Canada, China settle canola dispute
Beef access also part of negotiations that could lead to free-trade deal
With the resolution of key trade disputes, Prime Minister Justin Trudeau and China’s Premier Li Keqiang signalled deepening economic ties between the two countries Thursday, opening the door to the possibility of a free-trade agreement.
At a joint news conference in Ottawa, the two leaders said they aim to double trade by 2025 and had settled long-standing issues of access for Canadian canola and beef to China, while several companies signed commercial deals.
Trudeau said Canada had secured access for its canola to the Chinese market through 2020, settling a dispute that previously threatened to halt exports.
Li and Trudeau both said they want to see a “science-based” solution to the canola impasse, which revolves around the amount of foreign material permitted in Canadian exports of the grain.
Li said experts from both sides will work toward solutions, but in the interim, “we will continue to apply the previous practice.” Canada sold $2 billion worth of canola seed to China last year.
Canada’s canola growers have become increasingly reliant on export sales to China, which accounts for 40 per cent of all canola-seed shipments.
“Canadian exporters and processors in China will be able to enter agreements with a lot of confidence, and the market should pick up again,” said Patti Miller, president of the Winnipeg-based Canola Council of Canada. “The harvest is coming in, and farmers will be needing to move a lot of canola.”
Li also said China was lifting a ban on imports of bone-in beef less than 30 months old, a move that was immediately applauded by the Canadian Cattleman’s Association as a $10-million annual gain.
The decision reflected “China’s commitment to, and China’s goodwill to, farmers and producers in Canada,” Li said.
China has been eager to start free trade talks, but Canada has shown less enthusiasm — until Thursday.
During Trudeau’s own visit to China last month, Li said the two countries had embarked on a feasibility study of a free trade deal. But Canada’s ambassador to China later called that premature, citing issues including labour, the environment and Chinese state-owned enterprises.
“I don’t want to say this is a thaw. I would just say we’re going to explore the one missing element of our relationship with China, which is potential free trade,” said HSBC Canada chief economist David Watt.
“It’s not necessarily going to be easy. We also have some degree of uncertainty in Canada over what sort of a relationship we want to have with China.”
China is Canada’s third-largest trade partner, behind the U.S. and the EU. Economic activity between the two countries grew at a yearover-year increase of more than 10 per cent in 2015, reaching $85.8 billion in two-way merchandise trade.
“We need to recognize that our common interests far outweigh our differences,” Li said.
Watt said for Canada’s heavily resource-based economy, there are clear benefits to trade deals with a country that is likely going to be a key driver of commodity prices for the next 30 years.
“If you’re a commodity exporter you probably want to have some idea what’s happening in China so you can take advantage of opportunities that are going to arise,” he said.
Watt said China stands to benefit not only from access to Canada’s natural resources, but its financial sector knowledge and technical expertise. “With this step forward, we are closer to taking advantage of a huge opportunity to increase trade, Brian Innes, president of the Canadian Agri-Food Trade Alliance, said in a statement.
“Increasing agri-food exports to China will be crucial to Canada’s economic future over the next 50 years. Achieving that success depends on how well Canada can open doors in this market.”
Following Trudeau’s recent first official visit to China in August where more than 60 commercial deals were signed, the prime minister announced four business deals including a joint venture between SNC-Lavalin Inc., China National Nuclear Corp and Shanghai Electric Group Co Ltd. to develop, market and build new nuclear reactors.
Sinoenergy Corp Ltd. also signed a deal to invest $500 million over two years in Long Run Exploration Ltd., a Calgary-based oil and gas company, while Iovate Health Sciences International Inc. and Xiwang Food Stuffs Co Ltd. signed a share purchase agreement worth $962 million.