Canadian Pork Industry once again urgently calling on Federal Government
Sunday, November 20, 2011
Help bring closure to vital Free Trade Agreement with Korea!
Free trade between Canada and South Korea, formally launched in July 2005, has gone largely nowhere since then, despite several high-level meetings between the leaders. These meetings included a November meeting in 2010 on the fringes of the G20 in Seoul, and with South Korean President Lee Jyung-bak whom attended the G20 Summit in Toronto in June.
The republic of Korea is Canada’s 7th largest merchandise trading partner and 3rd largest in Asia, after China and Japan. Canada-South Korea two-way merchandise trade reached more than $9.8 billion in 2010. Canada’s main exports to South Korea include mineral fuels and oils, mineral ores, aluminum, wood pulp and pork. Canada is the second largest supplier of pork to Korea. In 2011, Canada pork exports are expected to reach $300 million. Korea is Canada’s fourth largest market in value terms accounting for 10% of the total.
Starting in 2008, Canada and Korea were in the midst of negotiations, but no deal has yet been concluded. Canadian pork producers and exporters urgently need the Government of Canada to stand up for their interests by completing negotiations of an FTA access to Korea as soon as possible.
In 2010, Canada exported $2.8 billion in pork products to over 140 countries. Canada is the 3rd largest pork exporter in the world. Canada is Korea’s 2nd largest pork supplier with expert of $99.4 million in 2010. Korea’s pork imports are expected to grow as a result of a domestic foot and mouth disease and Korea’s recent agreement with North Korea to provide food experts to that country. All of Canada’s key pork competitors in Korea – the US, EU and Chile – now have FTA’s with that country. When the US and EU FTA’s are implemented Canada pork exports to Korea are expected to disappear within two to three years. An FTA with South Korea could preserve Canada’s current exports and lead to growth opportunities of $300 million a year. In Manitoba, the value of pork exports to South Korea for 2011 to date has been over $163 million, as compared to over $200 million to Japan. While the Japanese population is expected to decline due to its older population, the Korean population is expected to rise, as it is a relatively young country. Overall, in 2010 the total value of pork exports to the world totaled $475,133,513. For comparative purposes, Hydro sold $427,000.000 in electricity. This is clearly a market that simply can’t be ignored – an FTA must be resolved and must be done so quickly.
Korean import tariffs on pork are in the 22.5 to 25% range. Elimination of these tariffs in a free trade agreement with Korea promised substantial growth in high quality Canadian pork exports. Korea has an active and expanding program of FTA Negotiations. FTA’s with Chile and the EU are already in place and have just completed an FTA with the US, our main competitor in the pork market in Korea. These provide reduced tariffs and eventually free entry for pork with competes with Canadian pork. Canada is losing market share to US and EU exporters – as Korean importers see no immediate prospect of Canada concluding an FTA.
The House of Commons Standing Committee on International Trade (SCIT) recognized that if Canada does not get access to the Korean market on the same terms as its competitors, then Canadian exporters will lose their existing position in Korea. This concern clearly applies to Canadian pork exports. Canadian pork exporters cannot afford to be at a permanent tariff disadvantage vis-à-vis the EU, US, Chile or any other of Canada’s competitors. Korea also concluded a free trade agreement with the US which has been approved by Congress. US pork exports expect that as a result, their exports will increase by nearly $700 million and increase the price of every hog produced by $10. Tariffs on US exports to Korea of fresh and frozen pork will be eliminated by 2016. The preference over non-FTA pork imports will accelerate and cumulate quickly. Without an FTA, Canadian pork exports to Korea will be eliminated or virtually eliminated over a very short period estimated at 15-24 months. In addition Canadian exporters would be denied export growth of at least $200 million a year. Exports of Pork to Korea will be shifted back into the Canadian market. Canadian prices for pork and the prices which farmers receive for their hogs will decline.
Canadian Pork producers, processors and exporters are urgently calling on the government to bring closure to FTA negations with Korea. Our third biggest export market is at risk and the time to act is NOW! Of course there is appreciation for Canada seeking a high quality agreement, but the stalemate isn’t acceptable. No meetings or negations have taken place for the past 3 years, stated Juregen Preugschas, Chairman of the Canadian Pork Council, “Canada needs Korea and its disappointing that after 13 sessions - virtually all of them generating positive signals, the discussion stopped.”