China delays new canola rules in late reprieve for Canada

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BEIJING - China agreed on Wednesday to delay introducing stricter rules on shipments of canola from Canada while both countries work to end a months-long trade spat over sales of the oilseed, offering an eleventh hour temporary reprieve for Canada's farmers.

Just a day before the new standards were due to go into force, Canadian Prime Minister Justin Trudeau and Chinese Premier Li Keqiang said Canada would be able to continue with the current canola export regime, while a longer-term solution was worked out.

China is Canada's top export market for the oilseed, and Ottawa has taken an increasingly strong line in talks on a new standard, which industry participants say would significantly raise costs for exporters.

While only temporary, the exemption for Canada will be seen as a small victory for Trudeau. The import dispute has taken centre stage during his visit to China.

China has said the tougher import rules were necessary to prevent the spread of blackleg disease from Canadian canola into Chinese crops of rapeseed, another name for the agricultural commodity.

"China itself is a large producer of canola, but China has no intention of keeping its doors closed to other exporters," Li told a joint news conference with Trudeau at his side.

"But it's also true that Chinese canola producers have their own worries, hoping that imported canola will not carry with it any disease. Chinese consumers also have that issue on their mind," Li added.

Both sides should take a flexible attitude on the canola issue, he said.

Industry participants say the new standard, under which China will reduce the amount of foreign matter allowed per shipment to no more than 1 percent from 2.5 percent, would significantly raise costs for exporters.

Negotiating teams from the two countries were currently meeting in Beijing, Canada's Trade Minister Chrystia Freeland said.

"We are now working on achieving a long-term agreement on terms of Canadian canola shipments and, as the prime minister said, we are working to achieve that in the coming days and weeks," she told reporters.

China has also been keen to start talks on a free trade agreement with Canada, similar to the pacts Beijing has sealed with Australia and New Zealand, although a senior Canadian government official said last week there is no near-term chance of agreement.

Li said both countries had agreed to start feasibility talks on a free trade pact at an early date, although Trudeau made no mention of this in remarks in front of reporters.