© Her Majesty the Queen in Right of Canada, 2014
All requests for permission to reproduce this document
or any part thereof shall be addressed to
Public Works and Government Services Canada
Cat. No.: FR5-87/2014
ISB: 978-1-100-54700-8
INTRODUCTION 5
Canada-South Korea trade and investment relationship .................................................................................................... 7
What are the benefits of a free trade agreement with South Korea? .......................................................................... 8
What does the Canada-Korea Free Trade Agreement cover? ........................................................................................ 9
PART ONE TRADE IN GOODS 11
Market access for goods ................................................................................................................................................................. 12
Non-agricultural goods .................................................................................................................................................................. 12
Opening markets for industrial goods ........................................................................................................................................... 12
Metals and minerals .......................................................................................................................................................................................... 13
Aerospace ............................................................................................................................................................................................................. 14
Chemicals and plastics .................................................................................................................................................................................... 14
Life sciences ......................................................................................................................................................................................................... 15
Information and communications technology ........................................................................................................................................ 16
Textiles and apparel ......................................................................................................................................................................................... 16
Fertilizer ................................................................................................................................................................................................................. 17
Natural gas ........................................................................................................................................................................................................... 17
Opening markets for forestry and value-added wood products ........................................................................................ 18
Opening markets for fish and seafood products ..................................................................................................................... 20
Opening markets for automotive products ................................................................................................................................ 22
Agricultural products ................................................................................................................................................................... 24
Opening markets for agricultural and agri-food products ................................................................................................... 24
Processed food .................................................................................................................................................................................................. 27
Wines and spirits ............................................................................................................................................................................................... 27
Furskins ................................................................................................................................................................................................................. 28
National treatment and market access .................................................................................................................................... 29
Rules of origin ......................................................................................................................................................................................... 30
Origin procedures and trade facilitation ................................................................................................................................. 31
Sanitary and phytosanitary measures ....................................................................................................................................... 31
Standards-related measures ........................................................................................................................................................ 32
Trade remedies ................................................................................................................................................................................. 32
Bilateral safeguards ......................................................................................................................................................................... 33
PART TWO SERVICES, INVESTMENT AND RELATED MATTERS 34
Cross-border trade in services ................................................................................................................................................... 35
Financial services ................................................................................................................................................................................... 36
Telecommunications ............................................................................................................................................................................ 37
E-commerce ............................................................................................................................................................................................. 38
Temporary entry for business persons ......................................................................................................................................... 38
Investment ................................................................................................................................................................................................ 39
Competition policy ........................................................................................................................................................................... 41
Monopolies and state enterprises ............................................................................................................................................. 42
PART THREE GOVERNMENT PROCUREMENT 43
PART FOUR INTELLECTUAL PROPERTY 46
PART FIVE DISPUTE SETTLEMENT AND INSTITUTIONAL PROVISIONS 49
Dispute settlement .......................................................................................................................................................................... 50
Institutional provisions ................................................................................................................................................................... 50
Exceptions ............................................................................................................................................................................................ 51
PART SIX ENVIRONMENT AND LABOUR 53
Environment ....................................................................................................................................................................................... 54
Labour ................................................................................................................................................................................................... 54
APPENDIX TECHNICAL SUMMARY OF FINAL NEGOTIATED OUTCOMES 55
5
INTRODUCTION
6
The Government of Canada is focused on creating
jobs
and opportunities for Canadians in every region
of the country.
The government has therefore launched the most
ambitious trade plan in Canadian history. In less than
seven years, Canada has concluded free trade
agreements with nine countries and is negotiating
with 30 more. In addition, Canada has announced an
historic agreement-in-principle with the 28-nation
European Union that will open markets in the EU
and give Canadian businesses access to half a billion
affluent customers, creating thousands of jobs for
Canadians.
Our long-term prosperity depends on our ability to
take advantage of economic opportunities in
emerging markets. The most recent Speech from the
Throne committed to expanding trade in Asia to
benefit Canadian workers, businesses and industries
across the country. The Canada-Korea Free Trade
Agreement delivers on that commitment.
On March 11, 2014, in Seoul, Prime Minister
Stephen Harper and President Park Geun-hye of
South Korea announced that Canada and South
Korea had concluded negotiations on a new free
trade agreement. This landmark achievement
constitutes Canada’s first free trade agreement in
Asia and will provide new access for Canadian
businesses and workers to South Korea, the fourth-
largest economy in Asia, with an annual GDP of
$1.3 t
rillion and a population of 50 million people.
Th
e Canada-Korea Free Trade Agreement will create
thousands of jobs for hardworking Canadians by
increasing Canadian exports to South Korea by
32 percent and boosting Canada’s economy by
$1.7 billion. It will level the playing field for Canadian
businesses competing with South Korea’s other
trading partners, including the United States and the
European Union, who already have free trade
agreements in place with South Korea. The
Agreement will benefit workers in every region of the
country by increasing sales and exports and will give
consumers more choice and lower prices.
South Korea is not only a major economic player in
its own right and a key market for Canada: it also
serves as a gateway for Canadian businesses and
workers to the dynamic Asia-Pacific region as a
whole. As a result, Canadian companies will be able
to take better advantage of South Korea as a strategic
base for expanding their presence in all of Asia and
across its supply chains.
Being well-positioned in this region against our
competitors is critical to Canada’s own long-term
economic prosperity. The Canada-Korea Free Trade
Agreement will tap into unrealized potential and
create jobs and opportunities for our businesses and
workers.
With more than 50 years of diplomatic relations
between Canada and South Korea, a free trade
agreement is the natural next step in a dynamic
relationship between two nations committed to
economic growth and development through free
trade.
7
Fast facts: South Korea
Capital: Seoul
Population: 50 million
Total area: 120,410 km²
Currency: Won
Language(s): Korean
Canada has long enjoyed positive relations with South Korea. The bilateral relationship continues to develop as South
Korea becomes an increasingly important economic partner and a like-minded ally in multilateral forums.
As trading nations, Canada and South Korea support trade liberalization and share membership in many multilateral
economic organizations, including the G-20, the Asia-Pacific Economic Cooperation (APEC) forum, the Organisation for
Economic Co-operation and Development (OECD) and the World Trade Organization (WTO). Both countries also share
similar views on many multilateral and global issues, including strengthening the multilateral trading system, UN Security
Council reform, human rights, and nuclear non-proliferation and disarmament.
South Korea’s economic growth in the last 30 years has been remarkable: since 1980, South Korea’s GDP has grown more
than sixfold and experienced an average annual growth rate of 6.5 percent.
Canada-South Korea trade and
investment relationship
Canada and South Korea enjoy a significant trade
and investment relationship with tremendous
potential for growth. South Korea is Canada’s
seventh-largest merchandise trading partner and its
third-largest in Asia, after China and Japan.
Trade and investment (2012)
(value in millions of Canadian dollars)
Merchandise exports from Canada to South Korea
(2010-2012)
(value in millions of Canadian dollars)
3,713.3
6,372.4
569
5,826
Canada’s merchandise exports to South Korea
Canada’s merchandise imports from South Korea
Canadian investment in South Korea
South Korean investment in Canada
Industrial goods, 2,887.0
Metals and minerals (included in industrial goods), 2,077.5
Agriculture and agri-food, 707.8
Forestry and value-added wood products, 501.3
Fish and seafood, 45.4
Economic facts (2012)
GDP: $1.3 t
rillion
GDP per capita: $22,570
GDP growth: 2 percent
Inflation: 2.2 percent
Unemployment: 3.2 percent
8
What are the benefits of a free
trade agreement with South
Korea?
1. The Canada-Korea Free Trade Agreement
provides new opportunities for Canadian
exporters and workers across the country,
which allows Canada’s economy to grow and
create jobs
The Agreement will create thousands of jobs and
opportunities for Canadians by opening new
markets to Canadian exporters and generate jobs
and opportunities for Canadians in every
province and territory. More than 2.78 million
Canadians working in the industrial goods sector
(such as chemicals and plastics, information and
communications technology, aerospace, metals
and minerals, medical devices, and textiles and
apparel), agricultural and agri-food products,
wines and spirits, fish and seafood, and forestry
and value-added wood products, will benefit
from more trading opportunities and duty-free
access to South Korea.
Canada’s world-class service sectors, including
professional services, environmental services and
business services, will also benefit from improved
market access. The Agreement will also
strengthen opportunities and protection for two-
way investment, as well as increase prospects for
joint ventures between Canadian and South
Korean firms, by lowering barriers to trade and
facilitating the movement of business persons
between the two countries. Bilateral investment
plays a crucial role in facilitating job creation,
spurring on creativity and technology, and linking
Canada to global and regional value chains in
Asia.
2. The Canada-Korea Free Trade Agreement
provides preferential access to an important
market in Asia
The Agreement is Canada’s first free trade
agreement in the dynamic and fast-growing Asia-
Pacific region. As part of the most ambitious
plan in Canadian history to open new markets,
the Government of Canada is working to create
deeper economic ties through trade and
investment agreements in the Asia-Pacific region.
Being well-positioned in this region is critical to
Canada’s prosperity, and this agreement is the
first step in realizing the untapped potential in
Asia.
The Canada-Korea Free Trade Agreement’s most
visible benefit is the ambitious obligation
undertaken by Canada and South Korea to
eliminate tariffs. When the Agreement is fully
implemented, South Korea will remove duties on
98.2 percent of tariff lines and Canada will
remove duties on 97.8 percent of tariff lines. As
average South Korean tariffs are three times
higher than Canada’s (13.3 percent vs.
4.3 percent), tariff elimination will be particularly
advantageous for Canadian businesses exporting
to the South Korean market.
For Canadian consumers, the elimination of
tariffs under the Agreement will reduce the cost
of imported products and result in lower prices
and more choice.
3. South Korea is a gateway to emerging and
fast-growing markets in Asia
South Korea is a gateway to the wider Asia-
Pacific region. With this agreement, Canadian
companies will become increasingly competitive
in the region, as South Korea offers strategic
access to regional and global value chains. As a
result of improved market access for goods,
services and investment under the Canada-Korea
9
Free Trade Agreement, Canadian companies can
use South Korea as a strategic base for growing
their business throughout the Asia-Pacific region,
further increasing their global competiveness.
4. The Canada-Korea Free Trade Agreement
will level the playing field for Canadian
exporters and investors
The Canada-Korea Free Trade Agreement will
secure Canada’s position in the South Korean
market, where competitors like the United States
and the European Union are already enjoying
preferential access due to the U.S.-Korea FTA
(KORUS) and the EU-Korea FTA. Without the
Agreement, Canadian businesses would continue
to face a disadvantage in areas ranging from
industrial goods to agriculture and agri-food
products, fish and seafood products, forestry and
value-added wood products, services and
investment.
5. The Canada-Korea Free Trade Agreement
looks to the future to provide opportunities
for Canadian workers, businesses and
investors
The Canada-Korea Free Trade Agreement
ensures that if South Korea reduces or eliminates
restrictions on other foreign-based service
providers or investors, Canadian companies and
investors will automatically receive the same
preferential treatment. It also ensures that if
South Korea provides additional flexibility to
goods from other countries on many regulatory
matters, including, notably, standards and taxes
pertaining to vehicles and parts, Canadian goods
would automatically be granted the same
flexibility.
What does the Canada-Korea Free
Trade Agreement cover?
The Canada-Korea Free Trade Agreement will cover
virtually all aspects of Canada-South Korean trade,
including trade in goods and services, investment,
government procurement, non-tariff barriers,
environment and labour cooperation, and other areas
of economic activity.
Canada has successfully negotiated an agreement that
puts Canadian companies on a level playing field
against key competitors who already enjoy
preferential access to the South Korean market. The
Agreement also opens market access for Canadian
exporters and investors by removing non-tariff
barriers that hinder trade. The Agreement will offer
Canadians greater temporary-entry commitments
Canada-Korea Free Trade Agreement
is a gateway to Asia
“Port Metro Vancouver is very pleased with the
conclusion of a free trade agreement between Canada
and South Korea. This is an important step forward in
the growing trade relationship between our two
countries. South Korea is the port of Vancouver’s third-
largest trading partner in Asia, with trade involving
more than 200,000 containers per year and including
commodities such as grain from the Prairies and natural
resources from British Columbia. This trade
liberalization agreement will further increase the
$10 billion in annual two-way trade between Canada
and South Korea, creating jobs and driving economic
growth across Canada.”
Robin Silvester, President and CEO of Port Metro Vancouver
10
than those enjoyed by South Korea’s other free trade
agreement partners, helping to facilitate the
movement of business persons between the two
countries.
“The Canada-Korea FTA is a pivotal agreement
for Canada. South Korea is one of the world’s
fastest-growing advanced economies, and this
agreement is a watershed in Canada’s efforts to
forge closer economic ties with the Asia-Pacific
region. This deal, and others like it, is essential if
Canada is to sustain a high quality of life for its
citizens by seizing new sources of export growth
and opportunities for international trade and
investment.”
