Question Period Note: BILATERAL AGRICULTURAL TRADE WITH CHINA

Q1 – What is the Government doing to resolve outstanding trade issues impacting agricultural exports to China?

R.1 - The Government of Canada is committed to addressing trade issues and advancing Canada’s agricultural interests in export markets, including China.

As such, the Government continues to allocate significant resources, both in Canada and across China, to support Canada’s engagement efforts with China to address trade issues, promote Canadian products in-market, and advocate for science-based trade to advance Canada’s agricultural interests.

Canada will continue to pursue every available opportunity, both at the bilateral and multilateral level, to press China to resolve current trade issues and to base its trade measures on scientific and non-discriminatory principles.

Doing business with China is high-risk, and Canadian exporters are facing increasing challenges. The Government continues to encourage Canadian exporters to adopt appropriate risk mitigation and diversification plans.

Canada-China Agricultural Bilateral Trade
China is a priority market for Canadian exports of agricultural, agri-food, and fish and seafood products, and despite market access disruptions, China remains Canada’s second largest export market for the sector, behind the United States. Canadian exports of agricultural, agri-food, and fish and seafood products to China were valued at $9.5 billion in 2022, and increased to $11.5 billion in 2023.

However, increases in Canadian exports tend to be in commodities that China currently needs (e.g., canola, wheat), and are not indicative of stable market growth nor sustained market share. For example, Canada’s share of China’s global imports of agriculture, agri-food, and fish and seafood products (by value) has been in decline since 2018: 5.8% in 2018 (ranked 4th), 4.8% in 2019 (ranked 5th), 4.2% in 2020 (ranked 6th), 4.0% in 2021 (ranked 7th), 3.2% in 2022 (ranked 8th). While Canada’s share increased in 2023 to 4.35% (ranked 5th), this could be partly attributed by an increase in commodity prices for key Canadian exports.

Since 2018, Canadian agricultural exports have been increasingly subjected to arbitrary trade actions and non-tariff barriers by China (e.g., unjustified sanitary and phytosanitary measures, lack of transparency), putting market access for Canadian agriculture, agri-food, and fish and seafood exports at risk and adding significant costs and uncertainty for Canadian exporters. China’s current measures against Canada include:

• Since December 2021, Canadian beef exports to China remain halted due to China’s BSE-related trade suspension following Canada’s notification of an atypical case of BSE. In accordance with guidelines of the World Organization for Animal Health (WOAH), the detection and reporting of this atypical BSE case did not affect Canada's WOAH negligible risk status for BSE and should not have affected trade. Moreover, revised WOAH standards on atypical BSE adopted in May 2023 reaffirm that atypical BSE detections do not affect the BSE risk status of a country or zone. Despite Canada providing all the technical information requested, China has yet to provide timelines for the restoration of access. Canada continues to engage China to resume trade without further delays.
• Since February 2022, Canadian exports of heat-treated dry pet food containing poultry ingredients remain halted due to China’s Highly Pathogenic Avian Influenza (HPAI) trade-related restrictions following confirmation of HPAI in Canada. Canadian officials have stressed that China’s restrictions are not consistent with its World Trade Organization (WTO) obligations, international guidance, and negotiated veterinary certificate, which does not specify that Canada must be recognized as free of HPAI. Canada continues to engage China to remove its restrictions without further delays.

Chinese authorities have shown limited willingness to constructively engage with Canadian officials to resolve and advance outstanding agricultural trade issues impacting Canadian exports. In some key cases, such as pet food and beef, Canada’s market access requests and submissions of technical data and/or official letters go unanswered by the General Administration of Customs of the People's Republic of China (China Customs), the CFIA’s Chinese counterpart.

Canadian officials continue to work closely with officials from like-minded countries to share information and experiences, and develop common approaches with respect to raising concerns with China’s measures at the WTO. China’s approach to trade continues to shift in contradiction to established international trade rules, its WTO obligations, and concerns by trading partners.

• The Government of Canada understands that maintaining and expanding access to key export markets, including China, is critical to the success and growth of the Canadian agricultural sector and the Canadian economy.
• Canada and like-minded trading partners continue to engage China bilaterally and multilaterally to advance a rules-based, predictable multilateral trading system, with the World Trade Organization at its core, to prevent unjustified disruptions to trade.
• The Government will always stand shoulder-to-shoulder with our farmers, producers, and workers who export the finest products around the world.