April 4, 2019 / 4:50 AM / 3 months ago

Breakingviews - Canola exposes Beijing’s blunt diplomatic tools

FILE PHOTO: A canola crop used for making cooking oil sits in full bloom on the Canadian prairies near Fort Macleod, Alberta, July 11, 2011. REUTERS/Todd Korol/File Photo

HONG KONG (Reuters Breakingviews) - Canadian canola has exposed Beijing’s limited diplomatic toolkit. Chinese officials are scrutinizing exporters due to quality concerns. Ties are frayed, and the status of the People’s Republic as a giant consumer and trader is one of its few geopolitical levers. Using health and safety rules for political ends, though, undermines watchdogs cleaning up all-too-real violations at home.

Beijing last month blocked shipments of canola seed from agribusiness Richardson International, citing the discovery of pests. It later widened the ban to a second exporter, Viterra. This week it emerged that a third firm had been placed under the microscope, according to Canadian officials. One minister suggested the measures “defy science”.

Relations between the two countries have deteriorated since Canadian authorities last year arrested telecom giant Huawei’s chief financial officer at the behest of the United States. China has since detained Canadian citizens. The latest move is blunter: canola seed exports to China account for an annual $2 billion, and the country makes up about 40 percent of Canada’s overseas sales of canola seed, oil and meal.

This isn’t the first time Beijing has deployed its consumers as a weapon. The People’s Republic buys and sells massive quantities of goods from abroad; in many commodities, it is the world’s largest buyer. That can make those very trades appealing ammunition, given some traditional means used by other countries – such as threats of sanctions, or freezing the assets of foreign officials – would be less effective.

Unfortunately, politicising health and other standards has a cost. It undermines the credibility and clout of watchdogs battling repeated safety scares at home, from tainted vaccines to outbreaks of African swine fever decimating the pork industry. Even as some government officials dealt with alleged Canadian pests over the past month, others were dealing with outrage over mouldy school lunches in Sichuan. The country’s premier, Li Keqiang, has threatened to make food safety offenders pay a heavy price.

Reinforcing the perception that regulators are being deployed as political tools is at odds with the goal of creating trustworthy, independent watchdogs. That goes beyond the realm of health and safety, and into antitrust and other areas too. Weaponising regulation has a price.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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