FTA with South Korea draws mixed reactions in Canada

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A new free trade agreement (FTA) signed by Canada and South Korea Tuesday drew mixed reactions in the North America country, with the auto industry and manufacturing sector complaining about being kept "in the dark" throughout the negotiations, and grain growers congratulating on the signing of the deal.

Canadian Prime Minister Stephen Harper said in Seoul that the FTA with South Korea -- the country's first with an Asian market -- "gives Canadian businesses access to a booming G20 economy, but more than that, the key supply chains that begin in Korea fan out all across Asia."

The Canada-South Korea FTA was signed Tuesday by Harper and South Korean President Park Geun-hye in Seoul, the capital of South Korea.

According to Canada's Conservative government, the bilateral trade pact is expected to increase Canadian exports to the Republic of Korea by 32 percent, about the equivalent of 1.7 billion Canadian dollars annually. Meanwhile, South Korean exports should grow by 20 percent a year, or around 1.3 billion dollars.

The FTA "can serve as a template for other trade negotiations in the Asia-Pacific region, including with Japan and India," said former Canadian Liberal industry minister John Manley, president and CEO of the Canadian Council of Chief Executives.

But the country's official opposition New Democrats accused the Conservative government of keeping the automobile industry and manufacturing sector "in the dark throughout the negotiations" leading up to the FTA.

Canada's largest private-sector union, Unifor, which represents more than 39,000 workers in the auto industry, also said that Canada failed to follow the United States in its 2012 free trade deal with South Korea, which includes protections against import surges into the U.S. market and a so-called snap-back provision that enables the U.S. government to return tariffs to pre- arrangement levels if Korean non-tariff barriers limit American exports.

"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," Unifor national president Jerry Dias said in a statement.

Canadian automaker Ford Motor Co., who claimed that Canada imported about 131,000 South Korean vehicles while exporting only 3,000 in 2012, said it is concerned that the FTA will remove Canada's 6.1-percent tariff, over three years, on imports from such Korean companies as Kia Motors Corp. and Hyundai Corp.

Harper told reporters in Seoul that Canada needs to diversify its exports beyond the U.S., which bought 76 percent of this country's foreign shipments in 2013, and the trade pact with South Korea will enable Canadian companies and sectors "to have the same access that Ford already has."

Meanwhile, Canada's grain growers congratulated Harper on signing the deal, expecting significant gains in export sales opportunities for grains and oilseeds producers and a boost for the overall economy.

With tariffs for agricultural exports to South Korea currently averaging over 52 percent, this trade deal will lead to expanded trade of wheat, grains, oilseeds and pulses, while providing a much needed boost to Canada's pork and beef exports to South Korean market.

"This Canada-Korea Free Trade Agreement will greatly enhance farmers' market access in South Korea and opens the door to further opportunity in the Asia-Pacific region," said Gary Stanford, Grain Growers of Canada President in a statement. "We urge the Government of Canada and Parliament to implement the Canada-Korea Free Trade Agreement as quickly as possible."

Currently, South Korea is Canada's seventh-largest merchandising trading partner and its third largest in Asia, after China and Japan, with whom Canada is pursuing a free trade deal.

Trade between Canada and South Korea reached about 10.1 billion dollars in 2012, Harper's office said in a statement.

The Canada-Korea FTA, which follows nearly a decade of negotiations and could come into effect within a year, covers a wide range of sectors from the automotive to the agricultural. But for Canadian businesses, Ottawa highlighted the elimination of tariffs on most goods within 10 years.

On average, Korean tariffs are three times higher than Canada's or 13.3 percent versus 4.3 percent according to the Canadian government. A level playing field will assist Canadian beef and pork, forestry and wood, and fish and seafood exporters who face high duties when shipping to South Korea, Asia's fourth-largest economy. Enditem (1 U.S. dollar = 1.1106 Canadian dollars

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