Making formal anti-dumping claims rather than questionable phytosanitary accusations could leave the door open to negotiations
China’s decision to use an anti-dumping claim against Canadian canola is a new approach that geopolitical and trade experts are watching closely.
It’s a different tactic than in previous Canada-China canola disputes, but not a new weapon in China’s arsenal.
“To some extent, I think it highlights the mirroring approach China is taking to trade restrictions (that) Canada, the EU and others are placing on it, and suggests they are open for negotiation,” said political risk analyst Rachel Ziemba, the founder of Ziemba Insights.
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“What they have announced so far is an investigation, which could go slowly or quickly, and suggests they may be open for negotiation.”
Jeff Mahon, a geopolitical adviser with StrategyCorp and executive-in-residence at the Canada West Foundation, also noted the difference in an opinion piece published by the Globe and Mail Sept. 3.
“In previous instances, such as when Beijing targeted canola for alleged health and safety concerns after the arrest of Huawei executive Meng Wanzhou, such actions were criticized as opaque and arbitrary as China didn’t engage to provide evidence,” said Mahon.
“But more recent bouts of such retaliation against western countries, including Monday’s announcement on canola, have utilized a more formalized process, such as anti-dumping investigations, to give a veneer of legitimacy.”
Indeed, China invoked anti-dumping claims in its retaliation against European Union countries for that trading bloc’s more limited tariffs on Chinese electrical vehicles and other restrictions on Chinese manufactured goods.
On Aug. 29, the Chinese Ministry of Commerce announced it was holding off on imposing tariffs on EU brandy imports, despite an anti-dumping investigation initiated Jan. 5 that found EU brandy could be hit.
“The investigating authority preliminarily determines that there is the dumping of the imported related brandy originating from the EU, that the domestic related brandy industry is threatened with substantial damage and that there is a causal relationship between the dumping and the threat of damage,” says the ministry’s statement.
However, a potential 34.8 per cent tariff remains possible.
This new-ish approach from China is less blunt than previous health and safety claims against canola and other commodities from countries such as Canada and Australia, but the Chinese government has made clear that there is a direct connection between western trade restrictions on Chinese products and its launching of anti-dumping allegations and investigations.
“China’s Ministry of Commerce on Tuesday announced decisive measures against Canada, including plans to initiate dispute settlement proceedings at the (World Trade Organization) and launch an anti-discrimination probe after Canada’s decision to impose hefty additional tariffs on Chinese products, including electrical vehicles, steel and aluminium,” says a Sept. 4 story in the Global Times, a Communist Party of China-controlled Chinese newspaper known for its strident nationalism.
“The significant measures against Canada are due to the ‘extremely vicious’ actions taken by Ottawa against Chinese products without any factual basis or due process, Chinese experts said.”
China is involved in multiple disputes with neighbours, trading partners and geopolitical rivals, including a simmering trade war with the United States, which imposed tariffs on many Chinese goods under former president Donald Trump that were retained by current president Joe Biden.
Australia has frequently provoked the ire of the Chinese government with its attacks on Chinese political interference, enduring bans and restrictions on major Australian exports, such as coal, which was banned from 2021-23.
The EU and China have had a less strident set of trade disputes. European manufacturers, particularly from Germany, have invested heavily inside China and are striving for harmony.
However, a potential flood of cheap and allegedly subsidized electrical vehicles from China has frightened EU manufacturers into calling for restrictions on competing Chinese products, and China responded with tit-for-tat provisions and threats, as with brandy.
Its neighbourly relations are also strained. China has engaged in deadly disputes along the Indian border, angered Vietnam, Malaysia and the Philippines with its broad claims in the South China sea, and continues its military threats against Taiwan, which it claims as a breakaway province from before communist rule on the mainland.
Chinese and Japanese relations are strained by disputes over small island chains between the two Asian powers, while its relations with South Korea are strained because of its support for the communist regime in North Korea.
Its most friendly relations are with Russia, some central Asian states and Mongolia, where its trading relations have been growing, as well as with many African countries, in which it has been investing heavily.
Mahon said the federal government’s decision to ape U.S. tariffs on Chinese electrical vehicles hurts western Canadian interests for the benefit of eastern Canadian manufacturers. Unlike the U.S., Canada doesn’t have the economic heft to intimidate China.
“Canada’s confrontational approach signals a missed opportunity to exercise leadership by finding a new modus vivendi with China,” said Mahon.
“We should’ve sought a more constructive way of dealing with this challenge because EVs aren’t going to be the last trade irritant we face with our second largest trading partner.”
Much of Canada’s shipbuilding industry is infuriated with the decision by some Canadian ship buyers to purchase vessels made in China, which the shipbuilders claim are also subsidized and part of the Chinese military-industrial complex. Elements of that industry also want tariffs on competing Chinese products.
Ziemba said the regional nature of Canada’s economies makes the federal response fraught with political risk for internal division.
“One challenge for Canada is that government may need to decide how to balance the interests of different sectors and, of course, regions,” said Ziemba.
“A lot of fights ahead, I think.”
