By: Stephen Chartrand- Specialty News Editor
In March 11, in Seoul, Prime Minister Stephen Harper and President Park Geun-hye of South Korea, announced the two countries concluded negotiations on a new free trade deal. The agreement is Canada’s first trade deal in the Asia Pacific region and marks the end of ten years of on-and-off negotiations with the South Korean government.
The government is touting the deal as one which will give Canadian business “unprecedented access” to South Korea’s $1.1 trillion economy and create “thousands of new jobs” in Canada as a result.
The Canada-Korea Free Trade Agreement “will cover virtually all aspects of Canada-South Korean trade, including trade in goods and services, investment, government procurement, non-tariff barriers, environment and labour cooperation, and other areas of economic activity,” according to government document.
The agreement is projected to increase exports by 32% and add $1.7b annually to the Canadian economy. Under the agreement, nearly all tariffs will be eliminated as it comes into force. South Korea will remove duties on 98.2 per cent of tariffs and Canada will remove duties on 97.8 per cent of tariffs.
The government states that Canadian sectors from the agricultural to the financial services sector stand to gain from the agreement. South Korea’s tariffs average three times higher than the levies imposed on Korean exports to Canada – 13.3 per cent vs. 4.3 per cent respectively.
Dozens of associations, business groups, and individual companies, from the Canadian Chamber of Commerce, the Agri-food Trade Alliance, Maple Leaf Foods, UPS Canada, Scotiabank, and Canadian Manufacturers and Exporters have expressed support for the Canada-Korea free trade agreement.
Jayson Myers, President and CEO of Canadian Manufacturers and Exporters, said in a statement that trade liberalization policies “with South Korea puts Canadian businesses on an equal footing with so of their global competitors, particularly the United States and the European Union.”
Although much of the business community is behind Harper’s agreement with South Korea, one company has been vocal in opposing the deal since its announcement: Ford Motor Company.
Over three annual cuts, Canada’s 6.1% tariff on South Korean imports of vehicles will be phased out – the first will take effect as soon as the agreement comes into force. The 8% tariff South Korea levies on Canadian vehicles and automotive parts will be eliminated as soon the deal comes into force.
Ford Motor Company of Canada president and CEO, Dianne Craig, said in a statement that South Korea “will remain one of the most closed automotive markets in the world.” Her statement pointed out that the agreements between Seoul, the United States and Europe have “failed to reverse this one-sided automotive trade flow,” noting that, “no Canadian manufacturer can compete with a market controlled by non-tariff barriers and currency manipulation,” she said.
Harper rebuked, saying Ford already has access to the South Korean market via a free trade deal between the United States and Seoul. “Ford supported the Korea-U.S. free trade agreement,” Harper said, “What we are doing here is allowing other Canadian companies and other Canadian sectors to have the same access that Ford already has,” Harper said in Seoul.
Researchers at the University of Toronto prepared for the government a detailed analysis of the impact the FTA would have on Canda’s and particularly, Ontario’s automotive sector, concluding that approximately 0.2 per cent of production, a negligible amount, would be offset as a result.
Canada’s largest private sector union, Unifor, also opposed the agreement. Jerry Dias, Unifor’s president, said the Canada-Korea FTA “is going to cost Ontarians and Canadians about 33,000 jobs.”
The Harper government has aggressvively pursued free trade agreements since being elected to office in 2006, bringing the number of FTAs from just five to 43, which will certainly increase as Harper continues to set his sights on the Pacific and Latin America.