OTTAWA — The fallout from Saudi Arabia’s move to punish Canadian companies was felt within a month of the countries’ sudden diplomatic feud last summer, leading to visa rejections, a government ban on food from Canada and a blockage of shipments at the kingdom’s ports.
A newly released federal document provides a close look at Saudi Arabia’s retaliation against Canada, following criticism by Foreign Affairs Minister Chrystia Freeland on Twitter of the regime’s arrest of women’s rights activists.
Angered by the public condemnation, Saudi Arabia suspended diplomatic ties with Canada last August, expelled the Canadian ambassador and recalled its own envoy from Ottawa.
The kingdom also stopped future trade and investment deals, cancelled grain imports and said it would shut down lucrative scholarships for its citizens to study in Canada. The Saudi central bank and state pension funds started selling their Canadian holdings.
A briefing note to International Trade Minister Jim Carr offers more detail on how events were unfolding on the ground about a month after the start of the dispute.
“It is important to note that over the last few days Global Affairs Canada has been learning of concrete actions taken by Saudi Arabia against Canadian companies across various sectors,” reads the memo, released this week to The Canadian Press under access-to-information law.
The document went on to list numerous measures, including:
— Requests for existing contracts to be replaced by new contracts with non-Canadian suppliers.
— Denial of access to military bases.
— Payment delays.
— Re-routing of flights for product supplies.
— Prevention of a Canadian company from importing and selling medication.
— Government ministries issuing orders to ban food and medication from Canada.
— Various shipments from Canada being completely stopped at Saudi ports.
The note was created last September for Carr in preparation for his meeting with members of the Canada Arab Business Council, who have interests in the kingdom.
The additional details of the dispute with Saudi Arabia emerge as Canada tries to manage other, bigger trade-related challenges with its two largest partners, the United States and China.
Saudi Arabia has previously been a key partner for Canada in the Middle East and, according to a separate internal briefing note, the countries had more than $4 billion worth of trade in 2017. That year, Saudi Arabia had $1.28 billion worth of direct investment in Canada, said the memo prepared for Finance Minister Bill Morneau after the crisis broke out.
Scott Jolliffe, the president of the Canada Arab Business Council, said in an interview that Saudi investment in Canada ground to a halt last August. He also said Canadian firms have been restricted from bidding on new projects in the kingdom.
On the other hand, he said things have mostly carried on as usual for those of his members who already had business in the country. Jolliffe also said he hadn’t heard of any visa refusals.
He said he would like to see the impasse resolved because Saudi Arabia and the region offer billions of dollars’ worth of potential business for Canadian companies — and possible alternatives to the U.S. There’s a deep need there, he added, for the expertise Canada offers in areas like infrastructure, telecommunications and engineering.
“At the moment, it doesn’t appear as if there is much going on to strengthen and rebuild the relationship,” said Jolliffe, who’s had meetings with Carr about the issue.
The feud has had an impact on agriculture. Feed-barley producers, for instance, have been shut out of the Saudi market.
“Any country we lose, even if it’s temporary, hurts us,” said Dave Bishop, a farmer and chair of Alberta Barley.
He said Canada had been shipping about 122,000 tonnes of feed barley to Saudi Arabia every year — amounts that can sometimes reach 10 per cent of all Canadian exports of the product.
This year, the industry has been lucky that feed barley is in short supply worldwide and extra demand from markets like China has helped make up for being shut out of Saudi Arabia, Bishop added.
The memo to Carr last September said Freeland and Saudi Foreign Minister Adel al-Jubeir, in an effort to resolve the conflict, “have been discussing ideas to de-escalate … including an incremental approach which could include a series of steps.”
Asked about the status of Saudi-Canadian relations now, Carr’s office provided a statement that said he’s still disappointed with the kingdom’s response to Canada’s human-rights concerns.
A few weeks after Carr received the memo, the kingdom’s relationship with Canada came under further strain — as did its relations with many countries — as details emerged about the murder of journalist Jamal Khashoggi inside the Saudi consulate in Istanbul.
Adam Austen, a spokesman for Freeland, said Thursday that Saudi Arabia’s explanations for the killing have been inadequate and that Canada has called for a thorough, credible and independent international investigation.
Andy Blatchford, The Canadian Press
Governments earned $186M in pot taxes in 5 1/2 months of legalization: StatCan
Federal and provincial governments earned $186 million in cannabis-related revenue in the first five-and-a-half months since legalization in October, Statistics Canada said Wednesday.
The Ottawa-based agency said revenue came from product-specific excise taxes and general taxes on goods and services, such as the Harmonized Sales Tax, directly related to the sale of cannabis.
The federal government drew $19 million in excise taxes, while provincial governments got $79 million from excise taxes and related adjustments.
Statistics Canada says revenues from general taxes on goods and services brought in an additional $36 million at the federal level and $53 million via direct provincial general taxes on goods and services.
It added that excise taxes increased by 12.4 per cent in the first quarter of 2019 compared with the fourth quarter of 2018 on higher sales by licensed producers to distributors.
