China suspends canola seed export licenses for two Canadian firms in March 2019
Context
In March 2019 China suspended the export permits for two of Canada’s largest canola seed exporter firms. A statement issued by China’s Canadian embassy claimed that these actions had been taken as a “safety precaution” following the identification of “intercepted quarantine pests in imported Canadian canola.” The move was officially presented by Chinese customs officials as an enforcement of regulation to strengthen inspection and quarantine measures.
The Canadian government strongly rejected this claim. The broader political context believed to have motivated this case is that in December 2018 Canada angered the Chinese government by arresting leading Chinese firm Huawei’s CFO, Sabrina Meng Wanzhou – due to a US extradition request. Beijing denied that the Huawei case influenced its decision here.
Impact
Canola seeds – used for cooking oil/ livestock feed/ bio diesel were the subject of this dispute. Two firms were targeted, Richardson International, Inc and Viterra, Inc. Notably, the canola seed industry is considered a symbol of Canadian agriculture exports. Prior to this disruption, in 2018, Canada’s canola seed exports to China were valued at C$2.8 billion, but this fell to only C$800 million in 2019.
Market analysis of this case published in 2021 concluded that Canadian losses from this Weaponised Trade measure were valued at between C$0.859 billion and C$1.051 billion.
Responses
(i) Canadian Industry Responses
The CEO of Richardson International, Curt Vossen, told a Canadian parliamentary committee that “[i]f the current disruption continues over the longer term, we will have no choice but to find other markets for Canadian canola seed, however doing so will be no easy task,” adding that “[w]hile we are confident that we can eventually find other markets, it will not be a painless exercise.” Vossen also called on the Canadian federal government to be “more aggressive” in advocating for its export industries.
(ii) Canadian Government Responses
In March 2019 Canada’s former ambassador to China, Guy Saint-Jacques, called on the US to be more supportive to Canada in this dispute, saying that “[w]e are in a big mess and Canadian farmers are going to suffer and so the Americans should recognize they have some responsibility in this. And they should try to help us.”
After failing to make progress with bilateral negotiations on this issue, in June 2021, the Canadian government escalated the Canola seed dispute by referring it to the WTO’s Dispute Settlement Body. In a statement from its WTO delegation, Canada said that “Canada has repeatedly attempted to obtain information from China regarding the scientific basis for its measures and on the process to restore full market access for Canadian canola seed” and that “Canada has employed numerous and varied formal and informal mechanisms at its disposal to solicit this information. To date, these efforts have failed to produce satisfactory results.” This circulation concluded that “China’s measures relating to the importation of Canadian canola seed appear to be inconsistent with China’s obligations under the WTO Agreement.”
In July 2021, the WTO committed to establish a panel to consider the case, and this panel was formed in November 2021. DS589: China — Measures Concerning the Importation of Canola Seed from Canada – is available here.
(iii) Chinese Government Responses
In March 2019, a Canadian journalist alleged that the suspension of Canadian canola seed imports was motivated by express political reasons (relating to the arrest of Meng Wanzhou). In response, the Chinese Ministry of Foreign Affairs condemned this account, saying the measure was completely driven by the need of controlling quarantine pests.
However, a Chinese state media report from April 2020 cited domestic analysts as saying that “Canada is more anxious than China to resume these exports as the latter has found new sources for canola products.” Moreover, it directly linked the case with bilateral political tensions, quoting one Beijing-based analyst as saying that “Huawei Meng Wanzhou’s arrest has affected bilateral trade and had a significant negative impact on both sides. Resolving Meng’s case will help restore ties between the two countries.”
(iv) Chinese Industry Responses
China here attempted to diversify its import sources.
Status
On May 18, 2022, the Canola Council of Canada (CCC) issued a statement acknowledging that both impacted canola seed firms – Richardson and Viterra – had regained their export permits. CCC President Jim Everson called the move a “positive step forward, restoring full trade in canola with China and ensuring that all Canadian exporters are treated equally by the Chinese administration”. The Canadian ministers for trade and for agriculture issued a joint statementwelcoming the news, and emphasising that “Canada will always firmly uphold the international rules-based trade system and related dispute settlement mechanisms, as well as a science-based approach to resolving such issues.” Subsequently, in August 2022 Canada ended WTO proceedings against China. Notably, the restoration of export permits came after a prisoner exchange between Canada and China in September 2021, in which Huawei’s Meng Wanzhou was swapped for two Canadian nationals.
