Canadian Manufacturing

Canada’s ‘unfair’ approach to canola dispute could impact Trudeau’s China trip

Canola farmers now face the possibility of losing more business with their biggest export market; China bought 40 per cent of Canada's canola seed exports


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OTTAWA—China’s ambassador to Canada says he hopes a simmering trade dispute over Canadian canola exports won’t become an even bigger problem with Prime Minister Justin Trudeau set to visit Beijing next week.

Canada has been inflexible and “unfair” in its approach to talks that began seven years ago over Chinese concerns about rules for the make-up of canola shipments, Luo Zhaohui told The Canadian Press in an August 25 interview.

At issue is the amount of so-called “dockage,” foreign material such as other plants and weed seeds, found in Canadian canola exports to China.

The Chinese government, which has concerns about the spread of a disease associated with canola, has given Canada until Sept. 1 to cut the level of dockage in its deliveries of the crop down to one per cent from 2.5 per cent.

Canada has stood its ground, with industry leaders saying scientific evidence shows such a change won’t change the risks.

Canola farmers are now facing the possibility of losing more business with their biggest export market, where they sold $2 billion worth of the oilseed last year. China bought 40 per cent of Canada’s exports of canola seed.

The canola industry says the dispute poses a threat to the bottom line of producers as they’re ready to take in one of their best-ever harvests.

The Sept. 1 deadline coincides with Trudeau’s first official visit to China. The prime minister departs next week for an eight-day trip that is expected to help deepen Canada’s trade relationship with the world’s second-largest economy.

“We really want to resolve this issue,” Luo said during the interview at China’s embassy in Ottawa. “It’s not a direction we want to see. Your leader is coming to Beijing and we don’t to make this become a trouble issue.”

China, Luo added, buys 87 per cent of its canola from Canada because of its good quality and production _ but he warned the economic superpower can always look elsewhere for the product, if necessary.

“Frankly speaking, you see, China, we have a lot of choice,” he said. “We can buy it from this country, from that country.”

During discussions, Ottawa told the Chinese that having a maximum of 2.5 per cent of foreign materials was reasonable and based on scientific research, Luo said.

Canada never showed any kind of flexibility and its position was non-negotiable, he added.

“Beijing thinks this is unfair,” said Luo, who argued that China agreed to postpone the deadline several times.

“Even so, I’m still quite optimistic and I wish, through joint efforts by both sides, we can resolve these issues.”

The ambassador also expressed concern about the politicization of what should remain a business issue. He referred to public comments recently made by someone whom he only described as a senior Canadian government official.

Luo said the person remarked that if the canola matter cannot be addressed, then Canada and China won’t be able to make progress on bilateral relations.

“I think this is not a constructive statement, it will not help to resolve these issues,” he said. “You say something publicly and you exercise pressure on the Chinese side and that’s unfair and not a proper way to resolve the issues.”

Luo appeared to be referring to International Trade Minister Chrystia Freeland, who was quoted by the Thomson Reuters news agency earlier this week as saying, “We cannot take the next step in our relationship with China until the canola issue is resolved.”

On Thursday, a spokesman for Freeland said the canola matter is a priority for government officials who have been working with China and the industry to resolve the dispute.

Alex Lawrence said Freeland has personally raised the issue with Luo and China’s minister of commerce.

“Canola is a key aspect of Canada’s bilateral trade relationship with China,” Lawrence wrote in an email. “We are focused on a long-term solution, based on science, for our Canadian producers.”

The president of the Canola Council of Canada said there’s no evidence that shows lowering the dockage from its current level would reduce the risk that the disease, known as blackleg, could be exported.

The risk of spreading is already “extremely low,” said Patti Miller, who added the approaching deadline has already begun to affect canola trade.

Mike Jubinville, president of market advisory service Pro Farmer Canada, described the country’s canola exports as “enormously important.”

“They’re our largest single export market for Canadian canola, so anything that has an influence on trade there is obviously going to be influential and potentially market moving,” said Jubinville, adding that canola trade with China is “grinding to a halt” until the issue is resolved, but is unlikely to seize up completely.

“What we’re going to have is instead of exporting four million tonnes there we might export three instead.”

_ With files from Ian Bickis in Calgary


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