March 12, 2014
Canada resumes beef export to South Korea
After finalizing years of negotiations on their bilateral free trade agreement (FTA), South Korea opened its beef market to Canada.
Canadian Prime Minister Stephen Harper arrived in Seoul Monday (Mar 10) evening to conclude the long-drawn-out FTA negotiations, which started in 2005, but later ground to a halt over disputes about import ban on Canadian beef.
In 2003, South Korea imposed ban on Canadian beef imports after cases of mad cow disease were reported in the North American country. Canada challenged the ban at the World Trade Organization in 2009.
The two countries held 13 rounds of FTA talks from July 2005 to March 2008, but the negotiations stalled in 2009 in the wake of Canada''s petition at the WTO.
After South Korea scrapped its nine-year-old ban on the Canadian beef, seven rounds of closed-door talks for the FTA were held in 2012, and the 14th round of FTA negotiation was resumed last November.
South Korean President Park Geun-hye and her Canadian counterpart Harper held a summit in Seoul to wrap up the bilateral FTA negotiations. The free trade pact, signed on Tuesday (Mar 4) by trade ministers of both sides, was widely expected to take effect in 2015 after domestic procedures for the ratification.
"We are committed to finalizing the legal review and required domestic procedures expeditiously with the mutual intention that the agreement will enter into force as soon as possible," the ministers said in a joint declaration.
Under the deal, South Korea will remove a 40-% tariff on Canadian beefwithin 15 years after the FTA takes effect, while eliminating a tariff of 22.5% to 25% on pork imported from Canada over the next 13 years.
The tariff removal will help Canadian beef and pork shippers raise their market shares in the South Korean market. After the implementation of the South Korea-US FTA in March 2012, concerns spread among Canadian livestock farmers that they may be deprived of the South Korean market by US producers.
In the South Korean import beef market, Australia held a 55.6% market share in 2013, trailed by the US with a 34.7% share and New Zealand with 8.8%. Canada''s share plunged to 0.6%.
From 2030, Canadian and Australian beef with a zero tariff will be imported to South Korea if free trade pacts with the two countries take effect next year. South Korea inked the free trade deal with Australia in December last year.
A presidential official said on condition of anonymity that consumption of home grown beef has grown faster than the US beef since the KORUS FTA took effect two years earlier, noting there was no big difference between Canadian and US beef.
The South Korea-Canada FTA will remove tariffs on 97.5% of goods in both countries in 10 years after the FTA takes effect.
South Korea became the first Asian country to sign the free trade pact with Canada, which has reached free trade deals with nine countries. The nine deals were small in size except for the North American Free Trade Agreement (NAFTA).
Trade between the two countries stood merely at US$9.9 billion as of 2013 as Canada depends heavily on the NAFTA members for more than 60% of its trade.
The South Korean government expected the signing of the deal would expand its exports to Canada given the small volume of trade till now. Canada is a member of G8 advanced nations, and the world''s 11th-largest economy with a US$1.8 trillion gross domestic product in 2012.