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China halts canola shipments from major Canadian supplier

A major Canadian exporter has had its registration to ship canola oil to China revoked, apparently the latest flare-up in a diplomatic and trade dispute between the two countries.

A Chinese customs document dated March 1 says the country has cancelled Winnipeg-based agricultural handler Richardson International’s registration. That means the company is forbidden to export canola to the country.

“Richardson has been directly targeted,” vice-president Jean-Marc Ruest told CBC News. “We think this is part of a larger Canada-China issue, and we hope it gets resolved expeditiously.”

In the past, China has sought to limit the amount of “dockage” it allows in Canadian canola — referring to material such as weeds, stems and other seeds — to help fight the spread of a fungal crop disease known as blackleg.

But Ruest said the company believes this new flare-up isn’t related to those claims, but instead is tied to a roiling diplomatic dispute between the two countries.

“In regards to any issue of quality, we disagree with the Chinese allegations. The Canadian government respects and supports our position, and the quality of our product, at the same time.”

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

A spokesperson for the Canola Council of Canada said, “We look forward to the company involved resolving the current issue.”

As one of the biggest agribusinesses in Canada, Richardson is one of the biggest single exporters of canola, so “news about blocked exports hurts the whole value chain,” Canola Council communications director Heidi Dancho said.

The cancellation comes against the backdrop of rising tensions between Canada and China ignited last year, when Canadian officials detained Meng Wanzhou, vice-president of Chinese technology firm Huawei, at the request of U.S. tax authorities as she was boarding a flight in Vancouver.

Meng, who is the daughter of Huawei’s founder, was arrested on Dec. 1, 2018, while in transit through Vancouver to Mexico and South America. She is now involved in an extradition case and personal litigation against Canadian border officials, the RCMP and the attorney general of Canada.

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.

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 with the CBC on Friday 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 [they] 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.

Canada’s sudden issue with China comes against the backdrop of even worse trade tensions between China and the U.S., and Canada has become something of a pawn in that dispute.

As the Trump administration put tariffs on Chinese imports last year, Beijing retaliated and put levies on all sorts of U.S. products bound for China. One of the major ones is soybeans, which are now subject to a 25 per cent levy when they are shipping from the U.S. 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.

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