Trade barriers in the form of antidumping and countervailing duties imposed by the Chinese on dried distillers grain imports from the United States, are compounding an already large trade deficit, Renewable Fuels Association President and Chief Executive Officer Bob Dinneen said in testimony before the U.S. Department of Commerce on Thursday.
The DOC along with the U.S. trade representative held hearings in response to an executive order from President Donald Trump calling for an examination of the trade deficit.
The Chinese government conducted a nine-month investigation that resulted in the Chinese imposing preliminary 33.8% anti-dumping duty and a 10% to 10.7% countervailing duty on U.S. DDGS in September 2016.
Then in January 2017, China issued a final ruling that set the DDGS anti-dumping duty to between 42.2% and 53.7%, and the countervailing duty at between 11.2% and 12%. In addition, the RFA said tariffs on U.S. ethanol increased from 5%, to between 30% and 40%.
Before China's actions the country was a top export market for U.S. DDGS and ethanol.
In 2015, China imported 6.5 million metric tons of DDGS, or 51% of total U.S. DDGS exports. By the end of 2016, China was the U.S. ethanol industry's third-largest export market, receiving nearly 20% of total exports.
"The U.S. economy is currently being weighed down by a $734 billion trade deficit," Dinneen said during his testimony.
"Three hundred forty seven billion of that, or roughly 50%, is from one country, China. Biofuels like ethanol represent one potentially bright spot to lessen that deficit. U.S.-produced ethanol is the lowest-cost and cleanest-burning source of octane on the planet. In 2016, the U.S. ethanol industry exported 1.1 billion gallons of ethanol, valued at more than $2 billion and 11.5 million metric tons of distillers' feed valued at $2.1 billion. That's why China's recent action to curtail ethanol and feed imports from the U.S. is so troubling."
Dinneen said China's actions have led to lower ethanol and DDGS prices.
The price of ethanol fell by about 15% since mid-December 2016. DDGS prices have fallen steadily since the summer of 2016. Today, DDGS prices are about 40% lower than they were in June 2016.
"China's recent anti-dumping and countervailing tariffs on ethanol and DDGS are significantly injuring U.S. ethanol producers and farmers, and undermining the substantial investments our industries have made in developing a trade relationship with the country," Dinneen told the committee.
"Moreover, by unfairly blocking imports of the lowest cost octane source, the most immediate victims are Chinese consumers who have to pay more for gasoline.
"However, the RFA is encouraged by the Department of Commerce's commitment to addressing this issue as evident by today's hearing, by President Trump's commitment to put America first when it comes to trade and by the nomination of Iowa Gov. Terry Branstad to be U.S. Ambassador to China, whose knowledge of agriculture generally and ethanol specifically should help educate Chinese policymakers of the benefit of increased biofuels imports."
Todd Neeley can be reached at email@example.com
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