On March 11, South Korea and Canada on Tuesday concluded their negotiations for a bilateral free trade agreement (FTA), which will likely be signed and ratified later this year.
1. EXECUTIVE SUMMARY: The Korea-Canada FTA is expected to help significantly boost bilateral trade. The Korea-Canada FTA completely removes the two countries’ import tariffs on 97.5 percent of products traded between them within 10 years from the day of implementation.
2. SEVEN YEARS TO NEGOTIATE: The negotiations for the Korea-Canada FTA resumed late last year after five years of stalled talks. The FTA negotiations were first launched in July 2007, nearly seven years ago. Canada has signed FTAs with nine other countries, but South Korea is the first Asian country to sign an FTA with the North American nation.
3. AUTOMOBILES AS WINNERS: South Korea will completely remove its 8 percent import tariffs on all automobiles and auto parts from Canada as soon as the bilateral trade pact goes into effect. Canada, on its side, will reduce its current 6.1 percent import tariffs on South Korean automobiles and parts to about 4 percent within 24 months of the implementation. In 2013, South Korea shipped over 130,000 vehicles worth some US$2.23 billion to Canada while importing approximately $92 million worth of vehicles and parts. Canada is the world’s fifth-largest market for South Korean automakers, also importing about 90,000 cars per year from South Korean manufacturers in the United States, according to the trade ministry.
4. RICE MARKET STILL PROTECTED: A total of 211 of 282 total products, including rice, will be permanently exempt from market liberalization. Rice is often considered one of the most sensitive items with South Korea’s FTA negotiations with various counterparties.
5. BEEF IMPORTS NOW ALLOWED: South Korea will also gradually remove its tariffs on another sensitive domestic issue– beef imports -from Canada over a span of 15 years.
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