China launches anti-dumping investigation into Canada’s canola imports in retaliation for EV tariffs

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Beijing is launching an anti-dumping investigation into Canada’s multibillion-dollar canola imports, in retaliation for Ottawa’s imposition of tariffs on Chinese electric vehicles.

It follows two years after China finally lifted a ban on Canada’s canola seeds, which was also imposed as a retaliatory measure after Canadian officials arrested Huawei executive Meng Wanzhou on a U.S. extradition warrant.

Last year, Canada exported $5-billion worth of canola to China. The seeds are used for food and biofuel.

In a statement Tuesday, the Chinese Commerce Ministry said the value of exports of Canadian canola – also known as rapeseed – had risen 170 per cent year-over-year amid a “continuous decline in prices,” which it said is evidence of potential dumping behaviour. International trade rules allow countries to defend themselves against dumping – where imports are sold at unfairly low prices – when the practice causes harm to local producers.

“Affected by unfair competition from the Canadian side, China’s domestic rapeseed-related industries continue to lose money,” the statement said.

Ottawa to impose 100-per-cent tariff on Chinese-made EVs

Ottawa gave a similar justification for its imposition last week of 100-per-cent tariffs on Chinese-made electric vehicles, after an identical move by the United States. Federal ministers said the tariffs were necessary to protect the burgeoning Canadian EV market.

The previous canola ban was introduced in March, 2019, months after Beijing detained Canadians Michael Spavor and Michael Kovrig in retaliation for the arrest of Ms. Meng. The Canola Council of Canada estimated the suspension of licences for two of the country’s biggest exporters, Viterra and Richardson International, may have cost the industry as much as $2.35-billion between the introduction of the ban and August, 2020.

The Chinese statement made clear that Tuesday’s move was in retaliation for the EV tariffs, referring to them as “discriminatory unilateral restrictive measures” and reiterating a promise to take the case to the World Trade Organization. Canada also sought remedy from the WTO over the 2019 canola ban, but it was lifted before the international organization weighed in.

Opinion: By sassing off with EV tariffs, Canada has invited China’s canola backlash

On Tuesday, federal Agriculture Minister Lawrence MacAulay rejected the allegation that Canadian canola farmers are breaking trade rules.

“Canadian canola is the best in the world and our producers depend on, and play by, a rules-based global trading order that provides reliable market access,” he said in a statement posted on social media.

International Trade Minister Mary Ng said in a statement that “our government will always defend Canada’s national interest, especially our hard-working farmers and producers – the backbone of our agriculture sector.”

Chinese-Canadian relations have been in a deep freeze since the arrest of Ms. Meng. Even though she and the two Canadians were released in September, 2021, there has been little improvement in bilateral ties, owing to alleged Chinese interference in Canada’s political system.

The tit-for-tat actions also follow a proliferation of tariff action among industrialized countries, as protectionism replaces global efforts to lower trade barriers through the WTO.

Opinion: Canada has lost its way in its China relationship, and its prosperity is at risk

The Canadian Marine Industries and Shipbuilding Association, whose members include shipbuilders Seaspan and Davie, last week called on Ottawa to impose a 100-per-cent surtax on Chinese-made vessels imported into Canada, and a prohibition against government bodies acquiring or leasing such ships. The organization alleged the Chinese government is financially supporting vessel-building in China.

“China’s shipbuilding industry operates under the doctrine of civil-military fusion whereby commercial ship exports are subsidized to strengthen the country’s military capabilities,” the association said in a statement. “The very shipyards that produce ferries and cargo vessels for the global market are also used to construct warships for the Chinese People’s Liberation Army Navy, fuelling its rapid and aggressive naval expansion.”

In April, U.S. Trade Representative Katherine Tai launched an investigation into what she called “serious and concerning allegations of [China’s] long-standing efforts to dominate the maritime, logistics and shipbuilding sectors.”

The shipbuilding association said it is disappointed that federal Crown corporation Marine Atlantic, which runs ferries between Newfoundland and Nova Scotia, is using a Chinese-built ship. “Few Western governments would support the construction of a taxpayer-owned ship in China, yet a Canadian Crown corporation has done so indirectly through this lease,” the association said. Officials at Marine Atlantic declined to comment Tuesday.

Last year, Ottawa expelled Chinese diplomat Zhao Wei – and Beijing responded in kind – after The Globe and Mail reported that China had targeted Conservative foreign affairs critic Michael Chong and his relatives in Hong Kong in an attempt to gain leverage over the MP.

There did seem to be some progress in repairing relations in recent months, with Foreign Affairs Minister Mélanie Joly making her first visit to China in July in a bid to reopen diplomatic channels.

From 2023: China expels Canadian diplomat, threatens further retaliation in election interference row

Ms. Joly said Canada was “committed to engaging pragmatically with a wide range of countries to advance our national interests and uphold our values.”

After her visit, Chinese Foreign Affairs Minister Wang Yi said he and Ms. Joly had discussed the “difficulties and twists and turns” in the Sino-Canadian relationship, adding that Beijing also wanted to “inject momentum into the restoration” of normal ties.

That progress seems to have been dashed, however, by the EV tariffs, which China’s embassy to Canada denounced as “trade protectionism” and a “politically motivated decision” that goes against “Canada’s traditional image as a global champion for free trade and climate change mitigation.”

Navpreet Chhatwal, a spokesperson for Deputy Prime Minister and Finance Minister Chrystia Freeland, defended the 100-per-cent tariff on Chinese-made EVs.

Ms. Chhatwal said the government “firmly believes that action is necessary to level the playing field for Canadian auto workers and for Canada’s electric vehicle industry to compete in domestic, North American and global markets.” She added that the surtax and other measures will ensure “Canadian workers and EV supply chains are protected from unfair competition from China’s intentional, state-directed policy of overcapacity and lack of labour and environmental standards.”

With files from Ann Hui and Alexandra Li