Canada takes tougher line with China over canola export dispute

By David Ljunggren OTTAWA (Reuters) - Canada hardened its line with China on Wednesday in a dispute over Canadian canola exports, saying bilateral relations could not improve until Beijing took action to settle the matter. Trade Minister Chrystia Freeland made the remarks in an interview just days before Prime Minister Justin Trudeau is due to visit Beijing on a trip designed to deepen economic and political ties. China says that starting on Sept. 1, it will toughen its inspection standard for canola over concerns about the crop disease blackleg, threatening C$2 billion ($1.6 billion) in Canadian exports of the oilseed. Freeland, stressing she felt Ottawa had addressed Beijing's concerns, said she was "pushing very hard on this" and would be raising the matter with Chinese Commerce Minister Gao Hucheng by phone later on Wednesday. "It's important ... the Chinese understand this is not some side issue. This is a priority issue for Canada," she said, noting that when the Liberal government came to power last year, Trudeau instructed her to expand trade with China. "We cannot take the next step in our relationship with China until the canola issue is resolved. ... We expect some action from China. Our canola is absolutely safe," she added. Canada is the world's biggest exporter of canola, used mainly to produce vegetable oil. Exporters, including Richardson International, Viterra Inc [VILC.UL] and Cargill Ltd [CARGIL.UL], stand to lose sales to Canada's biggest canola export market. Freeland said she did not know whether the dispute could be settled by the Sept. 1 deadline. A spokesman for the Chinese Embassy in Ottawa said it could not immediately comment on the canola discussions The matter threatens to overshadow the visit of Trudeau, who is promising to improve Canada's relationship with China after a rocky 10-year period under the former Conservative government. China has raised concerns for years about blackleg spreading from Canadian canola into Chinese crops of rapeseed, another name for the oilseed. Traders suggest China's real reason for a higher standard is that its domestic rapeseed oil stocks are high. The issue is a personal one for Freeland, whose father is a Canadian canola farmer. "I have asked my dad today to send me a jar of canola he has just combined, which I'm going to take with me to China and I'm going to give it to Minister Gao," she said. ($1=$1.29 Canadian) (Reporting by David Ljunggren; Editing by Matthew Lewis and Peter Cooney)