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Canada has used a major World Trade Organization gathering to demand China deliver evidence that Canadian canola is contaminated.

Stephen de Boer, the Canadian ambassador to the world’s leading trade body in Geneva, told the WTO’s general council on Tuesday that Canada wants to meet in China in good faith to hear its science-based concerns that recent Canadian canola shipments were, in fact, tainted.

China banned shipments from two Canadian canola companies last month. This week, the government announced China had similarly banned pork from two Canadian companies.

De Boer’s intervention at one of the WTO’s most senior decision-making bodies is an attempt to push China, which has stonewalled requests for Canadian experts to travel to the People’s Republic to examine Chinese evidence on the canola.

The government says two separate inspections by the Canadian Food Inspection Agency have turned up nothing, while several cabinet ministers have said China’s complaint about the quality of the canola shipments is not science-based.

China’s rejection of Canadian food products is part of the escalating tensions following the RCMP’s December arrest in Vancouver of Huawei Technologies executive Meng Wanzhou on a U.S. warrant alleging fraud.

Meng’s arrest infuriated China. Nine days later, China imprisoned two Canadians — ex-diplomat Michael Kovrig and entrepreneur Michael Spavor — and accused them of violating China’s national security. Both are still in custody.

While de Boer’s statement is not the formal complaint that Conservative Leader Andrew Scheer has urged the government to launch, it represents the first formal opportunity to draw attention to the issue in front of a major meeting of the WTO, said a senior Canadian government official, who was not authorized to speak on the record because of the sensitivity of the situation.

China places great importance on being a member in good standing of the WTO, the world’s trade referee, especially as it tries to displace the United States as a global trade leader.

De Boer told the WTO council that Canada wants to be a good trading partner and if another country identifies a problem with a Canadian export, then it wants to find a solution.

Canada has been working hard to resolve this issue with China using every available means on the ground in China and in Canada, said de Boer.

“But to do so we need to fully understand the problem and that’s why it’s important for them to show us the evidence,” said the senior Canadian government official. “Open and predictable rules-based trade is the cornerstone of international commerce. These are tough and difficult moments but it’s frank and open dialogue while standing up for Canadian values and interests that will resolve them.”

While Canada was pressing its case at the WTO, a Nova Scotia cabinet minister said the federal government would welcome American influence to resolve the ongoing dispute with China.

“I would say that it would be helpful, for sure,” Rural Economic Development Minister Bernadette Jordan said in an interview. “It’s different times now in the world than we’ve faced even four years ago. We see challenges all around the world. And we will continue, as a government, to stand up for our Canadian products.”

The halting of canola and pork imports has also raised the possibility that China could expand what is widely seen as economic retaliation into other areas.

Conservative MP Randy Hoback recently told the House of Commons agriculture committee he’s concerned China might decide to single out Canadian maple syrup or seafood.

Jordan said her constituency is the largest lobster-producing riding in the country, and hardly a day goes by without her talking to a fisher.

In 2017, Canada exported 10 million kilograms of live lobster to China.

Canada’s efforts to diversify its markets for seafood continue apace with the ratification of free-trade deals with the European Union and the 10 Pacific Rim countries in the Comprehensive and Progressive Trans-Pacific Partnership, she said.

“Yes, China accounts for a significant portion of our lobster sales — our seafood, it’s not just lobsters. But I think with the ability for us to open up Europe, our ability to open up other Asian markets, there is that potential to make sure that those challenges are mitigated.”

Jordan stressed there has been “absolutely no indication” of any movement by China to take trade action against Canadian seafood.

While she offered few details of what contingency plans the government may have if China does hit the seafood sector, Jordan suggested the government would come to its aid if necessary.

“We’ve worked with the canola farmers specifically on a package for them. I’m sure that when the time comes, if there’s a need, we will be there for our fishers as well.”

Last week, the government helped canola farmers by changing a special agricultural program that advances money against later crop sales. The change raises loan limits to $1 million from $400,000. The interest-free portion of that program is also rising to $500,000 from $100,000.

Agriculture Minister Marie-Claude Bibeau told The Canadian Press the government wants to ensure producers “have the support they need” and officials are “dealing with issues that arise on a case-by-case basis.”

Saskatchewan’s premier is again asking Ottawa to increase its cash advances to canola farmers.

Scott Moe says in a letter to Prime Minister Justin Trudeau, posted on Twitter, that he’s been waiting nearly a month for a response since he first asked for help.

