Trade associations support Canada’s request for WTO consultations with China
September 13, 2019
By Top Crop Manager
Both the Canola Council of Canada and the Alberta Wheat Commission threw their support behind the Canadian government’s formal request for consultations with China under the World Trade Organization (WTO) agreement.
This formal request is pursuant to the WTO Sanitary and Phytosanitary (SPS) agreement that prescribes the rights and obligations of all WTO members.
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 Jim Everson, president of the Canola Council of Canada (CCC). “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 per cent – 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 per cent renewable content in diesel to 5 per cent 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 per cent of all canola seed, oil and meal exports. Canola seed exports to China were worth $2.7 billion in 2018.
The Alberta Wheat Commission (AWC) support the government’s actions for the canola industry and in doing so, the government’s renewal of its call for similar action to resolve the loss of the Italian durum market which has caused devastating impacts on grain farmers.
Canadian farmers lost two-thirds their most important durum market following Italy’s introduction of mandatory Country of Origin Labelling (COOL) on pasta in 2017, a protectionist mechanism that circumvents the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
“As a durum grower in the southern dryland region of Alberta, this high-value crop has been a staple where moisture concerns limit yield potential for other types of wheat,” says Gary Stanford, AWC chair. “We fully support and commend the action being taken to resolve China’s ban on canola, but we have lost the majority of the Italian durum market for nearly two years – despite the CETA agreement being in place – resulting in a serious blow to our farm margins.”
Through our membership in Cereals Canada and the Grain Growers of Canada, AWC has pressed for a WTO challenge to be opened against Italy for nearly two years in response to the devastating loss of this market.
Historically, the Italian durum market has been the top purchaser for Canadian durum, accounting for a quarter of exports or approximately one million tonnes. Introduction of mandatory COOL Labelling has resulted in a 20 per cent drop in Canadian durum production this year.