October 28, 2009 / 1:51 PM / in 8 years

Canada seeks to end China canola fight without WTO

OTTAWA (Reuters) - Canada is confident it can resolve a dispute with China over China’s refusal to accept canola with blackleg disease without seeking World Trade Organization action, Agriculture Minister Gerry Ritz said on Wednesday.

Ritz said he met with the Chinese ambassador to Canada on Tuesday.

“It’s way too soon to (seek a WTO dispute settlement panel),” Ritz said in Ottawa. “I think we can resolve this long before a panel would be required.”

Ritz said Canada has already dispatched officials to China.

“I‘m hopeful that within a week or 10 days we’ll get a really good idea (of China’s position),” he said. “Our guys are there for the duration (and) they’ll keep hammering away at this.”

Asked if Canada wants China to extend its November 15 deadline to stop accepting Canadian blackleg canola, Ritz said Ottawa wants China to end the ban altogether.

“(Blackleg) is a situation that’s totally under control and we’re asking them to recognize that. We don’t need this thing hanging over us.”

Ritz said China is refusing blackleg canola so that it can reduce its canola inventory.

China was Canada’s top canola seed market last year. It imported 2.6 million tonnes from Canada (not counting July figures that are not yet available). Canola is crushed for its oil, which is used in vegetable oil and biofuel, and for its meal, used in livestock feed.

Canada is the world’s top canola exporter.

Canadian Prime Minister Stephen Harper said on Wednesday that he will visit China from December 2 to December 6. The trip may provide an opportunity to resolve the canola dispute but it was likely planned before China said it would stop accepting Canadian blackleg canola.

Canada November canola futures were trading at C$390 per tonne late on Wednesday, down 2.4 percent from the settled price just before news of China’s refusal broke last Thursday.

The market turned positive after Ritz said he was confident of a resolution without the WTO, but a canola trader said the gains reflected a favorable decline in the Canadian dollar.

Blackleg disease, which is caused by a fungus and can kill canola plants, is commonly found in Canadian canola but is no longer a major threat to yields because of resistant varieties. It is already present in China.

Canada has assured China that blackleg disease has nothing to do with human health and that there’s no chance of blackleg from Canadian canola spreading in Chinese fields, Ritz said.

The canola Canada ships to China is genetically modified for producing oil and contains a gene that keeps it from sprouting, Ritz said.

“I think there’s some misinformation over there that we’ll seek to resolve.”

($1=$1.07 Canadian)

Additional reporting and writing by Rod Nickel; editing by Peter Galloway

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