Just weeks before an expected trip to China for the upcoming G20 meeting, Prime Minister Justin Trudeau may be about to get a crash course in agricultural trade spats after Canadian and Chinese officials failed to resolve an ongoing dispute over canola imports.
China wants to tighten the rules around dockage amounts (excess removable foreign materials) permitted in canola imports, restricting a shipment to no more than one percent foreign material. The regulations, which are already affecting Canadian canola export volumes, are set to take effect Sept. 1.
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The Chinese quarantine authority says the new regulations are designed to protect its domestic rapeseed industry from disease, particularly blackleg. Canada and China signed a memorandum of understanding (a formal official partnership that is not legally binding) on blackleg in 2010.
Canadian officials and industry stakeholders argue the regulations cannot be scientifically justified and risk jeopardizing a significant trading relationship while significantly slowing down the entire grain supply chain.
The Canadian Grain Commission currently sets shipment dockage levels at 2.5 percent, a threshold that research has shown is sufficient to mitigate disease control.
For Canadian farmers, there is no international marketplace more valuable than China.
Forty-two percent of Canadian oilseeds intended for export are shipped to China — a trade relationship valued at more than $2 billion. The shear volume of canola imports to China make it a market that is nearly impossible to replace, industry officials have said.
Canada is the world’s largest exporter of canola.
The pending quarantine regulations were originally set to come into effect in April, but Chinese officials agreed to delay the start date as Canadian officials worked to negotiate a change.
Now, with a big crop expected in Western Canada, canola producers are understandably nervous.
The dispute also poses challenges for the Trudeau government, which hoped for improved and expanded trade with China.
The prime minister is expected to visit Beijing on an official visit ahead of this year’s G20 meeting in China next month. As of press time, it remained to be seen whether Agriculture Minister Lawrence MacAulay, whose office has insisted the canola issue is on its radar, would accompany the prime minister on this upcoming visit.
However, with the canola issue still unresolved, warming relations with Beijing may prove more difficult. The dispute could also jeopardize trade negotiations between the two countries, which have been known to be testy at times.
International diplomacy aside, the outstanding canola dispute is yet another agriculture issue demanding the Liberals’ attention and domestic agriculture remains nervous about the federal government’s intentions on the file.
Canadian grain producers are already nervous about getting this year’s harvest to market. While Canada’s two major railways have repeatedly said they are ready to move this year’s crop, Ottawa — notably Transport Minister Marc Garneau — has been noticeably subdued in its reassurances.
MacAualy has insisted that grain transportation and market access are priorities, but few specifics have been offered on how it plans to ensure crop gets to market.
The minister has also repeatedly championed the importance of science-based regulations, a position that industry insists China’s proposed dockage regulations contradict.
MacAulay was in China in June for the G20 agriculture ministers meeting, where a solution to the canola issue remained elusive. While the minister has admitted trade officials are closer to the file than his department, MacAulay has repeatedly said he is hopeful for a fix.
Lengthy transport time, and the uncertainty over whether the Sept. 1 regulations will take effect, has meant Canadian canola shippers have already stopped exports of Canadian canola to China, which will cost Canadian farmers.
If a resolution isn’t reached soon, Canadian farmers could very well find themselves harvesting a big canola crop that may have few places to go — a scenario Ottawa would very much like to avoid.
