Canada-Korea Trade Deal Ratified, To Take Effect Jan 1, 2015

The Canadian agriculture sector is welcoming the ratification of the Canada-Korea Free Trade Agreement in both countries’ Parliaments.

After being approved by the Korean government this week, International Trade Minister Ed Fast announced Wednesday that the CKFTA will come into force on January 1st, 2015.

As discussed previously on RealAg, the deal is expected to help Canadian exports compete against American exports. The U.S. has had a relative advantage against Canadian beef, pork and other commodities since implementing a similar trade deal with South Korea in 2012.

“Now that both Parliaments have ratified the CKFTA, it can be implemented in time to avoid the U.S. gaining another year’s tariff reduction ahead of Canada,” said Canadian Cattlemen’s Association President Dave Solverson on Wednesday. “I am very pleased that the CKFTA will be in place on time to restore a competitive position for Canadian beef in the Korean market.”

Under the terms of the agreement, the 40 per cent Korean tariff on fresh and frozen beef will be fully eliminated in 15 equal annual steps and the 18 per cent tariff on offals will be fully eliminated in 11 equal annual steps.

Canadian pork exports have also suffered since Korea signed trade deals with not only the U.S., but the European Union and Chile. Pork sales to Korea fell from $223 million in 2011 to  $76 million in 2013. Duties of up to 25 percent on Canadian pork will be eliminated over five to 13 years.

The grain and oilseed sector is pleased with the deal, too.

“Canada’s farmers and exporters depend upon free and open trade around the word,” noted Cam Dahl, President of Cereals Canada. “Increased access support the entire Canadian value chain, from crop development and seed companies, farmers, shippers and exporters.”

For canola, South Korea will eliminate the current five percent tariff applied to seed. Tariffs on refined and crude canola oil will be removed within three and seven years, respectively. Canola seed and oil exports are currently valued at $60 to $90 million annually.

“Under the agreement, those export numbers could grow substantially,” says Rick White, CEO of Canadian Canola Growers Association. “It’s also encouraging to see Canada’s first free trade agreement in the Asia-Pacific region, with other trade files including the Trans-Pacific Partnership and the Canada-Japan Economic Partnership Agreement still under negotiation. These agreements will improve market access even further for our farmers.”

Barley producers also stand to benefit, according to Phil de Kemp, president of the Malting Industry Association of Canada. The CKFTA will eliminate tariffs on 13,000 tonnes of malt beginning January 1st, with a gradual move to tariff free access in the 12th year of the agreement. Korea is Canada’s second largest overseas customer of malt, with current sales averaging around 30,000 tonnes annually.

A complete list of agricultural tariff reductions included in the Canada-Korea Free Trade Agreement can be found here.

 

RealAgriculture News Team

A team effort of RealAgriculture's videographers and editorial staff to make sure that you have the latest in what is happening in agriculture.

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