After nearly a decade of negotiations, Canada’s meat industry is satisfied and relieved that prime minister Stephen Harper will sign a free trade agreement with South Korea.
The prime minister flew to Seoul on the weekend and is expected to sign a trade deal with South Korean president Park Guen-hye Tuesday.
Details of the deal are not public but meat industry representatives said the agreement would help restore competiveness in South Korea, a market that purchased more than $230 million of Canadian pork in 2011 and $40 million of beef prior to the BSE crisis.
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The U.S. signed a free trade agreement with South Korea in 2012 and the Asian country has lowered tariffs on American pork and beef over the last two years.
Consequently, the playing field is no longer level for Canadian meat exporters.
Jean Guy Vincent, Canadian Pork Council chair, said Canada has lost $150 million in pork sales to Korea in two years.
In 2011 Canada exported $233,409,582 in pork to South Korea and only $76,145,689 in 2013.
While the details of trade deals are crucial, Vincent said getting an agreement with South Korea is paramount because it has traditionally been Canada’s fifth largest market for pork.
“The first thing that is important is to have the free trade agreement. Other countries, the U.S., Chile and the EU have this free trade agreement (with Korea).”
Ron Davidson, Canadian Meat Council director of government and media relations, said Korea has a 22.5 percent tariff on chilled pork and 25 percent on frozen pork from Canada.
For chilled or frozen beef the tariff is 40 percent. The tariff on beef offal is 18 percent.
John Masswohl, Canadian Cattlemen’s Association director of government and international relations, said the Korean deal would lower those tariffs over time, giving Canadian beef exports a fair shot against American beef.
“My expectation is we’re going to have a tariff phase-out schedule that is going to enable us to ship commercially meaningful quantities of beef into Korea.”
In 2002, prior to BSE, Canada sold $40 million in beef to South Korea. In 2012 when Korea finally lifted its BSE ban on Canadian cattle, Canada exported $10 million in beef to South Korea. Last year it was $8 million.
Since signing their deal, the Korean tariff on U.S. beef has dropped to 32 percent, Masswohl said.
“We’re still at 40 (percent). So each year it’s been a little harder,” he said. “If we can get it implemented by the beginning in 2015 and we get our first (tariff) cut the same time as the Americans getting their fourth cut… then we’ll stay eight percent behind the Americans during the (tariff) phase out.”
Similarly, the deal will likely reduce South Korean tariffs on Canadian pork over time, which means the tariff on Canadian products will remain higher than the U.S. until the phase-in is complete.
“We hope to (eventually) be at zero. Same as the Americans,” Davidson said.
Masswohl isn’t sure if Canada has finalized all the details of the Korean deal, or if this is a political, symbolic agreement.
Nonetheless, he thinks it’s more advanced than the Canada-European Union free trade deal.
“I just know they’re going to sign something. They haven’t given us the document,” said Masswohl. “(But) I think this is different from the CETA (Canadian EU free trade political agreement). With CETA what they basically signed was… a negotiators understanding on what the major elements were.”
Masswohl said the text of the deal could be nearly finalized because negotiators agreed upon the principal elements approximately 18 months ago.
“We’ve been waiting on the Korea government to get itself reorganized. They had an election last year and a new president,” he said. “My feeling is the lawyers certainly haven’t stopped working during that time.”
Canada began negotiating a free trade deal with South Korea in 2005.
