Letter to Secretary Vilsack

Dear Mr. Secretary,

As you are aware, China this week unofficially announced that it would require official U.S. government certification that export cargoes of DDGS bound for China do not contain even trace levels of MIR 162, a biotech event not yet approved in China. This action is arbitrary, capricious, a major impediment to trade, and a direct threat to the viability not only of DDGS exports but to the U.S. ethanol industry as a whole. I am writing, therefore, to urge your immediate, direct, and personal intervention with your counterpart in China, Agriculture Minister Han, to halt this current regulatory sabotage of the DDGS trade with China.

In addition, I also urge renewed efforts at the highest levels of the U.S. government to achieve the prompt approval of MIR 162 by China. MIR 162 was commercialized in 2010. It has been approved for import in all other major markets, including even the European Union. Approval has been pending in China for more than four years. MIR 162 is safe, widely planted in the U.S., and widely planted in Argentina and Brazil as well. The continuing refusal of China to approve MIR 162 is a significant and costly impediment to trade.

This matter is urgent for U.S. corn producers, DDGS exporters, and the ethanol industry as a whole, which is threatened with severe harm due to China’s action. My understanding is that both APHIS and FGIS regard the requested official certification as impossible. A suitable test simply does not exist; testing for unapproved traits in DDGS is highly susceptible to false positives, meaning that even cargoes that test negative in the U.S. are quite likely to test positive when retested upon arrival. In addition, some commingling at trace levels is likely to occur in the U.S. grain handing system, making a zero tolerance standard tantamount to an import ban.

Time is of the essence. China’s new certification requirement is effective immediately, affecting all U.S. DDGS shipments scheduled to depart to China from July 24 forward. This was issued with no notice and no window for adjustment, discussion, or accommodation and does not comply with the provisions of the WTO Sanitary and Phytosanitary Agreement. It thus immediately threatens contracts already signed but not yet shipped, and will inhibit or preclude any additional sales in the future.

Until this action, China was importing DDGS at a rate of 20,000 MT per day, which is the equivalent of 750 standard containers. The value of DDGS exports to China exceeded $1.6 billion in 2013 and this year was running well ahead of that pace prior to the current interruption. Finally, corn and other feed prices in China remain well above world market levels, so Chinese end-users and consumers are paying a significant penalty for their government’s arbitrary actions to restrict trade. It is in the interest not only of U.S. producers and exporters, but also of the Chinese feed and livestock industries, and Chinese consumers as well, that this situation be speedily resolved. 

There is no scientific or technical basis for China’s action. The motivation seems clearly to be overtly protectionist and incompatible with China’s obligations as a member of the WTO. The U.S. Grains Council believes that an immediate and vigorous response at the highest levels of the U.S. government is essential to avert an imminent crisis and to seek a long-term solution towards a predictable and transparent biotechnology policy to normalize trade going forward. We thank you for your consideration, and for your tireless advocacy for American agricultural exports.

Julius Schaaf
U.S. Grains Council