For the first time in over a decade, the United States Commerce Department late last year self-initiated an antidumping and countervailing duty case. This case was against aluminum sheet imports from China. Almost all other antidumping and countervailing duty cases are initiated by domestic producers filing a petition asking the U.S. government to investigate whether the subject imports are dumped or subsidized, and injure the domestic industry. It was highly unusual for DOC to self-initiate AD/CVD cases and act as both prosecutor and judge in these cases.
On February 4, 2018, China’s Ministry of Commerce (“MOFCOM”) self-initiated its own antidumping and countervailing duty case against the United States for imports of US sorghum grain. Total China imports of US Sorghum Grain in 2016 were 5,869,000 tons worth more than $1.26 billion USD. China is a significant export market for U.S. sorghum, accounting for about 70 percent of total US sorghum exports in 2016. Sorghum is used primarily as a livestock feed, but can also is used to make alcoholic beverages like Chinese Mao-tai and other baijiu. This self-initiated action by MOFCOM is widely viewed as China’s counter to U.S. trade actions over the past year.
China’s case involves dumping claims and it also targets large US agricultural subsidies for sorghum grain, such as the following United States agricultural assistance programs: Crop Insurance; Price Loss Protections; Agricultural Risk Protections; Marketing Loans; Export Credit Guarantees; Market Access Programs and Foreign Market Development Partner Program.
The following North American sorghum/ grain exporters may be targets of this MOFCOM Action:
- Agniel Commodities, LLC
- Attebury Grain, LLC=
- Big River Resources
- Bluegrass Farms of Ohio, Inc.
- Bunge North America, Inc.
- Cardinal Ethanol, LLC,
- Cargill, Inc.
- Consolidated Grain and Barge Co.
- DeLong Company Inc.
- Enerfo USA, Inc.
- Fornazor International Inc.
- Freepoint Commodities LLC
- Gavilon, Illinois Corn Processing, LLC
- International Feed
- Louis Dreyfus Commodities
- Marquis Grain Inc.,
- Mirasco Inc.,
- Pacific Ethanol, Inc.,
- Perdue AgriBusiness, LLC,
- The Scoular Company,
- Southwest Iowa Renewable Energy, LLC,
- Tharaldson Ethanol Plant I, LLC,
- United Wisconsin Grain Producers
- Zeeland Farm Services.
This case is important because it signals a possible escalation of the on-going trade war with China. In January 2017 China issued AD duties of 42.2 to 53.7% and CVD duties of 11.2 to 12% on another U.S. grain product used primarily for livestock feed, dried distiller’s grains with solubles (DDGS). Some of the companies who exported DDGS to China may also export sorghum to China.
At a minimum, it shows that what goes around can come around and that China has no intention of remaining idle in the face of US trade actions. If the US is going to self-initiate antidumping and countervailing duty cases against China, China is going to self-initiate antidumping and countervailing duty cases against the US. This sorghum grain trade case indicates there is a price to pay for US tariffs and trade actions. Most of the companies listed above are based in or have very close connections to America’s heartland and that is surely no coincidence; China is aiming this sorghum grain case right at President Trump’s constituency—the agriculture and rural states.
Both the Wall Street Journal and Investors Business Daily have in numerous editorials warned the Trump Administration that the economic issue that could stop the rise in the US economy is a trade war. Trump and the Republicans have tied their political star to the rising US economy. But if President Trump levies more tariffs against Chinese imports, expect the Chinese government to retaliate and aim its trade guns at products and constituencies that will hurt President Trump and the Republicans the most—agriculture.
In the meantime, any company involved in providing sorghum grain to China should be looking to retain counsel experienced with both China and with international trade.
Things are starting to get serious.