The Canada-Korea Free Trade Agreement: Benefits and Impacts
The Canada-Korea Free Trade Agreement (CKFTA) is a comprehensive trade deal that aims to strengthen bilateral economic ties between Canada and Korea. Signed in 2014 and implemented in 2015, the CKFTA eliminates tariffs and non-tariff barriers on a wide range of goods and services between the two countries.
The CKFTA covers 98% of all tariff lines, making it one of Canada’s most ambitious and far-reaching trade agreements. It is expected to create new opportunities for Canadian businesses, investors, and workers, as well as increase access to the Korean market for Canadian goods and services.
One of the main benefits of the CKFTA is increased market access for key Canadian sectors, such as agriculture, forestry, and seafood. Korea is Canada’s seventh-largest agricultural export market, with exports worth over $630 million in 2019. Under the CKFTA, most tariffs on Canadian agricultural products, including beef, pork, and wheat, have been eliminated, making them more competitive in the Korean market.
The CKFTA also provides greater access for Canadian services, including professional services such as law and accounting, engineering, and architecture. It promotes increased mobility of skilled professionals between Canada and Korea, making it easier for businesses to tap into new markets and expertise.
Furthermore, the CKFTA is expected to increase foreign direct investment (FDI) between Canada and Korea. It eliminates Korea’s 15% tariff on Canadian plywood, which will help promote Canadian investment in Korea’s construction industry. Likewise, the CKFTA aims to increase investment in Canada’s automotive, mining, and manufacturing sectors, which will create new jobs and stimulate economic growth.
The CKFTA has also led to a number of environmental and labour provisions, including commitments to uphold international labour, environmental, and conservation standards. The agreement provides for a dispute settlement mechanism that allows both countries to resolve disputes through consultations, rather than litigation.
However, some critics of the CKFTA argue that it may have negative impacts on certain sectors of the Canadian economy, such as the auto industry. They suggest that increased competition from Korean automakers will hurt Canadian jobs and manufacturing competitiveness.
Despite these concerns, the Canada-Korea Free Trade Agreement has the potential to significantly benefit both Canada and Korea. It is an important step towards creating a more integrated and prosperous global economy, and could pave the way for future trade deals between Canada and other Asian economies.
