The Canada-Korea Free Trade Agreement: Benefits and Opportunities for the Canadian Fish and Seafood Sector

The CKFTA is Canada’s first FTA in the Asia-Pacific region. It strengthens Canada’s presence in the important South Korean market and helps expand our economic footprint in this dynamic and vibrant part of the world. It also offers exporters, investors and service providers strategic access to regional and global value chains, and levels the playing field vis-à-vis their key competitors from the U.S., the EU, Australia and other countries that have concluded an FTA with South Korea. As such, the CKFTA provides a platform for Canadian companies to become increasingly competitive in the region. In terms of economic impact, the CKFTA is projected to boost Canada’s GDP by $1.7 billion and result in an increase in Canada’s exports to South Korea by over 30%.

Overview of Opportunities in South Korea

• In 2013, South Korea imported nearly $78 million worth of fish and seafood from Canada.
• The major fish species consumed in South Korea include mackerel, cod, herring, monkfish, cuttlefish, rockfish, lobster, shellfish, croaker, and pike.
• Opportunities also exist for snow crab, capelin, shrimp, whelk, hagfish, surf clams, live freshwater eels, elver, skate and ray, and salmon.
• When making purchasing decisions, South Korean consumers tend to look for high quality and low cost food products that are healthy and convenient. This also applies to fish and seafood purchases.

Improved Market Access

The CKFTA creates significant market access opportunities for Canada’s fish and seafood sector by eliminating South Korea’s tariffs on all fish and seafood products.  Nearly 70 percent of products in this sensitive South Korean sector will be duty-free within five years of the Agreement’s entry into force, and all remaining duties will be eliminated within 12 years.

For example, with the CKFTA’s entry into force on January 1, 2015, tariffs were eliminated on products such as:

• lobster (frozen), from a rate of 20 percent; and
• Pacific and Atlantic salmon (fresh/chilled/smoked), from a rate 20 percent.

Tariffs on the following products of interest to Canada will be eliminated within three years:

• lobster (not frozen), from a current rate of 20 percent;
• mussels, from a current rate of 20 percent;
• smoked shrimps and prawns (not in airtight containers), from a current rate of 20 percent; and
• red snow crab meat (preserved or prepared), from a current rate of 20 percent.

Tariffs on the following products of interest to Canada will be eliminated within five years:

• prepared/preserved salmon in airtight containers, from a current rate of up to 20 percent;
• Bai top shell (sea snails), from a current rate of up to 20 percent;
• frozen sardines, from a current rate of up to 10 percent;
• fish oil, from a current rate of up to 3 percent; and
• frozen Pandulus borealis shrimp, from a current rate of up to 20 percent.

Tariff elimination gives Canadian fish and seafood exporters preferential access to the South Korean market and levels the playing field vis-à-vis South Korea’s current FTA partners such as the United States, Chile and the European Union.

With Canadian fish and seafood exports to South Korea facing an average tariff rate of 16.5 percent and tariff peaks as high as 47 percent, Canadian exporters stand to gain considerably from the CKFTA.

Simplified Origin Procedures and Trade Facilitation

The CKFTA makes it easier and less costly for Canadian fish and seafood companies to do business in the South Korean market. For example, the Agreement simplifies the process of clearing goods through South Korean customs in view of:

• clear and transparent origin procedures to administer effectively the rules of origin without creating unnecessary obstacles to trade;
• access to advance rulings on the origin or tariff classification of products;
• the promotion of border procedures automated through the use of information technology in order to expedite procedures for the release of goods; and
• an impartial and transparent system for addressing any complaints about customs rulings and decisions.

Reduced Non-Tariff Barriers

Canada and South Korea recognize the importance of ensuring that improved market access in the fisheries and seafood sector is supported by robust sanitary and phytosanitary (SPS) provisions.

Under the CKFTA, an SPS committee allows experts to collaborate and consult on SPS measures to enhance cooperation and facilitate trade by discussing issues before they become problems. This benefits Canadian fish and seafood exporters by helping to ensure that market access gains are not undermined by unjustified SPS trade barriers.

The CKFTA also contains strong disciplines on technical barriers to trade, which help Canadian businesses reap the benefits of the Agreement and prevent market access gains from being undermined by a lack of transparency or unjustified trade restrictions. These strong disciplines are backed up by comprehensive bilateral dispute settlement provisions. Specifically, the Agreement:

• promotes and requires (in the absence of good reason not to) the use of internationally accepted standards that minimize duplicative certification and testing of products;
• improves transparency with respect to standards and regulatory development by ensuring that companies have access to information, such as laws, regulations and administrative rulings, that can affect trade;
• encourages cooperation in bilateral, regional and multilateral forums on ways to promote increased transparency; and
• establishes a committee (and prospectively a working group) whereby any standards-related concerns can be addressed and dealt with on a timely basis.

Other Key CKFTA Benefits for the Fish and Seafood Sector

Investment

Canadian companies investing in South Korea benefit from the provisions contained in the Agreement’s investment chapter.  These provisions provide Canadian investors with a more transparent and predictable investment environment, and help mitigate any risks associated with investing in South Korea. Among other things, the investment chapter provides protection against discriminatory and arbitrary treatment, protection from expropriation without prompt and adequate compensation, and access to independent international investor-state dispute settlement.

Intellectual Property

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

For more information on the CKFTA and prospective benefits from this Agreement, please visit Canada-Korea Free Trade Agreement, or contact the Trade Commissioner Service in South Korea (seoul-td@international.gc.ca).