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Exporters ramp up push for S. Korea trade pact

Globe and Mail, Canada

Exporters ramp up push for S. Korea trade pact

By Eric Atkins

10 February 2014

A wide array of manufacturing groups and companies is urging the federal government to reach a free-trade agreement with South Korea, warning Canada is being beaten by rivals in the race to do business with the fast-growing country.

Free-trade talks with South Korea began about nine years ago but stalled in 2008 amid the mad cow scare that prompted a ban on Canadian beef imports. The two countries took a step toward a trade pact in the fall – but have run into resistance from North American auto makers that fear losing market share to Asian rivals.

With no new talks scheduled, exporters are growing impatient. “Every passing day without a free trade agreement, Canada is losing export sales,” said Rory McAlpine, a vice-president at Maple Leaf Foods Inc., a food manufacturer that which has seen South Korean sales cut in half.

Overall Canadian trade with South Korea fell by 30 per cent last year after the United States, Europe and Australia began reducing tariffs with South Korea. Thirty companies and organizations, including food makers, retailers and mining companies, are calling for Prime Minister Stephen Harper to speed up efforts to help them gain access to South Korea, a country of 50 million people with an economy that is growing at a rate of 4 per cent a year.

The debate over tariff reduction has revealed a rift in Canada’s manufacturing sector between the auto industry and just about every other exporter. The auto industry opposes a free-trade agreement with South Korea because it doesn’t believe Ottawa will be able to guarantee free access to the market, while tariffs on South Korean vehicles entering Canada would come down. Ontario’s government threw its weight behind the auto sector recently and demanded Ottawa negotiate more protection for the companies that make cars in the province.

But other industries say it’s time to complete a deal.

“This agreement is very important to us,” said Jim Quick, president of the Aerospace Industries Association of Canada. “Aerospace companies all across the country have identified [South] Korea as a key priority target in the Asia-Pacific market.”

Speaking at a press conference in Toronto on Monday, Mr. Quick said South Korea is an important market due to its proximity to other major economies, including Japan, China and Malaysia. He said in the next 20 years, airlines in the Asia-Pacific region would account for 37 per cent of global aircraft demand, or 12,000 planes worth $1.9-trillion. At the same time, half of the world’s air traffic would be driven by travel to, from and within the region, said Mr. Quick, who represents companies with a total $42-billion in sales, including Bombardier Inc. and MDA Corp.

The Canadian Council of Chief Executive Officers added its voice to the push for a trade deal, saying the move would be “pivotal” for Canada.

“A comprehensive Canada-Korea FTA would strengthen the ability of Canadian companies to sell Canadian-made products and services to Korean consumers and to participate in Korean-based supply chains,” council president and CEO John Manley said in a letter to Ed Fast, Minister of International Trade.

The move is seen as a sign the influential group believes a deal will be reached this year, despite intense lobbying from Ontario’s auto sector and provincial government. Ford Motor Co. of Canada, which opposes the trade deal, is a member of the group.

Rudy Husny, a spokesman for Mr. Fast, said trade talks are continuing in an attempt to create jobs and deepen trade ties between Canadian companies and new markets.

He said Ottawa agrees with the manufacturers who signed the letter that an agreement would level the playing field, but “we will only sign an agreement that’s in the best interest of hard-working Canadians, including through the elimination of Korean tariffs and creation of effective tools to counter non-tariff barriers to trade.”