September 6, 2019 – Today’s announcement of the Government of Canada’s formal request for consultations with China under the World Trade Organization (WTO) agreement is welcomed by the canola industry. This formal request is pursuant to the WTO Sanitary and Phytosanitary (SPS) agreement that prescribes the rights and obligations of all WTO members.
“We’re disappointed that this action needed to be taken, but it is a necessary step to help determine the legitimacy of China’s trade measures,” says Jim Everson, president of the Canola Council of Canada (CCC). “While we’ve supported continued technical engagement, the scientific basis for China’s actions remains unclear.”
Since market access issues affecting canola seed trade started in early March, Chinese importers remain unwilling to purchase Canadian canola seed from exporters. The licenses of two companies, Richardson and Viterra, to export canola seed to China remain suspended.
“China has an obligation to explain the scientific basis for its actions as part of its commitments to World Trade Organization rules,” says Everson. “We need to consider all options to support predictable, rules-based trade, a critical requirement for Canadian agriculture.”
The canola industry hopes that this consultation can resolve the dispute so that further steps toward WTO dispute resolution will not be necessary.
Since market access issues began in March 2019, prices for canola have fallen approximately 10% – which translates into $1 billion less from canola for the Canadian economy on an annual basis.
“Today’s actions are an important step to regain access to China, but they’re not enough,” says Everson. “We need concrete action to diversify at home and abroad so that canola can continue supporting Canadian prosperity.”
The CCC continues its efforts to focus attention in Ottawa on resolving this issue as soon as possible. This includes co-chairing the Government of Canada working group on canola. The CCC believes more action is necessary to diversify canola markets, including enhancing market access in Asia and diversifying markets in Canada by increasing the amount of canola used in biofuel.
Using more canola and vegetable oil in Canada for biofuel represents an important diversification opportunity, one that is entirely within the control of Canadian governments. Going from the current 2% renewable content in diesel to 5% would be a market for 1.3 million tonnes of canola, while at the same time helping Canada significantly reduce greenhouse gas emissions.
“Increasing renewable content in fuels is a win-win,” says Everson. “Canada reduces emissions and the canola sector diversifies its markets with stable homegrown demand. We know that there needs to be government action to reduce emissions, and the canola sector can be a partner to meet Canada’s goals while taking control of unprecedented trade uncertainty that is well beyond industry’s control.”
Supporting producers is also top of mind for the working group and efforts are underway to monitor market conditions closely, so that if action is needed in the future it is timely and effective.
China has been a major market for Canadian canola, accounting for approximately 40% of all canola seed, oil and meal exports. Canola seed exports to China were worth $2.7 billion in 2018. Demand has been very strong until recent disruptions.
The Canola Council of Canada is a full value chain organization representing canola growers, processors, life science companies and exporters. Keep it Coming 2025 is the strategic plan to ensure the canola industry’s continued growth, demand, stability and success – achieving 52 bushels per acre to meet global market demand of 26 million metric tonnes by the year 2025.
For more information on trade with China, check out our centralized resource for common questions and updates: Canola & China – information for growers
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