South Korea trade deal benefits foothills farmers

Agriculture: Canada signs first free trade agreement with Asian country

By: Don Patterson

  |  Posted: Thursday, Mar 20, 2014 06:00 am

Blackie area farmer and rancher Phil Rowland stands with some of his cattle on his property. He said a new free trade agreement between Canada and South Korea will benefit foothills farmers.
Blackie area farmer and rancher Phil Rowland stands with some of his cattle on his property. He said a new free trade agreement between Canada and South Korea will benefit foothills farmers.
Jordan Verlage/OWW

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A new free trade agreement signed last week between Canada and South Korea is worth more than a billion dollars for the Canadian economy and could give a big boost to foothills farmers.

The agreement will take as much as a dozen years to fully implement, but once complete it will see South Korea eliminate tariffs on 98.2 per cent of Canadian imports. Korea’s tariffs average three times higher than Canada’s.

The agreement is expected to benefit several sectors of the Canadian economy, including forestry and agriculture.

“The Canada-Korea Free Trade Agreement demonstrates our commitment to giving Canadian investors and exporters the tools they need to compete – and win – benefiting all Canadians from the jobs and opportunities that are created at home,” said Ed Fast, Canadian minister of international trade.

Canada and South Korea signed the agreement on March 11.

South Korea is the fourth largest economy in Asia, with a population of 50 million people, and it’s the first Asian nation Canada has completed a free trade agreement with.

The agreement is expected to boost Canadian exports to South Korea by 32 per cent and benefit the economy to the tune of $1.7 billion each year.

The agreement will see South Korea lift tariffs on 86.8 per cent of agricultural products.

Foothills farmer Phil Rowland said it’s good for southern Alberta agricultural producers. He said farmers who grow cereals and canola are big winners.

“Any time you have one more guy to trade with is a plus,” he said.

Canada’s agricultural trade with Korea was worth an average of $708 million per year, between 2010 and 2012, led by wheat, pork, animal hides, canola oil and prepared foods. In 2013, Canada exported $140 million for animal products and $139 million for vegetable products to South Korea.

The agreement will see the immediate removal of import tariffs and duties in South Korea on grains and oilseed crops, which range from three per cent for wheat, to 108.7 per cent on rye and as high as 554.8 per cent on oats.

Over the next three to five years, tariffs will be eliminated additional products, including refined canola oils, chickpeas, lentils, wheat flour and a number of processed foods.

Duties, which range as high as 72 per cent for beef products and 25 per cent for pork products, will be gradually eliminated over up to 15 years.

The trade agreement will not affect supply management systems in place in Canada.

Rowland said he has sold rye to South Korea in the past, even with the 108 per cent tariff. He said it’s not a big market for rye, but the removal of tariffs for the crop will mean it won’t cost as much to do so the next time he sells his crops in the country.

“I suspect that opportunity will happen sooner then later,” he said. “Rye’s one of those grains that you can find interesting places to go.”

While the agreement will take more than a decade to fully implement, he said it’s still a good step forward.

“I think overall, it looks pretty positive, I don’t think we gave much away,” he said. “There’s more gain than give.”

He does have one concern. He questions whether the removal of tariffs on Canadian fertilizers exported to South Korea could result in higher prices in Canada as demand for the products rises.

Korea is a major market for wood and forestry related products, having imported $6.3 billion worth in 2012. The agreement will see tariffs on forestry products eliminated, increasing access for Canadian products to South Korea.

Canada exported $503.8 million worth of wood and forestry products to Korea in 2012, representing a full 13.7 per cent of Canada’s total exports to Korea.

The Canadian government has been busy working to open markets to Canadian exports. In seven years, the government has completed trade agreements with nine countries and is negotiating with 30 additional countries. The South Korea agreement follows on the heals of a major trade agreement signed with the European Union last year.

Work on the South Korea free trade agreement became an issue during the recent Macleod Conservative nomination race as potential nominees all pointed to the country as a good market for agricultural producers.

The agreement was signed three days after the nomination race ended.

Macleod Conservative candidate John Barlow said the government needs to continue working on new trade deals to ensure opportunities for agricultural producers to market their products.

He said the South Korean agreement will greatly benefit Macleod producers.

“This is very significant for Macleod because we do have such a strong agricultural base in our riding,” he said. “This is great news, any time you can open another market to your products, it improves competition, it should impact grain prices.”


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