The Honourable John Manley, President and CEO, Canadian
Council of Chief Executives
“During my visit to South Korea last fall, I saw
first-hand how Canadian companies were losing
their footing in the market to competitors from
other countries. Some were even making the
difficult choice to shut down their marketing
offices. A free trade agreement between
Canada and South Korea will help our
businesses and increase growth opportunities
across many industries: agri-food, aerospace,
infrastructure, energy, chemicals, forestry,
financial services—the list goes on. Reducing
and eliminating trade and investment barriers
to this market will boost exports and create new
jobs for Canadians.”
The Honourable Perrin Beatty, President and CEO, Canadian
Chamber of Commerce
“Asia’s rich markets are the next frontier for
Canada in our quest to eliminate tariffs and
non-tariff barriers to trade and investment.
Canada’s free trade agreement with South
Korea will be the first step in gaining much more
open access for Canadian exports. This
agreement should make Canada an even more
attractive destination for investors and
manufacturers, create jobs and opportunities
for Canadians and level the playing field for
Canadian businesses, making them more
competitive on the global stage.”
Jayson Myers, President and CEO, Canadian Manufacturers &
Exporters
“I.E. Canada believes strongly that the
liberalization of trade benefits the Canadian
economy. An FTA with South Korea will create
new opportunities and secure market access for
our members. Establishing free trade with South
Korea puts Canadian businesses on an equal
footing with some of their global competitors,
particularly the United States and the European
Union, with whom the country has already
established FTAs. Formalizing our relationship
with South Korea ultimately provides Canada
with another opportunity to expand our
commercial presence and create critical growth
in new markets.”
Joy Nott, President, Canadian Association of Importers and
Exporters (I.E. Canada)
“Canada’s small and medium-sized businesses
[SMEs] have always supported freer trading
arrangements with other countries, provided the
right conditions are in place. CFIB surveys show
that high tariffs and navigating through the
rules of different countries are two of the most
difficult trade barriers faced by small
businesses. By addressing these challenges, the
Canada-Korea Free Trade Agreement will give
Canadian entrepreneurs better access to the
South Korean market, which can serve as a
launching pad for getting into the giant Asian
market. This agreement is great news for
Canada’s SMEs.”
Dan Kelly, President and CEO, Canadian Federation of
Independent Business (CFIB)
11
PART ONE
TRADE IN GOODS
12
For over half a century, Canada and South Korea
have enjoyed a stable trading relationship. Today,
South Korea is Canada’s seventh-largest merchandise
trading partner and its third-largest in Asia, after
China and Japan. The Canada-Korea Free Trade
Agreement will take this relationship to the next
level, opening new markets to Canadian exporters
and generating jobs and opportunities in every
province and territory, benefiting Canadians from
coast to coast to coast.
The chapters covering trade in goods make up the
longest and most extensive section of the
Agreement. These chapters address measures that
have a direct impact on merchandise trade and are
felt at the border, such as tariffs and customs
procedures, as well as those that are felt “behind the
border”—such as product certification and technical
standards—that can distort or restrict trade or
otherwise add costs or uncertainty for businesses
looking to increase sales.
Market access for goods
The Canada-Korea Free Trade Agreement’s most
visible benefit is the ambitious obligation undertaken
by Canada and South Korea to eliminate tariffs.
Tariffs are taxes levied at the border that have the
effect of increasing the costs to consumers of
imported goods. These tariffs are applied to “tariff
lines,” where each line corresponds to a specific
product. Tariffs can be very high, making imported
goods uncompetitive in the market.
On the first day the Agreement comes into force,
South Korea will remove duties on 81.9 percent of
tariff lines and Canada will remove duties on
76.4 percent of tariff lines. Once the Agreement is
fully implemented, South Korea will remove duties
on 98.2 percent of tariff lines and Canada will
remove duties on 97.8 percent of tariff lines. As
average South Korean tariffs are three times higher
than Canada’s (13.3 percent vs. 4.3 percent), tariff
elimination will be particularly advantageous for
Canadian businesses exporting to the South Korean
market. For Canadian consumers, the elimination of
tariffs under the Agreement stands to reduce the cost
of imported products and expand choices for them
that are increasingly cost-competitive.
The Canada-Korea Free Trade Agreement will
protect against other kinds of restrictive trade
measures that could reduce or nullify the market
access gained through the elimination of tariffs. For
example, the Agreement contains strong provisions
on non-tariff measures, backed by fast and effective
dispute settlement, to ensure that market access gains
are not undermined by unjustified trade barriers.
Non-agricultural goods
Canada-Korea Free Trade Agreement
highlights
Once the Agreement is fully implemented, duties
on all non-agricultural goods will be eliminated,
including on industrial goods, fish and seafood
products, and forestry and value-added wood
products.
Upon entry into force, 90.2 percent of non-
agricultural tariff lines on Canadian products will
be duty-free; 100 percent of non-agricultural
tariff lines will be duty-free within 12 years,
covering 10,307 tariff lines.
Opening markets for industrial goods
Canada is a nation endowed with a wealth of natural
resources and people with the creativity and skill to
turn them into a wide range of industrial goods.
Canada’s industrial goods capacity comprises a wide
range of sectors, including aerospace, automobiles,
medical-testing equipment, industrial machinery and
chemicals and plastics. If something can be
manufactured, chances are a Canadian is producing it
or working on ways to improve it. In 2012, roughly
1.8 million Canadians were employed in this sector.
13
Top industrial goods exports from Canada to South Korea
(2010-2012 annual average)
(value in millions of Canadian dollars)
Trade snapshot
The Canada-Korea Free Trade Agreement will
significantly improve market access opportunities for
Canada’s industrial sector by eliminating tariffs on all
Canadian exports of industrial goods. In 2012,
Canada’s exports of industrial goods to South Korea
were worth $2.6 billion, representing 70 percent of
Canada’s total exports to South Korea. In 2012,
South Korea imported approximately $491.4 billion
worth of industrial goods.
The Canadian market is already largely open to global
imports, including those from South Korea. Mutual
tariff elimination will help make Canadian exports
more price competitive with South Korean domestic
production. The Canada-Korea Free Trade
Agreement will also help Canadian exporters
maintain a competitive footing with major
competitors who have already implemented a free
trade agreement with South Korea, such as the
United States and the European Union.
Canada-Korea Free Trade Agreement
highlights
Upon the Agreement’s entry into force, more
than 95 percent of South Korea’s tariff lines for
industrial goods will be duty-free.
A further 4.2 percent of tariff lines will become
duty-free within five years, while the remaining
0.1 percent will be duty-free within 10 years.
For more details on tariffs, please consult the
Appendix.
Metals and minerals
Canada, one of the most resource-rich countries in
the world, is a global giant in mineral exploration and
mining, producing more than 60 minerals and metals
in Canada and operating in 100 countries around the
world. The metals and minerals industry is a
significant driver of economic growth, contributing
close to $144.1 billion to Canada’s GDP in 2012.
This sector employs more than 387,000 Canadians,
creating employment opportunities from coast to
coast to coast.
Trade snapshot
The Canada-Korea Free Trade Agreement will
significantly improve market access opportunities for
Canada’s metals and minerals sector by eliminating
tariffs on all Canadian exports, including aluminum,
iron, steel, nickel, non-ferrous metals, precious gems
and metals, and other mineral products. In 2012,
Canada’s exports to South Korea were worth
$1.8 billion, representing 49 percent of Canada’s total
exports to South Korea.
Canada-Korea Free Trade Agreement
highlights
Upon the Agreement’s entry into force,
98.7 percent of tariff lines on metals and
minerals will be duty-free and all remaining
tariffs will be eliminated within five years
(current duties of up to 8 percent).
Bituminous coal, 1,386.4
Copper ores, 199.4
Aluminum (alloyed and non-alloyed), 179.7
Nickel oxide sinters, 56.2
Fertilizer, 52.2
Uranium, 47.1
Zinc ores, 45.3
Airplanes, 41.8
Unwrought nickel, 37.5
Pulley tackle and hoist parts, 37.1
Other, 802.4
14
Products of export interest include unwrought
and unalloyed aluminum, aluminum alloys,
unwrought nickel, nickel powders, certain ferro-
alloys, and cobalt powder.
“The Canadian mining industry welcomes the
new free trade agreement with South Korea,
which is a key market for Canada’s mineral and
metal exports. The industry’s ability to compete
globally relies on having access to emerging
markets and on the free flow of goods and
capital. We strongly support this most recent
milestone of the Canadian government’s active
trade agenda.”
Pierre Gratton, President and CEO, Mining Association of
Canada
Aerospace
Aerospace is critical to Canada’s economy,
consistently ranking as one of the country’s top
manufacturing sectors. Over 80 percent of the
sector’s output is exported, and in 2012, aerospace
revenues in Canada exceeded $22 billion. Directly
and indirectly, aerospace employs 170,000 Canadians.
Aerospace is also Canada’s largest exporter of
leading-edge technology—ranked third worldwide in
civil aircraft production.
Trade snapshot
The Canada-Korea Free Trade Agreement will
significantly improve market access opportunities for
Canada’s aerospace sector by eliminating tariffs on all
Canadian exports upon entry into force. Canada’s
aerospace exports to South Korea were worth an
average of $74.5 million annually between 2010 and
2012. Over the same period, South Korean aerospace
imports were worth an average of approximately
$3.9 billion annually.
Canada-Korea Free Trade Agreement
highlights
Upon the Agreement’s entry into force,
100 percent of tariff lines will be duty-free
(current duties of up to 8 percent).
Products of export interest include turbo
propellers, turbo jet and propeller parts, and
ground-flying training equipment.
“Our industry depends on exports and access
to international markets to remain competitive
and continue creating jobs and revenues here at
home. This agreement is imperative to restoring
a level playing field for Canadian firms in the
South Korean market, which is especially
important given the considerable growth the
aerospace industry will see in the Asia-Pacific
region in coming years. We congratulate the
Government of Canada on this achievement,
and thank its representatives for their ongoing
commitment to boosting Canadian
competitiveness in international markets.”
Jim Quick, President and CEO, Aerospace Industries
Association of Canada
Chemicals and plastics
Canada has a thriving, multi-billion-dollar chemicals
and plastics industry. The sector employed close to
110,000 Canadians in 2012 and contributed
$12.4 billion to the Canadian economy. The industry
produces inorganic and organic chemicals and resins
and plastic packaging, with some 55 percent of
production exported abroad.
Trade snapshot
The Canada-Korea Free Trade Agreement will
significantly improve market access opportunities for
Canada’s chemicals and plastics industry by
eliminating tariffs on all Canadian exports. Canada's
exports of plastics to South Korea were worth an
average of $17.7 million annually between 2010 and
2012 while South Korean imports were worth an
average of approximately $10.6 billion annually. Over
15
the same period, Canadian exports of chemical
products were worth an average of $91.5 million
annually while South Korean imports of chemical
products were worth an average of approximately
$27.8 billion annually. There is great potential for the
expansion of exports.
Canada-Korea Free Trade Agreement
highlights
Chemicals
• Upon the Agreement’s entry into force,
94 percent of tariff lines will be duty-free and
all remaining tariffs eliminated within five
years (current duties of up to 8 percent).
• Products of export interest include ethylene
glycol, germanium oxides and carbides and
catalysts.
Plastics
• Upon the Agreement’s entry into force,
91.5 percent of tariffs will be duty-free and
all remaining tariffs will be phased out within
five years (current duties of up to 8 percent).
• Products of export interest include ethylene
polymers, polyamides and self-adhesive flat
plastics.
“The Chemistry Industry Association of Canada
[CIAC] congratulates the federal government
for completing the Canada-South Korea trade
deal. CIAC members depend on international
markets to thrive and grow, and the recent
improvements in market access for Canadian
products will make a difference. This deal with
South Korea, along with the government’s
ongoing Asia-Pacific focus, is improving the
competitiveness of Canada’s chemistry industry
within global value chains.”
Richard Paton, President and CEO, Chemistry Industry
Association of Canada
Life sciences
The Canadian life sciences sector is an important
contributor to Canada’s innovation economy, and is
engaged in creating the medical innovations that will
improve health-care delivery and patient care in
Canada and abroad. The Canadian industry spans the
research-development-manufacturing continuum.
Industry players include small and medium-sized
companies developing diagnostics, biopharma-
ceuticals, pharmaceuticals and medical devices, as
well as global companies with research, development
and manufacturing operations in Canada, serving
both domestic and international markets. In 2013,
the manufacturing portion of the pharmaceutical
sector alone employed 27,000 people.
Trade snapshot
Canadian exports of medical devices to South Korea
were worth an average of $24.5 million annually
during 2010 to 2012, while South Korean medical
devices imports were worth an average of
approximately $3.8 billion. During the same period,
Canada’s exports of pharmaceuticals to South Korea
were worth an average of $17 million annually, while
South Korean pharmaceuticals imports were worth
an average of approximately $4 billion annually. The
Agreement will create new opportunities for
enhancing the market presence of Canadian
exporters in the life sciences sector by eliminating
tariffs on all Canadian exports.
Canada-Korea Free Trade Agreement
highlights
Pharmaceuticals
• Upon the Agreement’s entry into force,
63 percent of tariff lines will be duty-free and
all remaining tariffs will be eliminated within
five years (current duties of up to 8 percent).
