ministry of Agriculture. The U.S. subsequently negotiated interim agreements that have delayed the actual implementation of the rules until September.

But trader uncertainty created by the new rules has been blamed for a 37% year-on-year decline in U.S. soybean exports to China in January-August 2002 shipping year.

U.S. soybean sales to China are valued at about $1 billion annually.

"You couldn't say (AQSIQ) is stopping the soybean trade, but they're regulating trade when in fact they're supposed to be concerned with issues like plant health and not using their rules and procedures to regulate trade," Laney said.

The new rules are widely perceived as non-tariff barriers to shield China's farm sector from the impact of increased imports mandated by China's World Trade Organization agreement, as well as an attempt by cash-strapped ministries to expand their regulatory reach to bolster revenues.

China joined the global trade body in December, 2001.

The U.S. criticized AQSIQ's import procedures as non-science based and unnecessarily restrictive during China's year-end WTO Transitional Review Mechanism, or TRM process.

The European Union and Taiwan also expressed concern during the TRM sessions about the transparency of AQSIQ regulations and the consistency of their application.

EU Trade Ban Criticized

Li said that China's GMO import regulations were similar to those of the E.U. and Japan and denied any criticism from trading partners.

"In the trade policy review on China we have already seen very positive comments and high points from all related WTO members on the transparency of the Chinese trade policies and in their opinion the Chinese government has fulfilled its commitments," Li said.

A Beijing-based western diplomat questioned Li's assertions about the acceptability of AQSIQ import rules among China's trading partners.

"It isn't true ... for China's soybean import rules the classic case is that they aren't science based," the diplomat said.

While rejecting criticism of AQSIQ import rules, Li in turn blamed an ongoing trade row between the E.U. and China on what he called the E.U.'s nontransparent and nonscientific import standards.

The row began in January 2001 when the E.U. banned various Chinese aquatic products as well as rabbit meat and honey after inspectors detected traces of a prohibited veterinary antibiotic in imported shrimp.

The E.U. is China's fourth largest market for fish and aquatic products.

China has called the ban unjustified and protectionist and retaliated by banning E.U. cosmetics imports. China cited fears of contamination by animal products that might transmit the human version of bovine spongiform encephalopathy, commonly known as mad cow disease for the ban.

"This trade dispute was triggered by the E.U. side due to their unfair and unscientific inspection procedures," Li said. "The reasons (for the E.U. ban) are far from adequate, far from scientific, far from transparent and far from open."

Li accused the E.U. of not consulting China on the ban before its imposition, resulting in economic losses of $1 billion and the loss of tens of thousands of jobs among Chinese workers.

The E.U. has lifted the ban on certain unspecified products and technical discussions on resolving the issue will continue after China's Lunar New Year holiday in February, Li said.

Li also confirmed China will open its pre-shipment inspection service market to foreign companies in line with its WTO commitments.

Under China's WTO agreement, foreign pre-shipment inspection firms will be permitted to operate wholly-owned companies by the end of 2005, Li said.