2012 (Pilot Project)

8,000 Kms apart (Pt. 2)

(All the graphs and statistical/empirical studies presented below are taken from Alexandre Gauthier & Katie Meredith, “Canadian Trade and Investment Activity: Canada-South Korea”, (Ottawa: Library of Parliament Research Publication, August 15, 2011), online: <http://www.parl.gc.ca/Content/LOP/ResearchPublications/2011-14-e.htm>).

As a reminder, I ended my last blog with discussion of Korea-Canada trade in goods. We found that Korea and Canada are more inter-related and intertwined than what appears on the surface. More specifically, the volume and trend of trade between these two countries revealed (generally) natural resources going from Canada to Korea, in order for them to be manufactured and sold as finished goods back to Canada. In total, the trade in goods in 2010 between Korea and Canada amounted to a whopping CAD $9.9 billion, $6.2 billion of which were attributable to Korean exports (Canadian imports).

Trade in merchandise

The amount of trade in services is small in comparison to the trade in goods; however, its an area of rapid growth, characterized by a steep line of graphical representation. Unlike the trade in goods, Canadian exports more services than it imports from Korea, with an increasing margin over time.

Trade in services

Of course, this adds another complex dimension to the Korea-Canada relationship as revealed from merchandise trade statistics. We can no longer simply define Canada as a provider of natural resources and Korea as a manufacturer. To the extent that Canadian services are rendered to the ultimate Korean consumers (eg: Korean tourist in Canada), Canada too is a “manufacturer” of those services. Where Canadian services are used in manufacturing process in Korea (eg: Canadian consultants for Korean manufacturer), Canada and Korea may be said to be business partners in a vertical supply chain.

The narrative behind these graphs should not be missed. It tells us that Korea and Canada are extremely integrated, and that what people in Korea does matters whole a lot to the Canadians, and vice versa. For example, a union protest in Korea and resulting factory closure will have a direct impact on the Canadian raw material and service suppliers. In turn, there will be less imports of the goods due to the Korean factory closure, causing the consumer price to rise. For another example, if Canada imposes green taxes for certain raw materials, it would increase the cost of production for the Korean producers who uses Canadian supplies. Faced with profit squeeze, the Korean factories may try to cut its services spending and/or increase export prices, all of which may affect Canadians in turn.

8,000 Kms apart are Korea and Canada, but only in geographical sense. In a global sense, we are neighbours and partners. That’s just one reason why we (Canadians) should pay more attention to our friends over the Pacific.

Categories: 2012 (Pilot Project)

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