CHINA—China has lifted its ban on canola from two of Canada’s largest exporters, three years after suspending their licenses amid escalating tensions between the countries, alleging harmful organisms had been detected in their canola shipments.

A statement from Global Affairs Canada on Wednesday said that China has advised Canada of its decision to reinstate the licenses of the companies. Viterra and Richardson International Ltd. had been facing a ban on exporting to China since March, 2019.

“We welcome this decision to remove the restrictions and immediately reinstate the two companies to allow them to export Canadian canola seeds,” the statement said.

However, low stockpiles of canola, which is crushed into meal to feed animals and oil for cooking, are expected to curb flows of the oilseed to China.

Last summer’s drought in Western Canada cut crop yields so badly that, as of the end of March, national canola stocks were at the lowest they’ve been in 17 years, according to Statistics Canada.

The shortage has had a knock-on effect on exports, which as of March had dropped to a level not seen since 2008 “despite strong global demand for canola,” Statistics Canada said.

Before the trade tensions, the Chinese market made up 40 per cent of Canada’s canola exports and as a result, the Chinese restrictions created a multi-billion-dollar hole.

Exports to China, worth US$2.8 billion in 2018, dropped to US$800 million in 2019, US$1.4 billion in 2020, and US$1.8 billion in 2021, according to the Canola Council of Canada.

The licence suspensions took place against the backdrop of heightening tensions between Beijing and Ottawa.

In late 2018, China denounced Canada for its move to arrest and authorize extradition proceedings against Huawei chief financial officer Meng Wanzhou.

And while China cited quality concerns as reason behind its initial canola decision, the move was still widely seen as retaliation for Canada’s actions on Ms. Meng.

In late 2019, Canada took the case to the World Trade Organization (WTO), requesting a panel to assist in resolving the dispute.

In its submission to the WTO at the time, China said that the measures were imposed to the extent necessary to protect human, animal or plant life or health and were done so in a transparent and non-discriminatory manner.

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