New trade deal fails to protect the domestic auto industry
One of the most important news of the last week came
from Seoul, where Canadian Prime Minister Stephen Harper and South Korean
President Park Geun-Hye announced that Canada and South Korea have reached a
free-trade agreement, ending around nine years of on-off negotiations.
The agreement will eliminate 98.2% of South Korean tariffs and 97.8% of Canadian duties, the Canadian government said in document released to reporters. Currently, South Korean duties average about 13.3%, while Canadian tariffs average 4.3%.
One of the most disputable aspects of the agreement is the elimination of Canada's 6.1 percent duty on imports of Korean vehicles. Leading manufacturers
fear that
if it is removed, the Canadian market would be flooded with Korean-made brands
such as Hyundai and Kia, which may lead to loss of jobs in Ontario. Unifor, representing autoworkers, said the deal could cost thousands of jobs.
I think one can argue that this deal will lead to jobs loss and these accusations look a bit like shifting the blame and Ontario government speaks more for Ford, Toyota and Honda, which are worried new competitors will come to the market. Hyundai and Kia can both consider opening their factories in Canada. In addition, 50% of South Korean-brand vehicles sold in Canada enter the country tariff-free from the US under NAFTA. But potential for growth is considerable as, for instance, after similar agreement was concluded between South Korea and the US, South Korean auto imports from the US have more than doubled. Ford announced recently that they set an annual sales record for South Korea in 2013 and became the fastest-growing brand.
I think one can argue that this deal will lead to jobs loss and these accusations look a bit like shifting the blame and Ontario government speaks more for Ford, Toyota and Honda, which are worried new competitors will come to the market. Hyundai and Kia can both consider opening their factories in Canada. In addition, 50% of South Korean-brand vehicles sold in Canada enter the country tariff-free from the US under NAFTA. But potential for growth is considerable as, for instance, after similar agreement was concluded between South Korea and the US, South Korean auto imports from the US have more than doubled. Ford announced recently that they set an annual sales record for South Korea in 2013 and became the fastest-growing brand.
It's a great news! I hope Canada will support the participation of South Korea in the Trans - Pacific Partnership and will increase influence on U.S. to create conditions for free trade of the Pacific basin.
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