China has lifted a 3-year ban on Canadian canola, Ottawa says

A three-year Chinese ban on Canadian canola has ended, according to the federal government.

In a joint statement released Wednesday afternoon, Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau said China had restored market access for two Canadian grain trading companies that had been prevented from exporting canola seed to China since March 2019.

“We welcome this decision to remove restrictions and immediately reinstate both companies to allow them to export Canadian canola seed,” the statement said.

“Canada will always firmly uphold the rules-based international trading system and related dispute settlement mechanisms, as well as a science-based approach to resolving such issues.

In March 2019, the Chinese government blocked canola shipments from Canadian companies Richardson International Ltd. and Viterra Inc. in suspending their licenses, alleging detection of pests in canola shipments.

The move follows the arrest of Chinese tech giant Huawei’s chief financial officer, Meng Wanzhou, in Vancouver a few months earlier.

In September 2019, Canada took the canola dispute to the World Trade Organization. A WTO dispute settlement panel was constituted in November 2021.

Expensive litigation

Before the trade tensions, the Chinese market accounted for 40% of Canadian canola exports.

According to the Canola Council of Canada, seed exports to China rose from $2.8 billion in 2018 before the restrictions, to $800 million in 2019, $1.4 billion in 2020 and $1.8 billion dollars in 2021.

The industry organization estimates that the dispute cost the industry between $1.54 billion and $2.35 billion due to lost sales and lower prices between March 2019 and August 2020 alone.

“This is a positive step forward, restoring full canola trade with China and ensuring that all Canadian exporters are treated equally by the Chinese administration,” said the Canola Council of Canada President Jim Everson in a statement.

“We will continue our efforts to foster and maintain a predictable and rules-based trading environment.”

Canada is the largest canola producer in the world. It is one of the most widely grown crops in Canada and is currently trading at record highs as the war in Ukraine drives up agricultural commodity prices.

Canola is primarily used to make cooking oil, but can also be used as livestock feed and to make biodiesel.