OTTAWA, Sept 22 (Reuters) – Canada and China have agreed on a solution to a trade dispute over C$2 billion worth of annual canola sales, lasting to 2020, leaders of the two countries said on Thursday.
The solution is “predictable, science-based and stable,” ensuring access for Canadian shipments to China, Canadian Prime Minister Justin Trudeau said in Ottawa at a joint press conference with Chinese Premier Li Keqiang. He gave no details but it appears the acceptable threshold for dockage will stay at the industry standard of 2.5 percent.
China has twice this year backed down on plans to toughen its standard on foreign material, called dockage, in Canadian canola shipments. The dispute was an irritant as the two countries seek to broaden trade ties.
China, which has said it was concerned about the foreign material spreading a crop disease called blackleg, had intended to make the change on Sept. 1 before agreeing to continue negotiations with Canada leading up to meetings in Ottawa.
The maximum level of dockage China accepts will continue to be 2.5 percent of a shipment during the time of the agreement. China had intended to lower the maximum to one percent.
Canadian exporters, which include Richardson International, Glencore PLC unit Viterra Inc, and Cargill Ltd, had raised concerns that the tougher standard would result in fewer sales to China as it raises their costs. Industry analysts have said China’s stance was likely linked to high domestic stockpiles.
The news should support canola futures and the contract is trading higher today.
Li said until 2020, China would apply its previous inspection standard on Canadian canola shipments. In the meantime, the countries will study the risk dockage may pose, he said.
“For China, we have pretty sufficient amount of time to increase the quality of exports to China,” Li said through an interpreter. “That agreement is in the larger picture of Canada-China relations.”