UPDATE 1-Canadian minister hopeful of deal in China canola dispute

Mon Jul 18, 2016 5:59pm EDT
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(Adds comment from China embassy)

By Rod Nickel

WINNIPEG, Manitoba, July 18 (Reuters) - Canada is hopeful of striking an agreement with China before it toughens its shipping standard for Canadian canola, Canada's agriculture minister said on Monday, as the issue threatens to curtail sales to its top export market for the oilseed.

China's quarantine authority, AQSIQ, told the Canadian government in February that it would impose a stricter standard for foreign material in canola shipments starting April 1. It later postponed the move to Sept. 1.

"There have been some difficulties but we truly hope and feel that we'll have an appropriate solution," Agriculture Minister Lawrence MacAulay said in Winnipeg, adding that Canada's trade department was closer to the situation than his officials.

"It's vitally important to the country and vitally important that we establish regulations that are adhered to. I think we will come to an agreement that will satisfy both (countries), hopefully."

A tougher Chinese canola shipping standard would raise costs and risk for Canadian exporters, who include Richardson International, Viterra Inc and Cargill Ltd .

Counselor Yang Yundong, spokesperson of the Chinese Embassy in Ottawa, said Chinese experts are currently visiting Canada and conducting research with Canadian counterparts into establishing how much foreign material should be allowed.

"I believe this issue will be solved in a proper way," the counselor said in a statement.

The new standard will allow no more than 1 percent foreign material, such as straw and other plant seeds, per shipment, compared with the current maximum of 2.5 percent.

Some traders in both countries have said they believe China's main motivation for the new standard is a need to slow imports due to large domestic rapeseed oil stocks. However, China has since 2009 raised concerns about possible transmission of blackleg disease, caused by a fungus that Beijing now fears could be transmitted through foreign material in crops. (Reporting by Rod Nickel in Winnipeg, Manitoba; editing by Chris Reese and Jeffrey Hodgson)