Sudan, China to set up agricultural free-trade zone

KHARTOUM Sun Nov 25, 2012 2:19pm EST

KHARTOUM (Reuters) - Sudan has allowed China to set up a free-trade zone for agricultural products and livestock to boost bilateral transactions, state news agency SUNA said on Sunday, as the African country seeks to increase farm exports to offset the loss of oil.

China is Sudan's main trading partner and donor for development projects, throwing a lifeline as few Western countries or firms deal with Khartoum because of a U.S. embargo over the country's human rights record.

Sudan has been trying to boost exports of agricultural products and livestock such as cattle to generate a new source for state revenues and foreign exchange after losing three-quarters of oil production when South Sudan became independent in July 2011. Oil used to fund much of the state budget.

Sudan and China signed during the visit of a Sudanese delegation to Beijing a memorandum of understanding to set up an agricultural trade zone, SUNA said, without giving a timeframe or details. China would also cooperate with Sudan to train farmland workers and help with equipment.

China used to be the biggest buyer of South Sudanese oil exported through Sudan until Juba decided to turn off all wells in January in a row with Khartoum over export fees.

The two countries agreed in September to resume oil exports in the next few months, but recent tensions have led to delays in resuming oil production in the South. Sudan does not export oil as its small-scale output is for domestic consumption only.

(Reporting by Ulf Laessing; Editing by Dale Hudson)

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