Once in effect, the Canadian-Korea Free Trade Agreement will eliminate almost all duties between the two countries.
Canada has concluded a Free-Trade Agreement with South Korea after more than a decade of negotiations. Once in effect, this agreement will put an end to almost all customs duties between the two countries. The Federal Government promises five benefits to this deal:
1. Canada will establish itself as one of South Korea’s main trade partners
This is a landmark agreement for Canada as it is the first of its kind with an Asian country. While Canada was busy negotiating, the U.S., the EU and Australia beat us to the punch and ratified agreements of their own with South Korea. These countries opened the doors to this market and now provide stiff competition to Canadian companies here.
2. It will provide an estimated $1.7 billion in economic benefits to Canada
The Canadian Government expects this deal to lead a 32% increase in exports to South Korea, boosting the Canadian economy by $1.7 billion.
3. Pig farmers can rejoice
Pig farmers, who export 71% of their output, are among those who will benefit the most from the FTA. Canada’s pork exports to Korea dropped from $92.2 million in 2011 to $33.5 million in 2013.
4. New jobs will be created
The Federal Government expects the agreement to create thousands of new jobs, namely in the chemicals, plastics, IT and communications, aerospace, metals and mining industries – even in the forestry sector.
However, nothing is settled for the automotive industry. There is concern surrounding the end of the 6.1% customs duty on Korean cars made by Hyundai and Kia, which will take effect in just two years.
5. Canadian consumers will pay less for automobiles and electronic accessories
Canada’s main imports from Korea include cars, electrical equipment and electronics. The FTA is projected to lead to greater competition in these industries, resulting in lower prices.
Overview of Canada-South Korea relations
- South Korea is Canada’s 7th largest trade partner in terms of export goods and its 3rd largest export destination in Asia (after China and Japan).
- Canadian-South Korean bilateral trade reached about $10.1 billion in 2012.
- Canadian exports to South Korea were around $3.7 billion, while imports totaled $6.3 billion.
- Canada’s main exports to South Korea are mineral fuels and oils, cereals, wood pulp, mineral ores and meat.
- Main imports from Korea are vehicles, electrical equipment and electronics, machinery, oils and mineral fuels, iron and steel.
Source: Foreign Affairs, Trade and Development Canada, Government of Canada
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