MONTREAL — China’s impending entry into the world trading community has significant potential benefit for Canadian grain and fertilizer exporters, say federal trade officials.
But they also told the annual meeting of the Canadian Fertilizer Institute March 13 that nothing is certain, since the Chinese have a history of protecting food security.
Still, Steven Goodinson and Greg Chin, of the foreign affairs and trade department, said China holds potential for trade by Canadian sectors.
The world’s most populous country has a growing need for food and a trend toward grain farmers switching to higher value crops.
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China has agreed to negotiations allowing it into the World Trade Organization, which include agreeing that import barriers will fall, import rules be more predictable and state manipulation of imports and distribution be curtailed.
Look to imports
It could be good news for Canadian grain exporters who once sold China billions of dollars worth of grain. Chin said that with a switch to livestock production and out of low-price grain production, China will be ripe for increased imports.
“China will increasingly depend on imported grain,” he said.
Likewise, the Chinese demand for fertilizer will outstrip supply, even as Chinese authorities try to reduce domestic overuse of fertilizers.
“I think that changes in trade rules will lead to increased opportunity for Canadian (fertilizer) exporters,” said Chin.
As it stands, China imports close to $300 million worth of fertilizer from Canada, all potash.
But Goodinson said it will take China some time to fully comply with world trade rules and lower its barriers. It will consider its rural population and its food security special cases.
“China will not change overnight,” he said.
Previous market access was based on the fact that Canada was the first capitalist country to sell wheat to communist China in 1961.
Goodinson said the market is now more open.
“Canadian suppliers will have to compete with companies from other WTO members to sell within the quotas,” he said.
“If there is a demand for grains of the type and quality that Canada is producing, and the Chinese market can support the price of Canadian exports, then exports from Canada would likely increase.”
