CIIT Committee Report

Government Response to the Third Report of the Standing Committee on International Trade

A STUDY OF THE CANADA-KOREA FREE TRADE NEGOTIATIONS

Introduction

The Government of Canada is pleased to respond to the 3rd Report of the House of Commons Standing Committee on International Trade entitled Study of the Canada-Korea Free Trade Negotiations.  The Government shares the Committee’s commitment to ensuring that an FTA with South Korea is in the best interests of Canadians and contributes to Canada’s economic prosperity.

Canada’s prosperity is a product of many distinct Canadian advantages, including in particular our openness to international trade and investment. Our participation in global commerce has helped us build a strong, stable economy that boasts thousands of leading-edge businesses, a highly-skilled and educated workforce, world-class financial and physical infrastructure, top-quality research and development facilities and excellent post-secondary institutions.  To ensure that Canada can continue to take advantage of new markets and extend its global reach, the Government has stepped up its efforts to improve Canada’s performance.  The Government’s overall economic plan, Advantage Canada, and the Global Commerce Strategy respond to this challenge.  It is through the Global Commerce Strategy that the Government has enhanced its efforts to negotiate bilateral trade policy instruments, including free trade agreements, so as to maintain Canadian competitiveness abroad.

As part of this re-invigorated trade policy agenda, Canada is pursuing a comprehensive free trade agreement (FTA) with the Republic of Korea (South Korea, hereinafter referred to simply as “Korea”).  Korea is Canada’s 8th largest trading partner and the world’s 13th largest economy.  The FTA being negotiated will cover a wide range of areas including trade in goods and services, investment, government procurement, competition policy, intellectual property, electronic commerce, as well as cooperation agreements on labour and environment.  The aim is to provide greater market access opportunities for Canadians doing business in Korea, as well as to lower costs on products and services imported from Korea and thereby improve price and choices for Canadian consumers. As well, an FTA with Korea could leverage Canada’s commercial presence in Korea  and open doors for Canadian businesses in key neighbouring markets in the wider Northeast Asian region, including China and Japan.

In the area of trade in goods, Canada is seeking the elimination of tariffs on substantially all trade, consistent with World Trade Organization (WTO) requirements on the formation of free trade areas.  An FTA with Korea would provide Canadian exporters with significantly improved market access opportunities for agricultural products, including beef, pork, grains (wheat, barley, malt, flax), fruits (apples), honey, vegetables (potatoes, french fries), vegetable oils (canola, soybean) and oilseeds, as well as consumer-ready products. There are also significant potential gains in the fish and seafood sector, given Korea’s high tariffs and Canada’s comparative advantage. Canadian industrial and forestry sectors would also benefit from enhanced market access opportunities in Korea, including for products such as building materials, pre-fabricated buildings, softwood lumber, aluminium, aircraft engines, metals, chemicals, machinery and equipment, electrical and power generating equipment, coal, fur products, and fertilizers. Results from preliminary macro-economic modelling suggest that, if the FTA had been fully in place in 2005, Canadian total merchandise exports to Korea that year could have been 56% or $1.6 billion higher, and Canada’s gross domestic product (GDP) $1.6 billion greater (an increase of 0.114%).

Beyond tariff elimination, the Government is also seeking to create new opportunities for Canadian businesses through the elimination of a range of non-tariff barriers (NTBs) in the context of FTA negotiations with Korea. Concerns have been expressed about Korean NTBs across a number of manufacturing sectors, including the automotive sector. Canadian stakeholders have cited as serious problems a lack of transparency in the regulatory and standardization processes, including a lack of predictability and consistency in applying regulatory measures, as well as burdensome and complex certification requirements. Other issues include complex permit and licensing requirements, differential taxation regime for similar products, and domestic policies that may have the effect of discouraging imports.

