The ongoing trade dispute between Canada and China escalated Thursday, with word this country’s biggest market for canola seed has stopped importing Canadian product.

The Canola Council of Canada said in a news release that Chinese importers “are unwilling to purchase Canadian canola seed at this time,” which has forced exporters to sell to other markets.

“We’re disappointed that differing viewpoints cannot be resolved quickly,” President Jim Everson said. “Under the circumstances, Canadian canola seed exporters who normally ship to China have no alternative but to supply customers in other countries who value high quality Canadian canola.”

Based on ongoing technical discussions between the two countries, the council said there’s been no indication “an immediate resolution is possible.”

Everson said the federal government must “continue to intensify efforts to resolve the situation.”

China is Canada’s largest market for canola, accounting for 40 per cent of exports. In 2018, exports to China were valued at $2.7 billion. Until recently, demand in the market had been considered stable.

Thursday’s announcement comes just weeks after Chinese officials announced they were pulling the canola export license from one of Canada’s largest canola exporters, Richardson International Ltd, alleging “hazardous organisms” had been found in one of the company’s shipments. Two days later, Chinese officials announced all Canadian canola imports into China would face heightened import inspections because of pest concerns.

Canadian officials, including International Trade Minister Jim Carr and Foreign Affairs Minister Chrystia Freeland, have vehemently refuted those claims, arguing they are not based on science.

In a statement March 18, Carr and Agriculture Minister Marie-Claude Bibeau said the Canadian Food Inspection Agency (CFIA) had conducted further investigations and had “not identified any of the pests detected by the Chinese notices of non-compliance.” The agency had also requested additional technical information from Customs China, which had provided CFIA with preliminary information the week of March 11.

Conservative MPs estimate the crisis has already cost the Canadian canola industry $1 billion in losses.

The trade spat also comes as tensions between Canada and China remain strained after authorities arrested Meng Wanzhou, the chief financial officer of Chinese tech giant Huawei, at Vancouver’s airport in December following an extradition request from the United States. American officials have said they want her extradited to face allegations of fraud and skirting U.S. sanctions on Iran. Earlier this month, Canada said it will allow the U.S. extradition case against Wanzhou to proceed.

Two Canadians – former diplomat Michael Kovrig and businessman Michael Spavor – were detained by Chinese authorities shortly after her arrest. They remain in Chinese detention, accused of espionage.

The spat also comes when there is lots of canola still waiting to be exported. In December, Statistics Canada said there was a record amount stored in Canada, known as stocks, on farms and commercially. The agency estimated total canola stocks at about 14.6 million tonnes, thanks to lower exports and higher amounts of canola stored on-farm. That was a result of falling prices, higher than expected carryover from the previous crop year and poor weather on the Prairies during harvest.

With spring seeding fast approaching, farmers are in the process of finalizing their planting plans. The council hasn’t said whether it expects the current dispute to affect the amount of canola seeded this spring.

Canola was developed by researchers from Agriculture Canada and the University of Manitoba in the 1970s and is one of the most common crops grown by grain farmers in Western Canada. Statistics Canada data shows the amount grown in Canada has tripled over the past 20 years, making Canada one of the world’s largest exporters of canola.

But sources told iPolitics Thursday evening that finding alternative markets for Canadian canola will be challenging given the large volume of seed China traditionally buys.

In 2017, China bought more than 4.4 million tonnes of canola. Canada’s second largest market for canola was Japan (2.4 million tonnes) followed by Mexico (1.7 million tonnes). The United Arab Emirates, Pakistan and the United States rounded out the top five.

The House international trade committee was set to hold an emergency meeting on the canola dispute Thursday afternoon, with officials from Agriculture Canada and Global Affairs Canada scheduled to testify. However, that meeting was cancelled after Conservative MPs forced a marathon voting session involving 257 votes.

That meeting has been rescheduled for April 4. Ahead of that, Bibeau and Carr are expected to testify at the committee on April 2.

Feuds over canola aren’t new. In February 2016, China threatened to tighten the rules for the amount of dockage (foreign material like leaves and stems) allowed in canola exports because of disease concerns — a move Canadian canola growers feared would bring exports grinding to a halt.

China later agreed to keep current regulations in place until March 2020 to allow officials time to study the matter.

In 2018, Canada and China agreed to double its agricultural trade relationship by the year 2025. The Trudeau government has also challenged the Canadian agriculture industry to grow its total exports to $75 billion by 2025.

Agriculture and Agri-Food Canada estimates that combined agricultural trade between Canada and China is worth $8.4 billion. Top exports to China include canola, pork, seafood, barley, maple syrup and peas.