Canada escalates WTO case against China’s blocks on its canola seed exports

China suspended imports from Richardson International and Viterra in March 2019, while making shipments from other firms subject to enhanced inspections
China remains Canada’s largest canola seed export market with 2.6 million tonnes in 2020, just ahead of the European Union and Japan

World Trade Organization (WTO)

Andrew Mullen

Published: 9:07am, 27 Jul, 2021

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Canada has succeeded at the second time of asking to establish a World Trade Organization (WTO) panel to look into China’s restrictions placed on its canola seed exports, which have been in effect for over two years.

China suspended imports of canola seeds from Richardson International and Viterra in March 2019, while also making shipments from other Canadian firms subject to enhanced inspections, due to the detection of pests.

The first attempt by Canada to establish a panel was blocked by China at the end of June, but at a meeting of the WTO Dispute Settlement Body on Monday in Geneva, it was not able to gain the consensus against the panel’s formation required to block it on this occasion.

In the absence of progress, this is the next step to resolve the dispute and preserve rules-based, predictable trade with China

Canola Council of Canada

“The Canola Council of Canada supports the government of Canada’s action to take the next step in the WTO process by establishing a dispute settlement panel at the WTO,” said a statement from the Canola Council of Canada.

“The canola industry had hoped that the bilateral consultations between Canada and China would lead to a resolution, restoring full trade in canola seed and ensuring all Canadian exporters are treated equally by the Chinese administration.

“In the absence of progress, this is the next step to resolve the dispute and preserve rules-based, predictable trade with China.”

Canada claims discussions with China in October 2019 “failed to settle the dispute” and confirmed it plans to escalate its complaint to the Geneva-based trade body at the end of June.

Canada’s canola farmers hope WTO complaint against China can ease costly blocks on seed exports

In March 2019, China’s customs agency confirmed the suspension of canola imports from Richardson International “and relevant firms” after local offices in Shanghai, Dalian, Nanning and Shenzhen had “detected harmful pests”, according to local media reports.

At the time, Beijing said its decision to revoke the import permit was “well-grounded”, denying speculation that it was a retaliation against the arrest of Huawei Technologies Co. executive Meng Wanzhou.

According to the Canola Council of Canada, Canada exported 11.8 million tonnes of canola seeds to all overseas markets in 2020, with China the largest export market with 2.6 million tonnes, just ahead of the European Union and Japan.

So far this year, the data taken from Statistics Canada and the Canadian International Merchandise Trade Database, shows that Canada has exported 4.1 million tonnes of canola seeds up to the end of May, with some 1 million tonnes shipped to China.

According to the Canola Council of Canada, exports from other Canadian firms are down between 50 and 70 per cent compared with levels seen before both the ban and the enhanced inspections were put into place.

The industry body claims that the value of Canada’s canola seed exports to China fell from US$2.27 billion in 2018 to US$650 million in 2019 and US$1.13 billion in 2020.

Exports of canola oil and meal have continued, but an expert analysis by LeftField Commodity Research in February estimated that the disruptions had cost the industry between US$1.25 billion and US$1.9 billion, due to lost sales and lower prices.