The Chinese government is poised to effectively shut the door on $2-billion in annual exports of canola seed from Canada – a potential blow to bilateral trade with the Asian giant that could land just as Justin Trudeau makes a historic visit to the country to try to rebuild relations with Beijing.
China is preparing to enact a rule as of Sept. 1 that would require the amount of extraneous plant material in canola-seed exports to make up less than 1 per cent of each shipment. The Chinese are a major customer for 43,000 farmers, mainly in Western Canada but also Ontario and Quebec, who export their product through grain handlers. Last year, China bought more than 40 per cent of all canola Canada sold abroad.
Canada's canola industry says this new measure would all but halt shipments to China, where the canola seeds are mostly used to make cooking oil and livestock meal. It says it's impractical for Canadian shippers to filter and remove sufficient plant material to meet this new standard.
Canadian government officials and canola-industry representatives are currently in China trying to head off the new rule as the clock ticks down to a visit by Mr. Trudeau – one where both countries are trying to move beyond a chill in relations that persisted throughout the Stephen Harper era.
The Canadian Prime Minister is scheduled to attend Group of 20 meetings in Hangzhou in early September – and he is expected to undertake an official visit to China ahead of this international gathering. It would be the first such visit since winning election, and Mr. Trudeau's father, Pierre, is still held in high regard there.
Asked whether there is any chance that Beijing may stay the measure, China's embassy in Canada on Thursday said both sides are still trying to resolve the matter.
"The quality-inspection departments from China and Canada are in close contact with each other and striving to find a reasonable solution to this issue," said Yang Yundong, an embassy spokesman.
Beijing has explained the measure by saying it's trying to prevent the spread of blackleg fungal disease that canola growers around the world have contended with for decades. The Chinese believe the "dockage" or extraneous plant material contributes to the spread of this disease. In March, it delayed implementing the new rule until Sept. 1.
Over the past half decade, canola has regularly ranked among the top exports to China from Canada and the industry warns a new Chinese trade barrier would create a ripple effect through Canadian agriculture. It would have adverse impacts for not only farmers but grain handlers operating in Canada including, potentially, Richardson International, Viterra, Cargill and Parrish & Heimbecker, among others.
"It would be a big blow to the entire value chain, reducing incomes and creating uncertainty," said Patti Miller, president of the Canola Council of Canada. "Canola is Canada's crop. It was invented here and is our most valuable export to China."
Asked what they are doing to forestall the new measure, the Trudeau government called the matter a priority, saying canola is a "key aspect" of the bilateral trade relationship with China and they will keep working to resolve this.
International Trade Minister Chrystia Freeland's office said she has repeatedly pressed the matter with the Chinese.
"[She] personally raised the issue in meetings with the Chinese Minister of Commerce, Gao Hucheng, last week in Laos, and last month at the Shanghai G20," press secretary Alex Lawrence said. "In May, the minister also met in Ottawa with the Chinese ambassador and spoke with the president of the Canola Council of Canada."
The canola industry says Canadian producers have found a way to mitigate the impact of blackleg, including fungicides and crop rotation, and noted that growers are enjoying record yields in Canada. It said it wants to help China reduce the risk of blackleg based on the best scientific evidence available.
Ms. Miller said there's a big incentive to solve this before Mr. Trudeau arrives in China.
"A science-based, practical solution before the visit would be very positive. If we get this right, we are optimistic about the future for Canada-China trade."