China holding Canadian rapeseed imports ransom over Huawei arrest, say importers
China's 拢1.5bn Canadian canola industry has taken a dip since Meng Wenzhou was arrested in Vancouver in December 2018.
Wednesday 6 February 2019 17:08, UK
Chinese importers have claimed their government is delaying shipments of Canadian rapeseed for oil in retaliation over the arrest of a Huawei executive.
Beijing has so far been taking revenge for the arrest of the Chinese telecoms giant's chief financial officer Meng Wanzhou in Vancouver by detaining Canadian citizens.
After she was arrested in December for extradition to the United States on suspicion of violating Iran trade sanctions, China arrested two Canadians and escalated a drug smuggling sentence of another Canadian to death.
Chinese importers have now said shipments of Canadian canola - a type of rapeseed used for oil or animal feed that Canada is the world's largest exporter of - are taking longer to clear customs.
Permits needed to import genetically modified (GM) crops, including canola - which stands for Canadian Oil - are also becoming more difficult to obtain, traders said.
China buys about $2.5bn (£1.5bn) of the Canadian seed a year, more than 90% of its canola imports, and if those sales slowed down it would hit the industry in Canada hard.
Canola seeds are crushed into oil for cooking or used as pig and fish feed.
James Watson, a Canadian government spokesman, said it is not aware of any decision by Beijing to stop Chinese companies from buying Canadian crops.
However, traders in both countries have said they have been experiencing delays, and blame it on the Chinese government fighting back against Ms Meng's arrest.
Importers in China said several shipments have cleared customs since Ms Meng was arrested on 1 December, but many have been unusually delayed.
A dozen companies, some with direct knowledge of sales in the two countries, and others in the US who monitor sales, said the shipping pace has noticeably slowed since the Huawei CFO's arrest.
One importer said it took more than 20 days for his shipment of canola seeds to clear customs - about twice the usual time - and customs officers carried out more thorough inspections of GM crop imports.
Another shipment that arrived in mid-January had still not cleared by the end of the month.
He said the increased checks are the Chinese government wanting to "pressure Canada" over Ms Meng's arrest and said it has made him "more cautious" about future purchases.
A source at a Chinese company that imports canola said it stopped buying from Canada shortly after Ms Meng's arrest.
"We are not buying now as the current situation is quite tense and sensitive," he said.
A Canadian exporter said their canola seed shipments have faced additional inspections and tests at Chinese ports.
"There's no doubt that they are retaliating specifically against canola seed itself," the exporter said.
Some Chinese importers have said they are avoiding Canadian purchases as they fear the canola delays are just the start of added import hurdles.
Although there has been no acknowledgement by either government of a slowdown, total exports of Canadian canola are down 7% year on year from August to 27 January, according to the Canadian Grain Commission.
Canola futures prices have remained the same since Ms Meng's arrest, but brokers say concern over a Chinese backlash has caused canola prices to miss out in competition with another highly utilised oil, soybean.
Canada has until 1 March to decide whether to authorise an extradition hearing after the US formally requested her extradition on 28 January.