Hey there, time traveller!
This article was published 18/3/2014 (829 days ago), so information in it may no longer be current.
The Harper government's free-trade deal with South Korea opens a door for Canadian business to tap into the dynamism of one of the fast-growing Asian-tiger economies. It also creates a need for Canada to take a continuing interest in the complex politics of South Korea and its north Asian neighbours.
The deal calls for elimination of import tariffs on most products moving either way -- South Korean import duties averaging 13.3 per cent and Canadian import duties averaging 4.3 per cent. A country of 50 million people with little land and few natural resources, South Korea has a huge appetite for oil, coal, iron ore and forest products to feed the steel mills, shipyards and automotive plants that made it a global economic powerhouse.
Mr. Harper airily dismissed the warnings of Ford of Canada chief executive Dianne Craig. In her company's experience, South Korea is a fiercely protected market. If they can't levy import duties, they find non-tariff barriers related to paint colour or radio frequency of remote door-locking devices. They now say they will let Canadian-made cars into the country. Ms. Craig will believe it when she sees it.
But a free-trade deal without political followup may produce little result. Canada has had a free-trade deal with Mexico for 20 years, but Mr. Harper is disinterested in Mexico and will not lift the visa requirement he imposed for Mexican travel to Canada. The commercial relationship has stalled as a result.
South Korea lives under constant military threat from North Korea and shelters under the umbrella of U.S. military power. South Koreans know they have a country because the U.S. Seventh Fleet is nearby. Korean people are also motivated by deep resentment of Japan, their former colonial master. Japanese industry still dominates the region. South Koreans seek ties with others such as Canada in order to make the Japanese mind their manners.
Canada comes late to the party, since South Korea already has free-trade agreements with the U.S., Chile, Peru, Singapore and India. Now Canada must learn to tread delicately through the minefield of north Asian politics. We can't just sign a free-trade deal and go home. We have to show we are a dependable friend and ally -- and that is not a simple matter.
Removal of trade barriers is a good thing in itself and may produce economic benefits for Canadian canola growers, hog and cattle producers, coal miners and oil exporters. There may also be Canadian economic losers, as the Ford Motor Co. fears. The agreement should be one step in a developing relationship, and Canada should stick with it.