South Korea Free Trade Agreement with Canada

south korea free trade agreementSouth Korea Free Trade Agreement with Canada

Canada has long held a leadership position with regard to delivering valuable energy commodities across the globe. Recently, South Korea has become one of Canada’s key free trade partners. The South Korea Free Trade Agreement represents the first of its kind with an Asian nation. This is going to be good news throughout the Canadian economy. The Mining Association of Canada has come out in strong support of the Canadian federal government’s efforts regarding the historic new agreement that was just signed into law.

The goal of the Canada-Korea Free Trade Agreement (CKFTA) is to establish a conduit between Canadian businesses and workers to distribution points in South Korea. Presently, South Korea generates an annual GDP of $1.1 trillion. It also has a growing population of around 50 million. That would mean 50 million potential customers for Canadian goods, services and energy resources.

The support from the Canadian mining industry is due, in no small part, to this trade pact’s reduction in tariffs. As it stands, the tariffs are in excess of 8% for various types of metals. Iron, aluminum and nickel ore are all impacted by those tariffs. When all the kinks in the agreement have been worked out, Korean importers will wipe out duties on 98.2% of their tariff lines. That will have a direct impact on the vast majority of Canadian imports. When you consider that the typical amount of a Korean tariff hovers around 13.3%, then it’s clear that having those taxes taken out of the equation is going to mean a huge boost for businesses that are set up to export into South Korea.

In 2012, the levels of mineral exports sold from Canada to South Korea was in the vicinity of $1.8 billion CAD. Of that amount, coal was the largest commodity with sales totaling out at $1.1 billion CAD in 2012. The rest of the sales were from aluminum, copper, nickel, and zinc.

Right now, South Korea ranks at number seven for Canada’s merchandising trade partner.  This makes it the third largest importer in all of Asia. Add up all of the merchandise that flowed from Canada to South Korea in 2012 and you’ll hit a total of $10.1 billion CAD in sales. Free trade agreements have already been established between South Korea, the U.S. and the European Union. It’s time that Canada gets a piece of that lucrative pie.