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Blackleg or blackmail? Economics of the Canada–China canola trade dispute

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  • Ryan Cardwell
  • Derek G. Brewin

Abstract

The Chinese government's recent decision to suspend the export licenses of two Canadian grain firms has garnered international attention. The dispute has been portrayed by some as a diplomatic dispute between two countries, and by others as a concern about plant health. We analyze the economics of the dispute, including a simple economic model of international trade in which a large‐country importer imposes a targeted import ban on one large‐country exporter. The model provides a framework for understanding the economic effects of a trade ban under various market conditions. We also discuss the legal framework and dispute settlement process that would be encountered if the disagreement proceeds to a formal dispute in the World Trade Organization. La récente décision du gouvernement chinois de suspendre les licences d'exportation de deux sociétés céréalières canadiennes a attiré l'attention de la communauté internationale. Le différend a été présenté par certains comme un différend diplomatique entre deux pays, et par d'autres comme une préoccupation phytosanitaire. Nous analysons les aspects économiques du différend, y compris un modèle économique simple de commerce international dans lequel un grand pays importateur impose une interdiction d'importation ciblée à un grand exportateur. Le modèle fournit un cadre permettant de comprendre les effets économiques d'une interdiction commerciale dans diverses conditions de marché. Nous discutons également du cadre juridique et du processus de règlement des différends qui seraient rencontrés si le désaccord devenait un différend formel au sein de l'Organisation mondiale du commerce.

Suggested Citation

  • Ryan Cardwell & Derek G. Brewin, 2019. "Blackleg or blackmail? Economics of the Canada–China canola trade dispute," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(3), pages 251-260, September.
  • Handle: RePEc:bla:canjag:v:67:y:2019:i:3:p:251-260
    DOI: 10.1111/cjag.12203
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