The Canadian government announced yesterday that "Canada has been advised that China has reinstated access to its market for two Canadian companies that China Customs had suspended from exporting canola seed to China since March 2019." The Chinese restrictions had been the subject of a Canadian request for a WTO panel filed in June 2021.

More details may emerge soon, but based on the Canadian announcement, it looks like this dispute has been resolved. Canada also said the following in the announcement: "We welcome this decision to remove the restrictions and immediately reinstate the two companies to allow them to export Canadian canola seeds."

The origins of the dispute

China imports canola seeds in part so as to turn them into vegetable oil and meal to feed pigs and fish. In early March 2019, China revoked the license of one Canadian exporter, Richardson, on quality grounds. A second Canadian exporter, Viterra, had its license cancelled a few weeks later when Chinese authorities said they had found pests in its shipments. These developments led some Chinese importers to cancel canola seed orders from Canada. According to the Canola Council of Canada, canola seed exports to China "were down approximately 70 per cent in 2019 due to trade disruptions, resulting in an estimated $1 billion in lost revenue from canola."

The Chinese government claimed (link in Chinese) that the import restrictions were due to the detection of certain bacteria and diseases in the Canadian seeds, but on the Canadian side there was a view that the restrictions were connected to diplomatic disputes between Canada and China. A CBC article noted that: "[t]he dispute boiled up in March 2019 amid rising diplomatic tensions over Huawei executive Meng Wanzhou's detention in Vancouver and the subsequent arrests of Canadians Michael Kovrig and Michael Spavor in China" (Meng was arrested on December 1, 2018). And a Reuters timeline of events related to Meng's case includes this item: "FEB. 4, 2019: Canadian canola shipments are delayed in China."

The WTO complaint

At the WTO, Canada raised the issue in a General Council meeting on May 7-8, 2019. Then in September 2019, Canada requested WTO consultations with China on these issues. Consultations were held in October of that year but failed to resolve the dispute. In June 2021, Canada requested a WTO panel, with its request referring to two measures:

1) China's suspension of canola seed imports from two Canadian companies; and

2) China's application of enhanced inspections to canola seed imports from other Canadian companies.

The panel was established on July 26, 2021 and the panelists were announced on November 12.

The resolution

The connection between the diplomatic issues and the canola seed restrictions can be hard to prove definitively. Nevertheless, Meng Wanzhou was released in September 2021; and Michael Kovrig and Michael Spavor were released at the same time. There were no reports about the canola seed dispute over the past few months, but then yesterday the Canadian government announced the resolution as follows:

Canada has been advised that China has reinstated access to its market for two Canadian companies that China Customs had suspended from exporting canola seed to China since March 2019.

We welcome this decision to remove the restrictions and immediately reinstate the two companies to allow them to export Canadian canola seeds.

The Canola Council of Canada announcement made reference to the two Canadian companies involved: "On May 18, 2022, Canada was advised that China has reinstated access for Richardson and Viterra to export canola seed to China.

In response to the Canadian government announcement, the Canola Council of Canada said that "[t]his is a positive step forward, restoring full trade in canola with China and ensuring that all Canadian exporters are treated equally by the Chinese administration.” Its announcement noted that: "Market access restrictions for canola seed to China were first implemented on March 6, 2019. Seed exports to China have fallen from $2.8 billion in 2018 before the restrictions, to $800 million in 2019, $1.4 billion in 2020 and $1.8 billion in 2021."