Welcome!

Article

Free Trade Agreement Makes Canada More Attractive to Investors

Tremendous Optimism for the Canada-Korea Free Trade Agreement!

Canadian Prime Minister Stephen Harper has been hard at work closing a deal with his South Korean counterpart President Park Geun-hye. And the agreement that the two leaders have been working on is the Canada-Korea Free Trade agreement. On the 11th March 2014 the free trade agreement was signed, sealed and delivered and it promises to eliminate 98% of duties on all goods between the two countries. This ground-breaking development has been over nine years in the making, and it offers Canadian investors a fantastic opportunity to tap into the rich South Korean market. For South Korea, this is but one of many massive free-trade agreements that the country has recently signed. Economic analysts point to the recent free-trade deals with the US, the EU and Australia.

How should Canadians feel about the Free Trade Agreement with South Korea?

Free-trade agreements typically provide cannon fodder to opponents of these agreements who worry that local industry will be severely impacted by the elimination of tariffs and duties between nations. Let's assume that a manufacturer in Ontario has been producing vehicles or heavy machinery for export to foreign countries and that tariffs and duties in Canada make imports from foreign countries competitively priced so that local industry can sustain itself. In the absence of tariffs and duties, foreign-produced vehicles - perhaps from South Korea - may in fact be cheaper than domestically produced vehicles, machinery, or equipment. Therein lies the dilemma in respect of free-trade agreements. Fortunately, various safeguards and clauses can be added to protect local industry.

In the US for example, President Barack Obama recently concluded the biggest free-trade agreement in the history of the US known as the Trans-Pacific Partnership (TPP). This free-trade agreement will allow the US to reposition itself as a major economic power in the Pacific, to counter China's growing influence in the region. Again, critics of this free-trade deal worry that the elimination of tariffs, duties and other taxes will make US industries vulnerable to foreign producers. However, the benefits of free-trade agreements are extensive. Since tariffs, duties and excise taxes are effectively eliminated the consumer gets to pay less for goods that are imported from the signatories of the free-trade agreement.

Free-trade deals lower costs for consumers; the trick is to protect local industry from job losses and lower levels of production. What is beneficial to Canada in this instance is that South Korea is a highly advanced country where GDP per capita is among the highest in the world. This means that labour costs, and production costs are similar to Canadian standards of living - so the discrepancies will not be as glaring as they might be if the free-trade agreement was concluded with China. The GDP per capita in South Korea is $24,328 (IMF figures for 2013) while the GDP per capita in Canada for 2013 is $51,989 (IMF figures for 2013).

Ways that Canadians will Benefit from the Free-Trade Agreement

Food producers will benefit immeasurably from this new deal. South Korean duties on seafood, beef and pork have traditionally been very high, but within 15 years they will be removed. Border taxes will also be eliminated on ice wine, lumber, liquefied natural gas, whiskey and the like. Now for more good news: Canada's gross domestic product is expected to rise by $1.7 billion. This is over and above the recent trade deal that was concluded with the European Union in October 2013.

More importantly, the expansionary policy being adopted by the conservative government in Canada is likely to lead to additional free-trade deals with other Asian Tigers like Japan. Unfortunately, Canada was unable to protect its automobile industry with retaliatory measures such as the snapback mechanism that the US negotiated in its free-trade deal with South Korea. There are ways for the South Koreans to make Canadian vehicles more expensive to the local market by imposing greater taxes on imports from Canada.

The 6.1% duty that is currently being levied on all Korean auto imports will all but disappear within 2 years of the finalized trade agreement. This will make South Korean vehicles significantly cheaper - thereby endangering domestic automobile manufacturers. A nifty clause has been included that allows Canada to impose tariffs if the number of South Korean vehicles gets too high.

Supporters of the free trade agreement with Canada/South Korea insist that the deal is far bigger than the automobile industry. The benefits to Canadians extend far and wide. Beef producers and pork producers are particularly pleased at the deal. Their only regret is that the Canadians were unable to negotiate a more rapid phasing out of tariffs in key sectors where Canadian exports are strong.

According to the Canadian government, the Canada-Korea free trade agreement is likely to create thousands of jobs and increase Canadian exports to South Korea by at least 32%. It is also Asia's fourth biggest economy valued at $1.1 trillion. The Canada-Korea Free Trade Agreement will make it possible for Canadian businesses to expand into South Korea and enjoy duty-free access on 81.9% of tariff lines in South Korea. Money saved is like cash in the bank!

Risk Disclaimer: Please ensure that you understand fully the risks involved and do not invest money you cannot afford to lose. The information provided can under no circumstances be considered as a recommendation to engage in any trade.

Our group of companies through its subsidiaries is licensed by the Cyprus Securities & Exchange Commission (CySEC, License Number 079/07), which has been passported in the European Union through the MiFID Directive and in Australia by ASIC (AFS license No. 246566).

More Stories By Jay Elliott-Purdy

Jay Elliott-Purdy joined easy-forex in 2010 and is the UK Branch Manager. He has an MSc in International Economics and has managed portfolios in South America and more recently in London with easy-forex. Elliott-Purdy specializes in trader education on technical and fundamental market dynamics. He has presented at some of the UK's biggest Trading and Investment conferences and has comprehensive knowledge of intra-day demand and supply, behavioral finance and trading psychology.

Latest Stories
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
As the world moves toward more DevOps and Microservices, application deployment to the cloud ought to become a lot simpler. The Microservices architecture, which is the basis of many new age distributed systems such as OpenStack, NetFlix and so on, is at the heart of Cloud Foundry - a complete developer-oriented Platform as a Service (PaaS) that is IaaS agnostic and supports vCloud, OpenStack and AWS. Serverless computing is revolutionizing computing. In his session at 19th Cloud Expo, Raghav...
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business in 2016. However, IoT is far more complex than most firms expected. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, a renowned visionary and thought leader, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology and business models to adopt and leverage IoT. He will drill down to the components in this fra...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
There is growing need for data-driven applications and the need for digital platforms to build these apps. In his session at 19th Cloud Expo, Muddu Sudhakar, VP and GM of Security & IoT at Splunk, will cover different PaaS solutions and Big Data platforms that are available to build applications. In addition, AI and machine learning are creating new requirements that developers need in the building of next-gen apps. The next-generation digital platforms have some of the past platform needs a...
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, wil...
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Enterprises have forever faced challenges surrounding the sharing of their intellectual property. Emerging cloud adoption has made it more compelling for enterprises to digitize their content, making them available over a wide variety of devices across the Internet. In his session at 19th Cloud Expo, Santosh Ahuja, Director of Architecture at Impiger Technologies, will introduce various mechanisms provided by cloud service providers today to manage and share digital content in a secure manner....
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
Pulzze Systems was happy to participate in such a premier event and thankful to be receiving the winning investment and global network support from G-Startup Worldwide. It is an exciting time for Pulzze to showcase the effectiveness of innovative technologies and enable them to make the world smarter and better. The reputable contest is held to identify promising startups around the globe that are assured to change the world through their innovative products and disruptive technologies. There w...
SYS-CON Events announced today that Isomorphic Software will exhibit at DevOps Summit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Isomorphic Software provides the SmartClient HTML5/AJAX platform, the most advanced technology for building rich, cutting-edge enterprise web applications for desktop and mobile. SmartClient combines the productivity and performance of traditional desktop software with the simp...
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.