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China delays its final decision in the canola dispute between Canada and China

China extended its investigation into Canadian canola exports on Friday, buying six months more for negotiations to ease a long-running trade dispute that was sparked by Ottawa’s tariffs against Chinese electric vehicles. A statement from the Ministry of Commerce stated that the anti-dumping investigation would now last until March 9, 2026. The Ministry cited the complexity of the situation as the reason for this. Beijing, the largest canola importer in the world, imposed preliminary tariffs of 75.8% for Canadian canola seeds imports. The final decision could lead to a different rate or reverse the decision.

Heath MacDonald, Canada's Minister of Agriculture, said in an interview that his government hopes the Chinese move will give both sides more time to resolve their trade tensions.

MacDonald stated that "if there is a chance to have a further dialogue and further communication with the Chinese government officials, we are doing this, it would be a big plus."

On Friday, the Canadian government announced a new round of support for Canada's Canola Industry. This included subsidies for biofuel production at home, an improved biofuels regulation to encourage investment and subsidized canola loans.

The main Canadian canola organizations said that they "hoped" the extension of preliminary duties would provide time to find a long-term solution. Canada, which is the largest canola exporter in the world, exported almost C$5 Billion ($3.63 Billion) worth of canola to China in 2024. About 80% of that amount was seed. If the steep duties on canola seeds remain in place, they will likely end these imports. China, who relies heavily on Canada to supply its canola seeds, imposed tariffs in March on canola meal and oil. Canada has also imposed tariffs against Chinese steel and aluminium. Ottawa is increasingly worried about losing a major customer, particularly as China seems to be shifting its focus towards Australian products.

Kody Blois, Parliamentary Secretary to Prime Minister Mark Carney and Scott Moe, Premier of Saskatchewan are headed to China between September 6-9 for meetings with Chinese officials to discuss trade issues.

Saskatchewan, a prairie province in Canada, produces the bulk of the canola that is exported. Reports in July indicated that Canberra and Beijing are close to an agreement that would allow Australian suppliers the opportunity to ship five test canola cargoes into China. In the following month, COFCO, a Chinese state-run firm, imported Australia's first canola crop since 2020.

After the China news, the Winnipeg ICE Canola Futures Market initially rose. However, a trader explained that some participants may have misinterpreted the headline to mean China suspended its duties rather than extended the preliminary duties into March.

ICE November Canola settled lower by 0.55%.

The canola industry in Canada has been waiting for a quick resolution of the duties and tariffs on canola. Reporting by Ethan Wang, Ryan Woo, and Ed White in Winnipeg. Editing by Kevin Liffey and Sharon Singleton. Alexandra Hudson, Marguerita Choy and Marguerita Hudson.

(source: Reuters)