Canada moving closer to free trade deal with South Korea: minister

CBC News

Canada moving closer to free trade deal with South Korea: minister


20 July 2005

OTTAWA (CP) - Canada is close to launching formal free-trade negotiations with South Korea as part of the federal government’s efforts to gain a firmer - and more lucrative - foothold in the massive and booming Asian region.

Prime Minister Paul Martin is expected to travel to South Korea later this year to help advance an arrangement he initiated last November after meetings with the country’s president Roh Moo-hyung.

But Canadian trade officials have already struck controversy, as some sectors of the economy - particularly shipbuilders and parts of the auto industry - are opposed to freer trade with what they complain is a competitor with unfair advantages.

Still, Trade Minister Jim Peterson says he discussed continuing work towards a free trade pact with his South Korean counterpart earlier this week while the pair were in China for World Trade Organization meetings.

"This is something that is possible," Peterson said in an interview Wednesday from the Chinese city of Dalian.

"We’ve been talking to South Korea on an ongoing basis and the question of if and when we start (official) negotiations is one that will probably be concluded sooner rather than later."

Still, Peterson cautioned, even if formal free trade negotiations begin soon, their complexity means a deal could be as far as two years off - not something the prime minister could sign this fall.

Officials confirm that Martin will be travelling to South Korea in November for an annual summit of Asian-Pacific leaders - a natural opportunity to continue to promote freer trade between the two countries.

Not only is South Korea already a huge market for Canada, but such an official free trade arrangement would mark a rare formalized pact with a country beyond North America.

Canada already has free-trade deals with the United States, Mexico, Chile and Costa Rica but outside the continent, Israel is its only formal free trade partner.

Ottawa has been working on a larger continental deal with more of the Americas and the European Union.

South Korea already is Canada’s sixth largest export destination with two-way trade of $8 billion in 2004 - but the vast majority of that is goods coming into Canada rather than flowing in the other direction.

Imports totalling $3.6 billion in 1999 rose to $5.8 billion by 2004 while Canada’s exports to South Korea grew to $2.3 billion from $2 billion over the same period.

A free trade deal would help to balance the flow, says Ottawa trade lawyer Peter Clark.

"I think a deal is a good thing. . .it would give us better access, for one thing," he said in an interview.

And the interest isn’t one-sided.

"I’ve spoken to the ambassador and other Korean officials and they’re very interested, they’re taking this very seriously," said Clark.

But federal consultations with various industries have found "sensitivities" to such a deal with South Korea, Peterson admitted.

The auto sector complains that non-tariff barriers make it difficult to sell to Korea while Canada’s struggling shipbuilding industry says its competitors there unfairly benefit from government subsidies.

Clark dismisses the complaints, saying industries fearful of free trade should turn this to their advantage.

"Instead of moaning and groaning about that, you sit down with Canadian advisers and structure the deal so it benefits you."

On the broader trade front, ministers from 32 countries including Canada left this week’s WTO talks concerned that a huge amount of work lies ahead to reach a deal on reducing agricultural subsidies before the final session in Hong Kong in December.

"My own assessment of where we stand now is one of grave concern," Supachai Panitchpakdi, the WTO’s outgoing director-general, told a news conference at the end of the two-day meeting.

Too many unresolved issues come December would almost certainly doom the Hong Kong talks to failure, he said.

The current round of WTO negotiations were launched in 2001 in Doha, Qatar, with the goal of slashing subsidies and other trade barriers so poor countries could use trade to improve their lot.

But officials have warned that if the December round fails in Hong Kong, the whole process could be doomed.