In less than six months, Stephen Harper’s Conservative government has reached a free trade agreement in principle with Europe and another with South Korea. Bravo. Opening up new markets for business, and allowing consumers to purchase cheaper products from overseas, are good for Canada’s economy.
These agreements were years in the making, and they allow Canada to make up for lost time. In the 1990s, after the U.S. free-trade agreement and NAFTA, exports represented the spearhead of Canada’s economy. Since then, Canada’s economic growth has been hampered by an inability to sell more products and services to global markets, particularly emerging ones. In 2012, Canada’s export growth was a meagre 1.3 per cent. Last year, it was 3.6 per cent.
The European free trade agreement and the deal with South Korea should boost those numbers. Yes, South Korea is only a mid-sized country, but concluding an agreement brings us up to speed with the EU, Australia and the U.S., which have already inked deals with the world’s 15th-largest economy. Without a Korean trade deal, Canadian pork and beef exports to that country slumped, hampered by high tariffs.
Not everyone is satisfied. Ford Canada says the removal of a 6.1-per-cent tariff on Korean cars could decimate the auto sector, flooding the market with KIAs and Hyundais. But it’s hard to believe such a small tariff reduction can have that dramatic an impact. Annual currency fluctuations are often bigger than 6 per cent.
Besides, this trade agreement is about much more than one particular sector. Canadian industries that stand to gain from lower Korean tariffs include aerospace, life sciences, forestry, agriculture and food processing. For years, Ottawa has touted its Canada-Pacific strategy as key to economic growth. The South Korea deal is a first step in making that happen.