A major Canadian canola exporter has had its registration to ship canola seeds to China revoked, the latest flare-up in a diplomatic and trade dispute between the two countries.

A Chinese customs document dated March 1 says the country has cancelled Winnipeg-based agricultural handler Richardson International's registration. That means the company is forbidden to export canola seeds to the country.

"Richardson has been directly targeted," vice-president Jean-Marc Ruest told CBC News. "We think this is part of a larger Canada-China issue, and we hope it gets resolved expeditiously."

In the past, China has sought to limit the amount of "dockage" it allows in Canadian canola — referring to material such as weeds, stems and other seeds — to help fight the spread of a fungal crop disease known as blackleg.

But Ruest said the company believes this new flare-up isn't related to those claims, but instead is tied to a roiling diplomatic dispute between the two countries.

"In regards to any issue of quality, we disagree with the Chinese allegations. The Canadian government respects and supports our position, and the quality of our product, at the same time."

Canada exported more than $5 billion worth of canola last year, and almost half of it was destined for the Chinese market — almost five million metric tonnes worth, according to the Canadian Canola Growers Association.

Richardson is among the largest individual shippers of the product in the world, and this move "would basically curb or shut down their exports of canola," growers association chief executive Rick White said in an interview.

"If Richardson can't buy and move it and send it to China, farmers are to be left with it here in Canada."

The news comes against the backdrop of rising tensions between Canada and China ignited last year, when Canadian officials detained Meng Wanzhou, vice-president of Chinese technology firm Huawei, at the request of U.S. tax authorities as she was boarding a flight in Vancouver.

Meng, who is the daughter of Huawei's founder, was arrested on Dec. 1, 2018, while in transit through Vancouver to Mexico and South America. She is now involved in an extradition case and personal litigation against Canadian border officials, the RCMP and the attorney general of Canada.

Two Canadians — Michael Kovrig and Michael Spavor — have since been detained in China, and on Monday the two men were accused of stealing state secrets from China.

White said that while there's "no evidence or any information that ties that issue one to the other," others are drawing a direct line between the revocation of Richardson's permit with ongoing Chinese-Canadian trade and diplomatic issues.

One industry expert who has been granted anonymity for fear of becoming the target retaliatory measures from China said the move is "direct retaliation" for Canada's recent actions — including the unfolding scandal involving SNC-Lavalin.

Canada exports almost five million tonnes of canola to China every year. (Todd Korol/Reuters)

The Chinese see that "Trudeau was willing to intervene in legal matters to help ... SNC, while at the same time refused to intervene to have Meng released to avoid extradition," the source said.

"Richardson is the largest canola exporter and is Canadian … so [it's] the best target to send a message."

For its part, the government of Canada says it "will work with China to resolve this issue as quickly as possible."

"We are closely monitoring the situation and any potential impact on Canada's agricultural trading relationship with China," newly minted Agriculture Minister Marie-Claude Bibeau said in a statement to CBC News.

"We are in regular contact with industry stakeholders regarding this matter, and we will keep them informed as additional information becomes available."

Charles Burton, senior fellow at the MacDonald-Laurier Institute and a former Canadian diplomat who served two postings in China, predicted last week that a crackdown on Canadian canola would be one possible tactic it would employ.

"Richardson seems to be a completely innocent victim of a larger geopolitical game," he added on Tuesday.

He added that he hopes Beijing will reverse the decision, so both countries will "see what we can do to try and recover from the very damaged trust between our two nations because of the Chinese government's horrendous response," he said.

Sui Sui, a professor at the Ted Rogers School of Management at Ryerson University in Toronto, said she suspects the move against Richardson is likely more tied to a specific rule violation than some larger diplomatic game.

"I'm sure there's something special about this company," she said in an interview. "If [a] Canadian company has a good relationship and [they] comply with regulations, I don't think they have to worry too much about it."

While the canola industry has been thrown for an unexpected loop, on the whole agricultural exports from Canada to China are inching higher.

Canada's sudden issue with China comes against the backdrop of even worse trade tensions between China and the U.S., and Canada has become something of a pawn in that dispute.

Foreign Affairs Minister Chrystia Freeland spoke to reporters in Longueuil on Tuesday 1:52

As the Trump administration put tariffs on Chinese imports last year, Beijing retaliated and put levies on all sorts of U.S. products bound for China. One of the major ones is soybeans, which are now subject to a 25 per cent levy when they are shipping from the U.S. to China.

Faced with that sudden bill, Chinese importers tried to work around it by buying more from other countries, including Brazil and Canada. Canada was the second-leading supplier of soybeans to China in January, behind only Brazil.