The Chinese Government said more US products, including liquefied natural gas and crude oil, have a chance to be exempted from the additional tariffs China imposed in response to the US Section 301 tariff measures.
According to an official statement from the Customs Tariff Commission of the State Council starting from March 2, 2020, China's tax authority will accept applications of domestic firms for the exemption of additional tariffs imposed on some US products within a certain period of time.
“The new policy covers a specific list of products and applies to domestic firms who plan to sign deals to purchase and import these products from the United States in a market-oriented and commercial fashion,” stated the Customs Tariff Commission.
Analysts said that the long-awaited announcement was widely welcomed by Chinese refiners and LNG and natural gas traders.
However, they explained that it would take time for purchases to begin due to the coronavirus outbreak that has severely hit economic activity and depressed energy demand in the country.
Under Phase 1 of the latest trade deal, China pledged to buy $50 billion more in US energy supplies, a commitment that will depend heavily on crude sales to Beijing as it is a high value commodity and US crude is competitive in Asian markets.
Market constraints are much more likely to constrain US LNG sales into Asia at historic low prices.
China National Offshore Oil Corp., the leading LNG importer in the country with none terminals, is also likely to apply for tariff exemptions.
CNOOC, which has term contracts for US LNG supply, has been forced to swap US cargoes for non-US cargoes to avoid tariffs of 25 percent, sometimes at high premiums, because of uneconomic US-Asia arbitrage.
China imported 1.53 million tonnes of US LNG in 2017 and 1.64MT in 2018.
This dropped to just 258,955 tonnes in 2019 because of the trade war, while the Chinese purchased 60MT from other countries.
“Applicants can submit their filings online,” said the Customs Tariff Commission of the new trade regime with the US.
“Once approved by the authority, they will enjoy exemption of additional tariffs for certain US imports within the approved amount of value and within one year starting from the approval date,” it added.
The Commission said it would support imports from American companies based on solely on business considerations.