To address these concerns, Canada is seeking comprehensive enhanced transparency measures, including the creation of mechanisms that allow for the early identification of issues and timely consultations to address specific NTBs raised by industry.  Canada is also encouraging the use of international standards so as to minimize the risk of future trade barriers and promote joint cooperation. It is also seeking the inclusion of sector-specific provisions in the FTA to address particular concerns from Canadian stakeholders regarding NTBs such as in the automotive sector.  An FTA would maintain the ability of either country to use legitimate measures to ensure the protection of health, safety, and the environment, and would focus on improving procedures to help manage issues through better consultations and dialogue between the two countries.

Given the importance of the automotive sector to the Canadian economy and to our overall trading relationship with Korea, the Government has devoted particular attention to issues involving this sector, including by establishing a key automotive consultative group here in Canada, as well as a dedicated group on automotive issues within the negotiations themselves.  In addition, two in‑depth studies have been conducted analysing the impact of eliminating Canada's 6.1% auto tariff under a Canada‑Korea FTA. The first study was conducted by Industry Canada and the second, commissioned by Foreign Affairs and International Trade Canada, was conducted by a professor of economics at the University of Toronto. Both studies conclude that the impact of tariff elimination under a Canada‑Korea FTA on Canadian automotive production would be very limited.

These conclusions reflect a number of factors, including that the vast majority of Canadian‑manufactured vehicles are exported to the United States, and would be unaffected by a Canada‑Korea FTA. Of the remaining production, only a limited number of models are in direct competition with Korean imports. These conclusions also reflect the reality that roughly 75% of vehicles sold in Canada are imported, making it likely that any increase in imports from Korea would displace other imports more than domestic production. Potential import growth from Korea will also be tempered by the new Hyundai plant in Alabama, which stands to benefit from duty free access to the Canadian market under North American Free Trade Agreement (NAFTA), and a proposed new Kia facility in Georgia. The other exporter of Korean automobiles to Canada is GM‑Daewoo, which is owned by General Motors. More information on these studies can be found at http://www.international.gc.ca/tna‑nac/ RB/Korea‑en.asp.

To improve access for the Canadian automotive industry to the Korean market, Canada is seeking to eliminate Korea’s 8% tariff on autos and auto parts, and to establish the most extensive, robust, state-of-the-art provisions Canada has ever sought in an FTA with respect to non-tariff measures in the automotive sector.

Other potential benefits to Canadian exporters and consumers include the establishment of rules of origin that ensure the benefits of the FTA flow only to goods qualifying as originating in the territory of either or both countries; the establishment of effective customs procedures to administer and enforce the FTA’s rules of origin; and the reduction of administrative and transaction costs for businesses through trade facilitation measures.  An FTA would ensure that each Party maintains measures to proscribe anti-competitive business conduct and takes appropriate action, so that the benefits of trade and investment liberalization are not undermined. An FTA would also contain procedures for the avoidance and settlement of disputes raised by either Party.

A bilateral FTA could yield benefits, particularly for small and medium-sized enterprises, in services-oriented sectors and areas of export interest to Canada, including financial services, information technology and communication services, environmental services and professional services. Canadian exporters would benefit from improvements in rules designed to increase transparency of regulations, broader access through temporary entry for business persons, including a range of service providers and investors, as well as non-binding frameworks for the negotiation of mutual recognition agreements and the affirmation of mutual obligations in the WTO relating to domestic regulation and to the development of any necessary disciplines pursuant to the General Agreement on Trade in Services. Canadian investors would benefit from the added protection afforded by state of the art investment disciplines, including access to international arbitration to resolve disputes.

Canada’s approach to protecting our health, public education, culture and social services in our negotiations with Korea is consistent with our current approach in both the multilateral and bilateral contexts: they are not on the negotiating table. Over-quota tariff protection on supply managed goods (i.e. dairy, poultry and eggs) will also be preserved in any FTA with Korea.

The Government has carefully reviewed the recommendations in the Standing Committee’s Report and welcomes the opportunity to respond to each recommendation individually.

