Document in the House of Commons Once approved and implemented, agreement will increase market access for Canadian meat and canola
Canadian farm groups are relieved that the Canada-South Korea Free Trade Agreement has finally been tabled in the House of Commons after nine years of negotiations.
Canada was the first country to begin free trade negotiations with South Korea in 2005, but since then the country has signed pacts with the European Union, the United States and Chile.
“We went from being the leaders to being the laggards and serious laggards,” said Ron Davidson, director of government and media relations with the Canadian Meat Council.
The agreement was held up by disputes surrounding the automobile sector and the reopening of trade following the BSE crisis.
In the meantime, competitors such as the U.S. have been gaining increased access to an affluent market of 50 million people that imports a lot of food. The U.S. agreement with Korea was implemented in March 2012.
“We have been losing market share and volume dramatically,” said Davidson.
Canada’s meat exports to Korea have shrunk to $8 million for beef and $76 million for pork in 2013 from $96 million and $233 million, respectively, in 2011. Exports of beef have contracted another 56 percent this year, while pork sales are down 24 percent from the same time a year ago.
“The longer we’re out of it the further behind we get,” said Davidson.
Import tariffs are 40 percent for chilled and frozen beef, 22.5 percent for chilled pork and 25 percent for frozen pork.
Tariffs on fresh, chilled and frozen beef cuts will be eliminated over 15 years. Fresh and chilled pork duties will be removed over 13 years while tariffs on frozen pork will shrink to zero over five years.
The canola industry is also pleased that the federal government has published the final text of the agreement.
“I’m not sure (the agreement) has gotten the kind of profile that maybe it should,” said Jim Everson, vice-president of government relations with the Canola Council of Canada.
He believes the Korean pact has been dwarfed by the recently negotiated deal with the EU and talks on the Trans-Pacific Partnership.
“This is really delivering true free trade in a sense, reducing tariffs to zero,” said Everson.
The 10 percent tariff on canola seed would be immediately eliminated upon implementation of the agreement.
The five percent tariff on refined and crude canola oil would be phased out over three years and seven years, respectively.
“It’s truly the start of a new environment that is conducive to trade, so over the longer term it could turn into a pretty significant market by the fact that it’s tariff-free,” said Everson.
Seed sales to South Korea have been sporadic at best and non-existent in many years. Oil exports have averaged $60 to $90 million annually, but Canada has been losing ground to U.S. soybean oil, which has been facing reduced tariffs since March 2012.
Everson said Canadian negotiators did a good job of keeping canola oil phase-outs comparable to U.S. soybean oil phase-outs, which are five years for refined soybean oil and 10 years for crude soybean oil.
The council anticipates that canola oil sales will double under the new trade agreement.