Canada’s trade minister led a mission to Korea last week to link businesses after a bilateral free trade agreement went into force this year.

“The Canada-Korea Free Trade Agreement will open the Asia-Pacific market to Canadian businesses and the North American market to Korean businesses,” International Trade Minister Ed Fast told The Korea Herald in an interview.

“As we move toward complete tariff elimination, our companies will gain international competitiveness through barrier-free, preferential market access.”

The CKFTA was signed last September after nearly nine years of negotiations and went into effect on Jan. 1. Once fully implemented, both sides will remove duties on nearly all export items. 

“Our government believes trade and investment are the twin engines of our economic growth,” Fast said. “Most importantly, trade liberalization has an overall positive impact on the economy by setting in motion the process of innovation.”

When the North American Free Trade Agreement was being negotiated 25 years ago, the minister noted, it was feared that Canada’s wine industry would be overtaken by that of California.

“But over the last 20 years, our industry has adapted to new global challenges and kept on improving. Today, Canadian wine is savored by connoisseurs and sweeping the highest accolades worldwide,” he noted.

Fast said the key to Canadian companies’ competitiveness on the world stage has been innovation, which requires a high level of education, creativity and a culture of entrepreneurialism. To this end, Canadian Prime Minister Stephen Harper’s government has preferred providing repayable loans to the industries rather than direct subsidies.

“We believe the economy should be able to stand on its own two feet and the best way to (incentivize) companies to grow and invest is to keep corporate tax as low as possible,” Fast said.

Canada’s corporate tax rate dropped from 29 percent to 15 percent over the past decade, making Canada the most competitive tax jurisdiction among the G7 countries, according to the minister.

Fast pointed to Canada’s socially responsible corporate governance, which has laid the foundation for ethical business operations worldwide.

“The Canadian government has brought in a series of laws to make our public servants more accountable to their acts; make their transactions transparent; and apply regulatory prudence to our finance industry,” he said.

The Extractive Sector Transparency Measures Act, which applies to oil, gas and mining companies, was recently introduced to enhance the transparency of payments to foreign governments.

“This legislation was driven by the industries themselves,” Fast said. “They formulated the initiative and asked the government to implement it in legislation.”

Touching on Canada’s successful immigration policy, the minister said his government prioritizes attracting “economic immigrants” who have the required skills to “plug into our economy” where there are labor shortages.

“Having the most generous immigration and refugee program in the world, our government wants to make sure that our immigrants have the necessary skills to contribute to our economy and society successfully,” Fast explained. “Those Koreans who want to be part of the Canadian family moving forward are very much welcome in Canada.”

Fast came with 115 individuals representing over 80 Canadian companies in diverse industries: agriculture and agri-food, aerospace, defense and security, information and communications technology, automotive, banking, shipping and sustainable technology.

At a Canadian beer, wine and spirit tasting event at Lotte Hotel in Seoul last Monday, Canadian and Korean companies had a chance to network and build partnerships.

The trade mission was given institutional and financial support by the Canadian Trade Commissioner Service, Export Development Canada, the Canadian Commercial Corporation and the Business Development Bank of Canada.

Fast announced the appointment of Eric Walsh as the new Canadian Ambassador to Korea prior to his departure from Canada.

As Canada’s first free trade agreement with an Asian country, the CKFTA covers trade in goods and services, investment, government procurement, nontariff barriers and environment and labor cooperation.

It also covers provisions in intellectual property, telecommunications services, environment, labor and electronic commerce.

Canadian merchandise exports to Korea are expected to increase by 32 percent, and the prices of popular items such as goose down jackets, ice wine and lobster will drop.

Korean auto parts, home appliances and textile goods are expected to benefit while Korea’s agricultural industry will suffer about $3.2 million in losses annually.

The Korean government said it would invest over $2 billion to enhance export competitiveness and the FTA utilization rate, particularly for small and medium-sized enterprises.

By Joel Lee (joel@heraldcorp.com)