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Canola dispute looms over Canadian PM's visit to China

A long-standing dispute involving Canadian canola exports to China threatens to overshadow Prime Minister Justin Trudeau's trip to the economic superpower that begins next week.

Canada currently exports about 4 million tonnes of canola seed to China

The Chinese market accounts for about 40 per cent of Canada's canola seed exports.

A long-standing dispute involving Canadian canola exports to China threatens to overshadow Prime Minister Justin Trudeau's trip to the economic superpower that begins next week.

Canada says it wants the canola issue settled before relations between the two countries can move forward, while China has accused Ottawa of inflexibility and says it may look to other suppliers.

​At stake is a significant customer for Canadian farmers. Canada currently ships about four million tonnes of canola seed — about 40 per cent of the country's canola seed exports — to China. That represents a market worth around $2 billion to Canada.

The 6½-year spat centres on a disease known as blackleg that can affect canola, and the amount of dockage — the stems, pods, weeds and other plants — that winds up in shipments.

The current maximum dockage rate of foreign materials is 2.5 per cent, but China, which is worried about the spread of blackleg to its domestic rapeseed crops, is insisting that the rate must be cut to one per cent, and has given Canada a Sept. 1 deadline to make that change.

'Signficant slowdowns'

That deadline comes during Trudeau's China visit, which is slated for Aug. 30 to Sept. 6, and includes stops in Beijing, Shanghai, Hong Kong and Hangzhou for the G20 leaders' summit.

A representative of Canada's canola industry said if the dockage rate is lowered, the country's big producers would have to look for other markets for their product.

"Taking the dockage down to one per cent would mean a lot of additional cleaning, and it would cause significant slowdowns in a system that's really built to move bulk commodities to port and to customers very quickly," said Patti Miller, the president of the Canola Council of Canada, in a recent interview on CBC's The Exchange.

"You could see some shipments go, you could see some smaller companies meet that demand, but the bulk of our exports would need to remain under current standards," she said.

Canada is insisting that the 2.5 per cent dockage rate is backed up by science and that the risk of transmission of blackleg to China's crop is low, but China isn't accepting that, Miller said.

Earlier this week,  International Trade Minister Chrystia Freeland told the Thomson Reuters news agency: 

"We cannot take the next step in our relationship with China until the canola issue is resolved."

A spokesman for Freeland has said the canola issue is a priority for Canadian government officials

In an interview with The Canadian Press, China's ambassador to Canada, Luo Zhaohui, said Ottawa has lacked flexibility in its negotiations.

"Beijing thinks this is unfair," said Luo. 

"Even so, I'm still quite optimistic and I wish, through joint efforts by both sides, we can resolve these issues," the ambassador added.

Luo said China gets about 87 per cent of its canola from Canada, but he warned it could look to others sources if required.

As canola is Canada's biggest cash crop, denial of entry into the Chinese market would affect farm incomes here, Miller warned.

Corrections

  • An earlier version of this story said incorrectly that Canada exports 40 per cent of its total canola seed crop to China. In fact, Canada sends about 40 per cent of its exports of canola seed to China.
    Aug 26, 2016 2:35 PM ET

With files from The Canadian Press

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