27/09/05 PETALING JAYA, (Bernama) -- The relationship between China'sdomestic market and the international market is expected to be closerafter China removes its palm oil import quota, said Steven Zhou ofShanghai Pansun Cereal & Oils Development Co Ltd.

However, the abolishment of the quota does not mean imports would expandwithout limit, he said.

In recent years, the imports of soyoil and rapeoil were actually lowerthan the import quota limit, Zhou said at the International Palm OilCongress (PIPOC), 2005 here Tuesday.

He said that this meant that such imports are determined by domestic andinternational market trend, and the market will regulate the importedamount by itself.

Before China joined the World Trade Organisation (WTO), to a large extent,oil import was restricted by tariff quota. China then undertook to opendomestic agriculture products gradually after its WTO entry, and abolishall oils import quota until 2006.

By that time, oils import duties would decrease to nine percent totally,Zhou said.

The abolishment of import quota meant no more barrier, prompting thedomestic market to worry about the impact of imported products in thedomestic market.

Zhou said that the government might take some measures, such as a registersystem, to regulate the imports after the quota is lifted.

"Time will tell us which kind of measures the government will take," hesaid.

He said that China is a large oils and oilseeds importer and therelationship between domestic and international markets would be moretightened along with the complete opening of the oil market.

Zhou said that the more China imported, the more it influenced theinternational market, meaning that China will not only be affected by theinternational market, but will also become the focus of the internationalmarket.

China annually imports about 20 million tonnes of soybeans in recentyears, accounting for more than one third of US soybean export, andimported about 10 million tonnes of Brazil and Argentina soybean,accounting for more than one third of total exports for both countries.

It is easy to imagine how significantly the international soybean marketwill be impacted if China decreases or rises the imports of soybean, Zhousaid.

-- BERNAMA