• Products of export interest include
antibiotics, certain other medicines and anti-
tuberculosis medications.
16
Medical devices
• Upon the Agreement’s entry into force,
88 percent of tariff lines will be duty-free.
• Tariffs on diagnostic/laboratory reagents,
medical apparatus parts, thermometers—
current duties of up to 50 percent—will be
eliminated within 10 years.
“Our member companies are providing
innovative, life-saving products to Canadian
patients every day, but they also rely on the
export of these products in order to thrive. We
are confident that this free trade agreement will
support and enhance the Canadian medical
technology industry, which will benefit
Canadian patients and contribute to increased
economic growth and job creation.”
Brian Lewis, President and CEO, MEDEC–Canada’s Medical
Technology Companies
Information and communications
technology
Canada’s information and communications
technology (ICT) industry includes leaders in every
sector, from the manufacturing of
telecommunications equipment, to software
development and services, to digital media and
microelectronics. The sector, consisting mainly of
small enterprises, contributed $8.3 billion to Canada’s
GDP in 2012. ICT companies in Canada employ
some 86,500 Canadians in a knowledge-intensive
industry that boasts world-class high-tech
manufacturing capabilities.
Trade snapshot
The Canada-Korea Free Trade Agreement will
significantly improve market access opportunities for
Canada’s information and communications
technology sector by eliminating tariffs on all
Canadian exports upon entry into force. In 2012,
Canada’s ICT exports to South Korea were worth
$95.5 million, representing 2.6 percent of Canada’s
total exports to South Korea.
Canada-Korea Free Trade Agreement
highlights
Upon the Agreement’s entry into force, certain
cameras, transmission apparatus parts, electrical
conductors—with current duties of up to
13 percent—will be duty-free.
Textiles and apparel
The textiles and apparel industries have long been an
important part of Canada’s economy. In 2011,
36.6 percent of manufacturing shipments in the
textiles and apparel sector was exported, and in 2012,
gross domestic product from textiles, apparel and
leathers totalled $2.7 billion. In 2012, textiles
employed 17,833 Canadians while clothing employed
22,200.
Trade snapshot
Upon entry into force, the Canada-Korea Free Trade
Agreement will significantly improve market access
opportunities for Canada’s textiles and apparel sector
by eliminating tariffs on almost all of Canada’s
exports. In 2012, Canada’s textiles and apparel
exports to South Korea were worth $18.2 million.
Between 2010 and 2012, South Korean imports of
textiles and apparel goods from around the world
were worth an average of $10.7 billion annually. The
Agreement will provide additional export
opportunities for Canadian textiles and apparel
producers.
Canada-Korea Free Trade Agreement
highlights
Upon the Agreement’s entry into force,
99.8 percent of tariff lines will be duty-free
(current duties up to 13 percent); these lines
include high-tenacity yarn (current tariff of
8 percent), cotton wadding (current tariff of
8 percent) and textiles for technical uses (current
tariff of 8 percent).
17
“The Canadian Apparel Federation applauds
the Government of Canada’s achievement of a
free trade agreement with South Korea
featuring very progressive rules of origin. As a
fast-growing economy and market of
increasingly affluent consumers, South Korea
has real potential for Canadian apparel
exporters. In addition, we look forward to the
government moving forward to conclude trade
agreements with other priority markets in Asia,
such as Japan.”
Elliot Lifson, President, Canadian Apparel Federation
Fertilizer
The Canada-Korea Free Trade Agreement will
improve market access opportunities for Canada’s
fertilizer sector by eliminating tariffs on all Canadian
exports. Canadian fertilizer exports to South Korea
were worth an average of $53 million annually
between 2010 and 2012. Over the same period,
South Korean fertilizer imports were worth an
average of $1.4 billion annually.
Canada-Korea Free Trade Agreement
highlights
While the majority of Canada’s existing exports
are already duty-free, Canada will gain improved
access through the Agreement. Of the tariff lines
with duties, 93.6 percent will become duty-free
immediately, and the remainder will become
duty-free within five years for certain
nitrogenous, potassic and phosphatic fertilizers
as well as fertilizers containing two or more of
these elements.
Natural gas
While Canada does not currently export liquefied
natural gas to South Korea, the Canada-Korea Free
Trade Agreement will provide Canadian exporters
with duty-free access on their products, which will
become increasingly important as Canada’s energy
trade matures.
Canada-Korea Free Trade Agreement
highlights
Upon the Agreement’s entry into force, liquefied
natural gas—with current duties of 3 percent—
will be duty-free.
Industrial goods: beyond tariffs
Canada and South Korea recognize the importance
of fostering cooperation and transparency in
standards-related measures and have committed to
encourage the use of internationally recognized
standards and membership in multilateral
arrangements to minimize duplicative certification
and testing of products, including those related to
medical devices.
The Canada-Korea Free Trade Agreement will also
include a mechanism that will allow a party to the
Agreement to raise concerns with the standards-
related measures of the other party, with the goal of
minimizing or eliminating their impact on trade.
Both Canada and South Korea have negotiated
provisions that will allow citizens of the other
country to participate in the development of
technical regulations and conformity assessment
procedures on terms no less favourable than those
that apply for their own citizens. This will help
minimize or eliminate barriers before they come into
place.
Minimizing the impact of technical barriers will help
maximize market access for Canada’s exports.
Reaping the benefits
Canadian businesses stand to gain considerably when
all tariffs on industrial goods are eliminated within 10
years. The Canada-Korea Free Trade Agreement will
help secure Canada’s competitive position and will
level the playing field in this major Asian market,
where our competitors—such as the United States
and the European Union—are already enjoying
preferential access.
18
Opening markets for forestry and value-
added wood products
Canada’s forestry industry contributes substantially to
the Canadian economy. By value, Canada is the
world’s leading exporter of newsprint and wood pulp
and the fifth-largest exporter of wood panels. In
2012, the sector contributed $20.2 billion to Canada’s
GDP and employed some 235,000 Canadians, most
of them in jobs that tend to be highly skilled.
Most of Canada’s wood is turned into value-added
products that sell around the world. The Canada-
Korea Free Trade Agreement will provide enhanced
market access for value-added products such as
lumber, plywood and oriented strand board. As a
result of increased demand for these products, and
given the multiple value-added steps throughout the
production process, benefits will be felt throughout
the entire sector.
Trade snapshot
The forestry products sector encompasses wood
products, including such products as cork and
basketwork, and pulp and paper. The Canada-Korea
Free Trade Agreement will provide a significant
advantage for Canadian wood and forestry producers
and exporters looking to expand market
opportunities in South Korea. While all South
Korean pulp and paper tariff lines and the majority
of other forestry product tariff lines are duty-free on
a most-favoured-nation (MFN) basis, South Korean
wood tariff lines have significant tariffs, as high as
10 percent, which present a competitive disadvantage
for Canadian exporters.
Canada exported $503.8-million worth of wood and
forestry products to South Korea in 2012,
representing 13.8 percent of Canada’s total exports
to that country. Canadian wood exports to South
Korea were worth an average $171.1 million annually
between 2010 and 2012. In 2012, South Korea
ranked fourth as an export destination for Canadian
wood products, and in the same year the country’s
overall imports of wood products were worth
$2.5 billion.
Wood and forestry products of key export interest to
Canada, including spruce, pine and fir lumber,
oriented strand board, Western hemlock lumber,
wood beams and arches, and red cedar lumber,
currently face tariffs ranging from 5 percent to
8 percent.
Canada-Korea Free Trade Agreement
highlights
Under the Canada-Korea Free Trade Agreement,
all South Korean tariffs on forestry and value-
added wood products will be eliminated. Current
duties average 2.9 percent, with tariff peaks of up
to 10 percent.
Upon the Agreement’s entry into force, over
57 percent of tariff lines for wood and forest
products will be duty-free, while a further
13.1 percent will become duty-free within three
years.
Duties on the remaining tariff lines of Canada’s
exports will be eliminated within 10 years.
New markets for custom home
packages
Viceroy Homes has designed, engineered and
manufactured custom home packages for more than
half a century. The company is one of Canada's largest
manufacturers of panelized wood-frame housing,
kitchen cabinets, and hardwood flooring. With
facilities in Ontario and British Columbia, Viceroy
proudly employs more than 400 workers, most of
them involved in production for export markets. In the
past three decades, the company has exported
products worth more than $865 million to the United
States and to offshore markets. Some of the Viceroy
products exported to South Korea currently face an
8-percent tariff. With the trade agreement, Viceroy
can be on an even footing with its competitors and is
looking forward to expanding into the fast-growing
and dynamic Asian market.
19
For more details on tariffs, please consult the
Appendix.
This outcome on wood and forestry products will
provide Canada with market access commensurate
with that obtained by the United States under
KORUS.
With Canada’s current capacity to export to Asian
markets, and the removal of South Korea’s tariffs on
these products, the Canada-Korea Free Trade
Agreement will provide the Canadian forestry sector
with new market access, offering diversification and
export opportunities to Canadian industry.
Beyond tariffs
The Canada-Korea Free Trade Agreement contains
strong provisions on non-tariff measures that will
ensure that market access gains in the forestry and
wood building products sectors are not undermined
by unjustified trade barriers. For example, the
Agreement requires the use of internationally
accepted standards (in the absence of a compelling
reason not to) and contains strong transparency-
related commitments that go beyond existing WTO
obligations. This will make it easier for Canadians
and South Koreans to work together on the
development of technical regulations and standards,
and help to prevent the introduction of new technical
barriers to trade, including in the areas of forestry
and wood building products.
The Canada-Korea Free Trade Agreement also
establishes various institutional mechanisms of
relevance for this sector. For instance, the
Agreement creates a subcommittee on trade in forest
products that will facilitate addressing any issues
related to trade in forest products. The Agreement
also provides for a working group—specifically
related to wood building products—designed to
facilitate trade through cooperation and information
sharing, including in the areas of standards and
regulatory issues. The Agreement also establishes a
sanitary and phytosanitary (SPS) committee that will
enable experts to collaborate and consult on forestry-
related SPS issues.
Reaping the benefits
Canada has a competitive advantage in the
production of forestry products and is one of the top
exporters of these products worldwide. Canadian
producers and exporters of forestry products already
have the capacity to export to Asian markets. The
Canada-Korea Free Trade Agreement will create new
opportunities to further develop existing and new
markets in South Korea.
“South Korea is now the fourth-largest market
for the Canadian forest products industry and
an important target country as we push to
export more into the Asia-Pacific region. This
free trade deal targets existing tariff and non-
tariff barriers on our forest products sales to
South Korea, and as such will help us reach our
sector’s ambitious Vision2020 goal of an
additional $20 billion in economic activity from
new products and markets by the end of the
decade.”
David Lindsay, President and CEO, Forest Products
Association of Canada
20
Opening markets for fish and seafood
products
Canada is surrounded by the Arctic, Atlantic and
Pacific oceans and is home to the Great Lakes.
Canada has one of the world’s most valuable
commercial fishing industries, which contributed
more than $2.2 billion to Canada’s GDP in 2012 and
provided some 41,000 jobs to Canadians in
everything from fishing to aquaculture. The industry
is the economic mainstay of approximately 1,500
communities in rural and coastal Canada. The sector
makes Canada the world’s seventh-largest exporter of
fish and seafood products, exporting an estimated
73 percent, by value, of its fish and seafood
production.
With a significant share of its global exports of fish
products going to China, Japan and Hong Kong
(ranked second, third and fourth by market share,
respectively), Canada has a demonstrated capacity to
export to Asian markets. These markets accounted for
20.3 percent of Canada’s global fish exports in 2012.
Trade snapshot
The Canada-Korea Free Trade Agreement will create
significant market access opportunities for Canada’s
fish and seafood sector by eliminating South Korea’s
high tariffs on all fish and seafood products.
In 2012, South Korea ranked ninth as an export
destination for Canadian fish and seafood products.
While Canada’s fish and seafood exports to South
Korea were worth only $44.8 million in 2012, Canada
has significant export capacity in this sector, with
global exports worth $4.2 billion in 2012. In 2012,
South Korea imported approximately $1.5-billion
worth of fish and seafood.
Atlantic Canada exports of fish and
seafood to South Korea
Lobster is Canada’s most valuable seafood export
and an iconic Canadian crustacean exported around
the world. In 2013, Atlantic Canada’s exports of
lobster were worth $904.6 million and accounted for
95 percent of all Canadian lobster exports.
Canada’s exports of lobster to South Korea were
worth an average of $16.9 million annually between
2010 and 2012 and accounted for nearly 37 percent of
Canada’s total seafood exports to South Korea
during that period.
Under the Canada-Korea Free Trade Agreement,
current duties of up to 20 percent on lobster
products faced by Canadian exporters will be
eliminated. This duty-free access will give Canadian
products preferential access to the South Korean
market and will create a level playing field for
Canadians with South Korea’s current FTA partners.
“The Lobster Council of Canada supports a Canada-
South Korea free trade agreement, as it will greatly
enhance our industry’s competiveness in South Korea.
Tariff elimination and improved market access for
lobster exports helps to ensure the long-term
prosperity of our industry and the thousands of
people it employs in Atlantic Canada.”