Detailed Responses to the Recommendations

Recommendation 1

That the Government of Canada make every effort to ensure that Canada negotiates access to the Korean market on the same or better terms as already gained by its international competitors.

Response

The Government is committed to pursuing an FTA with Korea that ensures that Canadian exporters benefit from similar preferential market access terms obtained by Canada’s key competitors.  This includes trading partners such as the United States (U.S.), Chile, the European Free Trade Association countries (Iceland, Liechtenstein, Norway, Switzerland), and the countries of the Association of Southeast Asian Nations (ASEAN), which have already concluded FTA negotiations with Korea, as well as the European Union and India, with whom Korea is engaged in ongoing FTA negotiations.  In actively seeking an FTA outcome that provides Canadian businesses with a level playing field vis-à-vis Canada’s key competitors, the Government has placed a particular focus on sectors of significant commercial interest to Canada.  These include agricultural products, fish and seafood products, forest products, pharmaceuticals, cosmetics, medical devices, fertilizers, metal and mineral products, pre-fabricated buildings, aeronautic equipment, power generating equipment, and other machinery and electrical equipment.

Of course, Canada is not negotiating an agreement that is identical to agreements previously negotiated by Korea. This is partly due to Canada’s unique export interests compared to other countries with whom Korea has either concluded, or is pursuing, an FTA. Furthermore, Canada’s negotiating leverage is not identical to that of other trading nations, and every negotiating partner brings a different package of offensive and defensive interests to the table that must be reflected in the overall balance of concessions.

Recommendation 2

That, to ensure that Canadian industries are not put at a disadvantage in the Korean market in the future, the Government of Canada negotiate a most-favoured nation clause in the Canada-Korea free trade agreement.

Response

The Government is pursuing a variety of approaches in order to negotiate a level of market access in Korea that is commensurate with that obtained by Canada’s key international competitors.

A key Canadian objective in the areas of cross-border trade in services, investment and financial services is to ensure that Canadian exporters and investors are not placed at a competitive disadvantage against Korea's current and future FTA partners as regards preferential treatment afforded under those FTAs. Canada is seeking strong “most-favoured nation” (MFN) provisions in all three areas, which present significant opportunities on par with the outcome of Korea’s other recent FTAs.  In particular, Canada is seeking to obtain specific commitments concerning MFN treatment in sectors of significant commercial interest to Canada. However, both Canada and Korea are seeking to maintain policy flexibility in certain sectors and areas of policy sensitivity through the listing of MFN exemptions.

In the context of trade in goods, MFN clauses are not common in free trade agreements since the purpose of an FTA is to extend preferential tariff treatment to a specified negotiating partner. Seeking MFN provisions for tariff treatment in an FTA would normally require the expenditure of significant negotiating capital, and would tend to invite difficult reciprocal requests from Canada’s FTA negotiating partners.  In the case of the Canada-Korea FTA, the Government is seeking competitive terms of access to the Korean market which place Canadian businesses on a level playing field with their key competitors. Canada’s normal approach is to negotiate specific concessions on a product-by-product basis, with due consideration given to Canadian export interests and the relative competitive threat posed by preferential levels of access obtained by other countries for each product.  Given that Canadian commercial competitive strengths and interests differ from those of Korea’s various FTA partners, this has allowed Canada to tailor its requests and offers for tariff elimination in accordance with unique Canadian offensive and defensive considerations.

Recommendation 3

That, in the event that a free trade agreement with Korea is signed, the Government of Canada not include accelerated tariff phase-out provisions for automobiles and related parts.

