BLOG: China dispute much bigger than canola sales

In 2015, the Federal Reserve Bank of Minneapolis released a report about intellectual property in China.

Normally, reports on intellectually property rights are about as appealing as flavourless oatmeal, but the document contained at least one remarkable tidbit.

“We estimate that as of 2010, more than half of all technology owned by Chinese firms was obtained from foreign firms.”

That was nine years ago, but it’s a safe bet that China continues to “acquire” a large share of its technology from foreign companies.

Thousands of American businesses are sick of China’s behaviour around intellectual property, and President Donald Trump has, dozens of times, directly accused China of IP theft.

To gain access to its markets, the Chinese government sometimes requires high-technology foreign firms to transfer partial property rights to domestic firms.

Trump, the U.S. Chamber of Commerce and others are no longer willing to accept that practice and they want China to follow global rules around intellectual property rights.

The battle over IP has become a major sticking point in the ongoing trade war between the U.S. and China.

For more than nine months, Canada has suffered through a different economic and political battle with China. The Chinese have refused to buy canola seed, pork and beef because of “pests” in canola and documentation irregularities for pork exports.

No one really believes those explanations.

Most observers believe China is punishing Canada for the detention of Meng Wanzhou, an executive with Huawei, a Chinese telecommunications giant. The U.S. Justice Department wants Canada to extradite Meng to America, where she will face charges of breaking sanctions on Iran.

In all the stories I’ve read about the Meng Wanzhou mess, I’ve rarely heard a Canadian government rep or a business leader express concerns about China and intellectual property rights.

That’s odd, seeing China has made public its plans to become the world leader in high tech industries such as aerospace, big data, electric cars and agricultural technology.

The last one should be concerning to Canadian farmers and Canadian firms who have dreams of selling biological products, precision ag systems and other ag technology to the world.

One such company is Bee Vectoring Technology.

The Ontario firm has commercialized a bio-control product, a fungus, that protects crops from harmful pathogens like botrytis and sclerotinia. In early September the U.S. Environmental Protection Agency approved and registered the bio-control fungus, granting BVT the right to sell its IP protected technology to American farmers.

Other countries will soon follow, creating a global market for a made-in-Canada agricultural technology — developed, in part, thanks to taxpayer-funded research.

China, with 1.4 billion people, is a key component of the global market and BVT may have ambitions of selling its technology to Chinese farmers.

But if it’s forced to partner with a Chinese firm and give away its IP rights, the Canadian success story could quickly become another statistic for the Federal Reserve Bank of Minneapolis.

A Chinese company could pilfer the BVT technology, create its own version of the beneficial fungus and sell the crop protection product to the world.

Losing control of such a product and the lost economic opportunity wouldn’t cripple Canadian agriculture. It certainly wouldn’t be as noticeable as lost canola sales or discount prices on pork exports.

But Canada’s ag industry and federal government need to make a decision.

Do we want to become global player in the ag tech business, or not?

If not, by 2035 Canadian farmers will likely become accustomed to the new norm, where they buy most of their bio-pesticides, high tech machinery and hybrid canola seeds from Chinese companies.

In exchange, Canadian producers will get to ship ag commodities back across the Pacific — if the Chinese are in the mood to buy from us.

Contact robert.arnason@producer.com

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