HONG KONG (July 16 2004): China, the world's top soya importer, said itwould stick to a zero tolerance policy on harmful fungicide carboxyl forsoya cargoes, despite an agreement with Brazil to scrap a ban on exportersbecause of the chemical.

China's quarantine authorities, known as CIQ, said on a Web site atwww.aqsiq.gov.cn that it would not allow any contaminated soyabeans to becrushed into oil and meal and that all the contaminated beans had to bepicked out and destroyed.

The announcement contradicted a statement by the government of Brazil, theworld's number two soya exporter, that China would accept Brazil's newstandards for one-fungicide-tainted seed per kilogram, effective from June11.

Traders said CIQ had held a meeting in Beijing with traders, crushers andsuppliers on Tuesday to elaborate on its latest rules on soya imports,which were announced last month and confused many in the market.

"The problem with Brazilian soyabeans still exists. But some buyers canlive with that," said a trader at an international house based in Beijing.

The traders said the new rules were better than the previous regime, underwhich Beijing had turned down and sent away five cargoes of Braziliansoyabeans, though industry sources have criticised the zero-tolerancepolicy as unscientific and unacceptable.CIQ would speed up the procedurefor issuing import permits for soyabeans to a maximum of 20 working days,down from 30, and make the permits valid for six months, up from threemonths, traders and industry sources said.

"They (CIQ) tried to explain that they were not trying to play hard ball,"said another trader based in China. "They are trying to say they are notvery strict, they are going to relax (soya imports) a little bit," thetrader said, though the new procedures had not yet been seen in themarket.

Payment remained a chief concern among traders. Many crushers were stillbalking at paying for high-priced cargoes contracted before a slump inChicago futures and freight rates, they said.

Ten to 20 soya cargoes are stranded due to payment problems, whichinternational suppliers and some of China's major crushers are inarbitration over. Few suppliers were willing to sign fresh sales contractsbefore solving the issue.

Some traders said they were also concerned about a CIQ recommendation thatfuture soya purchasing contracts include a clause requiring parties adhereto all unspecified Chinese laws and regulations. CIQ officials declined tocomment.