Commodity Groups Want A Trade Deal With South Korea

Commodity groups and processors are urging the federal government to get cracking on a free trade agreement with South Korea to ensure Canadian exports are not displaced by competitors.

Trade talks between Canada and South Korea have been stalled since 2008.

South Korea is a valuable market for Canadian grains and oilseeds, said Jim Everson, vice-president, corporate affairs for the Canola Council of Canada in a release. Canada and South Korea are well down the road on negotiating a free trade agreement to build on this market. It is important that negotiations resume and the agreement be concluded.

The group says that without a trade agreement, current agrifood exports to South Korea, valued at $600 million per year, are in jeopardy, and further growth potential of an additional $600 million will be hindered sighting competitors such as the U.S., which recently concluded their trade agreement with South Korea.

The Korea-U. S. FTA (KORUS) that was ratified by U.S. Congress in October gives the U.S. substantial tariff advantages in most agri-food product exports including malt, canola oil, grains, oilseeds and pulse crops. Other nations including Chile and the EU have also completed FTAs with South Korea and discussions continue with other agri-food exporting nations including Australia.

The tariff differential will prove detrimental for some sectors. Unless we have a level playing field, our members forecast that within 24 months the malt market in Korea will be a complete loss to major competitors including the U.S. and EU, says Phil de Kemp, president of the Malting Industry Association of Canada. Canada s malting industry currently exports 20,000 tonnes of malt the equivalent of 25,000 tonnes of barley to South Korea annually.

Under KORUS, American products including vegetable oil will move to a zero-based tariff over time, says Rick White, general manager of the Canadian Canola Growers Association, leaving Canadian canola and canola oil at a disadvantage. An FTA with South Korea could grow canola oil exports from $43 million to $140 million per year, and growth in meal and seed exports are also possible under a Canada-Korea agreement.

The Grain Growers of Canada also notes that Canadian exports of $2.7 million in pulse crops and $216 million in wheat could be disrupted without a bilateral trade deal.

South Korea is currently a $600-million market for Canadian agri-food exports. With 50 million consumers and a growing demand for food products, this a priority market for Canada.

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