Harper Starts Sales Pitch in BC After Signing Trade Deal in Korea

March 12, 2014 Updated: March 12, 2014

VANCOUVER—Prime Minister Stephen Harper has wasted no time in selling a free-trade deal he’s just signed in South Korea, highlighting its benefits to a business crowd in Vancouver. 

Harper said in a question-and-answer session Wednesday before the BC Chamber of Commerce that the deal inked earlier this week offers unprecedented access to the South Korean market. 

He said the agreement will eliminate virtually all tariffs between the two countries. 

“Korean tariffs have generally been three times the level of Canadian tariffs,” he said. 

“So there are some very, very big potential wins here in making Canadian goods much more competitive in a market of 50 million people with linkages throughout Asia.” 

Canada’s first such agreement with an Asian country is considered a major step in the Conservative government’s international trade strategy. 

“We now have access to over half the global GDP so this is a huge change for Canada,” Harper said. 

Harper said he will be travelling to Europe in the next couple of weeks and he singled out Japan, India, and Thailand as targets of Canada’s next big trade pacts. 

The South Korea deal concludes nearly a decade of on-again, off-again talks, and marks Canada’s first free-trade foray into the Asia-Pacific region, which the Conservatives have targeted as essential for the country’s economic well-being.

“It gives Canadian businesses access to a booming G20 economy but more than that—and I can’t emphasize this enough—the key supply chains that begin in Korea fan out all across Asia,” Harper said Tuesday in announcing the deal.

Korea will cut 81.9 percent of duties on the first day the deal comes into force, and Canada will remove 76.4 percent of levies.

Some tariffs, particularly in agriculture, will take more than a dozen years be fully phased out.
The deal could come into effect within a year.

According to the government release, the deal is expected to increase Canadian exports to South Korea by 32 percent and expand the economy by $1.7 billion.

“This is indeed a pivotal deal for our country,” Harper said.

Threat to Auto Industry?

The biggest winners from the Canadian side will likely be in the agriculture sector, particularly beef and pork, the forest industry and seafood exporters, all of whom face stiff tariffs for shipping into the Korea market of 50 million people.

But Ottawa was already bracing for blow-back from Ontario and the domestic auto sector, which will see a 6.1 percent duty on Korean exports of Hyundai and Kia vehicles eliminated over two years once implemented, making the strong-selling brands even more competitive in the Canadian market.

Unifor, which represents workers at Ford and other automakers, said in a statement Tuesday that the agreement “poses a serious threat to Canada’s auto industry” and that Harper has failed to address a trade imbalance.

“We needed our political leadership to broker a deal that addressed the reality that we have 100,000 Korean-made cars being imported to our market, while we are exporting only 100 cars to the Korean market,” said Unifor president Jerry Dias.

Material provided by the federal government estimated that damage to the Ontario auto sector would be limited to about 0.2 percent of production, or 4,500 vehicles annually, noting that 88 percent of cars produced in Canada are for export.

The government also believes that Canadian automakers will be able to increase 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 percent duty on autos disappears on the first day of the treaty’s implementation.

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

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

With files from Julian Beltrame in Ottawa and Steve Rennie.