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Canada’s China-Canola challenge – what now?

BY SARAH PITTMAN

Policy Analyst, Canada West Foundation

Any farmer in Western Canada can tell you that China’s decision in March to cut off imports of Canada’s canola is alarming.

Canola is a major part of the agriculture industry: In 2018, Canada exported nearly $12 billion worth of canola – about 1.5 times the amount of seafood exported in the same time period.

The Prairies, which produce almost all of Canada’s canola, are particularly exposed. In 2018, Canada sold nearly $4 billion worth of canola seed and oil to China alone.

But beyond the threat to the industry – which delivers $26.7 billion in jobs, spending and other economic impacts to the Canadian economy – there are implications, both political and economic, for the overall Canada-China relationship.

China is Canada’s second-largest trading partner, after the United States, and the volume of trade is growing. A deteriorating economic relationship carries risk for all of Canada.

Recommendation

There is no silver bullet to end the canola dispute, or solve Canada’s broader economic and political vulnerability when it comes to China.

However, Canada has a handful of practical steps it can take. These include trying to get China to engage on a non-tariff barrier agreement for the agricultural sector; diversification of countries where Canada sells canola; diversification of the canola products sold, which would have the added benefit of creating more jobs and economic growth here; and a longterm China strategy. Each has its own challenges, but may create more stability for Canada’s canola industry right away, and provide a path to improve the Canada-China economic relationship in the future.

Read the full policy brief for more on Canada’s canola industry, the toll of China’s decision to cut off imports, and some practical steps Canada can take to create more stability right away and provide a path to an improved relationship in the future.

WHAT NOW? | Canada’s China-Canola Challenge