Canada, South Korea ratify free trade agreement
Canadian cattle and pork producers received an early Christmas present with the ratification of the Canada-South Korea Free Trade Agreement.
The Dec. 3 ratification means Korean tariffs on Canadian beef and pork will start to reduce Jan. 1, 2015, and once again be competitive against Canadian and Australian ex-porters.
The agreement means the 40 percent Korean tariff on fresh and frozen beef will be eliminated in 15 equal steps over 15 years. It will be reduced by 2.6 percent a year.
The 18 percent tariff on offal will be eliminated in 11 equal steps over 11 years.
“This is very important,” said Canadian Cattlemen’s Association president Dave Solverson.
Without the agreement, Canadian exporters would have been too far behind American and Australian exporters, who are already in the market.
The U.S. signed a free trade agreement with Korea in 2012, and tariffs have already started to drop. Australia negotiated a free trade agreement in 2013, which will come into effect Jan. 1.
Korea was Canada’s fourth largest beef market worth $40 million before BSE closed the borders in 2003. It was a critical market for non-traditional North American cuts of meat, including ribs.
“It was a way to add value to the carcass,” said Solverson.
Canadian Pork Council chair Jean-Guy Vincent is also looking to rebuild markets in Korea.
“The absence of an FTA with Korea was causing substantial and growing prejudice to the Canadian pork industry due to tariff rate disadvantages arising from all our key competitors,” Vincent said in a news release.
Korea has a 22.5 percent tariff on chilled pork and a 25 percent tariff on frozen pork.
The U.S. already has access to Korean markets. An American study showed U.S. pork producers gained a $10 per hog benefit because of their country’s trade agreement with Korea.
Korea is a large importer of high-value cuts of meat.
Gary Stordy, public relations manager with Canadian Pork Council, said the agreement would allow the industry to regain an equal footing with its competitors in Korea. The Asian country has previously been the sector’s third or fourth most important export market.
In 2011 Canadian pork exports to Korea were worth $223 million to Korea in 2011, $129 million in 2012 and $76 million in 2013.
Stordy said the steady reduction in sales is directly related to the tariffs imposed on Canadian pork compared to other countries.
The ratification of the free trade agreement means Canadian exporters can once again open talks with Korean customers.
“They can once again start to be competitive,” said Stordy.
The free trade agreement was tabled in Parliament in June, and the final text of the agreement was signed in September.
The agreement will also eliminate a five percent tariff on canola seed and remove tariffs on refined canola oil and crude oil within three to seven years. Imports of canola seed and oil to South Korea are worth $60 to $90 million annually.
Under the new agreement, those export numbers could grow substantially, said Rick White, eco of Canadian Canola Growers Association.