The Canada-Korea Free Trade Agreement (CKFTA) took effect as of January 1, 2015. This agreement provides some marked benefits for Canadian businesses that are looking to expand by exporting their products and services. The estimated market size for packaged food in South Korea in 2014 was $26.2 billion. Additionally, in 2012 South Korea was Alberta’s fifth largest destination country for agri-food products, with the top export being wheat, valued at $56 million. With improved access to the Korean market, agriculture and agri-food industries will stand to gain important advantages when exporting products or increasing exports to Korea.
Prior to the free trade agreement with Korea, Canadian agricultural exports faced on average tariffs of 52.7%. The newly ratified CKFTA will see “progressive elimination of 86.8 per cent of agricultural tariff lines.” (Foreign Affairs, Trade and Development Canada). Notably, within 15 years an elimination of 40 to 72 per cent of duties on fresh/chilled and frozen beef cuts are expected to be implemented. As well, many Canadian agricultural products will receive immediate duty-free access, such as wheat, canola and other major crops produced in Alberta, including barley, will be duty free within three to five years. Visit the Government of Canada website for a complete list of products with tariff reductions or eliminations.
Alberta is the largest cattle producing province in Canada with 44% of Canadian production at 4.87 million head. Of the total production of Alberta beef, 35% is exported outside of Canada; 28% goes to the U.S. and 7% goes to other countries. While the U.S. will likely remain a main consumer of Alberta beef, the CKFTA represents an opportunity for Alberta producers to access a new foreign market in Korea and take advantage of reduced or eliminated tariffs.
Crop production in Alberta could also stand to gain from the new free trade agreement. In 2014 the top three crops produced in Alberta were wheat at 8,586,700 tonnes, canola at 4,932,800 tonnes and barley at 4,134,600 tonnes. All of these crops will experience a decrease in duties with the implementation of CKFTA. Wheat and canola will gain immediate duty-free access to Korea experiencing a 3% and 10% drop in duties respectively. Furthermore, duties of 324% on barley within the quota volume will be eliminated by 2017 to 2020.
In 2013 Alberta’s food and beverage processing industries were estimated to represent the second largest manufacturing sector in the province accounting for 16.8% or $12.6 billion of total manufactured goods. Therefore, business in this sector could stand to gain substantially under the new trade agreement by exporting products to Korea.
Is your business interested in pursuing the Korean market? The Government of Alberta is hosting an Alberta-Korea Business Opportunities Seminar in Edmonton on Wednesday, January 14, 2015 that will provide businesses with information on pursuing opportunities in Alberta. Click here for more information about the seminar and to sign up.
If your business is interested in exporting your products to Korea please contact us at email@example.com for more information on how Enterprise Edmonton can help your business expand.