South Korea free trade a done deal; could boost economy by $1.7B

The government also believes that Canadian automakers will be able to increase its exports, which are currently practically non-existent, noting that since the European Union and the U.S. signed their pacts, shipments have doubled in a few years. South Korea’s eight per cent duty on autos disappears on the first day of the treaty’s implementation.

Harper addressed criticism from some automakers.

“First of all, I note that there are supportive voices in the auto sector. The opinion is not unanimous. The government’s commitment to the auto sector I think was made very clear in our most recent budget,” the prime minister said.

“With regard to particular critics, let’s talk about Ford specifically. Ford supported the Korea-U.S. free-trade agreement. Thereby, Ford got access to the United States and has access through the United States to the Korean market.

“What we are doing here is allowing other Canadian companies and other Canadian sectors to have the same access that Ford already has. So it is, I don’t think, realistic for a company to think it will have one set of rules for it and another set of rules for the entire rest of the Canadian economy.”

While the agreement touches virtually every sector of the economy, officials said finding the acceptable trade-off between auto access that Korea wants and the access for pork and beef exports Canada wants, was the most the most difficult.

Supporters of the agreement say it was critical for Canada to conclude the talks quickly given the competitive advantage enjoyed by the U.S., Europe and Australia from having trade pacts with Korea.

According to federal estimates, Canadian exports to South Korea have fallen by $1.5 billion, or 30 per cent, since the U.S. pact went into force in the spring of 2012.

Even so, Canada didn’t get the same deal as the U.S. was able to negotiate. Korean tariffs of up to 25 per cent on high end pork will take up to 13 years to be fully eliminated.

Canada Pork International president Jacques Pomerleau said the simple fact was that Canada doesn’t have the same clout as its bigger southern neighbour.

“We didn’t have the same power to get the better treatment to what they gave the Americans,” he said. “(But) the worst case could have been no deal at all. Then we would have been unhappy forever.”

Even with the agreement, industry spokesmen cautioned that the U.S. has a four-year head start on Canada and that it will take time to catch up, or recoup market share.

For instance, Jim Quick of the Aerospace Industries Association of Canada said his sector has seen shipments to Korea plummet from about $180 million to $34 million after the U.S., Europe and others signed their deals.

Currently, South Korea enjoys a significant trade advantage with exports of $6.3 billion in 2012 to Canada, and imports from Canada totaling $3.7 billion.

The successful conclusion, the second significant deal within a year, likely sends a signal to other potential free-trade partners that Ottawa is currently negotiating with, including India, Japan, and the countries of the TransPacific Partnership, that it is a serious negotiator, said Paul Evans, director of the Institute of Asian Research at the University of British Columbia.

With files from Julian Beltrame in Ottawa