Canada-Korea Free Trade Agreement (CKFTA)
How the Canada-Korea Free Trade Agreement Will Benefit Yukon
Creating jobs and opportunities for Yukoners
Yukon stands to benefit from preferred access to the South Korean market. South Korea is already Yukon’s second-largest export destination, with exports worth an average of $14 million annually from 2010 to 2012.
While the majority of this trade already enters South Korea duty-free, the Canada-Korea Free Trade Agreement, upon entry into force, will provide access to new opportunities in the South Korean market. For example, potential gains will be had in sectors where Yukon has global export capacity but does not currently export to South Korea—such as mineral products, construction equipment and precious gems—and for which South Korean tariffs will be eliminated under the Agreement. Exporters in these sectors will also benefit from other Agreement provisions that will improve conditions for exports—provisions, for example, that ease regulatory barriers, reinforce intellectual property rights and ensure more transparent rules for market access. Overall, Yukon has a lot to gain from the Canada-Korea Free Trade Agreement.
Top benefits for Yukon:
- tariff elimination on hand tools, from a current rate of up to 8 percent;
- tariff elimination on surveying instruments, from a current rate of up to 8 percent;
- tariff elimination on gold, from a current rate of up to 3 percent;
- tariff elimination on mineral products, from a current rate of up to 8 percent;
- tariff elimination on construction equipment, from a current rate of up to 8 percent;
- improved access for professional services;
- predictable, non-discriminatory rules for Canadian investors;
- improved access to South Korea’s government procurement market;
- strong provisions on non-tariff measures, backed up by fast and effective dispute settlement provisions
Opening new markets in South Korea for Yukon’s world-class services
The service sector plays an integral role in Yukon’s economy, accounting for 65.6 percent of the territory’s total GDP in 2012.
Canada’s service exports to South Korea are worth more than $750 million a year. Jobs in this sector are traditionally highly skilled and well-paying, creating important opportunities for Canadian expertise.
Improved access to markets
The Canada-Korea Free Trade Agreement will provide Canadian service suppliers with greater and more predictable access to the dynamic South Korean market. Once in force, the Agreement will create a level playing field for Canadian service suppliers against key competitors from the United States and the European Union, both of whom have implemented their own respective free trade agreements with South Korea.
- The Agreement includes significant improvements and new sectoral market access, which go well beyond South Korea’s obligations under the WTO’s General Agreement on Trade in Services (GATS) in many sectors of export interest to Canada. The Agreement will establish enhanced market access in areas such as professional services (e.g. foreign legal consultancy services, commercial education and training, research and development), environmental services and business services. This outcome is commensurate with South Korea’s free trade agreement commitments with the United States and the European Union.
- The Agreement uses a “negative list” approach for listing reservations to the obligation of the cross-border trade in services chapter, which means that everything is open unless otherwise listed in a reservation.
- The Agreement also ensures that any future changes that aim to make it easier for Canada’s service providers to access the South Korean market (or for Canadian investors to obtain better treatment) will be locked in every time they bring improvements in access. This is referred to as the “ratchet mechanism.” This mechanism means that if South Korea liberalizes a law, policy or regulation that makes it easier for Canadians to conduct their services or investment activities in South Korea, the liberalization becomes South Korea’s new obligation under the Agreement.
Temporary entry for business persons
South Korea’s temporary-entry commitments under the Agreement are more ambitious than any of South Korea’s other free trade agreements. The Agreement’s temporary-entry provisions will provide new, preferential access to the South Korean market, facilitating movement between Canada and South Korea for business visitors, traders and investors, intra-company transferees, professionals (i.e. contract service suppliers and independent professionals) and their spouses.
Under the Agreement, Canadian firms can send their employees to South Korea to fulfill service contracts, for instance, in science, engineering and IT fields. Canadian independent professionals (i.e. self-employed professionals contracted directly by a South Korean or South Korean company) such as architects, engineers, management consultants and veterinarians may enter the South Korean market with a pre-arranged contract.
In addition, the Agreement will benefit the e-commerce and telecommunications sectors.
The telecommunications sector is important for the economies of Canada and South Korea. Not only is telecommunications a constantly growing service sector, it is also one of the most important enablers in the modern economy, providing the means of delivering other services that Canadians depend on.
The Agreement will ensure that all players in the telecommunications market have fair access to networks and services in each other’s market and that regulators act impartially, objectively and in a transparent manner. Service providers and investors will benefit from increased transparency and predictability of the regulatory environment and secure, competitive marketplaces.
Electronic commerce was in its infancy 20 years ago. Today, e-commerce is a part of our daily lives. Canadians shop and plan holidays online, and buy and download software and entertainment content, including movies, television and music. Advertisers are making increased use of “smart advertising” on the Web to track our shopping habits and promote specific deals likely to interest us.
Canada and South Korea recognize the growing economic importance and changing nature of this technologically advanced sector. To facilitate trade in the digital economy, the Agreement includes a commitment whereby both parties will not levy customs duties, fees or other charges on digital products that are transmitted electronically. As well, Canada has agreed to important measures under the Agreement aimed at building trust and confidence in the digital environment, such as those having to do with the online protection of e-commerce users’ personal information.
Reaping the benefits
The Agreement provides Canadian service providers with improved protection, predictability and transparency for conducting business, as well as greater access to South Korea’s sophisticated services market.
Canadian gains under the Canada-Korea Free Trade Agreement will enable Canadian companies to compete on a level playing field with their major competitors in the South Korean market, giving them an advantage over competitors from other countries. Ultimately, this advantage will benefit the entire Canadian economy and lead to new jobs, growth and prosperity in a sector that exemplifies Canadian expertise.
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