Honey Laundering: Chinese honey sold in US as “Made in India” to evade duties

Have you heard about “Honey Laundering”?  Well, its a complete operation and art that the Chinese have now perfected.  And countries like India are sitting ducks!  So China is exporting honey to US with label “Made in India” to escape anti-dumping duty!

A torrent of illegal Chinese honey labeled in India is slipping into the U.S. potentially laden with untraceable antibiotics and heavy metals, according to accusations in several new reports.  The American Honey Producers Assn. said that more than 60 million pounds of Indian honey exports reached the U.S. in the first half of 2011 and that much of it is believed to have been first produced in China, then rerouted to skirt American trade restrictions.  The “unimpeded colossal flow of honey” puts the U.S. honey industry in a sticky spot, potentially depressing wholesale prices, the producers group said.

And as a result, more than three-quarters of the product that ends up on American grocery shelves labeled as “honey” is actually far from it, according to Food Safety News. (source: LATimes)

The amount of duties evaded is huge – $80mn.

Chinese honey is cheap and the US had been a major importer. But in 2001, in the wake of a US government investigation that found domestic honey producers being harmed by significant price disparities between Chinese and American honey, the US levied an anti-dumping duty of roughly $1.20 per pound (454 gm) on Chinese honey. This tariff, its imposition implying that this honey was being sold below its real cost of production, was intended to level the playing field for American beekeepers who could not compete with imported honey selling in America at half their cost.

For companies like ALW that were importing tonnes of Chinese honey into the US every year, this was a big business setback. To evade the duty, some of them started getting shipments via third countries, with the honey’s point-of-origin relabelled accordingly. After all, no tariff was due on honey from India, Malaysia, Mongolia or Russia.

The operation soon came to be called ‘honey laundering’. ALW was one among several firms doing it, but it has been in the spotlight ever since the arrests. According to a 44-count indictment of the firm, over 2004-06, it laundered over 2 million pounds—900 tonnes—of Chinese honey through India, evading nearly $80 million in duties. (Source: OPEN Magazine)

Here is a graph which shows something that the Indian Government can probably feel very proud about, but it actually has a different reality.