Geoff Irvine, Executive Director, Lobster Council of
Canada
21
Canada-Korea Free Trade Agreement
highlights
Under the Canada-Korea Free Trade Agreement,
all South Korean tariffs on fish and seafood
products will be eliminated. Products that will
benefit from immediate tariff elimination include
lobster (frozen) and Pacific and Atlantic salmon
(fresh, chilled and smoked), which currently have
duties of up to 20 percent.
Nearly 70 percent of fish and seafood tariff lines
will be duty-free within five years of the
Agreement’s entry into force and all remaining
duties will be eliminated within 12 years.
The Agreement will eliminate South Korea’s
average tariff of 16.5 percent in this sector, which
includes tariff peaks as high as 47 percent.
This outcome on fish and seafood products will
provide Canada with market access
commensurate with (and for key products such
as lobster, better than) that obtained by the
United States under KORUS.
For more details on tariffs, please consult the
Appendix.
Beyond tariffs
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 standards provisions.
Under the Canada-Korea Free Trade Agreement, an
SPS committee will allow experts to collaborate and
consult on SPS measures to enhance cooperation and
facilitate trade by discussing issues before they
become problems. This will benefit Canadian fish
and seafood exporters by helping to ensure that
market access gains are not undermined by
unjustified SPS trade barriers.
Reaping the benefits
Market access obtained under the Canada-Korea
Free Trade Agreement will help level the playing field
with Canada’s key competitors from countries that
already have free trade agreements with South Korea,
such as the United States, the European Union,
Norway and Chile, and facilitate the expansion of
Canadian exports to South Korea’s growing market.
B.C.’s exports of fish and seafood to
South Korea
British Columbia’s fish and seafood sector makes a
significant contribution to the provincial economy and
the social fabric of numerous coastal communities.
British Columbia’s average fish and seafood exports to
South Korea were worth an average of $8.1 million
annually between 2010 and 2012, and included salmon
and salmon products, and Dungeness crab.
Under the Canada-Korea Free Trade Agreement,
current duties of up to 47 percent on fish and seafood
products faced by Canadian exporters will be
eliminated. This duty-free access will give Canadian
products preferential access to the South Korean
market, and will create a level playing field with South
Korea’s current FTA partners.
“A Canada-Korea free trade agreement will be good
for Canada’s Pacific wild seafood industry. The U.S.-
Korea free trade arrangement, which came into effect
in 2012, is eagerly being seized on by our Alaskan
competitors and we cannot afford to be left behind.
We know there are benefits to a free trade agreement
with Korea because our Alaskan competitors are
already enjoying them. Reducing tariffs on seafood will
open up the Korean market to high-quality Canadian
Pacific seafood, and this will translate into jobs and
prosperity for British Columbians.”
Christopher Sporer, Executive Director, Seafood Producers
Association of British Columbia
22
Opening markets for automotive
products
The automotive sector is a key driver of Canada’s
economy and employs more than 115,000 highly
skilled Canadians across the country.
Highly dependent on trade, the Canadian automotive
industry exports some 85 percent of its production
every year, with a majority of exports going to the
United States. However, Canadian vehicle
manufacturers are increasingly looking beyond their
traditional North American market for new
customers. In this respect, the Canada-Korea Free
Trade Agreement provides Canadian manufacturers
with a level playing field relative to key competitors
in the United States and the European Union, who
already benefit from preferential access to the South
Korean market through their own free trade
agreements.
Trade snapshot
The Canada-Korea Free Trade Agreement will
provide a significant advantage for Canadian
automotive industry stakeholders looking to further
expand market opportunities in South Korea. The
automotive products sector is composed of vehicle
manufacturers and the various automotive parts
suppliers that make up the value chain.
In 2012, South Korea imported $48.5-million worth
of motor vehicles with engine sizes over 1.0 L (2,023
vehicles) and $35.9-million worth of automotive
parts from Canada.
Canada-Korea Free Trade Agreement
highlights
Exports of Canadian vehicles and automotive
parts will be duty-free immediately upon the
entry into force of the Canada-Korea Free Trade
Agreement, compared to a longer phase-out of
five years under KORUS and three to five years
under the EU-Korea FTA. Therefore, Canadian
automotive exporters will benefit from tariff-free
market access in South Korea faster than that
provided to our U.S. and EU competitors.
Upon the Agreement’s entry into force, South
Korean tariffs will be eliminated on:
• all light vehicles (8 percent tariff); and
• all automotive parts (tariffs ranging from 3 to
8 percent).
The removal of South Korea’s tariffs on
automotive products will provide the Canadian
automotive sector with improved market access,
offering diversification and export opportunities
to the Canadian industry.
For more details on tariffs, please consult the
Appendix.
Beyond tariffs
Under the Canada-Korea Free Trade Agreement,
Canada has ensured that Canadian vehicle
manufacturers can continue to export vehicles to
South Korea built to key U.S. safety standards. South
Korea had accepted the practice under a regulation
that could be repealed at any time, but the
Agreement means that the flexibility will be locked in
for Canadian manufacturers.
The equivalency provisions in the Agreement will
give Canadian automakers preferential access to the
South Korean market for cars built to key U.S. safety
standards (as most Canadian manufacturers currently
do) or EU safety standards (as is necessary to export
vehicles to the European Union and to many other
markets) and will not be subject to any numerical
limits. This will ensure that vehicles manufactured in
Canada for export to the EU market can be shipped
to South Korea on the same basis as vehicles
manufactured in the European Union. Combined,
these outcomes will provide Canadian vehicle
manufacturers with additional flexibility to build for
the global marketplace.
23
well as internal taxes on motor vehicles and The
Overview of auto provisions in the Canada-South Korea FTA
The Canada-Korea Free Trade Agreement’s automotive provisions feature robust outcomes across many areas, including
tariffs, non-tariff issues, standards-related measures, specialized dispute settlement procedures and safeguard provisions to
protect against import surges.
The Agreement secures Canada’s position in the South Korean automotive products market, where competitors such as the
United States and the European Union already benefit from preferential access as a result of their respective free trade
agreements.
The Agreement’s outcome on automotive products will re-establish a level playing field in the South Korean market by
providing comparable and in some cases stronger outcomes than those found in South Korea’s other free trade agreements.
The Agreement’s key automotive-sector features include:
• T
T
a
a
r
r
i
i
f
f
f
f
s
s
:
:
South Korea’s 8-percent auto tariff will be eliminated immediately upon the Agreement’s implementation while
Canada’s lower, 6.1-percent tariff on imports of South Korean passenger vehicles will be phased out in three annual cuts.
• R
R
u
u
l
l
e
e
s
s
o
o
f
f
o
o
r
r
i
i
g
g
i
i
n
n
:
:
The Agreement includes rules of origin for vehicles that provide Canadian vehicle manufacturers with
the ability to source inputs from the United States and still benefit from the Agreement when exporting their vehicles to
South Korea. Neither KORUS nor the EU-Korea FTA provides such “cumulation”. The thresholds and methodologies for
origin content will ensure that the rules of origin under the Canada-Korean Free Trade Agreement can be met by all
Canadian manufacturers without volume limits.
• A
A
c
c
c
c
e
e
l
l
e
e
r
r
a
a
t
t
e
e
d
d
d
d
i
i
s
s
p
p
u
u
t
t
e
e
s
s
e
e
t
t
t
t
l
l
e
e
m
m
e
e
n
n
t
t
:
:
The specialized dispute settlement provisions in the Agreement will ensure that
any dispute related to motor vehicles will be dealt with as quickly as in KORUS and on a faster timeline than in the EU-
Korea FTA. Furthermore, the Canada-Korea Free Trade Agreement’s accelerated dispute settlement procedures are
permanent, whereas the equivalent KORUS provisions can expire after 10 years.
• T
T
r
r
a
a
n
n
s
s
i
i
t
t
i
i
o
o
n
n
a
a
l
l
s
s
a
a
f
f
e
e
g
g
u
u
a
a
r
r
d
d
s
s
:
:
The Agreement includes safeguard provisions equivalent to those found in KORUS for motor
vehicles, and extends these provisions to all products, as in the case of EU-Korea FTA. An unprecedented element of the
provisions is the ability to introduce a safeguard measure and not pay any compensation to the other Party for the first
two years.
• I
I
n
n
t
t
e
e
r
r
n
n
a
a
l
l
t
t
a
a
x
x
e
e
s
s
:
:
The Agreement’s MFN provision ensures that Canada benefits not only from existing KORUS provisions
but also from any future improvements to the South Korean internal taxation regime for motor vehicles and automotive
parts made for any third party. This represents a KORUS-plus outcome for Canada.
• E
E
m
m
i
i
s
s
s
s
i
i
o
o
n
n
s
s
a
a
n
n
d
d
f
f
u
u
e
e
l
l
e
e
c
c
o
o
n
n
o
o
m
m
y
y
s
s
t
t
a
a
n
n
d
d
a
a
r
r
d
d
s
s
:
:
The Agreement’s outcome ensures that Canada will benefit, now and in
the future, from the best treatment that South Korea provides to any other trading partner. This will ensure full protection
for Canadian automakers in the future, and represents a KORUS-plus outcome for Canada.
• S
S
a
a
f
f
e
e
t
t
y
y
s
s
t
t
a
a
n
n
d
d
a
a
r
r
d
d
s
s
:
:
The equivalency provisions in the Agreement will give Canadian automakers preferential access to
the South Korean market for cars built to key U.S. safety standards (as most Canadian manufacturers currently do) or EU
safety standards (as is necessary to export vehicles to the European Union and to many other markets) and will not be
subject to any numerical limits, as is the case under KORUS. Provisions on new vehicle technologies and compliance
testing procedures will also help to facilitate access to the South Korean market.
24
Canada-Korea Free Trade Agreement also includes
most-favoured-nation obligations that cover vehicle
emissions and fuel economy regulations, as
automotive parts. The MFN obligations will ensure
that any additional benefits on these issues granted
by South Korea to any other trading partner will
automatically be extended to Canada.
In addition, the Agreement includes rules of origin
that reflect Canada’s place within the integrated
North American automotive industry. This will allow
Canadian-manufactured automobiles to benefit from
the preferential tariff treatment with South Korea
while preserving the ability of manufacturers to
source automotive parts from the United States.
The Canada-Korea Free Trade Agreement also
provides Canada with accelerated dispute settlement
procedures in the event that South Korea fails to
comply with its Agreement obligations. This means
that any disputes related to motor vehicles, should
they arise, would be dealt with more quickly than
disputes concerning other products and ensure that
Canadian vehicles continue to benefit from
preferential access in the South Korean market.
Reaping the benefits
Canadian producers and exporters of automotive
products already have the capacity to export to Asian
markets. The Canada-Korea Free Trade Agreement
will create new opportunities to further develop
existing and new markets in South Korea and the
Asia-Pacific region.
Market access obtained under the Agreement will
help level the playing field for Canadian
manufacturers competing with key manufacturers
from the United States or the European Union that
already have free trade agreements with South Kore
Agricultural products
Canada’s agricultural (crops and animals) and agri-
food (food and beverages) sector is one of the most
dynamic in the world and is renowned as a reliable
supplier of safe, high-quality products. The Canada-
Korea Free Trade Agreement will result in significant
benefits to Canadian exporters through the
elimination of South Korean tariffs on a wide range
of agricultural products.
Opening markets for agricultural and
agri-food products
The agricultural and agri-food sector employed more
than 585,000 people in 2012, accounting for close to
3 percent of Canada’s GDP. In the same year,
Canada was the world’s fifth-largest exporter of
agricultural and agri-food products. More than one
third of Canadians employed in the sector work in
the processing segment of the industry, turning raw
ingredients into processed foods, ready-to eat meals,
beverages, nutritional supplements and a wide range
of other products.
“The benefits from an FTA with South Korea are
real and substantive for our country’s national
and provincial economies. In the agri-food
industry, we directly employ more than half a
million Canadians and represent 80 percent of
Canada’s agriculture and agri-food exports. The
food processing sector is the largest
manufacturing employer in Canada, and a
Canada-Korea FTA creates tremendous
opportunities for our members and the
Canadians they employ.”
Lisa Skierka, President, Canadian Agri-food Trade Alliance
Trade snapshot
Canada’s annual agricultural exports to South Korea
were worth an average of $708 million from 2010 to
2012, led by wheat, pork and pork offal, hides, skins
and furs, refined and crude canola oil, malt and
prepared foods.
Canada will benefit from expanding exports of these
and a wide variety of other products, including
meats, grains, oilseeds and pulses.
25
Canadian agricultural exports to South Korea
currently face high tariff rates, which averaged
52.7 percent in 2012.
Canada’s access to South Korea’s beef market was
restored in January 2012 when South Korea lifted a
ban on Canadian beef that had been imposed over
concerns of bovine spongiform encephalopathy
(BSE). While beef exports to South Korea remain
relatively low, the Canada-Korea Free Trade
Agreement will enable Canada to rebuild its presence
in this important export market.
Top agricultural exports from Canada to South Korea
(2010-2012 annual average)
(value in millions of Canadian dollars)
Canada-Korea Free Trade Agreement
highlights
The Agreement will provide increased market
access for Canada’s key agricultural export
interests, ensuring that Canadian producers are
on a level playing field with major competitors in
the South Korean market. The Agreement will
result in the elimination of tariffs on 86.8 percent
of agricultural tariff lines.
