The Canada-Korea Free Trade Agreement (CKFTA) took effect on January 1st, 2015, marking a new phase in Korean Canadian trade relations. As Canada’s first free trade agreement in the Asia Pacific area, the CKFTA lays the groundwork for future trade agreements and provides a gateway for Canadian businesses and workers seeking to expand exports to the region. Upon implementation, the agreement phased out 86.8 percent of agricultural tariff lines on Canadian exports to Korea and is projected to increase exports by 32 percent and boost the economy by $1.7 billion.
South Korea is the world’s 15th largest economy, the fourth largest economy in Asia and overall a lucrative export market. The country has a population of 50.4 million people and a GDP of 1.3 trillion. In 2013 Korea was globally the 7th importer in wheat, 6th importer in rapeseed oils, 6th in beef and veal and 5th in pork. The country has a wealthy population, a growing consumption base and a highly developed consumer market. The country imports over 70 percent of its food and has a consumption base with a growing demand for western-style foods.
Trade between Canada and South Korea
South Korea represents an important export market for the Canadian agri-food and agricultural sector and a gateway into Asia. In 2014 the South Korean economy was Canada’s 9th largest export market with over $578.9 million Canadian exports penetrating the market. Top five exports to the country in 2014 included, wheat, canola, swine cuts, prepared foods and malt products.
The Level Playing Field
Maintaining a balance playing field for Canadian agricultural and agri-food exporters is an important element of Canada’s economic health. Losing the South Korean market was a major blow to Canada’s agri-food industries, including beef, pork, canola and grains.
The Canada-Korea free trade agreement will help the sector regain competitive access to South Korea.
- In 2011, South Korea was Canada’s fifth largest export market, with Canada exporting over $1 billion dollars in agricultural and food products to that country.
- By the end of 2014, Canada’s agriculture and agri-food exports to Korea had plunged by more than 50 per cent.
- This massive loss in exports is directly attributed to free trade agreements concluded between South Korea and Canada’s key competitors, namely the European Union in 2011 and the United States in 2012, and most recently Australia. Without a free trade agreement, Canada’s agri-food exports faced tariffs as high as 50 per cent, and in some cases 400 per cent, while our main competitors have had their tariffs eliminated or phased out.
- Losing the South Korean market is a major blow to Canada’s agri-food industries, including beef, pork, canola and grains. Through the elimination of tariffs on 86.8 percent of agricultural tariff lines, the Canada-Korea FTA provided the level playing field that simply does not exist today.