Response

Prior to the launch of FTA negotiations with Korea, the Government conducted two detailed analyses regarding the impact of a Canada-Korea FTA on the automotive sector. As noted by the Committee in its Report, one was conducted by Industry Canada and another commissioned by the Department of Foreign Affairs and International Trade to an outside expert, and both have been released publicly. These studies conclude that any negative FTA impact in terms of production and jobs in the automotive sector would be very limited. Even assuming the highest sensitivity to imports from Korea, estimates are that an FTA with Korea would have an impact on production of less than 2,200 units (out of a total of 2.6 million) and an impact on employment of less than 35 jobs. This reflects several factors, including the fact that the vast majority of Canadian-made vehicles are exported to the U.S. and the reality that currently about 75% of vehicles sold in Canada are imported.  The impact on Canadian automotive production could be even more modest than these studies predict if current and future Korean assembly plants in the U.S. were taken into account. Hyundai's plant in Alabama accounted for 32% of Hyundai sales in Canada in 2007 and the Kia plant being built in Georgia, which is scheduled to start production in 2010, are forecast to supply the Canadian market at a comparable level soon thereafter. Vehicles manufactured at plants in the U.S. and Mexico can benefit from duty-free access to the Canadian market if they meet the applicable NAFTA rules of origin.

Given that passenger vehicles alone represent over $1.4 billion in Korean exports  to Canada  (2007), and comprise 57% of Canada’s dutiable imports from Korea, tariff elimination on vehicles and auto parts is one of Korea’s top priorities in the FTA negotiations with Canada. Just as Canada is seeking tariff concessions from Korea in our areas of export interest commensurate to what Korea has given our competitors in other FTAs, Korea is seeking tariff concessions from Canada in their areas of interest - not least autos - commensurate to what it has obtained in its other negotiations.

The Government continues to consult extensively with the automotive industry, as it has throughout the negotiations, on all automotive issues in the negotiations, including tariff elimination.

As a result of these consultations, the Government is addressing the industry’s specific concerns and interests within the negotiations to the maximum extent possible. In the tariff negotiations, the Government will continue to consider carefully the balance between our offensive export interests and our domestic sensitivities.

Recommendation 4

That, in the event that a free trade agreement with Korea is signed, the Government of Canada should seek an expedited dispute resolution mechanism for disputes related to non-tariff barriers in the auto sector. Similar provisions in the Korea-U.S. free trade agreement should be used as a model.

Response

Canada is pursuing the recommended approach in its FTA negotiations with Korea.  Specifically, Canada is seeking specialised dispute settlement provisions for the resolution of any automotive issue that may arise under the FTA, in order to allow for a faster and more streamlined dispute settlement procedure than would be possible under the standard dispute settlement provisions of the FTA.  The approach that Canada is pursuing is similar to the obligations agreed by Korea and the U.S. under the Korea-U.S. FTA (KORUS), and reflects input provided by Canadian automotive stakeholders. The automotive provisions in the FTA, however, remain one of the most challenging areas under negotiation.

Recommendation 5

That the Government of Canada include a snap-back provision in any free trade agreement with Korea. Under such a provision, if an expedited dispute resolution mechanism demonstrates that Korea is not living up to its commitments to eliminate non-tariff barriers in autos, then Canada would automatically revert to its Most-Favoured Nation tariff rate on Korean autos and auto parts.

Response

The Government is seeking provisions under a Canada-Korea FTA that would allow either Party to take a fixed retaliatory measure equivalent to the prevailing MFN tariff rate should there be a positive panel finding in an automotive-related dispute (i.e. a so-called “tariff snap-back” provision).  The provisions that Canada is currently seeking are similar to those agreed under KORUS, while reflecting specific input provided by Canadian automotive stakeholders. The automotive provisions in the FTA, however, remain among the most challenging areas under negotiation.

Recommendation 6

That the Government of Canada make any free trade agreement with Korea conditional on restoring access for Canadian beef exporters to the Korean market.

Response

Following Canada's announcement of its first bovine spongiform encephalopathy (BSE) case in May 2003, most of our trading partners, including Korea, banned imports of Canadian cattle, beef and other products. Since then, Canada has been making high level representations to all trading partners towards the full resumption of trade based on science and standards established by the World Organization for Animal Health (OIE). The OIE is the relevant international standards-setting organization for animal health referenced in the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.

