Canadian Canola Exports To China Lost Exporting Rights

Richardson International Ltd Canola Oil Cancelled Trading in ChinaPhoto By: Cliff/Wikimedia/CC BY 2.0

The on-going diplomatic and trade dispute between China and Canada causes Canadian canola exporter, Richardson International Ltd’s, to lose their exporting rights to China.

Richardson International is “Canada’s largest agribusiness and a worldwide handler and merchandiser of all major Canadian-grown grains and oilseeds,” according to the company.

According to a document, listing approved exporters posted on the website of the Chinese customs administration on March 1, Richardson International’s “Canola export registration already canceled,” meaning they can no longer export goods to China, the world’s largest importer of canola.

While the Canola Council don’t directly imply that any broader issue may not motivate China’s move, it does follow tightly around the time where tension between the two countries started to ignite last fall.

When Canadian officials allegedly illegally detained Huawei’s, China’s top tech company, the chief financial officer at the request of U.S. tax authorities as she was boarding a flight in Vancouver International Airport.

She is now involved in an extradition case and personal litigation against Canadian border officials, the RCMP and the attorney general of Canada.

Following the story, two Canadians, Michael Kovrig and Michael Spavor, have since been detained in China, and on Monday the two men were accused of stealing state secrets from China.

Oilseeds like canola, fruit, and grain are Canada’s biggest China export category, making up nearly 17 percent of all exports in 2017, the latest annual data available, according to the Asia Pacific Foundation of Canada.

In numbers, China buys some C$2.5 billion ($1.88 billion) of Canadian canola per year. A drop in this market involving China would inevitably affect Canadian exporters and farmers which also includes companies like Viterra and Cargill Ltd.

Moreover, Canada exported more than $5 billion worth of canola last year, and almost half of it was destined for the Chinese market, Canola Council of Canada said.

There had already been reports last month that Canadian canola shipments to China had been slow to clear customs amid the dispute.

The on-going trade disputes will impact Canada’s economy from the export market, especially in a year when Prime Minister Justin Trudeau faces a tight race for re-election.

It’s one of the largest single canola exporters in Canada, and “news about blocked exports hurts the whole value chain,” Canola Council communications director Heidi Dancho said.

The current proceedings with the export market between China and Canada, with which links have worsened, resounds similar to China’s recent actions towards the slow clearing in Chinese customs of Australian coal imports.

Australia’s ties with China had deteriorated since 2017 when Canberra accused China of meddling in its domestic affairs.

Also, US President Donald Trump’s administration put tariffs on Chinese imports last year, where Beijing retaliated and put levies on all sorts of US products bound for China. One of the major ones is soybeans, which are now subject to a 25 percent levy when they are shipping from the US to China.

Faced with that sudden bill, Chinese importers tried to work around it by buying more from other countries, including Brazil and Canada. Canada was the second-leading supplier of soybeans to China in January, behind only Brazil.

Brock University professor Charles Burton, a former Canadian diplomat who served two postings in China, said Beijing was likely to retaliate further and suggested in an interview that a crackdown on Canadian canola would be one possible tactic it would employ.

“They’re not going to take this lying down,” he said. “One shudders to think what the consequences could be.”

Sui Sui, a professor at the Ted Rogers School of Management at Ryerson University in Toronto, said she suspects the move against Richardson is due to the company running afoul of some specific rule — a minor breach that would ordinarily be ignored but in the current era of heightened tensions has drawn a stricter response.

“I’m sure there’s something special about this company,” she said in an interview. “If [a] Canadian company has a good relationship and [and] comply with regulations, I don’t think they have to worry too much about it.”

While the canola industry has been thrown for an unexpected loop, on the whole agricultural exports from Canada to China are inching higher.

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