Agriculture at the centre of new Free Trade Agreement with South Korea

After years of negotiations between Canada and South Korea, the two countries finally concluded negotiations on a Free Trade Agreement and agriculture is at the heart of the new deal.

87 per cent of products headed to South Korea from Canada will see tariffs eliminated gradually.

Beef and pork seem to be the two biggest winners of the FTA.

According to the agreement, which is yet to take effect, the 40 per cent Korean tariff on fresh and frozen beef will be fully eliminated over 15 years, while the 18 per cent tariff on offals will be fully eliminated in 11 years.

The Canadian Cattlemen’s Association is understandably pleased with the new agreement.

In a statement, newly elected President Dave Solverson said the tariff has been the main impediment to access the Korean market since that country lifted its BSE prohibition on Canada in 2012.

“For the past few years, Canada’s key beef competitor, the U.S. has enjoyed an increasing tariff advantage flowing from its FTA with South Korea. Today’s announcement means Canadian beef will be able to once again compete for meaningful access in the Korean market,”  said Solverson

Solverson traveled to Seoul, South Korea to be there when Prime Minister Harper made the announcement.

Facts on the deal provided by the Canadian Cattlemen’s Association:

Canadian beef export stats to Korea:

  • Prohibition from May 2003 to Feb 2012.
  • 2012 – 2247 tonnes for $10 million, $4.47/kg
  • 2013 – 1166 tonnes for $7.8 million, $6.70/kg

Tariff Elimination Schedule:

  • 40 per cent tariff on fresh and frozen beef eliminated in 15 equal annual steps (2.6 per cent or 2.7 per cent reduction each year depending on rounding).
  • Same as phase-out for U.S. beef.
  • Transitional safeguard starting at 17,769 tonnes in year one and growing 3 per cent per year to reach 26,877 tonnes by year 15.
  • 18 per cent tariff on offals eliminated in 11 equal annual steps (1.6 per cent or 1.7 per cent reduction each year depending on rounding).
  • Faster than phase-out for U.S. beef which is being reduced at 1.2 per cent each year.

An example of a highly valued offal product in Korea is the abomasum (one of the stomach chambers of a ruminant animal). Abomasum is commonly used in Korean BBQ. Intestines and tendons are also valued products in Korea.