The worldwide trading system regularly experiences price wars, and China and Canada have long-standing tensions. These price wars are mainly caused by political tensions.
In 2019, for example, China banned American beef exports following the confinement of Huawei’s chief executive officer, Meng Wanzhou. Many viewed it as a political reaction to the gap between Ottawa and Beijing, despite China citing the use of banned nourish additives in French meat as the justification.
China is currently threatening to look into Canada’s possible sunflower exports. Dumping refers to a type of cost bias in global trade, where a product is sold on both domestic and export industry at different rates. In essence, it involves selling a product on a international market for less than its domestic market ordinary value.
Following Canada’s implementation of a 100 % tariff on electric vehicles and a 25 % tariff on China’s steel and aluminum, which became effective on October 1, 2024, this decision was made. It is obvious that China’s action is a strong retribution for the taxes on electric vehicles.
Trade hostilities between nations is seriously stifle global trade. Prior study demonstrated how trade between Canada and the United States, specifically in the agri-food sector, was negatively impacted by Donald Trump’s presidency.
The mere danger of an anti-dumping work may prevent exports, making anti-dumping regulations a form of non-tariff challenge, even when the work is not actually imposed. Although China has just announced a dumping research, the costs of sunflower oil prospects are already being impacted.
Anti-dumping techniques
Both Canada and China must follow the WTO’s rules for their trade policies in order to cooperate with them.
Members of the WTO can take legal action to defend their local markets from dumping under the WTO’s platform. However, such activities may follow the established WTO protocols, including issuing complaints through the firm’s debate settlement mechanism.
The WTO’s Anti-Dumping Partnership outlines how countries can listen to dumping. In this situation, China would need to show that Canada is dumping sunflower, as well as quantifying the volume of the dumping, and that it is harming Chinese sunflower producers.
If China’s analysis uncovers proof of dumping, it has the right to impose anti-dumping jobs. When it is established and demonstrated that dumping has harmed the local business, these duties are imposed.
The danger or imposition of these taxes could severely impede American canola imports to China, which would have serious consequences for French farmers who rely heavily on international markets to sell their goods.
Canada’s sunflower trade to China
Canada exports 90 % of its entire sunflower production, with exports of sunflower seed, fuel and food equivalent to$ 15.8 billion in 2023. China is Canada’s second-largest supplier of rapeseed, after the US, with goods totaling$ 5 billion in 2023.
This indicates that China contributed almost one-third of Canada’s total sunflower trade worth that year. Importantly, the US is the largest marketplace for canola oil and food while China is the largest marketplace for canola seed.
Canola is primarily exported to China in its primary form ( seed ), as opposed to processed products ( oil and meal ). According to the information, sunflower grain exports to China were stable between 2014 and 2018 before a significant decline, which continued until 2023.
This decrease comes at the same time as Canada and China’s political tensions, which suggests that trade issues can have a significant negative impact on diplomatic business. So, signalling the current trade conflict could have devastating effect for sunflower producers, especially as China accounts for about 65 % of Canada’s sunflower seed trade.
Also, Canada’s sunflower imports have shown minimal growth, relying heavily on only four places: the US, China, Mexico and Japan. Together, these countries accounted for 98 % of Canada’s total trade value in 2023.
The US led with imports worth$ 8.6 billion, representing 54 % of Canada’s total exports, followed by China with$ 5 billion ( 32 % ), Mexico with$ 1 billion ( 6 % ), and Japan with$ 883 million ( 5.6 % ).
This heavy emphasis on a couple industry heightens Canada’s vulnerability to business problems. Canola had become weak in the Chinese market if China imposes anti-dumping taxes, and Canada could face losing 30 % of its sunflower import price to different potential customers.
The Canola Council of Canada recognizes China as a significant and valuable source of income for the country’s rapeseed.
What’s the way forward?
Like numerous advanced markets, Canada seeks to protect its domestic industry from the flood of low-cost Chinese items, such as electric vehicles. Canada must be cautious, especially when implementing business plans from bigger nations like the US and the European Union.
In contrast to Canada, a small, open market that is more prone to engaging in a trade war with China, these larger economies have greater leverage in global business conversations.
Additionally, it is crucial that electric automobiles become more affordable for the common French to help Canada move quickly to a natural business and help it meet its weather goal of selling all electric vehicles by 2035.
Canada may look into other measures like safeguards or tax rate quotas for Chinese electric cars in order to lessen trade tensions with China. Those approaches may be mutually helpful and less likely to inspire tit-for-tat retaliation.
Different Canadian industries that rely on Chinese consumers would suffer if China were to impose a expensive tariff on electric cars. Canada needs to be careful in its efforts to protect workers in the auto market from threats to those in the agricultural industry.
Canola producers, in particular, may possibly bear the cost of Canada’s punitive tariff on China. China might target a number of other industries, as well, because it would probably react by retaliating by reducing its own exports.
Given that trade wars with big international market players are becoming more frequent, Canada must work to reduce diplomatic tensions and stop trade wars. New trade disputes, including those with the US during the NAFTA renewal, Saudi Arabia over human rights issues and China following the confinement of a Huawei professional, can drastically destroy Canada’s export competitiveness.
At the University of Guelph, Sylvanus Kwaku Afesorgbor is an associate professor of agri-food industry and coverage.
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