(Adds details of agreement, sugar group comments, context)
By Marcelo Teixeira
SAO PAULO, May 21 (Reuters) - Brazil will no longer seek a panel at the World Trade Organization (WTO) to investigate China’s sugar trade policies, the Brazilian government said on Tuesday, smoothing commercial relations with its top trade partner.
“Brazil and China have reached an understanding regarding the consultations made at the WTO on sugar,” the Brazilian ministries of Foreign Affairs and Agriculture said in a statement.
“Considering the terms of this understanding ... there will be no need for the implementation of a panel at the WTO,” they said, without elaborating on the terms of the agreement.
Brazil opened a consultation at the WTO last year questioning anti-dumping tariffs on sugar imports that China called safeguard measures. The policy sharply reduced Brazil sugar sales to the Asian nation, which used to be one of its top clients.
China started to charge an additional import tax of as much as 45 percent on sugar in 2018. Previously, it had charged 15 percent on an annual import quota of 1.95 million tonnes, and 50 percent above that quota.
Brazil’s sugar industry group, Unica, said in a statement on Tuesday that China agreed not to renew the anti-dumping tax when it expires in May 2019. Brazil’s government did not confirm that.
Unica said Brazilian exports to China dropped from an average of 2.5 million tonnes per year before the antidumping tariffs to 890,000 tonnes in the last season.
“The expectation is that our exports could return to levels seen before the additional tariff,” the group said.
Protectionist measures such as the those by China, as well as from India and Thailand, have been cited by sugar market analysts as one of the factors behind depressed global prices. Brazil questioned some of those policies at the WTO.
Sugar prices are hovering around the lowest levels in 10 years, with production increases from India and Thailand leading to an increase in global supply. That is despite a cut of almost 10 million tonnes in Brazil’s production last season, which caused the country to lose its position as the world’s largest producer to India.
Brazilian Agriculture Minister Tereza Cristina Dias met Chinese officials in Beijing last week. Brazil’s vice president, Hamilton Mourão, is in China this week on an official visit. (Reporting by Marcelo Teixeira Additional reporting by Roberto Samora and Gabriela Mello; editing by Paul Simao and Leslie Adler)