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Report on future Korean trade deal under fire

Embassy, August 30th, 2006


By Lee Berthiaume

Report on Future Korean Trade Deal Under Fire

Two months after voting for its release, opposition MPs are still waiting for an Industry Canada study outlining the impacts a proposed free trade agreement with the Asian nation would have on Canada’s car manufacturing and ship-building industries.

Members of the Standing Committee on International Trade have been waiting for the past two months for an Industry Canada report that examines the impacts a free trade agreement with South Korea would have on the Canadian auto manufacturing and ship-building industries.

"We need to have it," says NDP trade critic Peter Julian. "I’m disturbed they haven’t been given to trade committee members. I can only surmise it’s because of the political pressure."

During the final committee meeting on June 21, before the House rose, Mr. Julian brought forward a motion requesting that the study be released within 30 days so committee members would have a better handle on what impact opening the auto and ship-building market to South Korean businesses would have on Canada.

The committee’s four Conservative MPs voted against the motion saying the studies contained sensitive information provided by Canadian companies, but the six opposition members pushed the vote through with the understanding the study would not be made available to the public.

With the Conservatives having repeatedly stated that they want to secure more free trade agreements because Canada is falling behind other countries around the world, and as a result is less competitive, Mr. Julian says it is essential Parliamentarians do everything to ensure Canadian industry isn’t damaged in the rush.

Bloc Quebecois trade critic Pierre Paquette also says he has not received the study and will be looking into the matter.

Industry Minister Maxime Bernier’s spokesman, Darren Cunningham, says the request has been received and the study will be available for committee members when they next meet in September.

"Whenever the House is in recess, any questions and requests are taken to the next sitting of the committee," Mr. Cunningham says. "When the committee sits next, the report will be there."

But Mr. Julian accuses the government of trying to stonewall the committee by preventing MPs from seeing the information even as negotiations continue.

Pointing to the controversial softwood lumber settlement with the U.S. as an example, he accuses the government of being "apt to capitulate" and "unwilling to stand up for Canadians."

"I can only surmise that what they are trying to do is cover up that this is not to Canada’s advantage," Mr. Julian says. "Is this another giveaway?"

More Talks Slated for September

Hwang Soon-Taik, Minister-Counsellor at the South Korean embassy, says the two countries have already had six rounds of talks and a seventh is planned in Ottawa for the end of September.

"We would like to finalize negotiations by the end of this year," Mr. Hwang says. Some contentious areas, like agriculture and manufacturing, are still being worked through and negotiations could be prolonged, he adds, "but I don’t think we can’t overcome them."

While Industry Canada is responsible for releasing the impact study, International Trade spokesman Brooke Grantham says the government will "proceed at a deliberate pace in full consultation with all stakeholders" in ironing out a free trade agreement that "ensures the best deal for Canada."

He acknowledges that the automobile and ship-building sectors are the most sensitive in these negotiations, though it’s unlikely negotiators have done more than touch upon the issues as the most sensitive areas are generally saved for the end of the negotiations.

But Mr. Grantham says South Korea’s two largest automobile manufacturers, Hyundai and Kia, have built or are in the process of building factories in the United States, and vehicles imported to Canada from there would be duty-free anyways because of the North American Free Trade Agreement.

"The impact would be limited," Mr. Grantham says of the effects a free trade agreement with South Korea would have on Canada’s auto industry. "Whether or not we have an FTA with Korea, a good percentage of Korean vehicles would be coming into the country duty-free."

In addition, Mr. Grantham says while most Canadian manufacturers have been focused almost exclusively on marketing to the U.S., and the majority of South Korea’s market is filled with domestic products, there have been signs that change is coming to the Asian country, which could provide an opportunity for Canadian companies.

Study is Shallow, Laughable

But members of one group that has received the study have dismissed it as shallow and masking the real impact that the elimination of tax barriers will have on Canada’s automobile industry.

"The study is extremely shallow," says Mark Nantaif, president of the Canadian Vehicle Manufacturers’ Association, which sits on an automotive advisory panel that advises the standing committee. Members of the panel received the report two weeks ago and were required to sign a confidentiality agreement before being given the report.

Not only did the industry have no input into the study, Mr. Nantaif says, but it also disregards the impacts a free trade agreement would have on all parts of the automobile industry, including dealers and auto parts shops.

Mr. Nantaif says automobile manufacturers aren’t against a free trade agreement with South Korea, but any deal will have to provide fair market access. South Korea’s own automobile industry supplies 98 per cent of its domestic market, he says, because of barriers set up by the East Asian country.

"Without that proper access [to South Korea], our industry will be damaged," he says. "We can’t even get in their market to compete."

Mr. Nantaif says auto industry representatives had been asking for the study for several months and "we find the timing of the release odd given that they’re far along in the negotiations."

Paul Forder, the Canadian Auto Worker Union’s national director of government relations, described the study as "laughable" and "embarrassing" to Industry Canada and believes the report’s poor quality was the reason it wasn’t released sooner.

Mr. Forder says auto industry representatives can’t understand why the government is still looking at signing an agreement, especially since South Korean vehicles are already flooding the Canadian market but the reverse isn’t true in the Asian nation.

"You’ve got to scratch your head," he says. "We still can’t understand why they’re pushing for this."

Industry Canada spokesman Darren Cunningham says the advisory panel members received a draft copy of the study for their input, and the final report will not be available until the next committee meeting.

 source: Embassy