FTAs with South Korea
Canada and South Korea’s nearly decade-long talks for a free trade agreement (CKFTA) have finally been settled to an affirmative conclusion. South Korea, the world’s 15th largest economy, is expected to boost Canada’s exports to Asia by at least 32% and vice versa.
As for tariffs, the Foreign Affairs, Trade and Development Canada organisation details that South Korea’s 8% tariff on vehicles will be eliminated immediately upon the agreement’s implementation while Canada’s lower 6.1% tariff on imports of South Korean passenger vehicles will be phased out in three annual cuts.
Nevertheless, the pact has been opposed by a few private sector groups led by Unifor, Canada’s 39,000-strong automotive workers union. Ford Motor (Canada) has also slammed the said CKFTA and warned of its adverse impact on the local automotive sector. The said sector is also reeling from competition with Mexican production since the North American Free Trade Agreement (NAFTA) between the US, Mexico and Canada came into effect in 1994.
Observers opine that Canada’s large vehicles, including vans, sedans, and SUVs, do not appeal to South Korean consumers and that the CKFTA is unlikely to encourage more vehicles being shipped into the Asian country. However, other automotive makers with plants in Canada, including Toyota Motor, Honda Canada and GM Canada, have expressed their support for the deal.
Meanwhile, South Korea’s own automotive sector is wary of an impending FTA with China, which if implemented would unlatch the door for China’s low to mid-priced cars, as well as foreign cars from the likes of Volkswagen, Benz, and BMW that are manufactured in China.
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