Saskatchewan wants the amount of money available to canola farmers through a federal advance payment program to increase to $1 million from $400,000.

The province also wants the program’s end-of-March deadline extended by one month and that no interest be charged on the maximum payment amount until the issue with China is resolved.

The province has been looking to the federal government for aid since China decided to block imports of the oilseed from Canada.

The ban on $2 billion worth of canola imports has caused trade uncertainty in the industry.

China’s move is perceived to be part of a growing rift between the two nations since Canada arrested Meng Wanzhou, daughter of the founder of telecom giant Huawei, at the behest of the United States.

When the Pan-Canadian Approach to Pricing Carbon Pollution was announced in October 2016, it was met with passionate responses, from supporters and those in opposition.

Agricultural groups were quick to dismiss the announcement, condemning the federal government for imposing costs on their operations. Farmers in Western Canada were particularly incensed. After investing in zero-tillage practices that sequester massive amounts of carbon into the soil, they were still being forced to pay a tax.

Understanding the likely effect of the tax is of course more nuanced. I’ve spent a significant amount of time on this issue, informing farmers and interest groups in the agricultural sector on what to expect with the new policy.

How much will it cost?

Amid the cacophony of complaint, common themes have emerged. The loudest complaints are understandably economic.

Farmers produce a homogeneous product and sell into an international market. This is a perfect recipe for having zero control over the price to sell their output. This means that any additional costs incurred by farmers — from a carbon tax, for example — are difficult to pass on in the supply chain.

To make matters worse, we’re far from consensus on the extent of those additional costs, especially as the federal backstop (the policy that takes effect when provinces, including Saskatchewan, don’t have their own plan) has only just been implemented.

Farmers are exempt from most of the direct costs with the backstop policy, but indirect costs remain. The costs associated with the carbon-intensive transportation required to get the product to market will likely be the largest, followed by increases in heating expenses and, possibly, fertilizer.

Both sides of the debate tend to bolster their arguments by pointing to British Columbia’s experience with an agricultural carbon tax. When the tax was implemented in 2008, agricultural energy inputs such as diesel were not exempt.

This naturally prompted concern about the sector’s ability to remain competitive with international jurisdictions not subject to the tax — a rational, justified concern. Later, economists Nicholas Rivers and Brandon Schaufele demonstrated that such concerns were likely overblown. Perhaps the study came too late, or perhaps the political power of the farm lobby was too strong to overcome, but in 2014, the sector was permanently exempted from the tax.

Diverging strategies on the Prairies

The bulk of Canada’s agricultural production occurs in the Prairie provinces where carbon tax opposition has been fierce.

Saskatchewan is in the midst of a lawsuit challenging the authority of the federal government to impose such a tax, and several parties throughout the country have taken sides as intervenors in the case.

Alberta, overruling the objections of its farm sector, imposed its own tax in advance of the federal announcement. In designing a custom tax policy, Alberta moved to protect its agricultural sector from the direct costs of the tax while still providing incentives to cut emissions.

This level of flexibility has been removed in the latest iteration of the federal backstop, constraining provinces that have not yet adopted carbon pricing to a much narrower range of choices. Alberta’s system is far from perfect, but does more than the federal policy to reduce agricultural emissions.

Misplaced focus?

Neither B.C.’s progressive system, the flexible system of Alberta, nor the default federal backstop tax the largest source of agricultural greenhouse gas emissions. In 2016, agriculture accounted for 8.5 per cent of Canada’s emissions, and of that, carbon dioxide only accounted for four per cent.

Nitrous oxide (48 per cent) and methane (48 per cent) make up the rest. Both are potent greenhouse gases. Preventing the emission of one kilogram of nitrous oxide can be much less costly than preventing 300 kilograms of carbon dioxide.

But a well-understood fact from environmental regulation suggests that an optimal policy induces change at the lowest possible cost. Taxpayers benefit more from greenhouse gas reductions that cost $15 per kilogram compared to those that cost $30.

The current federal policy does not facilitate this lowest possible cost arrangement, nor was it designed to. The idea was for each province to construct a plan suited to its economy and energy generation sources, not to act as a one-size-fits-all for a country as diverse as Canada.

For provinces with large agricultural sectors, the lowest-cost option for reducing greenhouse gas emissions may very well be in agriculture. But the political strength of the sector makes such policies difficult to envision.

Can Canada reach its climate goals without incentivizing meaningful emissions reductions in agriculture? Perhaps in the first few years of the policy. But for the most cost-effective reductions, we need agriculture to play a role.