Asia is one of the fastest growing and most dynamic trade regions in the world. And your access to that trade has just got a bit easier.
On March 20, 2014 Prime Minister Stephen Harper signed a new free-trade agreement with South Korea’s President Park Geun-hye, creating a gateway for Canadians to do business in Asia.
What Does the Canada-Korea Free Trade Agreement (CKFTA) Mean for British Columbia?
South Korea is already our fourth largest trading partner and export destination; in fact 50 percent of all Canadian exports to South Korea already come from BC. This new agreement eliminates tariffs on almost all of BC’s key exports, including manufacturing, forestry, fishing, natural resources and agriculture.
By eliminating those tariffs, it levels the playing field for BC businesses to compete against exporters from other countries around the world.
However it is not just about tariffs. The CKFTA will encourage the use of internationally recognized standards and minimize the duplicative certification and testing of products. It will also feature a mechanism that will allow both South Korea and Canada to raise concerns over standards, in order to minimize their impact on trade.
Which Industries will Most Benefit from the Agreement?
If you trade in industrial goods, minerals, forestry and agriculture you will be the primary beneficiary from the agreement. However that doesn’t mean to say, that if you are in the professional services industry you have been forgotten. We outline the benefits to each trade below:
Between 2010 and 2012, BC exported an annual average of $1.75 billion of international goods to South Korea, approximately 9 percent of BC’s GDP in 2012.
The CKFTA will eliminate tariffs on all chemicals (from up to 8 percent), scientific instruments (from up to 8 percent), and industrial materials (from up to 13 percent).
Metals and Minerals
BC is Canada’s largest exporter of coal and copper, and a significant producer of over 30 other metals and minerals. In 2012 metals and minerals represented 5.8 percent of the total GDP in BC.
The CKFTA will eliminate over 98 percent of tariffs on aluminum lines immediately, with the remainder scheduled to be eliminated within five years. This is line with the US free trade agreement, KORUS.
The agreement will also eliminate tariffs on over 94 percent of minerals (sold between 2010 and 2012), with the remainder scheduled to be eliminated within five years.
Forestry and Value-Added Wood Products
Between 2010 and 2012, BC exported an annual average of $327.9 million of forestry and value-added wood products to South Korea, the largest share in Canada.
The CKFTA will eliminate 57 percent of tariffs on implementation of the agreement, including spruce, pine, pine and western hemlock lumber, strand board, particle board and plywood, as well as wood beams and arches. A further 13.1 percent will be duty free by 2017, with the remainder being eliminated by 2024.
Fish and Seafood Products
Between 2010 and 2012 BC exported an annual average of $8.1 billion of fish and seafood to South Korea, facing tariffs of up to 47 percent.
The CKFTA will eliminate 70 percent of tariffs by 2019, with all remaining duties eliminated by 2026.
Agricultural and Agri-Food Products
Between 2010 and 2012 BC exported an annual average of $74 million of food preparations, animal and vegetable fats, tallow, wheat flour and pork. In addition, BC exported $210.8 million in fresh and frozen cherries and blueberries in 2012 alone.
The CKFTA will eliminate 86.8 percent of tariffs including wine, animal fats, wheat flour and most food preparations. And those all-important berries? The tariffs of up to 45 percent will also be eliminated, creating a big opportunity for BC farmers.
Canadian service exports including professional services, environmental services, information and technology services, oil and gas, mining, clean energy, transportation and tourism, are worth more than $750 million a year. Jobs in South Korea’s service industry are traditionally highly skilled and well-paying, providing great opportunities for your business.
The CKFTA will provide you with more predictable access to the market and help level the playing field for you against competitors from the US and EU, which already have free trade agreements.
The Agreement provides you with improved protection, predictability and transparency for conducting business, as well as greater access to South Korea’s sophisticated services market.
For more detailed information visit the Foreign Affairs, Trade and Development Canada website.