On May 22, 2007, Canada was officially recognized by the OIE as a "controlled risk" country for BSE. This recognition was the result of a comprehensive evaluation by the OIE's panel of BSE experts of Canada's BSE risk mitigation, surveillance, and eradication measures. Having achieved this designation, the OIE Code allows for the safe trade in all beef and cattle under conditions which Canada can certify. On this basis, Canada has been requesting trading partners to resume full trade in beef and cattle.

Following numerous Canadian high level representations, Korea has undertaken an 8-step regulatory process for Canadian beef. Canada is now at step 6 (negotiation of import conditions). Step 7 is for Korea to notify the Korean public of the text of the import conditions. Step 8 is for Korea to approve beef establishments (which will likely require on-site visits) and to establish the format of export certificates based on the import conditions agreed to at Step 6. Canada has made clear to Korea that this process should be completed on the highest priority basis.

The Government recognizes that restoring access for Canadian beef to the Korean market is critical with respect to securing domestic support for an eventual Canada-Korea FTA. Canada continues to take every opportunity, including in our FTA negotiations with Korea, to make it clear that the Canadian beef industry will not support an FTA with Korea unless access for Canadian beef is restored. Ministers and senior officials have emphasized to Korean authorities the importance of resolving access for Canadian beef, on an urgent basis.

One of Canada's objectives for the FTA negotiations is the establishment of a bilateral mechanism to deal more effectively and expeditiously with future sanitary and phytosanitary issues, such as Korea's BSE ban on Canadian beef.

Recommendation 7

That the Government of Canada include a definition of icewine in the text of a free trade agreement with Korea, as well as reference to geographic indicators for Canadian spirits and wine-producing regions.

Response

The Government is consulting with the Canadian wine industry on a regular basis as the Canada-Korea FTA negotiations proceed, and is aware of its interests as they relate to icewine labelling in Korea.  Taking these views into account, Canada is seeking to address the Canadian wine industry’s interests within the Canada-Korea FTA negotiations. The Parties have discussed the issue extensively in the FTA negotiations and are working towards a solution to this issue as part of the FTA that would be acceptable to both the Parties and to the Canadian industry.  This may include a mechanism to address substantive issues concerning icewine, including labelling and definition, in tandem with Canada’s broader international efforts and work on enhanced protection for icewine.

The Government is pursuing the inclusion of a chapter on intellectual property within an FTA with Korea which would include provisions on geographical indications (GIs) for certain products. Canada is seeking GI provisions that would make specific reference to “Canadian Whisky” and “Canada Rye Whisky” and would allow the Parties to exchange information on other geographical indications including wines. Canada and Korea are continuing to discuss text proposals on the issue. Canadian negotiators have recently been in contact with relevant domestic stakeholders to update them on the status of these negotiations.

Recommendation 8

That, in the event that a free trade agreement with Korea is signed, and once the details of that agreement are known, the Government of Canada study the expected impact on all major sectors of the Canadian economy and, if warranted, consider providing financial transition support to any sector adversely affected by the agreement.

Response

The Government’s overall economic plan, Advantage Canada, and the Global Commerce Strategy  seek to ensure that Canada can continue to take advantage of new markets and extend its global reach. It is through the Global Commerce Strategy that the Government has enhanced its efforts to negotiate bilateral trade policy instruments, including FTAs, so as to maintain Canadian competitiveness abroad. As part of this re-invigorated trade policy agenda, Canada is pursuing a comprehensive FTA with Korea.

The Government is pursuing a FTA with Korea in light of the expected gains that will result for the Canadian economy, including for exporters, service providers, investors, and consumers.  The impact of an FTA will vary from sector to sector, and the Government’s approach is to ensure that any possible negative impact is reduced through tariff phase-out periods and other transition measures for sensitive sectors.

