China has officially extended its deadline to enforce stricterrules on canola shipments from Canada yesterday, ending a months-long trade spat. While both countrieswork out a feasible long-term deal,the current canola export regime will continue to be in place.
According to the new rule which was supposed to be enacted on 1st September, the amount of foreign matter allowed per canola shipment was no more than 1%. The current standard is 2.5%.
China's call for stricter canola seed import rules is to prevent the spread of blackleg diseasefrom Canadian canola into Chinese rapeseed, another name for the oilseed.However, the chanceof having an outbreak of blackleg diseaseis very lowaccording to the Canola Council of Canada,as the canola imports arrive in parts of China that do not grow rapeseed.
As China is Canada's top export market for canola seed, such a change will no doubt endanger Canada's US$2 billion worth of canola exports to China, as the costs for Canadian exporters and farmers would increase if they were to meet the new standard.
In addition, some trade analysts are suggesting that the real reason for China to implement stricter rules on canola shipments is dueits highinventory of domestic rapeseed.Though China has managed to sell 2.8 million tonnes of rapeseed from its inventories in the first half of this year,its remaining stockpile of rapeseed is still alarmingly high.