Wheat, 273.6
Frozen, fresh and chilled pork, 133.0
Canola oil, 59.0
Raw mink fur skins, 31.7
Food preparations, 22.9
Unroasted malt, 14.8
Hides and skins (bovine), 14.0
Animal and vegetable fats and oils, 13.7
Other, 145.3
New access for world-class Canadian
potatoes
Prince Edward Island’s diverse agricultural and agri-
food sector is central to the rural way of life for many
Islanders. P.E.I. is the largest potato-producing
province in Canada, growing one-quarter of the
potatoes in the country.
Prince Edward Island’s exports of potato products to
South Korea reached almost $1.7 million in 2012.
Current South Korean duties range from 18 percent
to 304 percent for potato products.
The Canada-Korea Free Trade Agreement will
provide for tariff elimination on most potato
products, helping to level the playing field with South
Korea's current FTA partners.
“As a leading processor of frozen potato products, we
believe a free trade agreement between Canada and
South Korea presents a golden opportunity for us to
grow our presence in the South Korean market, and in
the Asia-Pacific region as a whole. Free trade helps to
support our industry, the workers we employ and the
sale of the high-quality products that we’ve been
producing for more than 30 years.”
Vince Taddeo, VP International, Cavendish Farms
26
This duty-free access will give Canadian
agricultural products, including beef, pork, canola
and grains, preferential access to the South
Korean market and will put Canada on a level
playing field with South Korea’s current free
trade agreement partners.
For more details on tariffs, please consult the
Appendix.
“The Canada-Korea FTA will be critical to
future growth of the Canadian pork industry, 70
percent of which is dependent on export
markets.”
Jean Guy Vincent, Chair, Canadian Pork Council
For the past few years, Canada’s key beef
competitor, the United States., has enjoyed an
increasing tariff advantage flowing from its FTA
with South Korea, and Australia is poised to do
likewise through its recent agreement with
Korea. Their gain has been our loss. This
announcement means Canadian beef will be
able to compete for meaningful access in the
South Korean market.”
Martin Unrau, Past President, Canadian Cattlemen’s
Association
New access for world-class Canadian
beef and pork
The Canada-Korea Free Trade Agreement will provide
new market access opportunities for Canadian exports
of beef and pork. The Agreement also recognizes the
integrated nature of this industry in the North American
economy, providing for rules of origin that will allow
these world-class products to benefit from preferential
treatment in South Korea. This is important to allow
Canada to continue to compete with other exporters of
beef and pork to South Korea, including the United
States and the European Union, competitors that have
benefited from lower tariffs since the implementation
of the KORUS and Korea-EU FTA.
Canada’s share of South Korean fresh, chilled and
frozen pork imports dropped from 14.2 percent in 2010
(i.e., before the implementation of the KORUS and
Korea-EU free trade agreement) to 8.9 percent in 2013,
representing a loss in export value of $22 million.
During the same period, U.S. and EU market share
increased by 10.2 percent to reach 76.3 percent.
In 2012, following the resumption of Canada’s access to
South Korea’s beef market, Canadian fresh, chilled and
frozen beef exports to South Korea were valued at
$9.6 million. However, in 2013, Canadian beef exports
declined to $6.7 million as a result of the growing tariff
differential vis-à-vis U.S. and EU competitors. Between
2010 and 2012, South Korean beef imports were worth
an average of approximately $1.3 billion annually, while
pork imports were worth an average of approximately
$1.1 billion annually.
Under the Canada-Korea Free Trade Agreement:
• duties of up to 25 percent for fresh/chilled and
frozen pork will be eliminated in 5 to 13 years; and
• duties that range from 40 to 72 percent for
fresh/chilled and frozen beef cuts, and some
processed beef, will be eliminated in 15 years.
27
Processed food
Trade snapshot
Transforming agricultural commodities into food and
beverages is an important part of Canada’s
agricultural and agri-food industry, and a key
manufacturing sub-sector. In 2012, the food
processing industry contributed $26.5 billion to
Canada’s GDP. Canadian processors across the
country transform primary agricultural goods into
value-added products that are consumed, sold and
enjoyed around the world. In 2012, annual Canadian
exports of manufactured food and beverages to
South Korea averaged $45.5 million.
Canada-Korea Free Trade Agreement
highlights
Currently, Canadian exports of processed food
products and beverages face high South Korean
tariffs. For example, South Korean tariffs for
frozen french fries are at 18 percent. The
Agreement will eliminate many of the existing
South Korean tariffs on processed foods and
beverages—including maple syrup, baked goods,
sugar confectionery, and chocolate and food
preparations containing cocoa—making these
world-class items more competitive and creating
the conditions for increased sales into South
Korea. Tariff elimination will directly benefit
Canada’s processed food and beverages sector
across the country by generating more jobs,
higher wages and greater long-term prosperity.
For more details on tariffs, please consult the
Appendix.
“This agreement is a major win for Canada's
agri-food industry. It restores a level playing
field and unlocks strong growth opportunities in
an affluent South Korean market for high-
quality Canadian pork and other agri-food
exports. We strongly encourage the government
to implement it promptly.”
Michael McCain, President and CEO, Maple Leaf Foods
Wines and spirits
Trade snapshot
The distilled spirits industry has a long history in
Canada, and has traditionally made a significant
contribution to the nation’s economy. Canada’s
primary reputation, domestically and internationally,
continues to be associated with the production of
Canadian whisky, a distinctive rye-flavoured, high-
quality beverage.
New opportunities for Canadian pork
producers
Conestoga Meat Packers, through a co-operative of
150 southern Ontario family farmers, has been
supplying the Canadian market with premium-quality
fresh pork for more than 30 years. However, the
company’s endeavours to expand its business have
been hindered by a lack of a free trade agreement
between Canada and South Korea as this Asian
country has been one of its most important markets,
coveted by all major meat-exporting nations. South
Korea has an import demand that exceeds $2 billion
for beef and pork products annually. When the free
trade agreement is signed, the present tariff rates of
22.5 percent for fresh/chilled pork and 25 percent for
frozen pork will be eliminated, giving Conestoga the
opportunity of again being on an equal footing with
its competitors. This agreement will allow for the
company’s continued growth—an integral component
28
In terms of wines, Canada is recognized as a world-
leader in the production of icewine. Forty-five
percent of the country’s wine export revenue is from
icewine.
The Canada-Korea Free Trade Agreement will
significantly improve market access opportunities for
Canada’s wines and spirits sector by eliminating
tariffs of up to 30 percent. In 2012, Canadian exports
of wines and spirits to South Korea were worth
$2 million, represented mostly by exports of icewine.
Canada-Korea Free Trade Agreement
highlights
Upon the Canada-Korea Free Trade Agreement’s
entry into force, duties on rye whisky (current
duties of 20 percent) and icewine (current duties
of 15 percent) will be eliminated. The Agreement
will also commit South Korea to protecting the
terms “Canadian whisky” and “Canadian rye
whisky” as geographical indications, ensuring
that they remain exclusive to Canadian producers.
For more details on tariffs, please consult the
Appendix.
“International exports of Canadian spirits are
critical to the financial health of our spirits
industry, and it is essential that Canada
continues as a leader in trade liberalization in
beverage alcohol. Each bottle of spirits
exported carries in it premium local cereal
grains, whether barley, corn, rye or wheat, and is
magically transformed into the highest quality
vodka, liqueur or Canadian whisky. A Canada-
South Korea free trade agreement is welcome
news and provides significant new export
opportunities for our industry.”
Jan Wescott, President and CEO, Spirits Canada
“The Canadian wine industry is pleased to
support the Government of Canada in its work
to finalize negotiations for the Canada-Korea
Free Trade Agreement. South Korea is an
important market for Canadian wine producers,
as evidenced by the significant growth in the
value of Canadian icewine exports, which
increased nearly 25 percent between 2012 and
2013. With a successful FTA, the Canadian wine
industry anticipates even stronger export
growth in the coming years.”
Dan Paszkowski, President, Canadian Vintners Association
Furskins
Trade snapshot
Canadian raw furskin exports currently supply a
significant share of the South Korean market.
Between 2010 and 2012, Canadian exports of
furskins were worth an average of $32.5 million
annually while, in the same period, South Korean
imports were worth an average of $145.1 million
annually.
Canada-Korea Free Trade Agreement
highlights
Upon implementation, the Canada-Korea Free
Trade Agreement will immediately eliminate the
3-percent tariff on raw furskin exports to South
Korea. This will provide Canadian furskin
exporters with an opportunity to expand existing
South Korean market share and allow Canadian
companies to compete on a level playing field
with their major competitors, such as those from
the United States and the European Union.
For more details on tariffs, please consult the
Appendix.
Beyond tariffs
Sanitary and phytosanitary (SPS) measures are
applied by governments to protect human, animal or
plant life or health. These measures can have an
impact on trade in agricultural and agri-food
products. The Canada-Korea Free Trade Agreement
includes a chapter that addresses SPS issues, in which
Canada and South Korea agree to build on their
shared commitments regarding the application of
29
WTO SPS measures. Under the WTO Agreement on
the Application of Sanitary and Phytosanitary
Measures (SPS Agreement), parties recognize the
rights of WTO members to take necessary measures
for the protection of human, animal or plant life or
health while ensuring these measures are based on
science and do not unfairly restrict trade.
Under the Agreement, Canada and South Korea
established a new bilateral SPS committee, through
which experts can collaborate and consult on SPS
measures to enhance cooperation and facilitate trade
by discussing and resolving issues at an early stage.
This will benefit Canadian agricultural and agri-food
exporters by helping to ensure that market access
gains are not undermined by unjustified SPS trade
barriers.
Reaping the benefits
South Korea is a major net importer of agricultural
and agri-food products, importing $20-billion worth
of such products in 2012. Canada, a significant global
supplier of high-quality agricultural products, is
South Korea’s fifth-largest supplier. The Canada-
Korea Free Trade Agreement will further develop
this trade relationship.
The Canada-South Korea Free Trade Agreement will
allow Canadian products to compete on a level
playing field with other agricultural exporting
countries that have concluded or implemented a free
trade agreement with South Korea, including the
United States, Australia and the EU member states.
Whether they produce soybeans in Ontario, wheat in
the Prairies or pork in Quebec, farmers and
processors across Canada will benefit from this
agreement as it opens new markets in South Korea.
“The Pet Food Association of Canada welcomes
the Canada-Korea FTA and the improved
market access it and other free trade
agreements provide for Canadian pet food
manufacturers looking to export Canada’s high-
quality pet food products abroad.”
Marty Wilder, Executive Director, Pet Food Association of
Canada
Canadian canola products stand to
benefit from the Canada-Korea Free
Trade Agreement
Colin is a third-generation farmer on the Prairies who
produces cold-pressed canola oil for gourmet and
specialty-food stores. He now exports his canola oil
duty-free to the United States under the North
American Free Trade Agreement. However, Colin’s
exports to Asia are hampered by tariffs imposed by key
countries, including South Korea. Under the Canada-
Korea Free Trade Agreement, current duties of
5 percent on crude and refined canola oils and of
10 percent on canola will be eliminated in South Korea,
a growing market for canola oil producers.
“South Korea is an important market for canola, with
annual sales ranging from $60 million to $90 million in
recent years. Under the Canada-Korea Free Trade
Agreement, we could significantly increase—even
double—our exports to this market.”
Patti Miller, President, Canola Council of Canada
30
National treatment and market
access
The national treatment and market access chapter of
the Canada-Korea Free Trade Agreement protects
against restrictive trade measures that could be
applied and that could thus reduce or nullify the
market access gained through the elimination of
tariffs. An important feature of the chapter is that it
will ensure that Canada and South Korea provide
each other’s goods with “national treatment” once
they are in each other’s markets—that is to say, in
South Korea’s market Canadian goods must be
treated the same way as goods from South Korea.
Aside from customs duties and other fees allowed by
the WTO, no discriminatory taxes or charges may be
levied against imported Canadian goods. This means,
for example, that South Korea may impose a value-
added tax—a form of consumption tax—on
Canadian goods only if it imposes the same tax on
South Korean goods.
Canada-Korea Free Trade Agreement
highlights
National treatment
• Under the Agreement, there is an obligation
to ensure that goods are not subject to
discriminatory treatment by the other party.
Tariff elimination
• Customs duties will be eliminated in
accordance with each party’s tariff phase-out
schedule on originating goods traded
between the parties. The parties have also
agreed to a mechanism to permit mutually
agreed acceleration of the tariff elimination
schedule after the Agreement is
implemented.
Import/export restrictions
• The Canada-Korea Free Trade Agreement
will prohibit import and export restrictions,
and export taxes and charges, except in
accordance with the parties’ obligations
under the WTO Agreement and a list of
exceptions provided for in the Canada-Korea
Free Trade Agreement.
