Canada-Korea Free Trade AgreementMarch 18, 2014
One in five Canadian jobs depends on trade. So, expanding trade is critically important to creating jobs and economic growth here at home. That’s why the federal government has been so focussed on negotiating new trade agreements.
Last October, I told you about the federal government’s new trade agreement with the European Union (EU). The Canada-EU trade agreement is expected to create 80,000 new Canadian jobs and add about $12 billion to Canada’s economy, representing an addition of $1,000 annually to each Canadian household’s income.
Now, I’d like to tell you about another, newly negotiated trade agreement. On March 11th, the federal government announced that Canada and the Republic of Korea had successfully negotiated a new trade agreement. The Canada-Korea Free Trade Agreement is Canada’s first trade agreement in the Asia-Pacific region, and will provide new access for Canadian businesses and workers to the world’s 15th-largest economy and the fourth-largest in Asia.
By reducing tariffs and others barriers to trade, this trade agreement is projected to create thousands of jobs right here at home, boost Canada’s economy by $1.7 billion and increase Canadian exports to South Korea by 32 per cent.
In particular, the agreement will benefit Ontario’s farmers (especially beef and pork farmers, much of whose production is for export), as well as our food manufacturing sector (the Toronto-Guelph-KW corridor is the largest food manufacturing region in Canada and the third largest in North America). Tariffs will be eliminated on Canadian agricultural and food exports to South Korea, which, until now, averaged 52.7 per cent. Now, duty-free access will be given to Canadian products like beef, pork, ice wine and prepared foods. In addition, Canadian exports of pet food, food-grade soybeans, navy/white peas, adzuki and kidney beans will now be allowed into South Korea.
Some have suggested that the agreement’s elimination of the 6.1 per cent tariff on Korean auto imports will harm Canadian auto manufacturing, by increasing auto imports from Kia and Hyundai. However, the protective effect of this 6.1 per cent tariff is diminishing dramatically: The US has already agreed to eliminate its 6.1 per cent tariff, and Korean vehicles could have entered Canada tariff-free from the US under NAFTA. In addition, a 2012 study by Dr. Van Biesebroeck at the University of Toronto concluded that the tariff elimination on Korean auto imports will have a very limited impact on Canadian production and jobs – in the order of 0.2% of production, or fewer than 4,500 cars out of a base of around 2 million units produced.
The new Canada-Korea Free Trade Agreement will create new jobs and economic growth by expanding exports for beef and pork farmers, as well as for our food manufacturing sector. This is good news for the Canadian economy. More details on the trade agreement can be found at: http://goo.gl/6xPzbE