Shippers are rushing to get canola and soybeans to China before new,
unclear regulations become law on March 20.
“Everybody’s trying to ram all this stuff in there before these
changes,” said Lawrence Yakielashek of Toepfer Canada.
“I don’t know if we’ll have problems after the 20th of March, but I’m
not taking any chances, that’s for sure.”
Last weekend, his company finished loading a ship with canola for
China. The shipment won’t need special safety certifications to be
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accepted by the Chinese buyer.
That changes on March 20 when all shippers will require safety
certifications from Chinese officials before shipments of genetically
modified grain and oilseeds can be unloaded.
The new system is rife with problems:
- No one knows where to get an application form for the certification.
- Chinese officials have 270 days, or almost nine months, to make a
decision on whether to issue the certificate once they receive whatever
documentation they require.
- There is a blizzard of regulations coming out of China.
“There are so many so-called guidelines or rules that you’re supposed
to be following,” Yakielashek said.
“It’s an ongoing change on a weekly basis.”
Agricore United canola marketer Dave Parsons said it’s hard to plan
future sales when you don’t know what the rules are going to be.
“It’s not very clear. That’s the problem,” Parsons said. “Obviously it
puts a hold on exports.”
Yakielashek said American soybean exports to China are surging to beat
the March 20 deadline. Some analysts think the U.S. will ship one
million tonnes of soybeans to China in February and another million in
early to mid-March.
The Canola Council of Canada is calling on the federal government to
raise the issue with the Chinese government. It wants Ottawa to ensure
that China is complying with the rules of the World Trade Organization,
which it officially joined in December.
“There are some questions the government of Canada needs to be asking,”
said Joanne Buth of the canola council.
Until those questions are asked and clearly answered, there won’t be
many exporters willing to risk shipping canola to China.
“As of March 20, technically we can’t export any canola to China,” Buth
said.
The uncertainty doesn’t help oilseed prices in the long run, said Ken
Ball of commodity trader Benson Quinn GMS.
The U.S. markets are already registering some worry over Chinese access
for American soybeans, but Ball said concerns haven’t been as visible
on the Winnipeg Commodity Exchange because China hasn’t been a big
buyer of Canadian canola recently.
But in a more normal year, the uncertainty over China would soften
demand expectations.
The U.S. government is threatening to challenge China’s rules before
the WTO, but Ball said that probably won’t make the Chinese back down.
“They will bring it into place. They’re pretty stubborn and they don’t
respond well to criticism or suggestions for improvement,” Ball said.
The recent regulations were available only in the Chinese language. It
took the United States Department of Agriculture more than a week to
translate them.
Ball said the Chinese government is using the regulations to protect
its domestic soybean industry. Forcing foreign sellers to translate the
rules allows the Chinese to play with the rules by claiming sellers are
misreading them.
“It’s all part of the smokescreen,” Ball said. “This is just a new way
for them to control things. They’re not going to just join the WTO and
immediately open up their markets. It just won’t happen that way. It
may take decades.”
