China — Measures Concerning the Importation of Canola Seed from Canada

The dispute will proceed under the parallel Multiparty Interim Appeal Arbitration Arrangement mechanism

Author: Simon Rollat

Canada and China have agreed to submit their dispute regarding Chinese measures restricting imports of canola seeds from Canada to the Multiparty Interim Appeal Arbitration Arrangement (“MPIA”). This is the second time China signed on to the MPIA procedures (DS598 with Australia and now DS589 with Canada).

In the Fall of 2019, Canada and China undertook negotiations to resolve a dispute arising from China’s restrictions on imports of Canadian canola seeds. Canadian exporters of canola seeds started facing increased quality checks and pest inspections by Chinese authorities. Ever since, Canada challenges the scientific findings brought forward by China to justify its measures. Chinese actions have had serious consequences for Canadian actors, for roughly 40% of all Canadian canola seed are sent to China.

Trade issues must be contextualized, for the geopolitical background often reveals underlying motivations. Here, Chinese measures were perceived by many to be partly triggered by the Canadian detention of Huawei executive Meng Wanzhou (now released).

Though the initial consultations between the two World Trade Organization (“WTO”) members failed to resolve the issue, the dispute was revived by Canada’s panel request in 2021. The request referred to China's revocation of canola seed export licenses of two Canadian companies and to China's accrued inspections of canola seed imports from other Canadian companies. Canada’s panel request was accepted and led to the establishment of a panel on July 26 (DS589).

Yet, the Trump administration caused a major freeze in the WTO dispute settlement mechanism for it blocked all new appointments to the Appellate Body its members’ terms expired, leaving the appellate level without any adjudicators as of December 2019. Therefore, since 2019, panel reports can still be appealed per the Dispute Settlement Understanding (“DSU”) but will remain in judicial limbo given the impossibility of the Appellate Body to receive the dispute.

To counter this procedural dead-end, the European Union launched the MPIA pursuant to Article 25 of the DSU. Recourse to MPIA appeals is only available to MPIA parties, but other WTO members may join the MPIA at any time and thus benefit from its mechanism. As of September 28, 2021, 25 WTO members have joined the MPIA.

Yet, questions remain about the way the MPIA will act. Will arbitrators follow the Appellate Body tradition of rewriting panel reports decisions, or will they be more deferential? Importantly, MPIA awards must be notified to the Dispute Settlement Body but do not need formal adoption by it. While the awards will be binding on the MPIA parties (JOB/DSB/1/ Add.12), the guiding value (jurisprudence constante) of the decisions (which are not precedential) for the resolution of future disputes (including under the Appellate Body if it resumes its activities) remains uncertain…