South Korea
Market Access Plan 2015-2017

CapitalPopulationTotal AreaCurrencyLanguages
Seoul50.22 million100,210 km²South Korean won (KRW)Korean

Why South Korea Matters

South Korea is:

  • a priority emerging market under Canada’s Global Markets Action Plan;
  • the world’s twelfth-largest economy and a country of remarkable growth; since 1980, South Korea’s GDP has grown more than six-fold and experienced an average annual growth rate of 6.5 percent; the country now boasts a vibrant, export-oriented $1.26-trillion economy (2014);
  • Canada’s seventh-largest overall merchandise trading partner and third-largest in Asia, after China and Japan; two-way trade has amounted to almost $11.5 billion in 2014;
  • one of Asia’s most dynamic and advanced markets, with a highly educated population of 50 million and GDP per capita of more than $25,000;
  • the world’s ninth-largest energy consumer, importing 96 percent of its energy needs in 2014.

South Korea is an increasingly important trade partner for Canada: The Canada-Korea Free Trade Agreement (CKFTA), which entered into force on January 1, 2015, represents Canada’s first free trade agreement in Asia and provides a gateway for Canadian companies to this growing and dynamic region. In terms of economic impact, the CKFTA is projected to boost Canada’s GDP by $1.7 billion and result in a more than 30-percent increase in Canada’s exports to South Korea. The opportunities inherent in the CKFTA are broad-based and benefit a range of industry sectors from coast to coast.

In the coming three years, top priorities to advance Canada’s commercial interests in South Korea will include efforts to attract additional investment from South Korea to Canada and to encourage Canadian companies, particularly in the information and communications technology and infrastructure sectors, to partner with South Korean chaebols (large conglomerates) in third countries and join their global value chains. In addition, South Korea’s chaebols are looking for opportunities to invest abroad, which creates opportunities for Canadian companies in the mining, oil and gas, sustainable technologies, automotive and life sciences sectors.

Domestic Economic Environment

Growth in South Korea has been weaker in recent years than had been the norm before the global financial crisis of 2008. GDP is expected to grow by 3.4 percent in 2014 and 3.6 percent in 2015—below the country’s average growth rate of 5.1 percent between 2000 and 2008. This deceleration can be attributed in part to high household debt, low domestic consumption, an economic slowdown in China (South Korea’s main trading partner) and increased competition from Japanese exports.

To support growth, South Korean officials have adopted expansionary fiscal and monetary policy stances in the recent past. In July 2014, the government introduced a $40-billion stimulus package for 2014-2015, which was further increased by $4 billion in October 2014 (together amounting to about 3.4 percent of GDP). Despite the recent fiscal stimulus, South Korea’s total government debt remains modest by international comparison, at 34.3 percent of GDP.

To further support growth, South Korea’s central bank, the Bank of Korea, lowered interest rates twice in 2014, from 2.5 percent in August to 2.0 percent in October, the lowest rate since 2010.

Key Figures – South Korea
GDP (billion$)1,344
GDP per capita ($)26,763
GDP growth (%)3.0
Inflation (%)1.3
Unemployment (%)3.1
Canada’s merchandise exports (million $)4,186.6
Canada’s merchandise imports (million $)7,250.8
Canada’s service exports (million $)778
Canada’s service imports (million $)356
Foreign direct investment (million $)4,946
Canadian direct investment in South Korea (million $)534
Potential long-term export growth (%)2.2

Canadian Commercial Interests in South Korea


Canadian exports to South Korea reached nearly $4.2 billion in 2014, consisting primarily of mineral ores, mineral fuels and oils, machinery and wood pulp. Ores were Canada’s single-largest export item to South Korea in 2014, accounting for over $1-billion worth of exports. In 2014, Canadian imports from South Korea were almost $7.3 billion, and consisted primarily of vehicles, machinery, electonics and electrical machinery and equipment. South Korea is also Canada’s third-largest source of international students.

Two-way stock of cumulative direct investment totalled $5.5 billion at the end of 2013, with the stock of foreign direct investment in Canada from South Korea valued at $4.95 billion and the stock of Canadian direct investment in South Korea valued at $534 million.

Canada-Korea Free Trade Agreement

The Canada-Korea Free Trade Agreement (CKFTA) was signed on September 22, 2014. It is Canada’s first free trade agreement in the Asia-Pacific region and provides a gateway for Canadian products into the wider region. The CKFTA, which entered into force on January 1, 2015, is expected to boost Canada’s economy by $1.7 billion and increase Canadian exports to South Korea by 32 percent.

