Talks with China to Cut Ethanol Tariffs ‘Positive’: U.S. Agriculture Secretary

(Reuters) – U.S. Agriculture Secretary Sonny Perdue said on Tuesday that talks with China about reducing Beijing’s tariff on U.S. ethanol products were “positive,” but cautioned the discussions were not over.

“There have been conversations with China on reducing that tariff on ethanol, which would obviously be good for our domestic corn industry,” he told reporters. “While things look positive, it’s never over till it’s over with the Chinese.”

The United States and China have been embroiled in a tit-for-tat tariff battle since July 2018, roiling global financial markets and supply chains, and costing both of the world’s two largest economies billions of dollars.

Beijing imposed retaliatory tariffs last summer of up to 70 percent on U.S. ethanol shipments, which made exports to the key market uneconomical.

U.S. officials are pressing China to make changes to address long-standing concerns over industrial subsidies, technology transfer and intellectual property rights.

The two sides wrapped up the latest round of talks in Washington late last week and will be resuming discussions this week remotely.

“The biofuels piece, especially ethanol, have been a bright spot to the trade negotiations,” a source briefed on the talks said. “I wouldn’t want to put any guarantees on anything. But as far as the current talks … China is willing to go toward that 5 percent number,” the source said, in reference to the tariff level.

He added that Beijing was also willing to buy imported ethanol to support a push to use a 10 percent ethanol blend in fuels.

But structural issues between the two countries are yet to be ironed out. Perdue said topics around non-tariff barriers were still a point of contention.

“I think … China will have to reform some of its protocols over approving biotech products there. We need dependability and consistency as well as enforceability of agreements,” he said.

Beijing has taken years to approve new strains of genetically modified crops, which U.S. companies and farmers have complained stalls trade by restricting the sales of new products from companies. Two sources with knowledge of the talks said last week the issue remained a sticking point in talks.