Almost a decade after negotiations began, the Canada-Korea Free Trade Agreement was signed today in Ottawa by Prime Minister Stephen Harper and Korean President Park Geun-hye.
The deal is expected to help Canadian agricultural exports compete against American exports, as sales of Canadian beef, pork and other commodities have declined since South Korea ratified a similar trade deal with the U.S. in 2012.
Korea’s 40 percent tariff on Canadian beef will be reduced to zero in 15 equal annual steps — the same schedule included in the Americans’ trade deal with Korea.
The elimination of this tariff will finally allow Canadian cattle producers to take advantage of Korea lifting its BSE-related ban on Canadian beef back in 2012, says Dave Solverson, the president of the Canadian Cattlemen’s Association.
“For the past few years, Canada’s key beef competitor, the U.S. has enjoyed an increasing tariff advantage flowing from its free trade agreement with South Korea. Today’s formal signing of the text brings us an important step closer to restoring a competitive position for Canadian beef in the Korean market,” Solverson said in a statement.
Korea was a $40 million market for Canadian beef prior to the first case of BSE in 2003. Last year, Canada exported less than $8 million worth of beef to Korea.
Meanwhile, Canadian pork exports to Korea fell from $223 million in 2011 to $76 million in 2013 after Korea signed trade deals with not only the U.S., but other pork exporters in the European Union and Chile. Duties of up to 25 percent on Canadian pork will be eliminated over five to 13 years.
As for canola, the current five percent tariff that Korea applies to canola seed will be eliminated immediately when the agreement takes effect, with refined canola oil and crude oil tariffs eliminated over three and seven years respectively. The Canola Council of Canada estimates that the agreement could double Korea’s imports of Canadian canola seed and oil, which are currently valued at $60 to 90 million annually.
A complete list of agricultural tariff reductions included in the Canada-Korea Free Trade Agreement can be found here.
The agreement was first announced back in March and must still be ratified by the Canadian Parliament and the Korean Legislature before it takes effect.