Canada/China Canola Exports Cancellation

Tensions heightened as China halts business from one of the largest canola exporters in Canada

Key Actor(s):

• Richardson International – Canadian agricultural and food industry

Since the eruption of the USA-China trade war, Canada has been caught in a cross-fire. So far, it has tried not to lean to either side. However, with the U.S.’s pressuring in the new NAFTA deals, Canada is now obliged to choose a side in the conflict.

Background

Last December, the U.S. ordered Canada to detain the Huawei CFO, Meng Wanzhou, for Huawei’s violation over U.S. sanctions on Iran and the stealing of intellectual property. (For more information, see the Canada column in Editions 36 of the Blueprint.)

The issue sparked a broader feud between the U.S. and China, eventually leading to backlash from the Chinese government for Canada’s support for the U.S.. Following this incident, China followed suit with the detentions of a Canadian businessman and a Canadian ex-diplomat, Michael Spavor and Michael Kovrig, which was depicted as China’s retaliation in the Western media. China avenged for “grave consequences” against the US, but their attacks were mainly directed at Canada, who is in an unnecessarily binding relationship with the U.S. for political purposes, such as the new NAFTA deal that threatened to put tariffs on the steel and aluminum industries in Canada.

In short, the relationship between China and Canada has been deteriorating, with China advancing trade policies unfavorable to Canada.

Canola Exports

Canada exports over $5 billion CAD worth of Canola seeds every year, with over half of the exports directed to the Chinese markets. With China placing higher tariffs and reducing Canadian exports, it is clear that their intention is either to harm the Canadian economy or to protect their own—or both.

In the past, China has put restrictions on the number of exports for canola and other seeds to stop the spread of a fungal crop disease known as blackleg. However, this instance is suspected to be related more to the diplomatic dispute between both countries rather than the protection of homegrown crops. 

Richardson International is among the major Canadian exporters for canola. According to Rick White—CEO of the Canadian Canola Growers’ Association—this move from China can potentially “curb and shut down [Canada’s] exports of canola.” The overflow of supply in Canada would lead to a decline in market price for Canadian canola, which would have serious negative impacts. 

What is China’s goal?

China’s canola issue with Canada has become a backdrop issue for the overall downhill relationship between Canada and China. Other conflicts arising from the Meng Wanzhou issue include China’s accusations in the SNC-Lavalin scandal.

(For more information, see the Canada column in Editions 38 of the Blueprint.)

China accused Trudeau of vouching for SNC-Lavalin, but not being willing to intervene in Meng Wanzhou’s extradition. An industry export from China stated that “Trudeau was willing to intervene in legal matters to help […] SNC, while at the same time refused to intervene to have Meng released to avoid extradition.” 

China has revealed that it will do whatever it takes to expose and close off diplomatic relations with Canada. It appears that Richardson International is just another part of their trade scheme.

Statistics:

• Canada exports more than $5 billion CAD worth of exports in canola seeds

• More than half of all canola seed exports go to the Chinese markets

Bibliography

Evans, Pete. “China Halts Canola Shipments from Major Canadian Supplier | CBC News.” CBCnews, CBC/Radio Canada, 6 Mar. 2019, www.cbc.ca/news/business/canola-china-export-1.5043182.

Vossler, Glenda-Lee. “Canola Takes Hit In Canada-China Trade Tensions.” SwiftCurrentOnline.com, www.swiftcurrentonline.com/ag-news/canola-takes-hit-in-canada-china-trade-tensions.

Patton, Dominique, and Rod Nickel. “China Cancels Major Canola Shipments from Winnipeg Company amid Rising Tensions.” Global News, 6 Mar. 2019, globalnews.ca/news/5021950/china-cancels-canola-winnipeg-richardson-international/.

McGregor, Janyce. “How NAFTA Talks Drafted Canada into a ‘Coalition of the Willing’ against China | CBC News.” CBCnews, CBC/Radio Canada, 13 Oct. 2018, www.cbc.ca/news/politics/usmca-canada-china-coalition-1.4855868.

Gollom, Mark. “Why a U.S-China Trade War Could Be a ‘Net Negative’ for Canada | CBC News.” CBCnews, CBC/Radio Canada, 26 Mar. 2018, www.cbc.ca/news/business/united-states-china-trade-war-canada-1.4590523.