• The Agreement includes a most-favoured
nation clause on internal taxes and emissions
regulations for motor vehicles and
automotive parts. This MFN provision
ensures that Canada will benefit from
existing provisions in South Korea’s other
free trade agreements as well as from any
future improvements to South Korean
internal taxation and emissions regulations
regimes for motor vehicles and automotive
parts made for any third party.
Institutional provisions
• A committee will be created to address any
issues related to trade in goods that may arise
under the Canada-Korea Free Trade
Agreement and to contribute to the effective
operation of the Agreement, once
implemented.
Agriculture
• Tariff rate quotas and administration: For
certain products, Canada will benefit from
preferential tariff treatment up to a
predetermined limit (i.e. until the import
access quantity has been reached).
For more details, please consult the Appendix.
Rules of origin
Under a free trade agreement, only goods that
“originate” in the parties’ territories may benefit from
preferential tariffs. It is therefore essential to have a
method to determine a product’s origin. For this
reason, the Canada-Korea Free Trade Agreement,
like other free trade agreements, includes product
content rules, or “rules of origin.” These rules specify
how much production must occur in Canada and/or
31
South Korea for a product to be considered from (or
“originating in”) one of the jurisdictions and
therefore eligible for preferential Canada-Korea Free
Trade Agreement tariff rates.
The Canada-Korea Free Trade Agreement, like all of
Canada’s free trade agreements, includes specific
rules of origin for all products. Rules of origin
prevent Agreement benefits from accruing to
countries other than Canada and South Korea (e.g.
products that are simply transported through Canada
to South Korea or vice-versa). The rules of origin
allow Canadian companies to take advantage of the
preferential access gained as a result of the Canada-
Korea Free Trade Agreement.
Canada-Korea Free Trade Agreement
highlights
The Agreement will provide for clear and simple
rules of origin that reflect Canadian production
realities and methods and minimize
administrative burdens by:
• allowing Canadian products to qualify for
tariff elimination in South Korea;
• recognizing the presence of global value
chains; and
• encouraging the use of Canadian inputs.
Rules of origin for vehicles will enable Canadian
vehicle manufacturers to benefit from unlimited
preferential access in South Korea’s market and
allow them to source key inputs from the United
States—and still benefit from the Agreement
when exporting their vehicles to South Korea.
For more details, please consult the Appendix.
Origin procedures and trade
facilitation
The process through which Canadian exporters get
their products to South Korean buyers will be easier,
faster and less costly.
Customs officials play an integral role in ensuring
that Canadians enjoy the benefits of free trade
agreements. They have the responsibility of ensuring
that only those goods that comply with rules of
origin enter Canada at preferential duty rates and that
Canadian goods entering South Korea receive the
preferential treatment for which they qualify. Canada
and South Korea share a desire to keep origin
procedures simple, effective, clear and predictable, to
facilitate trade and enable customs officials to do
their jobs efficiently, without creating unnecessary
barriers to trade.
Canada-Korea Free Trade Agreement
highlights
Transparent and effective origin procedures to
administer the rules of origin that promote
compliance with the rules of origin, without
creating unnecessary obstacles to trade.
Access to advance rulings on the origin or tariff
classification of products.
Promotion of automated border procedures
through the use of information technology in
order to expedite procedures for the release of
goods.
An impartial and transparent system for
addressing any complaints about customs rulings
and decisions.
Sanitary and phytosanitary
measures
Ensuring early cooperation on food safety, animal
and plant life and health strengthens the protection
of Canadians while preventing misunderstandings
that might restrict the free movement of goods.
Sanitary measures help ensure that food is safe for
consumers and aim to prevent the introduction or
spread of animal diseases. Phytosanitary measures
help prevent the introduction or spread of plant
pests that could infest crops and trees. Sanitary and
32
phytosanitary measures are a critical subset of
regulations that affect all Canadians. WTO rights and
obligations help ensure that SPS measures, which
governments use to regulate the protection of
human, animal and plant life and health, are not used
as a cover to unnecessarily restrict trade.
Canada-Korea Free Trade Agreement
highlights
Affirmation of rights and obligations under the
WTO Agreement on the Application of Sanitary
and Phytosanitary Measures (WTO SPS
Agreement);
Establishment of a committee on SPS measures
(SPS Committee), where SPS-related issues and
concerns can be discussed by experts to facilitate
trade, enhance bilateral cooperation and resolve
issues at an early stage.
Recognition of the importance of resolving SPS
issues on the basis of science.
Establishment of an effective SPS chapter,
important for Canadian agricultural and agri-
food, fish and seafood, and forestry exporters, to
help ensure that market access gains are not
undermined by unjustified SPS-related trade
restrictions.
Standards-related measures
Tariffs affect the free flow of goods, as do other
types of “non tariff” barriers. Standards-related
measures, or technical barriers to trade—which can
include technical regulations and various testing and
certification requirements—can act as non-tariff
barriers. While regulatory measures are important
and often establish necessary safety measures, they
can be problematic if they are discriminatory or
overly burdensome.
Canada-Korea Free Trade Agreement
highlights
Builds on the WTO Agreement on Technical
Barriers to Trade and incorporates its substantive
provisions to encourage greater transparency and
cooperation between Canada and South Korea
on standards-related measures, including on
conformity assessment.
Promotes the use of internationally accepted
standards and quality management system
guidelines in regulating medical devices and
pharmaceutical products to facilitate safe bilateral
trade in those products.
Permits the establishment of a working group on
building products, an important sector for
Canada, to facilitate trade through cooperation
and information sharing.
Improves transparency on standards and
regulatory development.
Ensures that Canadian vehicle makers will be
able to continue to export to South Korea
vehicles built to key U.S. safety standards and
that South Korea will accept Canadian-made
vehicles built to various European safety
standards.
Includes a most-favoured nation provision for
emissions regulations, which will ensure that
Canada benefits from all current and any
additional benefits granted by South Korea to
any other trading partner.
Establishes a committee at which standards-
related concerns can be addressed and dealt
with as quickly as possible.
Trade remedies
Clear rules will support a transparent and fair
trading environment between Canada and South
Korea.
Trade remedies are measures taken by governments
to protect their domestic industries against unfair
33
pricing by foreign exporters and unfair subsidies
provided by foreign governments. WTO rules and
obligations govern the use of trade remedy measures
and require a country to undertake a fair and
transparent investigation before imposing a trade
remedy, i.e. special duties to offset injury caused to
the domestic industry. Canada and South Korea
share a desire for strong provisions regarding
notifications and the transmission of information on
the relevant laws and procedures concerning
domestic trade remedy investigations.
Canada-Korea Free Trade Agreement
highlights
Reaffirms WTO rights and obligations for trade
remedies.
Recognizes certain practices in anti-dumping and
countervail investigations, consistent with
existing Canadian law and practice.
Provides for additional consultation mechanisms
to enable parties to exchange information and to
discuss respective trade remedies laws, policies
and practices that may be adversely affecting
their interests.
Bilateral safeguards
In order to safeguard against serious injury to a
domestic industry resulting from a surge in imports
following a reduction in tariffs under the Canada-
Korea Free Trade Agreement, the Agreement
contains a trade remedies chapter that includes
provisions allowing, in exceptional circumstances, for
temporary tariff increases.
Canada-Korea Free Trade Agreement
highlights
The bilateral safeguard provisions in the
Agreement allow the parties to temporarily
increase tariffs (up to the applied MFN rate) on a
product when increased imports as a result of the
Agreement are causing, or threatening to cause,
serious injury to a domestic industry.
Recourse to a bilateral safeguard is governed by a
number of substantive and procedural
requirements that are intended to ensure that
bilateral safeguards are not used as a barrier to
trade, but rather are limited to use in legitimate
situations of injury or threat thereof.
A bilateral safeguard may be taken only during
the transition period defined in the trade
remedies chapter. The transition period for a
given product is tied to the tariff phase-out
period for that good (i.e. tariff elimination period
plus 10 years, to a maximum of 15 years).
The maximum duration of a bilateral safeguard
action is four years.
After the first 24 months of a safeguard measure,
the party taking the measure must provide tariff-
based compensation to the party against whose
product the action is taken, or face retaliatory
tariff measures.
Measures may be applied on a provisional basis
only in critical circumstances and in accordance
with established procedural obligations.
The Canada-Korea Free Trade Agreement
includes safeguard provisions equivalent to those
found in KORUS for motor vehicles, and
extends these provisions to all products
.
34
PART TWO
SERVICES, INVESTMENT
AND RELATED MATTERS
35
Trade is more than just the importation and
exportation of goods. Ideas and expertise are also
traded in the form of services and investment flows
from one country to another, creating jobs and
growth in both the originating and destination
countries. Because of the importance of the
investment and service industries to the Canadian
and South Korean economies, the Canada-Korea
Free Trade Agreement includes chapters that deal
with these and a host of other related issues.
Cross-border trade in services
Canadian service providers will have more
business opportunities in South Korea.
Service industries are vital to Canada’s economy,
accounting for more than 70 percent of Canada’s
GDP and employing three out of four working
Canadians—more than 13.6 million people. Services
differ from goods in that they involve economic
activities based on the exchange of advice or
expertise rather than tangible products. For example,
a graphic designer uses his skills to design a logo for
a new software company. The act of designing the
logo for a software company is a service while the
software itself is a good.
Canadians excel at providing knowledge-intensive,
advanced services in such areas as engineering,
architecture, information management,
environmental protection and monitoring, mining
and energy development. The Canada-Korea Free
Trade Agreement will establish greater transparency
and disciplines in the South Korean services market,
resulting in better, more secure and predictable
market access in areas of interest to Canada.
Today, Canada’s service exports to South Korea—
which include transportation, financial and travel
services, and commercial services such as financial,
management, engineering and other professional
services—are worth more than $750 million a year,
and there is much potential for growth.
Canada-Korea Free Trade Agreement
highlights
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 provide 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 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 obligations 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 designed 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 result in improved 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
36
obligation under the Cana
da-Korea Free Trade
Agreement.
For more details, please consult the Appendix.
Financial services
Canadian financial services providers will enjoy
new and better access to the South Korean
market, while governments will be able to
maintain protections to ensure the stability and
integrity of the financial system.
In Canada, the financial sector is a source of high-
quality jobs, employing nearly three-quarters of a
million Canadians. In 2012, exports of financial
services were worth $9 billion, a
ccounting for one
quart
er of the financial sector’s overall sales of
$327 billion.
Canada is a large and growing net exporter of
financial services capital. Financial services
companies are a major driver of Canada’s
international investment activity. In fact, in 2012, the
sector accounted for 52.8 percent of Canada’s total
foreign direct investment stock abroad.
Canada-Korea Free Trade Agreement
highlights
The Agreement’s financial services provisions
will help protect existing investments and
encourage further competition in the financial
services sector.
• Canadian financial service providers with
investments in South Korea will benefit from
enhanced investment protection and access
in the South Korean market on par with the
best treatment provided to any foreign
companies.
New opportunities for Canada’s globally recognized financial services sector
For six consecutive years, the World Economic Forum has ranked Canada’s financial institutions as the soundest in the
world. Canadian financial institutions continue to successfully contribute to the development of a competitive financial
services marketplace globally.
On the international stage, financial services comprise Canada’s single-largest source of outward services trade and
investment, and roughly half of the Canadian stock of outward foreign direct investment originates in the financial
services sector. While the South Korean and Canadian financial services markets are mature, there is potential for
greater participation from each country’s respective financial institutions in these markets.
The Canada-Korea Free Trade Agreement will support this greater participation by ensuring that the South Korean
market remains open to Canadian financial service providers into the future and that their investments will be
protected. The access and regulatory commitments provided for in the Agreement is on par with the best treatment
provided to any foreign company, including those from the United States and the European Union.
At the same time, the Agreement recognizes the critical role that banks, insurance companies and other financial
institutions play in the economy. The Agreement safeguards the right of governments to regulate financial services to
protect the stability and integrity of the financial system and of consumer interests, which is integral to safeguarding
our economic health.
37
The Agreement recognizes the critical role that
banks, insurance companies and other financial
institutions play in the economy by including
special provisions on financial services.
• The Agreement includes special dispute
settlement rules for financial services and a
prudential carve-out that safeguards the right
of governments to take prudential measures
to protect the stability and integrity of the
financial system.
• The Agreement also encourages financial
sector officials in Canada and South Korea to
communicate with one another in order to
prevent unnecessary barriers to entry into the
financial services sector or to resolve issues
arising from such barriers.
For more details, please consult the Appendix.
“Scotiabank congratulates the governments of
Canada and Korea on successfully concluding
the Canada-Korea Free Trade Agreement
negotiations. Scotiabank has been operating in
the Asia-Pacific region for 50 years, and we
welcome this first free trade agreement
between Canada and an Asia-Pacific country.
This is a positive step toward deeper ties in the
Asia-Pacific market, and it recognizes the
importance of Canada’s trade with South
Korea—the 15th-largest economy in the world.
The free trade agreement will provide access to
the South Korean financial sector that is on par
with the Korea-U.S. FTA and will result in
increased investor protection for Canadian
financial institutions.”
Brian Porter, President and CEO, Scotiabank
Telecommunications
Improved competition ensures greater choice for
consumers.
