Canada’s canola conundrum has Trudeau pinned between China and U.S.
Trade diversification was supposed to make Canada less dependent on the U.S. But as the canola dispute shows, it has had a perverse effect. It has made this country more dependent on China.
Beijing’s decision to ban two major Canadian companies from exporting canola to China has Prime Minister Justin Trudeau’s government rattled.
Canola is Canada’s largest grain export after wheat. China is Canada’s number one market for canola. Last year Canadian canola seed exports to China were worth about $2.7 billion.
In short, the ban is a big deal — particularly since it is accompanied by a reluctance among Chinese importers to sign any new canola contracts with Canadians.
The ban has lowered canola prices and left Canadian farmers unsure of whether to plant a new crop this spring.
It wasn’t supposed to be this way.
Until now, canola has been the poster boy for Canadian efforts to diversify trade away from the U.S. and toward the new markets of Asia. A rapeseed variant both developed in and named for Canada, canola is a hometown success story.
Appropriately perhaps, Canada is the world’s largest producer of canola. Virtually all of it is exported, with China, Japan and Mexico being the top three destinations.
When Finance Minister Bill Morneau wrote in his 2017 budget about focusing on technological change in Canada’s agri-food industry, canola was almost certainly one of the examples he had in mind. When Trudeau mused about free trade with China, canola was front and centre.
But as Canada’s long and complicated history with the U.S. shows, trade relations come at a cost. (Continued: Toronto Star)