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China delays new Canadian canola standard after talks

WINNIPEG, Manitoba - China has delayed implementing a tougher standard on Canadian canola shipments, just days before it was to take effect, as a result of talks between the countries.

For six years, Beijing has raised concerns about possible transmission of blackleg disease, caused by a fungus, to Chinese crops, putting at risk some C$2.1 billion ($1.60 billion) in Canadian exports.

But China has repeatedly shown flexibility after announcing trade limitations against Canada, its major supplier of canola.

China's new standard for foreign material in canola shipments will take effect Sept. 1 instead of April 1, Counsellor Yang Yundong, spokesman for the Chinese Embassy in Ottawa, said in an email late on Monday.

The new standard will allow no more than 1 percent foreign material, such as straw and other plant seeds, per shipment, compared with the current maximum of 2.5 percent. Even with that tougher standard, Beijing estimates that more than one-quarter of its canola crop would be at risk of blackleg infection, which could reduce yields.

Yang said his government hoped Canada would take "effective measures so that the issue could be resolved at an early date.

"The measures taken by the relevant Chinese authorities for that purpose are very much science-based and reasonable," he said.

The Canola Council of Canada, whose directors include farmers as well as exporters Cargill Ltd and Richardson International, says there is no significant risk of spreading the disease through foreign material.

The next five months will be spent on research to confirm its position, said Canola Council President Patti Miller.

"For (exporters) who had made sales out into the future, they'll be able to trade based on current terms, and that's very welcome," she said. "We're solid on what we believe the scientific results are."

Canada is the world's biggest producer of canola, also known as rapeseed.

Some traders in both countries have said they believe China's main motivation for the new standard is a need to slow imports due to large domestic rapeseed oil stocks.

China's quarantine authority, AQSIQ, told the Canadian government on Feb. 23 that it was planning the new measure.

Despite the delay, Canadian exporters are reluctant to book new sales to China, said one Canadian canola futures broker.

ICE Canada canola futures for July delivery rose 0.9 percent, but the November contract's gains were more modest, reflecting China's standard taking effect in September.