South Korea agreement | Grain exports to Korea have fallen by more than $300 million annually since 2012
Farm groups are hoping for speedy implementation of Canada’s first free trade agreement in the Asia-Pacific region.
The Canada-Korea Free Trade Agreement, which was signed Sept. 22, will remove duties covering 97 percent of Canadian agricultural exports once it is implemented.
It took a long time for Canada and South Korea to reach a deal. Negotiations began in 2005, and in the interim South Korea signed pacts with the European Union, the United States and Chile.
The delay has proven costly for Canadian exporters.
Canadian beef and pork exports to South Korea fell to $84 million in 2013 from $234 million in 2011. Sales have contracted a further 16 percent since the start of this year.
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“Every month that implementation of the Canada-Korea Free Trade Agreement is delayed, the greater the negative impact will be for Canadian livestock farmers and meat processors,” Jim Laws, executive director of the Canadian Meat Council, said in a news release.
South Korean import tariffs are 40 percent for chilled and frozen beef, 22.5 percent for chilled pork and 25 percent for frozen pork. They are scaled back until they reach zero for countries with free trade agreements.
The meat council applauded the federal government for reaching an agreement with a country that is home to 50 million people but urged Parliament to approve the deal as quickly as possible.
The next steps for Canada are the introduction and passage of implementing legislation by Parliament, followed by regulatory updates. In Korea, the ratification bill needs to be reviewed and approved by the Korean National Assembly.
The Canola Council of Canada is urging Parliament to approve enacting legislation before the end of the year so that tariff reductions will start in January.
“This will put canola on equal footing with other oilseeds, improving export opportunities for both seed and oil,” council president Patti Miller said in a news release.
Korea’s five percent tariff on canola seed would be eliminated immediately, tariffs on refined canola oil would be eliminated over three years and crude oil duties would be reduced over seven years.
The council estimates the agreement could double South Korea’s imports of canola seed and oil, which are now valued at $60 to $90 million per year.
The wheat industry is also pleased with an agreement that will remove tariffs on Canadian wheat imports.
“This agreement holds the potential for significant economic growth for Canadian wheat imports,” Kent Erickson, chair of the Alberta Wheat Commission, said in a news release.
The Canadian Agri-Food Trade Alliance said Canadian grain exports to Korea have shrunk to $100 million, down from $479 million in 2012.
Much of the lost sales happened in the wheat trade. Canada exported an average of $273 million of wheat per year to South Korea’s eight flour milling companies between 2010 and 2012.
