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China

Customs Scrutiny Of The Meat Trade Increases

A new investigation of meat trading practices of several northeast Chinese meat traders suggests that Chinese customs authorities are stepping up their scrutiny of meat imports. In the most recent case, several traders are believed to have been called in for questioning by customs officials in Shenyang, in Liaoning Province. Sizeable quantities of meat, poultry and seafood are imported through several northeast ports, most notably Dalian and several smaller ports nearby. Red meat items include beef short plate, several popular beef variety meat items, and some middle meats for northeast Chinese hotels. For years, the area has had a sizeable demand for imports of low cost Oceanic lamb flap.

The inquiry comes on the heels of investigations earlier this fall in Nanjing and Shanghai. The Nanjing investigation cast a wide net on a number of South China and Hong Kong based meat traders. 

The state media in China has made several high profile pronouncements this year about campaigns to collect proper customs duties and stamp out smuggling. The issue has important revenue implications, as China is implementing aggressive cuts on import duties under its WTO accession pledges. Chinese beef and pork duties are scheduled to fall on January 1 by varying amounts depending on the product. Tariffs on most beef cuts will fall from 25.2 percent to 18.6 percent. Tariffs on beef variety meats will fall from 15.2 percent to 13.6 percent. The fresh pork tariff remains at 20 percent, while frozen pork will pay 12 percent instead of 15.2 percent. Pork livers will still pay 20 percent but other offals will pay 12 percent. Complete details are on the USMEF Web site at http://www.usmef.org/Tariffs/ChinaWTO_Tariffs.pdf.

For poultry, U.S. and Chinese officials are still discussing the issue of ad valorem versus fixed (RMB per kilogram) duties. Although China’s official tariff schedule lists an ad valorem duty for poultry, implementation is still believed to be based on a system of fixed payments per weight that vary according to the specific product. Trade analysts point out that China has struggled with proper valuations before, but has overcome such problems in some complicated food product categories, such as wines.  

Increased customs surveillance of the meat trade is not believed to be linked to other Sanitary and Phytosanitary (SPS) issues surrounding the meat trade. According to Joel Haggard, USMEF VP of the Asia Pacific Region, “We believe these are separate to other SPS issues we have faced this year such as labeling. China is under pressure to increase state revenues in response to growing state debt. Declining tariffs add pressure to collect proper customs duties.”