Hi all in this new world, where Korea and Canada are “free trade” partners.
I have already seen an article on this agreement in this blog, so I won’t repeat it. That said, I would like to share some further details reported by Korean media reports:
- Canada’s auto tariff: currently 6.1%, it is to be reduced by a certain amount on the first year anniversary of the FTA and eliminated by the 2 year anniversary date;
- Canada’s auto parts tariff: currently at 6%, it is to be eliminated immediately or by 3 year anniversary;
- Once fully implemented, Canada will remove duties on 97 per cent of is tariff lines.
- Korea’s beef tariff: currently 40%, to be eliminated by the 15 year anniversary date (as with beef from Australia pursuant to the draft text of Korea-Australia FTA);
- Korea’s pork tariff: currently from 22.5% to 25%, to be eliminated within the 3 and 13 year anniversary dates; and
- Once fully implemented, Korea will remove duties on 98.2 per cent of its tariff lines, covering virtually all of Canada’s imports.
I found this to be quite surprising, because Korea secured relatively aggressive concessions, especially with respect to its auto exports (2 year phase out). Although it is uncertain at this point, the text does not appear to include a snap-back provision, which, if it were included, could have been used to re-introduce the MFN rate of 6.1%. That said, the PMO released a backgrounder indicating that the agreement contains “specialized dispute settlement procedures, and unique safeguard provisions to protect against import surges.” It remains to be seen what these specialized and unique features are, but on the face, Korean automobile sector appears to be a winner.
On the other hand, Canadian beef and pork industry do not appear to have done very well, relatively speaking. The phase out period Canada secured appears to be comparable to the ones that Australia obtained, and not aggressive enough to catch up with the US imports in Korea under KORUS. In addition, a special agricultural safeguard mechanism is reported to be included (as with Korea-Australia FTA), which could trigger safeguard duties against rapid surges of imported agricultural goods. That is, compared to the Canadian competitors in the US and Australia, there does not seem to be much (if any) relative gain.
Welcome to the new era! (and more to come as details come out)