Among the CKFTA’s most tangible outcome is the wide elimination of tariffs in all sectors, including industrial goods, agricultural and agri-food products, fish and seafood, and forestry and value-added wood products. Nearly 90 percent of Canada’s current exports became duty-free on the day the Agreement entered into force, and a small fraction of the remaining exports will become duty-free over time.

The CKFTA also covers virtually all other aspects of Canada-South Korean trade. Extensive and ambitious automotive provisions provide enhanced access for Canadian automakers on terms commensurate with, and in some cases better than, terms available to their key competitors. The Agreement provides enhanced market access for Canadian service suppliers in areas such as professional services, environmental services and business services, and provides for temporary entry commitments that are the most ambitious South Korea has agreed to in any of its free trade agreements. The Agreement’s government procurement provisions place Canadian firms on an equal or better footing relative to their competitors in terms of access to government procurement in South Korea, estimated to be worth approximately $105 billion annually.

The CKFTA also includes provisions covering investment, sanitary and phytosanitary measures, intellectual property, telecommunications services and electronic commerce, while dedicated chapters of the Agreement cover substantive environmental and labour provisions. The Agreement contains strong provisions to reduce or eliminate non-tariff measures that hinder market access for exporters and investors, backed up by speedy and effective dispute settlement provisions. Finally, the Agreement offers a number of opportunities for Canadian resource, manufacturing, infrastructure and capital goods firms to access regional and global value chains through South Korea’s chaebols, many of which are world leaders in their sectors.

The CKFTA’s intellectual property chapter includes clear and transparent rules that help protect Canadians who have registered copyright, patent or trademark rights in South Korea. The Agreement’s robust provisions on the enforcement of intellectual property rights help ensure that Canadian intellectual property rights holders can do business with confidence in the South Korean market.

Key Elements for Exporters to Consider

Despite an increasingly open economy, there remain market access issues related to certain aspects of the South Korean economy. Products that compete directly with current or future offerings of South Korean chaebols would likely continue to be protected by the South Korean government. As such, Canada has prioritized efforts to work with South Korean government regulators on the effect of their protectionist approach to policy and regulatory decisions.

In February 2015, International Trade Minister Ed Fast led a multi-sector trade mission to South Korea to highlight the breadth of opportunities in this market and the CKFTA’s benefits for Canadian business. Trade missions such as these are one of the ways that the Government of Canada will try to support Canadian businesses, particularly small and medium-sized enterprises, explore opportunities, open doors and succeed in foreign markets.

Sector-specific Opportunities and Challenges

Agriculture and processed foods

The demand for high-quality food is growing in South Korea. It is estimated that South Korea imports 60 percent of what it consumes. Given that Canada supplies merely 2 percent of South Korea’s food import volume, there is considerable potential in this market for Canadian products, especially with respect to grains, oilseeds, tallow, beef, pork, seafood and processed foods. Export growth in this sector is dependent on the full implementation of the CKFTA, once all the tariff phase-out periods have expired, which will provide opportunities for Canadian exporters of agricultural and agri-food products by eliminating tariffs and creating a level playing field vis-à-vis South Korea’s current free trade partners. Once fully implemented, the CKFTA will eliminate tariffs on over 97 percent of Canadian agricultural and agri-food exports to South Korea. This will provide Canadian agricultural and agri-food products, including beef, pork, canola and grains, with preferential access to the South Korean market.

Consumer products

South Korea is one of the largest retail sales markets in Asia. The market provides significant opportunities for Canadian companies in the following sub-sectors: outdoor wear and shoes, luxury goods, and sports and leisure goods. The CKFTA provides new opportunities for Canadian exporters of consumer products by eliminating tariffs and creating a level playing field vis-à-vis South Korea’s current free trade agreement partners. For example, the CKFTA eliminates tariffs on sporting equipment, textiles and apparel, and cosmetics. The CKFTA also offers exporters, investors and service providers strategic access to regional and global value chains. It also provides a platform for Canadian companies to become increasingly competitive in the region.

Defence and security

South Korea possesses an advanced defence manufacturing sector, producing a range of military equipment for both domestic and export customers. The South Korean government’s September 2014 approval to purchase 40 F-35A Joint Strike Fighters makes South Korea the third foreign military sales customer for the aircraft, after Israel and Japan. As a result of Canada’s membership in the nine-nation Joint Strike Fighter consortium developing the aircraft, numerous Canadian suppliers are engaged as subcontractors for the global F-35 fleet—including the South Korean aircraft. Canadian industrial activity in South Korea is generally modest, though firms specializing in electronics and communications equipment, helicopters, thermal imaging and night vision products, simulation, digital signal processing, and remotely operated underwater vehicles have been active.