In September 2024 China hinted at a new round of measures targeting Canadian canola.
References & Further Information
Al Jazeera. 2018. “Anger in China over arrest of Huawei’s Meng Wanzhou in Canada.” Al Jazeera. December 7. Available at: https://www.aljazeera.com/news/2018/12/7/anger-in-china-over-arrest-of-huaweis-meng-wanzhou-in-canada
AP. 2019. “China stops purchase of Canadian canola seeds.” The Mainichi. March 23. Available at: https://mainichi.jp/english/articles/20190323/p2g/00m/0bu/044000c
Blatchford, A. 2019. “Canola exporters can’t easily find alternatives to China, Richardson International exec says.” CBC News. April 2. Available at: https://www. cbc.ca/news/canada/manitoba/canola-exports-china-richardson-1.5082256
Braun, K. 2019. “Column: Canadian canola conundrum echoes U.S. soybean woes with China.” Reuters. April 26. Available at: https://www.reuters.com/article/markets/ stocks/column-canadian-canola-conundrum-echoes-u-s-soybean-woes-with-china-idUSKCN1S20V9/
Canola Council of Canada Statement. 2022. “National Canola Organizations’ Statements on Removal of Restrictions for Canola Seed Exports to China.” Sask Canola. May 18. Available at: https://www.saskcanola.com/news-articles/national-canola-organizations-statements-on-removal-of-restrictions-for-canola-seed-exports-to-china
CBC. 2022. “China has lifted a 3-year ban on Canadian canola, Ottawa says.” CBC News. Available at: https://www.cbc.ca/news/politics/china-canada-canola-ban-ends-1.6458746
Chi, J. 2020. “Canada eager to resume canola exports to China, which has found new sources.” Global Times. April 1. Available at: https://www.globaltimes.cn/content/ 1184438.shtml
Elmer, K. 2019. “China defends ban on Canadian canola, saying it reported pest problem on four occasions.” South China Morning Post. March 30. Available at:
General Administration of Customs of the People’s Republic of China. 2018. ‘Regulations on Risk Warning and Rapid Response Management for Export and Import Inspection and Quarantine’ [出入境检验检疫风险预警及快速反应管理规定] 28 April. Available at: https://www.gov.cn/zhengce/2018-04/28/content_5723398.htm.
Global Affairs Canada. 2022. “Statement by Minister Ng and Minister Bibeau on China’s removal of restrictions on Canadian canola exports.” Government of Canada. May 18. Available at: https://www.canada.ca/en/global-affairs/news/2022/05/statement-by-minister-ng-and-minister-bibeau-on-chinas-removal-of-restrictions-on-canadian-canola-exports.html
LeftField Commodity Research. 2021. “Case Study – Impacts of the Chinese
Trade Restrictions on the Canadian Canola Industry.” LeftField Commodity Research. February. Available at: https://www.canolacouncil.org/wp-content/uploads/2021/03/CCC-Market-Access-Impact-Report-China-Final.pdf
Ministry of Foreign Affairs of the PRC,. 2019. ‘Spokesman for the Ministry of Foreign Affairs, Lu Kang, held a regular press conference on 11 March 2019’ [2019年3月11日外交部发言人陆慷主持例行记者会] March 11. Available at: https://www.mfa.gov.cn/wjdt_674879/zcjd/201903/t20190311_7943146.shtml.
Mullen, A. 2021. “Canada escalates complaint over China’s block on its canola seed exports, requests WTO panel.” South China Morning Post. June 23. Available at: https://www.scmp.com/economy/global-economy/article/3138421/canada-escalates-complaint-over-chinas-block-its-canola-seed
Reuters. 2019. “Canada gets tough with China over canola ban that ‘defies science’, demanding proof of contamination.” South China Morning Post. March 29. Available at:
Wong, C. 2019. “China denies block on Canadian canola firm is retaliation for Meng Wanzhou case.” South China Morning Post. March 6. Available at: https://www. scmp.com/economy/china-economy/article/2188824/china-blocks-canadian-canola-exporter-tension-sabrina-meng
WTO. n.d. “DS589: China — Measures Concerning the Importation of Canola Seed from Canada.” World Trade Organization. Available at: https://www.wto.org/english/ tratop_e/dispu_e/cases_e/ds589_e.htm
The Western Producer. 2024. “China threat on canola unpalatable, not surprising”. September 11. Available at https://www.producer.com/opinion/china-threat-on-canola-unpalatable-not-surprising/