Question Period Note: BILATERAL AGRICULTURAL TRADE WITH CHINA

Q1 – What has been the Government’s response to China’s launching its anti-dumping investigation on canola seed exports? Q2 – What is the Government doing to resolve other outstanding trade issues impacting agricultural exports to China? Q.3- What was the purpose of your travel to China?

R.1 - The Government of Canada appreciates the close collaboration with the Canadian canola sector further to China’s launching an anti-dumping investigation on the imports of canola seed from Canada. We will always stand up for Canadian canola farmers, businesses, exporters, and their communities and support their interests and success at home and in markets abroad.

Canola is one of Canada’s most valuable agricultural exports and an important driver of the economy. We remain committed to ensuring fair market access for our exporters, farmers and producers.

More broadly, Canada is focused on reinforcing supply chains, while building and maintaining predictable international trade rules upheld by the WTO dispute resolution settlement system. R.2 - 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. R.3 - I travelled to China from November 11-15, 2024, to advocate for fair trade to the benefit of producers, exporters, and consumers in both our countries.

With key Canadian stakeholders by my side, I took the opportunity to build and strengthen relations with local industry groups, discuss opportunities, priorities, and challenges for Canadian imports to China.

I also attended the Canada-China Business Council (CCBC) Annual General Meeting and Business Forum, where I was the keynote speaker.

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, representing 11.6 percent of Canada’s total agriculture, agri-food, and fish and seafood exports that same year. Key exports to China in 2023 were grains and oilseeds (e.g., canola seed, barley, wheat), fish and seafood, dried peas, pork products, and animal feed (e.g. canola meal, pet food). Canadian exports of agricultural, agri-food, and fish and seafood products to China have totalled $6.3 billion so far in 2024 (January-August).

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. Canada’s share in 2024 (January-August) is 3.8% (ranked 6th).

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.

China’s anti-dumping investigation on Canadian canola seed exports

On August 26th, 2024, the Government of Canada announced a series of measures to level the playing field for Canadian workers and allow Canada’s EV industry and steel and aluminium producers to compete in domestic, North American, and global markets.

This included the implementation of a 100 per cent surtax on all Chinese-made EVs and a 25 per cent surtax on imports of steel and aluminium products from China to become effective in October 2024.

On September 3rd, 2024, China’s Ministry of Commerce (MOFCOM) announced a series of measures in response to Canada’s announcement, including:

(i) China will initiate a WTO dispute against Canada;

(ii) China will start an "anti-discrimination investigation" under a domestic law against Canada’s measures and promises to take additional measures against Canada in the future “according to the actual situation”; and

(iii) China will launch anti-dumping investigations into Canadian exports of canola seed and unspecified chemical products.

On September 9, 2024, MOFCOM formally launched the anti-dumping investigation on Canadian canola seed (rapeseed) stating that:

(i) it had commenced effective September 9, 2024;

(ii) that preliminary evidence and information showed:

dumping had taken place between Jan. 1, 2023, and Dec. 31, 2023; China’s

domestic industry was materially injured between Jan. 1, 2021, and Dec. 31, 2023; and

(iii) it would be a year-long investigation (with a possible six-month extension under special circumstances).

Canada is monitoring developments closely and participating actively in the investigation to help defend Canadian interests. For example, Canada has filed initial written comments to MOFCOM noting the apparent retaliatory nature of China’s investigation and arguing that MOFCOM failed to meet the legal standard under the WTO Anti-Dumping Agreement (ADA) to justify the initiation of the case. Canada has also helped the industry respond to MOFCOM’s detailed anti-dumping questionnaire, by developing responses to questions related to federal and sub-federal laws, regulations and programs related to the growth, sale and exports of agricultural products, including canola seed.

Ministerial Mission to China, November 11-15, 2024

As part of ongoing engagement efforts, Minister MacAulay travelled to Beijing from November 11-15, 2024. During the mission, the Minister sought to demonstrate that Canada remains open and willing to engage with China at every opportunity, continue to advance Canada's agricultural relations and interests in China, engage in-person with key partners in market, and build and strengthen relationships to advance Canada's position.

Minister MacAulay’s program included delivering remarks at the Canada-China Business Council’s Annual General Meeting and Business Forum on November 15, 2024, and meetings with Chinese companies and industry associations to help deepen the relationship between our industries. The Minister also participated in a roundtable meeting with Canadian agricultural industry stakeholders from the grains, meat and seafood sectors. The meeting provided an opportunity to hear from Canadian companies on the key challenges and issues in exporting to the market, as well as on key opportunities to expand trade in the market.

Minister MacAulay requested meetings with Chinese ministries, including the Ministry of Agriculture and Rural Affairs (MARA), Ministry of Commerce (MOFCOM) and General Administration of Customs China (GACC), during his visit to Beijing; however, AAFC was informed that the Minister’s counterparts were not available to meet with him during his visit.

We are aware of China’s Ministry of Commerce initiating an anti-dumping investigation into Canadian canola seed exports.

The Government of Canada remains committed to supporting the canola sector and is closely monitoring these developments.

The Government 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.

We will continue to work to promote and advance Canada’s agricultural interests abroad.