View of a canola field in Alberta, Canada Photo: IC

Trade ties between Canada and China have been disrupted in the past two years by a freeze in diplomatic relations after a senior executive of Chinese tech giant Huawei was arrested in Canada at the request of the US. 

If tensions don't ease in a timely manner, which involves the Canadian side releasing the Chinese executive so as to remove the key roadblock, more bilateral trade flows will be affected, analysts said.

Canadian agricultural trade with China remains a key consideration in the broader trade relationship. From canola and pork to forest products, Canada has encountered sliding exports in the Chinese market over the past two years.

For example, canola exports to China fell about 70 percent in 2019, resulting in an estimated $1 billion in lost revenue, data from the Canola Council of Canada (CCC) showed. Previously, China accounted for about 40 percent of all Canadian canola seed, oil and meal exports. 

Three Canadian canola companies were suspended from exporting to China in March 2019. After the detection of pest contamination in their products, the two biggest Canadian exporters were blocked. A third canola exporter, Richardson International, received a non-compliance notice from China over quality concerns in the following month. 

The ban on Canadian canola imports was "in accordance with laws and regulations and international practice," as such imports contained harmful and dangerous pests, according to China's Foreign Ministry.

CCC figures showed that from January-September this year, Canadian canola exports to China totaled 1.764 million tons. That was more than the full-year figure of 1.544 million in 2019, but far below the normal level in previous years like 2017 and 2018, when exports exceeded 4.5 million tons.   

"The improvement this year was more related to China's overall trend in boosting agricultural imports. As China is actively implementing the phase one trade deal with the US, its imports of US soybean and corn have obviously increased," Jiao Shanwei, editor-in-chief of cngrain.com, a website specializing in grain news, told the Global Times on Tuesday.

"Also, international agricultural prices are more competitive now than domestic ones, so it is good timing to re-stock," Jiao said.

But this doesn't mean that any rebound in canola imports from Canada this year mean easing trade tensions as "we can see that the level is still much lower than in previous normal years," he added.

China remains a critical market for Canada's forest products, but imports by China and Canada's market share both decreased in recent years.

According to Chinese customs data, China's imports of paperboard and cellulose pulp, including wood pulp, hit about 1.43 million yuan ($217,522) in the first 10 months this year, down 14.9 percent year-on-year. 

Unlike Russia, which is a major lumber supplier to China with a growing market share, Canada's share fell from 24 percent to 10 percent between early 2019 and early 2020, a report by forest industry consulting firm Wood Resources International showed in August. 

Zhang Shenjin, secretary-general of the China Paper and Pulp Industry Chamber of Commerce, blamed poor processing in Canadian pulp mills. "Some Canadian pulp mills are obsolete and they're losing competitiveness with rivals in Russia and South America, which China has increased paper pulp imports from," he told the Global Times on Tuesday.

Market fluctuations related to the COVID-19 pandemic are also responsible for the changes, the Forest Products Association of Canada told the Global Times. "For instance, there have been reports of blank sailings, especially in Vancouver. We have also heard from members that there has been a container shortage which impacts our exports," the association said. 

Canada's exports of wood and wood-products to China dropped by 35.06 percent from 2019 to 2020 to date; with the export value of wood pulp, waste paper, scrap paper and paperboard also decreasing 19.08 percent over the same period, according to statistics provided by the association.

China ordered Canada to investigate and address issues with its logs after customs inspectors in China found such live pests as long-horned beetles and bark beetles early this year, according to China's Foreign Ministry. China also temporarily suspended imports of pork and beef from the North American country last year.

"The strained trade ties should prompt Canada to rethink and make efforts to resolve the current dispute, or its industries will continue to suffer," a Canada observer at a Beijing-based think tank, who asked to remain anonymous, told the Global Times on Tuesday.

With the signing of the Regional Comprehensive Economic Partnership, creating the world's largest trading bloc, "if Ottawa still cannot seize the opportunity to turn its eyes to the Asia-Pacific, to China, then its loss will be immense," said the expert.

Huawei's chief executive financial officer Meng Wanzhou, who is also the daughter of Huawei's founder Ren Zhengfei, was arrested at Vancouver International Airport on December 1, 2018 at the request of the US, and faces fraud charges. Since the arrest, some Canadian politicians, legal experts and Chinese officials have been calling for her release.

Chinese Ambassador to Canada Cong Peiwu held a phone call with Meng on Monday to express solicitude, stressing China's firm determination to protect the legitimate rights and interests of Chinese nationals and firms, and said China will continue to urge Canada to correct its wrong deeds.