Pakistan exempted China slaps import duties on sugar

BEIJING: China said on Monday it will impose hefty penalties on sugar imports after lobbying by domestic mills, but experts said the ruling may not go far enough to stem the flow of lower-priced sweetener into the world´s top importer.

The ruling, which will affect about a third of China´s annual sugar imports, introduces an extra tariff for the next three years on shipments that the government said had "seriously damaged" the domestic industry.  The move could dent imports from top growers such as Brazil and Thailand as it will close the big gap between Chinese and international prices.

Chinese sugar prices are around double those on the London market.  But traders said the higher tariffs will also likely spur increased smuggling across China´s porous southern border, while some imports from major producers may be shipped through third-party nations excluded from the tariffs.

Sugar is one of the few sectors in which China struggles to compete given the higher costs of its smallholder farmers, who produce about 10.5 million tonnes of cane and beet sugar a year.  The country imports another 3 million tonnes of the sweetener a year, while Beijing has been trying to crack down on illegal shipments of as much as 2 million tonnes a year, sources have said.

"While smuggling has temporarily slowed, there is a risk that the incentives for smuggling are still strong and in fact could increase if domestic prices rise," said Tom McNeill, director of Green Pool Commodities in Brisbane.

The latest ruling exempted about 190 smaller countries and regions from the new duty, including smaller producers such as the Philippines and Pakistan as well as Myanmar on its southern border.