The telecommunications sector is important for the
economies of Canada and South Korea. Not only is
telecommunications an ever-growing service sector,
it is also one of the most important enablers in the
modern economy, providing the means of delivering
other services on which Canadians depend.
Canada-Korea Free Trade Agreement
highlights
The Canada-Korea Free Trade Agreement will
ensure that all players in the telecommunications
market have fair access to networks and services,
and ensure 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.
For more details, please consult the Appendix.
Protecting the telecommunications
sector
Canada has reserved the right in all its international
trade agreements to maintain its foreign investment
regime with respect to telecommunications.
In June 2012, the government amended the
Telecommunications Act to no longer restrict foreign
investment in Canadian telecommunications service
providers with less than a 10 percent market share of
total Canadian telecommunications revenues.
38
E-commerce
Businesses engaged in electronic commerce will
benefit from greater certainty, confidence and
protection.
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 Canada-Korea Free Trade
Agreement includes a commitment whereby both
parties will refrain from applying customs duties, fees
or other charges on digital products that are
transmitted electronically. As well, there are
provisions in the Agreement aimed at building trust
and confidence in the digital environment, such as
the online protection of e-commerce users’ personal
information.
Temporary entry for business persons
Certain skilled professionals will more easily be able
to work temporarily in South Korea.
When it comes to investing and providing services,
there is no substitute for being on-site, where clients
are located. Investors want to witness their
investments, talk to their partners and get a feel for
the local environment. Professionals, including
architects, management consultants and engineers,
need to contact clients on-site in order to fulfil
contracts in the South Korean market.
Temporary-entry provisions in the Canada-Korea
Free Trade Agreement address barriers that business
persons face at the border, particularly by eliminating
the need to obtain a labour market opinion and/or
economic needs test. The Agreement will establish
new preferential access to our respective markets and
facilitate greater transparency and predictability for
the movement of business persons between Canada
and South Korea. The Agreement’s temporary-entry
provisions complement commitments taken in the
area of services, investment, goods and government
procurement.
“The Canadian Services Coalition welcomes the
announcement of a Canada-Korea free trade
agreement. This historic agreement, the first
between Canada and an Asian country, will
provide Canadian services companies with
increased access to the $1.3 trillion South Korean
market. Trade agreements are an important
priority for Canada’s services industries, which
include financial services, engineering and
environmental services, professional and
consulting services and information technology
services. Canadian services companies welcome
this agreement as it will be of significant benefit
to Canada.”
Shirley-Ann George, Vice Chair, Canadian Services Coalition
Protecting services and policies that
matter to Canadians
Nothing in the Canada-Korea Free Trade Agreement
prevents governments from regulating in the public
interest, including in areas related to the delivery of
public services, the provision of preferences to
Aboriginal peoples or the adoption of measures to
protect or promote Canadian culture. For example,
public services such as health, public education and
other social services have been excluded from Canada-
Korea Free Trade Agreement obligations, ensuring that
governments remain free to enact the policies and
programs they choose in these areas.
39
Canada-Korea Free Trade Agreement
highlights
South Korea’s temporary-entry commitments in
the Canada-Korea Free Trade Agreement are
more ambitious than they are in 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 as well as increased transparency
and predictability, facilitating movement between
Canada and South Korea for business visitors,
traders and investors, intra-company transferees,
professionals (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 the science,
engineering and information technology 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.
For more details, please consult the Appendix.
Reaping the benefits
The Canada-Korea Free Trade 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 Agreement will enable
Canadian companies to compete on a level playing
field with their major competitors—such as the
United States and the European Union—in the
South Korean market and give 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.
Investment
More investment means new jobs, new sources of
prosperity, new technologies and greater
competitiveness for Canadians.
Investment is a key driving force for economic
growth and competitiveness in Canada. It plays a
crucial role in facilitating the creation of jobs,
spurring on creativity and technology and linking
Canada to global value chains. The Canada-Korea
Free Trade Agreement includes rules covering direct
investments that Canadian and South Korean
companies make in each other’s territories.
While Canada and South Korea enjoy a well-
established investment relationship, ample scope
remains for further expanding bilateral cross-border
investment. As of 2012, South Koreans had invested
more than $327 billion abroad. The same year, the
stock of foreign direct investment by South Korean
companies in Canada reached $5.8 billion while
Canadian direct investment in South Korea reached
$569 million.
Foreign direct investment, such as a South Korean
company opening a plant in Canada, creates new jobs
and introduces the receiving country to new
technologies, different management techniques and
opportunities to participate in new global value
chains, thus expanding market possibilities. Foreign
direct investment has historically made a significant
contribution to the Canadian economy and it remains
an important contributor to growth and jobs.
Furthermore, investments by Canadian companies in
other countries, such as a Canadian firm buying a
company in South Korea, also bring significant
benefits to Canada: Canadian companies’
investments abroad have generally increased our
exports to those countries, generating jobs at home,
enriching our stock of technology and deepening our
people-to-people ties.
The Canada-Korea Free Trade Agreement’s
investment chapter sets out transparent and
40
predictable rules contributing to a more secure and
stable investment environment, leading to increased
bilateral investment flows into Canada and South
Korea.
Canada-Korea Free Trade Agreement
highlights
The Agreement will ensure that Canadian
investors can compete on an equal footing with
other investors in South Korea.
The Agreement’s investment provisions will
provide Canadian and South Korean investors
with greater certainty, transparency and
protection of their investments while preserving
the full rights of governments to legislate and
regulate in the public interest.
The Agreement’s predictable investment rules,
including a requirement that Canadian businesses
be treated no less favourably in South Korea
than South Korean businesses, will further
reduce the risks associated with investing abroad.
Among other things, the investment chapter
provides protection against discriminatory
treatment, protection from expropriation without
prompt and adequate compensation, and access
to independent international investor-state
dispute settlement.
These provisions will stimulate greater two-way
investment, which will help create jobs and long-
term prosperity for Canadians.
For more details, please consult the Appendix.
Reaping the benefits
Canada benefits from greater foreign direct
investment, regardless of whether investment is
outward or inward. Canadian foreign direct
investment in South Korea will improve our access
to South Korean markets, technology and expertise
and enhance the competitiveness of Canadian firms
in Asia. Greater South Korean investment in Canada
will stimulate economic growth and job creation here
at home, provide new technologies and increase
competition in the Canadian marketplace, ultimately
benefiting Canadian consumers. Key sectors that
stand to benefit from the Agreement include
automotive parts, transportation,
telecommunications and financial services.
Greater certainty for investors like
Nadia
Nadia owns a small company in the city of Québec that
produces a line of ski gloves and toques. The products
sell very well in Canadian stores and online to American
consumers. Nadia would like to expand into Asia, and
thinks the best way to do this is to invest in a small
manufacturing facility in South Korea.
This is a big step for a small-business owner. Fortunately,
the Canada-Korea Free Trade Agreement’s investment
rules provide greater certainty, transparency and
protection to Canadians who want to invest in South
Korea. The Agreement will ensure that the South Korean
government treats Nadia’s company no less favourably
than it treats South Korean businesses. Investing abroad
can be a risky undertaking, but the Agreement reduces
the risk for Canadians investing in South Korea and
opens up countless new opportunities for Nadia and
business owners like her.
41
Competition policy
The Canada-Korea Free Trade Agreement will
provide a fair and predictable trading environment
for Canadian firms.
Competition is good for both consumers and
businesses. For consumers, competition leads to
lower prices, better quality and greater choice of
goods and services. A competitive domestic
environment allows businesses to adapt to economic
conditions and strengthens their ability to succeed in
global markets. When Canadian businesses are able
to compete and succeed, they create more jobs and
prosperity for Canadians.
The purpose of the Canada-Korea Free Trade
Agreement’s competition policy chapter is to ensure
that the benefits of trade liberalization are not offset
by anti-competitive business conduct. While both
Canada and South Korea have existing domestic
competition laws, the Agreement sets out a
framework for effective enforcement action against
anti-competitive business conduct, making the
trading environment fairer and more predictable for
Canadian firms, and ultimately benefiting consumers.
Canada-Korea Free Trade Agreement
highlights
Provisions to ensure ongoing cooperation on the
barring of anti-competitive business conducts.
Emphasis on transparency and non-
discrimination, leading to improved procedural
fairness in the application of Canadian and South
Korean competition laws.
Agreement that provisions included in the
competition chapter will not be subject to
dispute settlement under the Agreement.
For more details, please consult the Appendix.
Attracting investment in Canada
Investment creates jobs and opportunities. Canada has
always been open to investment, welcoming and
encouraging foreign companies to invest in Canada.
Canada’s foreign-investment policy framework provides
a welcoming environment that maximizes the benefits
of foreign direct investment for Canadians while
preserving other public policy interests. Part of this
framework includes the Investment Canada Act (ICA),
which provides for the review of significant investments
in Canada by non-Canadians in a fast-changing global
investment landscape. The Canada-Korea Free Trade
Agreement recognizes the importance of the ICA and,
similar to all our other FTAs, Canada maintains the
ability to review certain foreign investments.
The Canada-Korea Free Trade Agreement also includes
rules for the protection of investors. Investor-
protection rules ensure that foreign investors will not
be treated worse than domestic investors or other
foreign investors operating in similar situations (i.e. in
the same sector, the same province, etc.) and ensure
that their investments will not be expropriated without
prompt and adequate compensation. These rules
include investor-to-state dispute settlement
procedures, which provide for independent access to
an impartial and timely process for the resolution of
conflicts. These rules have been a standard feature of
Canada’s comprehensive free trade agreements since
NAFTA and give assurance to investors that their
investments will be protected from discriminatory or
arbitrary government actions.
42
Monopolies and state enterprises
The Canada-Korea Free Trade Agreement
provisions will encourage fair market competition to
protect Canadian businesses and their investors.
The key provisions of the Canada-Korea Free Trade
Agreement’s monopolies and state enterprises
chapter ensure that Canadian and South Korean
monopolies and state enterprises do not operate in a
manner inconsistent with the Agreement when
exercising delegated governmental authority and
ensure that these entities give non-discriminatory
treatment to each party’s goods and services.
The chapter’s obligations are also important as they
prevent monopolies and state enterprises from
operating in a way that undermines the market access
obligations undertaken in the Agreement. To ensure
accountability related to obligations in the chapter,
the actions of monopolies and state enterprises are
subject to state-state dispute settlement. The actions
of these entities are also subject to investor-state
dispute settlement with respect to the obligations of
the investment chapter but only when the entities
exercise delegated governmental authority.
Canada-Korea Free Trade Agreement
highlights
Parties agree to promote fair competition and
prevent market distortion by state entities.
Monopolies and state enterprises with public
service obligations will continue to have
flexibility to serve public interests.
Parties maintain their ability to designate or
maintain an entity as a monopoly or state
enterprise.
For more details, please consult the Appendix.
43
PART THREE
GOVERNMENT PROCUREMENT
44
People and companies are not the only players active
in the marketplace. Governments are also important
participants, whether through the purchase of office
material or the construction of roads and bridges.
When it comes to purchasing products and services,
governments try to ensure at least two things: that
taxpayers’ money is spent wisely; and that there is a
transparent, fair procurement process in which
companies can compete.
Government procurement rules, including those in
trade agreements, set out how the public sector
should make purchasing decisions for goods and
services for its own use. These rules ensure that
government entities get the supplies they need while
also meeting other public-policy objectives through
their purchases, such as promoting environmental
sustainability or ensuring safety. These rules also
foster innovation and contribute to economic
growth.
Government procurement is a major source of
economic activity in South Korea. In 2012, South
Korea’s overall government procurement market was
estimated to be worth approximately $105 billion,
with the infrastructure/construction procurement
market estimated to be worth $47 billion alone.
The Canada-Korea Free Trade Agreement will
provide Canadian suppliers of products and services
preferential access to the procurement activities of
South Korean central government entities. The
Agreement will place Canadian firms on an equal or
better footing relative to their competitors in terms
of access to South Korea’s central government
procurement market. Opening procurement
processes also increases competition: the Agreement
will ensure that procurement processes covered by
the Agreement are conducted with transparency and
openness in order to realize the market access
benefits.
Canada-Korea Free Trade Agreement
highlights
The Canada-Korea Free Trade Agreement’s
government procurement chapter builds on
existing Canadian and South Korean
commitments included in the WTO’s Agreement
on Government Procurement (GPA). Canada
and South Korea are among the 15 parties to the
GPA. Canada and South Korea recently
expanded their respective commitments in a
revised GPA. The revised GPA is expected to
enter into force in April 2014 for all parties that
have ratified it, including Canada. Once South
Korea ratifies the revised GPA, it will apply
between Canada and South Korea.
Through the Agreement, Canadian suppliers will
benefit from additional access to procurement by
South Korean central government agencies, for
contracts valued above 100 million South Korean
Won ($100,000). This will put Canadian suppliers
on equal footing with U.S. competitors and in a
more advantageous position than competitors
from other WTO GPA parties, such as Japan
and the European Union.
Access to government procurement
opportunities complements gains that Canada
will obtain in other areas of the Agreement,
including tariff reduction and investor
protection. Where tariffs have been reduced,
Canadian products will be more competitive in
the local South Korean market and can be more
competitively priced for sale to South Korean
government agencies.
