China reallows exemption from value added tax for U.S. DDGS

U.S. DDGS exports to China fell from 3.3 million mt in 2016 to just 739,000 mt so far in 2017.

The China’s Ministry of Foreign Affairs' announced that it will again allow U.S. dried distillers grains with solubles (DDGS) to be imported without charging an 11% value added tax (VAT), potentially affecting global DDGS market dynamics for the better, the U.S. Grains Council (USGC) reported.

The announcement was made in a report of key areas of consensus between the U.S. and China during President Donald Trump’s official visit to China last week. Other areas affected include banking, security and automobiles.

"We are pleased to see this move, which we've been working toward for months," USGC president and chief executive officer Tom Sleight said. "This change will immediately improve the competitiveness of U.S. DDGS in what was once our top market, which is a very positive thing."

In January 2016, China’s Ministry of Commerce announced that it would begin antidumping and countervailing duty investigations related to U.S. DDGS exports to China. Those cases resulted in duties being applied to U.S. DDGS and the ending of an ongoing exemption from paying the VAT. The combination of the duties and the VAT made U.S. DDGS exports to China even less competitive, affecting market prices and export flows globally. While the VAT has been removed, the antidumping and countervailing duties remain.

China's actions against U.S. DDGS elicited a strong and detailed response from U.S. ethanol and DDGS industries, coordinated by USGC. The council’s staff members in China and the U.S. have been working closely with the U.S government at the highest levels for nearly a year to emphasize the importance of this $1.5 billion market to the U.S. grain and ethanol industries.

U.S. DDGS exports to China fell from 5.4 million metric tons in 2015 to 3.3 million mt in 2016 and just 739,000 mt so far in 2017.

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