August 10, 2016 / 9:57 PM / in a year

UPDATE 1-Canada, China meet to solve canola spat as deadline looms

(Adds comments by Chinese and Canadian officials)

By Rod Nickel

WINNIPEG, Manitoba, Aug 10 (Reuters) - Canadian officials are in Beijing this week to try to convince China to back off a plan to toughen its standard for Canada’s canola shipments, which has stalled C$2 billion ($1.53 billion) in trade, government and industry officials said on Wednesday.

China’s quarantine authority AQSIQ told Ottawa in February that it would impose a stricter inspection standard for canola shipments starting April 1. It later postponed the move to Sept. 1. Canada is the biggest exporter of canola, used mainly to produce vegetable oil.

AQSIQ and other Chinese officials are meeting through Friday with the Canadian Food Inspection Agency (CFIA), as well as Canada’s agriculture and trade departments, said Patti Miller, president of industry group Canola Council of Canada, which is also at the discussions.

“It’s a pretty difficult time right now,” Miller said in an interview from Beijing. “Both sides have been very open in expressing their desire to find a resolution, but there is a significant difference in opinion.”

Canadian canola shipments for delivery in China after Sept. 1 have stopped, she said.

China for years has raised concerns about blackleg disease spreading from Canadian canola into Chinese crops of rapeseed, another name for the oilseed. Traders have suggested that China’s real reason for a higher standard is that its domestic rapeseed oil stocks are high.

The two countries’ inspection agencies are working to find a “reasonable solution,” said Yang Yundong, spokesman for the Chinese Embassy in Canada.

China’s new standard would allow no more than 1 percent foreign material, such as straw, per shipment, compared with the current maximum of 2.5 percent. The tougher standard would raise cleaning costs and risk, exporters have said.

Canada’s farming and crop handling practices, along with China’s crushing process, mitigate any plant health risks, said CFIA spokeswoman Maria Kubacki.

At stake for Canada is the potential loss of its biggest canola market for exporters including Viterra Inc and Cargill Ltd, just as farmers harvest a big crop.

For China, the dispute may hurt its push for a free trade deal with Canada.

“There’s an expectation from all that we meet in the middle here,” said Guy Gallant, spokesman for Canadian Agriculture Minister Lawrence MacAulay, from Ottawa.

Trade Minister Chrystia Freeland met Chinese Commerce Minister Gao Hucheng last week about the issue, and is focused on finding a solution, said Freeland’s spokesman, Alex Lawrence. ($1 = 1.3053 Canadian dollars) (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Matthew Lewis)

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