China to Formalize Removal of Import Quota on Soya-Bean Oil, Palm Oil and Rapeseed Oil

On Aug. 7, 2019, China’s Ministry of Commerce opened the draft revision of "Interim Measures for the Administration of Agriculture Products' Import Tariff Quotas" to public feedback ^[1]. The consultation period will end on Aug. 22. Compared with the current version, the most significant change in the draft is that soya-bean oil, palm oil and rapeseed oil would no longer be included in the scope of commodities subject to import quota restrictions.

Agricultural product/commodity quotas were introduced in 2003 and occasioned the implementation of stratified management and imposition of tariffs based on the aggregated import volume of agriculture commodities imported from different countries. In this system Chinese authorities impose 2 tariff levels (low/high) which are imposed based on specific quotas. If quotas are exceeded higher tariffs are levied. Currently the product scope includes soya-bean oil, palm oil, rapeseed oil, wheat, corn, rice, sugar, cotton, wool and wool top ^[2].

Shi Lihong and Wu Xinyang, researchers from China Futures Co.,Ltd., explained that if the draft is implemented it would not precipitate any fluctuations in the price or the overall importation volume of these 3 oil products ^[3] because in practice, since 2006, the import tariff quota restrictions on soya-bean oil, palm oil, rapeseed oil were already canceled by Ministry of Commerce according to its No. 93 2005 announcement ^[4]. Since then all importation has been subject to automatic import permission.

Additionally, the exposure draft states that the transfer of import tariff quotas will no longer require the permission from competent authority, and products imported from bonded areas and special customs supervision zones are exempt from requirements to obtain an Agriculture Products Import Tariff Quota Certificate.