In addition, although the results of the Government’s analysis is that an FTA with Korea could deliver important benefits across the Canadian economy, the macroeconomic impact of a Canada-Korea FTA on the Canadian economy would be modest relative to the overall size of the Canadian economy.

Moreover, as noted above, the government conducted two detailed analyses regarding the impact of a Canada-Korea FTA on the automotive sector, which is the area where the most significant concerns have been expressed about the possible impact of an FTA in Canada. Both studies concluded that the likely impact would be very limited.

Once Canada has completed its negotiations with Korea, the Government will be in a better position to fine-tune its analysis of the impact of the FTA on the Canadian economy and particular sectors. It is important to note, however, that the Government has already created tools and programs to help Canadian businesses compete internationally, including measures provided in Advantage Canada. (More below in response to recommendation 9).

Recommendation 9

That, in light of recent job losses in Canadian manufacturing and the potential effect of a Canada-Korea free trade agreement on employment in that sector, the Government of Canada explore the adequacy of existing worker retraining programs, both in terms of effectiveness as well as funding.

Response

Over the past several years, the manufacturing sector has faced significant challenges, including a higher dollar, competition from emerging economies, fluctuating energy and commodity prices, and a slow down in the U.S.. To help Canada’s manufacturing sector face this crisis, the Government has already undertaken to address these concerns independently from FTA negotiations with Korea. The Government Response to the Fifth Report of the Standing Committee on Industry, Science and Technology provides more details on how the Government is responding to the challenges faced by the manufacturing sector.

More generally, the Government’s Advantage Canada framework is delivering important benefits for manufacturers by encouraging investment and increasing industry’s capacity to compete internationally.  Specifically, the Government has committed to:

• provide over $9 billion in tax relief by 2012-13, including broad-based tax reductions as well as a temporary accelerated write-off for investments in machinery and equipment used in manufacturing or processing;
• provide more than $1.5 billion over three years, through Budgets 2006 and 2007, to support Canada’s leadership in science and technology;
• take action to streamline the regulatory system and reduce the regulatory burden on businesses, including manufacturers;
• provide $33 billion over seven years in infrastructure investments, through Budgets 2006 and 2007, including for transportation corridors and gateways that benefit businesses, including manufacturers; and,
• invest $250 million over five years to support strategic, large-scale research and development projects in the automotive sector.

The Government also recognizes that being competitive in the international economy requires having the skills and training to adapt to a changing global market.  Following through on Advantage Canada commitments, the Government has taken action so that employees and employers have access to the skills and training they need to participate fully in the labour market, including through:

• the introduction of the Community Development Trust, which will provide $1 billion to provinces and territories to assist workers and communities experiencing economic adjustments due to international economic volatility;
• Budget 2007 commitments, such as $1.3 billion per year in additional funding to provinces for post-secondary education and training to create a more highly skilled workforce; and,
• Investing $160 million over five years, including the $90 million extension announced in Budget 2008, for the Targeted Initiative for Older Workers to help more older workers remain active and productive participant in the labour market.

The above announcements are in addition to the various ongoing initiatives in place to ensure that manufacturers have access to the skills and talent required to compete in today’s global economy, including: the Sector Council Program, the Office of Literacy and Essential Skills, the Apprenticeship Job Creation Tax Credit, the Apprenticeship Incentive Grant, and the Workplace Skills Initiative.

The adequacy of government programs in these and other areas are evaluated on an ongoing basis to ensure their responsiveness to significant changes in circumstances.

In the context of the Canada-Korea FTA negotiations, the Government continues to consult Canadian stakeholders to address specific concerns and interests within the negotiations.  This includes the negotiation of provisions within the FTA that would facilitate adjustment by the Canadian manufacturing industry to a duty-free environment vis-à-vis Korea.  For example, for certain sensitive products Canada is seeking phase-out periods that would eliminate tariffs over a specified period of time.