During the same time frame, general taxes on goods and services from the sale of cannabis were up 68.1 per cent from increased purchases made by households.
“Federal and provincial government revenue from general taxes on goods and services as well as excise taxes may rise further in the second half of the year, as additional cannabis retail outlets are scheduled to open,” Statistics Canada said in a release.
These figures are the first glimpse into pot-related government revenues since Canada legalized cannabis for recreational use on October 17.
Due to the “bumpy” rollout of legalization last fall, these first-ever government tax figures are lower than expected, said the Conference Board of Canada’s economist Robyn Gibbard.
“However, we think that as the kinks are worked out, governments can expect strong growth in revenues from cannabis sales going forward,” she said in a statement.
Legalization on Oct. 17 was met with brisk demand from Canadian consumers and supply shortages at government and private retailers, prompting some to reduce their hours of operation or provincial governments to cap the number of retail licences.
The supply situation has improved in recent months, and Alberta has lifted the moratorium on new retail licenses and Quebec cannabis outlets have resumed more normal hours.
Still, household spending figures from Statistics Canada for the first-quarter of this year show that most non-medical cannabis is purchased from the illicit market, at $1.1 billion, compared to $377 million bought through legal channels.
Armina Ligaya, The Canadian Press
PM worries China could target more Canadian goods as fears about soybeans rise
OTTAWA — Prime Minister Justin Trudeau says he’s worried an ongoing diplomatic dispute could see China target imports of other Canadian agricultural products as concerns grow about soybean shipments in particular.
One industry leader said Thursday that, without a clear explanation, Canadian soybean exports to China plunged suddenly from 3.2 million tons over the final four months of 2018 to just 3,700 tons through the first four months of this year.
Relations between Canada and China have deteriorated since the December arrest in Vancouver of Huawei senior executive Meng Wanzhou at the behest of the United States.
China was outraged by Meng’s arrest and has since detained two Canadians on allegations of espionage and sentenced two other Canadians to death for drug-related convictions.
Chinese authorities have also blocked imports of Canadian canola seeds, alleging they found pests in shipments, and have increased inspections and paperwork related to pork.
“When it comes to China, obviously, our top concern is the release of Canadians who are detained in an arbitrary way by the Chinese for political reasons,” Trudeau said in French on Thursday during a visit to France, where he marked the 75th anniversary of D-Day. “We are also concerned by their actions on canola and the potential of other actions on other products.”
Trudeau told reporters that he will see if it’s “appropriate or desirable” to have a conversation directly with Chinese President Xi Jinping about a number of bilateral difficulties later this month at the G20 summit in Japan.
Later Thursday, Agriculture Minister Marie-Claude Bibeau told a parliamentary committee that she’s heard concerns about shipments of Canadian soybeans to China.
Ron Davidson, executive director of Soy Canada, said in an interview that China’s purchases of Canadian soybeans collapsed at the end of last year following a run of very strong exports.
“It’s not a slowdown — it’s a virtual halt,” said Davidson, whose members have reported the drop to Bibeau. “We can see what’s happening, but we aren’t certain why.”
He said it’s not unusual to see soybean exports decrease during winter months, but the speed, magnitude and timing of the crash this time around has alarmed the industry.
Davidson said he’s received reports of Canadian soybean containers held up in Chinese ports for longer than usual as authorities there conduct additional tests. It’s possible, he added, that the drop is partly due to an increased reliance by China on soybeans from other parts of the world.
Soybeans are Canada’s third-most valuable agricultural export after canola and wheat, he said.
Any prolonged crackdown by Canada’s second-biggest trading partner on shipments of key products like soybeans and canola could deliver a blow to the national economy.
New data released Thursday from Statistics Canada showed overall exports of canola fell 14.7 per cent in April after China started turning away Canadian canola seed.
Conservative Leader Andrew Scheer’s spokesman said it’s not enough for Trudeau to be concerned because he’s not a casual observer when it comes to the dispute with China.
“He needs to actually do something,” Brock Harrison wrote in an email Thursday.
“Mr. Scheer has on several occasions urged him to take concrete steps to respond to China’s actions against Canada and send a message that Canada won’t be pushed around. He has refused to act.”
The federal government says it has tried unsuccessfully to send a delegation of inspectors to China to examine Chinese evidence of pests in canola shipments. Canada has also been unable to schedule high-level engagements on the matter despite multiple efforts.
Bibeau told MPs Thursday that Canadian scientists finally had a conversation Wednesday night with Chinese customs officials about their canola concerns.
“They agreed to have more sustained discussions, telephone conferences on the subject — and they did not close the door to the delegation,” she said. “We are still asking for that, but the conversation has been re-activated and yesterday we could feel that we were at a different level … This is encouraging.”
Earlier this week, China’s ambassador to Canada said in an interview that Chinese officials investigated Canadian canola based on regulatory and scientific principles, and provided “concrete” documents to Canada to justify their concerns.
Lu Shaye added that the relevant Chinese departments no longer maintained contact with their Canadian counterparts, suggesting the matter was closed.
—Follow @AndyBlatchford on Twitter
Andy Blatchford, The Canadian Press
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