Canada takes first formal step at WTO to challenge China's canola ban

OTTAWA (Reuters) - Canada, locked in a major dispute with Beijing, is taking the first formal step at the World Trade Organization to challenge China’s decision to block Canadian canola exports, Trade Minister Jim Carr said on Friday.

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China, angry at Canada’s detention of a top Huawei Technologies Co Ltd executive last year on a U.S. arrest warrant, blocked all imports of canola seed in March on the grounds they contained pests.

“We have continuously been engaging with China at multiple levels. The issue is that we’re not seeing progress fast enough and as we would with any trading partner, this is the next step,” Carr spokesman Michael Jones said.

Carr said in a statement that Ottawa was seeking bilateral consultations with China at the WTO. Under WTO rules, Canada and China should meet within 30 days, and if these talks fail, Canada can request adjudication by a panel.

The WTO timeline means there is slim chance of a resolution before Canadians vote in a federal election on Oct 21.

Polls show Prime Minister Justin Trudeau’s Liberals face a tough fight against the opposition Conservatives. Conservative leader Andrew Scheer, who has strong political support from Canada’s agriculture community, has attacked the prime minister for being weak in his dealings with China.

“I told Trudeau to take China to the WTO immediately. He had to think about it for over 120 days,” Scheer said on Friday, citing an April statement in which he called on Trudeau to launch a formal WTO complaint against China.

In 2018, Canada exported C$2.7 billion ($2.1 billion) worth of canola seed to China, a market that accounted for approximately 40% of all Canadian canola exports.

Canadian canola stockpiles surged to an all-time high this summer amid slumping sales to China.

“We’re disappointed that this action needed to be taken, but it is a necessary step,” said Jim Everson, president of the Canola Council of Canada.

In May, Ottawa extended a federal loan program to offer more financial assistance to canola seed farmers. China has also blocked imports of Canadian pork and beef.

John Guelly, chairman of the Alberta Canola Producers Commission, said the WTO move was “definitely something we’ve been asking for some time”.

Normally at this time of year, Guelly has sold up to one-third of his new harvest through contracts for forward delivery. This year, he has sold none of it.

Carr made his announcement a day after Foreign Minister Chrystia Freeland said both Canada and China had formally approved each other’s choice of new ambassadors.

China, which insists Ottawa release the Huawei executive, has also arrested two Canadian men and charged them with spying.

The Chinese embassy in Ottawa had no immediate comment.

Additional reporting by Rod Nickel in Winnipeg and Kelsey Johnson in Ottawa; Editing by Tom Brown and Alistair Bell