Other provisions include product-specific rules of origin that ensure that the benefits of an FTA accrue to Canada and Korea and not to third parties, as well as emergency action provisions that would allow Canada to temporarily reinstate the MFN rate of duty on a product in the event of certain conditions, e.g., imports of like products from Korea have increased in such quantities that they constitute a substantial cause of serious injury, or threat thereof, to Canadian manufacturers.

Recommendation 10

That the Government of Canada seriously consider pursuing alternatives to the NAFTA free trade model, for example, by investing in a vigorous trade promotion strategy that builds the Canadian brand abroad.

Response

In the February 2007 Budget, the Government provided, $60 million over two years to advance core objectives of the Global Commerce Strategy, namely: 1) making Canada a partner of choice for international business, leveraging our North American advantage; 2) negotiating improved access to international markets, capital, technology, talent ; and 3) connecting Canadian businesses with global opportunities.

The Global Commerce Strategy focusses on improving coherence and leveraging partnerships across Government and with the private sector; realigning our international network focussing on key sectors and priority markets; re-orienting our services and  harnessing private sector expertise; and improving accountability through better performance measurement and a greater emphasis on results. The Government notes that Canada must use the full suite of domestic policies and negotiating tools at its disposal to create the conditions for Canadian success abroad.

Although the Government recognizes the importance of investing in a trade promotion strategy that builds the Canadian brand in key markets such as Korea, trade promotion is not a substitute for negotiating bilateral and regional trade liberalization agreements.  This is particularly true in an environment in which virtually all of Canada’s competitors are aggressively pursuing bilateral FTAs with other partners. The failure by Canada to pursue comparable trade liberalization arrangements would leave Canadian exporters, investors, and service providers at a significant competitive disadvantage in global markets.

As a trade-oriented and globally-integrated economy, Canada benefits from a healthy, open, transparent and rules-based international trading system. While the WTO remains the cornerstone of Canada’s trade policy, bilateral and regional FTAs represent an important facet of Canada’s overall international trade agenda. Canada’s  regional and bilateral FTAs are a means to secure markets for Canadian business, to gain a better access to lower cost goods and services, and to strengthen rule-making. Regional and bilateral agreements can also have important collateral benefits, such as building common understanding among parties that can be effective in forming alliances to move forward our mutual interests in other fora.

The Government of Canada agrees that consideration of various negotiating models and approaches is useful, with a view to adapting or adopting those elements that may serve Canada’s interests, in accordance with our commitments under international law. Canada negotiates FTAs consistent with our WTO-obligations, and that address the broad range of Canada’s economic and commercial interests.

WTO rules governing bilateral and regional trade agreements require developed nation members’ FTAs to cover liberalization of “substantially all trade” between the FTA partners.  For this reason, and to support our broad commercial interests, Canada seeks to negotiate comprehensive FTAs along the lines of the NAFTA that cover a broad range of economic interests ranging from agriculture to non-agriculture export interests to services and investment.

Trade promotion and other business development activities are important tools that can help Canadian business identify and exploit new opportunities and form alliances with key foreign companies.  Canada has for many years implemented a vigorous trade promotion strategy in Korea, and, as part of the government’s Global Commerce Strategy, will soon launch a Market Plan for Korea which focuses on five priority sectors with the highest potential for generating economic benefits for Canadians. Furthermore, the Market Plan will span the full spectrum of integrative trade, promoting opportunities for bilateral trade in goods and services and for accessing global value chains centred in Korea, facilitating incoming investment by Korean companies as well as investment in Korea by Canadian businesses, brokering commercially-oriented Science and Technology/innovation partnerships, and marketing study-in-Canada to Korean students of all ages.

Trade promotion and other business development activities can be most useful when used in a complementary manner to Canada’s bilateral and regional negotiating agenda.  Once an FTA with Korea is in place, Canada will follow up with a program of strategically targeted commercial missions to and other activities in Korea that highlight and promote the Canada brand.