A Free Trade Agreement With China Would Increase Canola Exports and Create Jobs
March 6, 2017 – Friday’s federal government announcement seeking Canadian’s views on a free trade agreement with China is welcomed by the canola industry. An independent analysis commissioned by the Canola Council says that a free trade agreement with China could create 33,000 additional jobs in Canada from increased exports of canola alone.
“Freer trade with China would mean a lot more jobs and growth from Canadian canola,” says Brian Innes, vice president, government relations with the Canola Council. “In these uncertain times for global trade, Canadians should be very encouraged by the opportunity for a more stable and open trading relationship with China.”
The study by Dan Ciuriak, former deputy chief economist with the federal trade department, found that eliminating China’s tariffs on Canadian canola could increase exports of seed, oil and meal by up to $1.2 billion per year. That would be the equivalent of 1.8 million tonnes of canola or about 10% of Canada’s current annual canola production. Though it’s a big number, it reflects an opportunity the canola value chain sees as realistic.
While China is a major producer of oilseeds, it is unable to meet demand through domestic production alone. Canola is an obvious choice to fill the gap because China’s increasingly affluent population is seeking out healthier oils, and canola provides one of the healthiest. In addition, people in China are eating more meat and fish, which in turn increases the demand for a good-quality protein source like canola meal for animal feed and aquaculture.
“There’s tremendous growth potential for canola exports to China,” says Innes. “Getting rid of tariffs would make canola more competitive with other oilseeds and have a global impact on the value of canola.”
Currently, China’s tariffs on imported canola seed (9%) are three times higher than those applied to soybeans (3%). In 2016, this tariff made canola about $32 per tonne more expensive than it would be if it had the same tariff as soybeans. China has been eliminating tariffs on oilseeds in its trade negotiations with other countries. Chinese tariffs on canola oil are 9% while canola meal has a 5% tariff.
Innes notes that resolving non-tariff barriers will also be required to take full advantage of Chinese demand. Recent uncertainty related to Chinese concerns about blackleg illustrated the importance of using science to establish predictable trade rules. Predictable and science-based decisions for the approval of new biotech canola traits are also important.
Three canola traits, approved in Canada since 2012, are in the final stages of the Chinese approval process. Commercialization is on hold until they are approved in China – meaning growers do not have access to the latest seed innovations. Stronger trade ties will help to resolve non-tariff barriers as government-to-government relations are strengthened.
“Our trade with China has been growing but can still be unpredictable and hampered by barriers,” says Innes. “A free trade agreement would bring more stability to our trading relationship.”
After the United States, China is the largest export market for canola and canola products worth $2.7 billion in 2016. China imported 4.8 million tonnes of Canadian canola in 2016 – including 3.5 million tonnes of seed, 600 thousand tonnes of oil and 660 thousand tonnes of meal.
The study by Ciuriak Consulting Inc. found that the increase in sales to China because of lower tariffs would result in increased investment, revenue and spending by the Canadian canola industry, which would flow through the Canadian economy. New jobs would be created within the agricultural value chain, while also stimulating employment in a broad range of other economic sectors across the country.
The Canola Council of Canada is a full value chain organization representing canola growers, processors, life science companies and exporters. Keep it Coming 2025 is the strategic plan to ensure the canola industry’s continued growth, demand, stability and success – achieving 52 bushels per acre to meet global market demand of 26 million metric tonnes by the year 2025. The Canola Council will celebrate its 50th anniversary at the annual Canola Council Convention, March 7-9, 2017 in Winnipeg, MB.
Media may contact:
Heidi Dancho, Director, Communications