Under the CKFTA, Canadian education service providers benefit from enhanced market access to South Korea’s commercial education and training market, including private and adult education services, and vocational competency development training services. South Korea is Canada’s third-largest source of international students, and Canada has done well in attracting K-12 students from the country. There are sizeable opportunities in the post-secondary market too.

Forestry and wood products

South Korea is currently the fourth-largest market for Canadian forestry and value-added wood products, with exports of nearly $570 million in 2013. Canada is South Korea’s third-largest supplier of softwood lumber, after Chile and Russia. South Korea imports approximately 90 percent of wood products used domestically, presenting huge opportunities for Canadian exporters. The South Korean government’s focus on green policies, including sustainable housing, creates promising opportunities for the promotion of Canadian wood as a green building material that is safe, modern and cost effective. Lightweight wood infill and partition walls, and wood roofs, have potential in this market due to their green attributes, competitive cost, and ease and speed of construction. Examples of wood infill walls are starting to be seen in concrete and post-and-beam buildings, plus traditional Hanok wood homes. As a result, apartment- and commercial-building market segments are seen as potential growth opportunities for Canadian wood product producers.

The CKFTA provides enhanced market access for Canadian forestry and value-added wood products such as lumber, plywood and oriented strand board. Since the CKFTA’s entry into force on January 1, 2015, South Korea has eliminated tariffs on nearly 58 percent of forestry products and 85 percent of total trade. All remaining tariffs on Canadian exports will be eliminated within 10 years.

Information and communications technology (ICT)

South Korea is a priority market in Canada’s Integrative Trade Strategy for ICT. South Korea is a major manufacturer of ICT products and home to a large consumer base with a high propensity for investment in new ICT technologies, particularly in telecoms, game development and entertainment. Significant opportunities exist for Canadian ICT companies to partner with major South Korean companies and take advantage of their global value chains. The fast growth of fourth-generation mobile services in South Korea also presents opportunities to be involved in the development of new wireless technologies and network services. Finally, South Korea’s high smartphone penetration rate (at 73 percent of its population, the highest in the world) provides a great market base for Canadian game developers and digital entertainment producers.

The CKFTA significantly improves market access opportunities for Canada’s ICT sector by eliminating all tariffs on ICT products. This includes electric sound amplifier sets, certain video projectors, cameras, transmission apparatus parts, and electrical conductors (current duties of up to 13 percent). The Agreement will also facilitate the movement of skilled professionals such as software engineers and designers, computer programmers, interactive media developers, and other professionals in the technology sector, to fulfill contracts in the South Korean market. Through the CKFTA, Canadian suppliers of ICT products and services enjoy secure and predictable access to covered procurement by South Korean central government agencies, for contracts valued above 100 million South Korean won (approximately $100,000).


South Korea lacks domestic mineral resources and depends mainly on imports to fulfill its needs. It has identified Canada as one of its priority countries for joint ventures in the mining sector. South Korea is Canada’s eighth-largest market for all commodities exports. Even so, Canada is not ranked as one of South Korea’s top-10 suppliers of mineral resources. While coal is Canada’s largest export item to South Korea, Canada accounts for only 12 percent of South Korea’s total coal imports. Canada-bound foreign direct investment (FDI) has thus far been the main driver in this sector, with South Korea having interests amounting to $2 billion in Canada’s mining sector. There are opportunities for additional Canada-bound FDI as well as joint Canadian-South Korean mineral development projects in third countries.

The CKFTA significantly improves market access opportunities for Canada’s metals and minerals sector by eliminating tariffs on all Canadian exports, including aluminum, iron, steel, nickel, non-ferrous metals, precious gems and metals, and other mineral products. Since the Agreement’s entry into force, 98.7 percent of tariff lines on metals and minerals became duty-free and all remaining tariffs will be eliminated within five years (current duties of up to 8 percent).

Oil and gas

South Korea imports about 97 percent of its energy needs. Given the country’s growing domestic demand, especially for natural gas, its state-owned enterprises and private conglomerates have sought joint energy development projects internationally, including in British Columbia and Alberta. As with the mining sector, Canada-bound FDI is the key driver in this sector. Further opportunities exist to increase FDI from South Korea in the exploration and development of resources, and in mid-stream infrastructure.

Canada is well positioned to meet South Korea’s growing energy demand, and the CKFTA provides new opportunities for Canadian oil and gas exporters. Liquefied natural gas (LNG), which used to face a 3 percent tariff, now enters South Korea on a duty-free basis. South Korea also removed tariffs on more than 88 percent of Canadian exports of petroleum products, with all remaining tariffs eliminated within five years. While Canada does not currently export LNG to South Korea, duty-free access on LNG and other products will become increasingly important over time. The CKFTA also provides Canadian and South Korean investors with greater certainty, transparency and protection of their investment.

