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
The “Digital Era” is forcing us to engage with new methods to build, operate and maintain applications. This transformation also implies an evolution to more and more intelligent applications to better engage with the customers, while creating significant market differentiators. In both cases, the cloud has become a key enabler to embrace this digital revolution. So, moving to the cloud is no longer the question; the new questions are HOW and WHEN. To make this equation even more complex, most ...
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, provided a fun and simple way to introduce Machine Leaning to anyone and everyone. He solved a machine learning problem and demonstrated an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intelligence and B...
As you move to the cloud, your network should be efficient, secure, and easy to manage. An enterprise adopting a hybrid or public cloud needs systems and tools that provide: Agility: ability to deliver applications and services faster, even in complex hybrid environments Easier manageability: enable reliable connectivity with complete oversight as the data center network evolves Greater efficiency: eliminate wasted effort while reducing errors and optimize asset utilization Security: imple...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...
The past few years have brought a sea change in the way applications are architected, developed, and consumed—increasing both the complexity of testing and the business impact of software failures. How can software testing professionals keep pace with modern application delivery, given the trends that impact both architectures (cloud, microservices, and APIs) and processes (DevOps, agile, and continuous delivery)? This is where continuous testing comes in. D
Modern software design has fundamentally changed how we manage applications, causing many to turn to containers as the new virtual machine for resource management. As container adoption grows beyond stateless applications to stateful workloads, the need for persistent storage is foundational - something customers routinely cite as a top pain point. In his session at @DevOpsSummit at 21st Cloud Expo, Bill Borsari, Head of Systems Engineering at Datera, explored how organizations can reap the bene...
Digital transformation is about embracing digital technologies into a company's culture to better connect with its customers, automate processes, create better tools, enter new markets, etc. Such a transformation requires continuous orchestration across teams and an environment based on open collaboration and daily experiments. In his session at 21st Cloud Expo, Alex Casalboni, Technical (Cloud) Evangelist at Cloud Academy, explored and discussed the most urgent unsolved challenges to achieve f...
The dynamic nature of the cloud means that change is a constant when it comes to modern cloud-based infrastructure. Delivering modern applications to end users, therefore, is a constantly shifting challenge. Delivery automation helps IT Ops teams ensure that apps are providing an optimal end user experience over hybrid-cloud and multi-cloud environments, no matter what the current state of the infrastructure is. To employ a delivery automation strategy that reflects your business rules, making r...
The 22nd International Cloud Expo | 1st DXWorld Expo has announced that its Call for Papers is open. Cloud Expo | DXWorld Expo, to be held June 5-7, 2018, at the Javits Center in New York, NY, brings together Cloud Computing, Digital Transformation, Big Data, Internet of Things, DevOps, Machine Learning and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding busin...
In a recent survey, Sumo Logic surveyed 1,500 customers who employ cloud services such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). According to the survey, a quarter of the respondents have already deployed Docker containers and nearly as many (23 percent) are employing the AWS Lambda serverless computing framework. It’s clear: serverless is here to stay. The adoption does come with some needed changes, within both application development and operations. Tha...
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone in...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
In his general session at 21st Cloud Expo, Greg Dumas, Calligo’s Vice President and G.M. of US operations, discussed the new Global Data Protection Regulation and how Calligo can help business stay compliant in digitally globalized world. Greg Dumas is Calligo's Vice President and G.M. of US operations. Calligo is an established service provider that provides an innovative platform for trusted cloud solutions. Calligo’s customers are typically most concerned about GDPR compliance, application p...
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...