In 2013, South Korea was the second-largest importer of natural gas (after Japan), fourth-largest importer of coal and fifth-largest importer of crude oil, and had fifth-highest nuclear generation capacity in the world (including four CANDU reactors). South Korea views Canada as a potentially important partner in its energy security.

Sustainable technologies

South Korea has been identified as a priority market in Canada’s Integrative Trade Strategy for Sustainable Technologies. To reduce dependency on energy imports, South Korea has invested $35 billion to develop renewable sources of energy, including $20 billion earmarked for its chaebols. The Government of South Korea has also implemented a renewable portfolio standard, forcing power producers to seek renewable resources to meet new requirements. As such, considerable opportunities exist for Canadian companies to help South Korean companies and enter their global value chains, leveraging Canadian expertise in areas such as carbon capture and storage, water treatment, and hydrogen and fuel cells.

The CKFTA significantly improves market access opportunities for Canada’s sustainable technology sector by eliminating tariffs and creating a level playing field vis-à-vis South Korea’s current FTA partners. Once fully implemented, the Agreement will eliminate tariffs on all sustainable technology products (e.g. pumps, mixers, water-filtration equipment, wind- and solar-generating sets, panels for solar water heaters, etc.).

Trade Agreements

Canada-Korea Open Skies Air Transport Agreement

The Canada-Korea Open Skies Air Transport Agreement, which facilitates air travel and cargo between the two countries, was signed in September 2014. Air transport agreements play an important role in improving international connectivity for Canadians.

Canada-Korea Free Trade Agreement (CKFTA)

On March 11, 2014, Prime Minister Stephen Harper and South Korean President Park Geun-hye announced the conclusion of negotiations for the Canada-Korea Free Trade Agreement (CKFTA) and publicly stated their mutual intention to have the Agreement enter into force as soon as possible. The text of the final agreement was tabled in Parliament by the International Trade Minister Fast on June 12, 2014. On September 22, 2014, Prime Minister Harper and South Korean President Park witnessed the signature of the CKFTA during President Park’s state visit to Canada and reaffirmed their mutual commitment to prompt implementation. The CKFTA entered into force on January 1, 2015.

WTO Agreement on Government Procurement

South Korea is in the process of ratifying the revised WTO Agreement on Government Procurement (GPA). The revised GPA entered into force on April 6, 2014, for those parties which had ratified the Agreement (including Canada). The Agreement builds upon the original GPA of 1994 by further opening up procurement market access opportunities in key economies, including South Korea. Canadian businesses will benefit from the revised GPA through greater access to the government procurement markets of other GPA parties for a range of goods and services, particularly at the sub-national level. According to WTO estimates, the value of new market access opportunities provided by the revised GPA will be between $80 billion and $100 billion.

WTO Information Technology Agreement

SouthKorea was an original signatory to the WTO Information Technology Agreement (ITA) concluded at the 1996 WTO Ministerial Conference and is also taking part in negotiations on the ITA’s expansion. Under the ITA, South Korea provides duty-free access for all products covered by the ITA, including telecommunication products and their parts, computing products and their parts, semiconductors and integrated circuits.

Selected Trade Initiatives - Seize the Opportunity

  • Agriculture and Processed Food
    • Food & Hotel Asia, April 2016 (Singapore)
  • Education
    • Canada Education Fair, November 2015
  • Information & Communication Technology (ICT)
    • G-Star, November 2015
  • Sustainable Technologies
    • World Hydrogen Technologies Convention, October 2015 (Sydney, Australia)

Support Services

This document is not intended to provide specific advice and should not be relied on as such. It is intended as an overview only. Where not otherwise indicated, the information is provided by the Embassy of Canada to Korea. No action or decision should be taken without detailed independent research and professional advice concerning the specific subject matter of such action or decision. While Foreign Affairs, Trade and Development Canada (DFATD) has made reasonable efforts to ensure that the information contained in this document is accurate, DFATD does not represent or warrant the accurateness, timeliness or completeness of the information contained herein. This document or any part of it may become obsolete at any time. It is the user’s responsibility to verify any information contained herein before relying on such information. DFATD is not liable in any manner whatsoever for any loss or damage caused by or resulting from any inaccuracies, errors or omissions in the information contained in this document. This document is not intended to and does not constitute investment, legal or tax advice. For investment, legal or tax advice, please consult a qualified professional.