In addition to non-discriminatory treatment,
Canadian suppliers will have access to all the
information necessary to submit a bid as well as a
right to challenge procurement decisions if the
rules have not been followed.
In terms of the Canadian market, South Korea
will have access to Canadian central government
procurement opportunities for contracts valued
above $100,000. Under the Agreement, South
Korea will have access to the same Canadian
45
central government entities as those listed in the
WTO GPA.
Although the Agreement does not cover
provincial, territorial or municipal government
procurement, Canada and South Korea will have
commitments in relation to sub-national
procurement once the revised WTO GPA comes
into force.
For more details, please consult the Appendix.
Reaping the benefits
The Canada-Korea Free Trade Agreement will create
opportunities that could benefit workers and their
families in sectors that are vital to the Canadian
economy. Government procurement plays a key role
in providing economic opportunities and attracting
new investment. The Agreement will help secure
such opportunities, while providing a more stable
and predictable international commercial
environment.
46
PART FOUR
INTELLECTUAL PROPERTY
47
Canadians produce brilliant and innovative ideas that
become products and technologies that change the
way we live. For example, Canadians have played key
roles in the development of medical breakthroughs,
radar, television, smartphones and nanotechnology—
technology on which people everywhere now rely
daily. Canadian innovations, artistic works and
brands need protection so that their creators can
enjoy the fruits of their labour and be encouraged to
keep on innovating. An effective regime to support
intellectual property (IP) rights is important for
Canada’s growing knowledge-based economy and
helps to foster competitiveness, innovation and
creativity, attract investment and stimulate jobs and
growth.
At the same time, in developing IP policy and
legislation, the government seeks to ensure that there
is an appropriate balance between the interests of IP
rights-holders and the interests of users. This is to
ensure not only that innovation and creativity
continue but that consumers have ongoing access to
the products of that innovative and creative activity.
Putting in place a strong IP chapter in the Canada-
Korea Free Trade Agreement is important as it
contributes to a framework of regulatory certainty
that is so vital for individuals and businesses seeking
foreign markets and investors in future-oriented
technologies and innovation. Clear and transparent
IP rules help create that certainty.
The Agreement’s commitments to strong intellectual
property rights and rules for their enforcement will
complement access to the South Korean market for
Canadians who develop and market innovative and
creative products, thus bringing benefits for
investors, innovators and consumers alike.
Canada-Korea Free Trade Agreement
highlights
Through the Canada-Korea Free Trade
Agreement’s IP provisions, Canadian copyright,
patent and trademark owners have assurance that
their rights will be respected fully in the South
Korean marketplace. The Agreement’s robust
enforcement provisions will ensure that
Canadian IP rights-holders can do business with
confidence in the South Korean market.
Copyright
• Reflects Canada’s regime as updated by the
2012 Copyright Modernization Act, which
brought Canada into compliance with the
World Intellectual Property Organization’s
two Internet treaties.
• Reiterates existing aspects of Canada’s
regime, including the protection of
technological protection measures
(technology designed to protect copyrighted
material), protection of rights management
information, and special measures against
copyright infringers on the Internet (no
change to Canada’s “notice and notice”
regime).
Trademarks
• Reflects existing aspects of Canada’s
trademarks regime, including those
pertaining to trademark registration,
application and cancellation as well as to
well-known trademarks.
Enforcement
• Includes provisions on civil and criminal
remedies and border measures in line with
Canada’s existing regime and Bill C-8, the
Combating Counterfeit Products Act.
Patents
• In line with Canada’s current regime,
including criteria regarding patentability and
exclusions from patentability.
• No new commitments in the area of
pharmaceutical patents.
Public health concerns
• Recognizes the importance of the WTO
Declaration on Trade-Related Aspects of
Intellectual Property Rights (TRIPS
Agreement) and public health.
48
Geographic indications
• Includes provisions on the protection of
geographical indications; more specifically,
commits South Korea to protect the terms
“Canadian whisky” and “Canadian rye
whisky” as geographical indications.
• Obliges Canada to protect the terms Goryeo
Hongsam, Goryeo Baeksam, Goryeo Susam and
Icheon Ssal, including their translations,
respectively, “Korean red ginseng,” “Korean
white ginseng,” “Korean fresh ginseng” and
“Icheon rice” as geographical indications.
Other
• Increases opportunities for cooperation in
the field of intellectual property and
establishes a committee to oversee such
cooperation as well as to provide a forum for
discussion and consultations.
For more details, please consult the Appendix.
49
PART FIVE
DISPUTE SETTLEMENT
AND INSTITUTIONAL PROVISIONS
50
Dispute settlement
Improved, speedier and less costly dispute
settlement processes.
When individuals have disagreements, they have
various ways to resolve them. They can try to
negotiate among themselves or, if that doesn’t work,
they can seek the help of an impartial third party
such as a mediator, an arbitrator or a court. Trade
disputes between countries work much the same
way. Trade agreements include various dispute
resolution mechanisms so that governments can
resolve their disagreements. For instance, when
consultations fail to resolve a problem, trade
agreements provide governments with the option of
using impartial third parties to help resolve the
dispute. In some cases, these third parties act like
courts, in the sense that they hear evidence from
both sides and ultimately render binding decisions.
When a party loses a challenge brought against one
of its measures in a trade dispute, it may choose to
comply with the mediator or arbitrator’s decision by
amending or withdrawing the measure, but is not
obligated to do. If a party fails to bring into
compliance a measure that has been found
inconsistent with its obligations, however, the
winning party can impose retaliatory measures or
negotiate compensation. In the case of investor-state
disputes, damages may be awarded if it is found that
a measure has violated a trade obligation.
Trade disputes often harm both parties’ interests as
they prevent the efficient flow of goods and services
and can cost millions of dollars in lost opportunities.
Resolving trade disputes quickly and effectively is
therefore important.
Canada-Korea Free Trade Agreement
highlights
The dispute settlement chapter builds on lessons
learned from past experience by establishing a
dispute settlement process that is faster and more
efficient than the dispute resolution process in
the WTO and many other trade agreements.
Provides for efficient, three-person dispute
settlement panels, with panellists appointed
through an ad-hoc appointment process rather
than a process based on a standing roster of
candidate panellists.
• An ad-hoc appointment approach is
preferable because it broadens the range of
potential adjudicators, prevents situations
where a dispute cannot go forward
expeditiously because the roster has expired
and a new one has not yet been appointed,
and, for the parties in dispute, reduces
administrative burdens related to the need to
maintain the roster.
Provides for even more accelerated timelines for
disputes involving perishable goods and motor
vehicles.
Dispute settlement provisions allow for hearings
that are accessible to the public and permits
panels to consider submissions by non-
governmental persons.
For more details, please consult the Appendix.
Institutional provisions
The Canada-Korea Free Trade Agreement includes
clear and transparent rules so Canadians will
understand how the Agreement works.
Institutional provisions set out the ground rules for
how the Canada-Korea Free Trade Agreement will
be interpreted, implemented and managed. They
outline the parties’ joint commitments and
aspirations and affirm the right of governments to
regulate in the public interest. These provisions also
51
deal with important issues such as how the parties
may amend the Agreement in the future, what is
excluded from it, and even how it might be
terminated.
Canada-Korea Free Trade Agreement
highlights
The preamble sets out a number of aspirational
(non-binding) statements for the Agreement,
including those related to environmental
protection and conservation, workers’ rights and
cultural diversity.
An “Extent of Obligations” provision recognizes
that each party is responsible for ensuring the
observance of obligations and commitments in
the Agreement at all levels of government.
Includes provisions on cultural cooperation to
promote cultural exchanges and joint initiatives,
such as audiovisual coproduction.
Transparency provisions ensure that each party
has access to information, such as laws or
regulations that can affect the operation of the
Agreement.
Provides for a joint commission to oversee and
facilitate the implementation and application of
the Agreement and supervise the work of the
Agreement’s various committees, working
groups and other bodies.
Committees, working groups and other bodies
under the joint commission pertain to:
• goods (committee on trade in goods,
subcommittee on trade in motor vehicles and
automotive parts, subcommittee on trade in
forest products, rules of origin and customs
committee, committee on sanitary and
phytosanitary measures);
• standards-related measures (committee on
standards-related measures, ad-hoc working
group on standards-related measures related
to building products);
• trade remedies (committee on trade
remedies);
• financial services (financial services
committee);
• temporary entry for business persons
(contact points are identified);
• government procurement (committee on
government procurement);
• intellectual property (committee on
intellectual property);
• outward processing zones (committee on
outward processing zones on the Korean
peninsula);
• environment (contact point[s] are identified,
environmental affairs council); and
• labour (national points of contact, ministerial
council).
Scope of committee and working group
mandates is generally limited to issues falling
within the scope of the applicable chapter.
Includes amendment provisions that allow
parties to agree to revise and update the
Agreement.
Termination and withdrawal provisions allow
either party to terminate or withdraw from the
Agreement with six months’ notice.
For more details, please consult the Appendix.
Exceptions
As with all of Canada’s free trade agreements, the
Canada-Korea Free Trade Agreement includes an
exceptions section to preserve autonomy and
flexibility in key areas of public policy, including
culture, taxation, environmental protection and
national security.
Canada-Korea Free Trade Agreement
highlights
Includes a broad, general exception for measures
related to cultural industries to maintain Canada’s
flexibility to protect and promote cultural
industries through its policies and programs.
Includes a taxation article to ensure protection
for existing taxation measures, as well as broad
exceptions to ensure the ability of governments
52
to implement efficient tax policies that are
consistent with their overall social and economic
objectives.
Includes a general exception in line with those
included in Canada’s previous free trade
agreements for certain measures, including those
necessary to protect human, animal or plant life
or health, or relating to the conservation of
exhaustible natural resources.
Includes an exception for measures taken to
protect national security.
53
PART SIX
ENVIRONMENT AND LABOUR
54
The protection of the environment and labour rights
are fundamental values shared by Canada and South
Korea. The Canada-Korea Free Trade Agreement
recognizes this with provisions in these areas.
Environment
Commitments to strengthen linkages between
trade, investment and the environment.
Canada is committed to pursuing policies that
promote sustainable development and sound
environmental management. The Canada-Korea Free
Trade Agreement reinforces the mutual
supportiveness of trade and environment policies by
including commitments to foster good
environmental governance.
Canada-Korea Free Trade Agreement
highlights
Ambitious environmental obligations consistent
with Canada’s other agreements, including
commitments to:
• maintain high levels of environmental
protection, the effective enforcement of
environmental laws, and not waiving or
derogating from such laws to promote trade
or investment;
• ensure transparency and public participation
in the making of such laws; and
• reaffirm commitments to multilateral
environmental agreements Canada and South
Korea have ratified.
A framework for cooperation in areas of mutual
interest.
A dispute resolution process to address any
questions regarding compliance, including review
by an independent panel of experts whose
recommendations will be made publicly available.
For more details, please consult the Appendix.
Labour
The rights of workers will be respected.
Ensuring that trade and labour are mutually
supportive is a priority for Canada. Canada is
committed to fundamental labour rights, and
supporting high labour standards through the
Canada-Korea Free Trade Agreement is a key
component of that commitment.
Canada-Korea Free Trade Agreement
highlights
Labour chapter provisions that are similar to
those found in Canada’s recent labour
cooperation agreements, such as those with
Colombia, Honduras, Jordan, Panama and Peru.
An ambitious level of obligations ensuring that
national labour laws and policies in Canada and
South Korea respect international labour
standards, including in regard to the International
Labour Organization’s 1998 Declaration on
Fundamental Principles and Rights at Work.
A non-derogation clause preventing either party
from derogating from its labour laws in order to
encourage trade or investment.
Setting up of institutional structures to
implement and monitor compliance with
Agreement commitments in the area of labour:
• either party can request labour consultations
with the other party regarding any obligation
found in the chapter; and
• a mechanism through which members of the
public can raise concerns about labour issues
related to the chapter.
An enforceable dispute settlement mechanism,
which may result in financial penalties in cases of
non-compliance, to help ensure that all labour
obligations are respected.
For more details, please consult the Appendix.
57
APPENDIX – CANADA-KOREA FREE TRADE AGREEMENT
Technical summary of final negotiated outcomes
This document summarizes the key negotiated outcomes of the Canada-Korea Free Trade Agreement as
announced on March 11, 2014, in Seoul.
The outcomes are categorized in the following seven sections:
1. Non-agricultural goods
2. Agricultural and agri-food products
3. Services and investment
4. Government procurement
5. Intellectual property
6. Dispute settlement and institutional provisions
7. Environment and labour
Non-agricultural goods
General tariff elimination
The Canada-Korea Free Trade Agreement will eliminate duties on all non-agricultural goods: 10,307 tariff lines,
including industrial goods, fish and seafood products, and forestry and value-added wood products.
South Korean tariff elimination
90.2 percent of non-agricultural tariff lines set at 0 percent on entry into force – transition periods of three,
five, seven, 10, 11, 12 years on certain goods;
fish and seafood: duties on 70 percent of tariff lines will be eliminated within the first five
years – 100 percent of tariff lines will be duty-free within 12 years;
forestry and value-added wood products: duties on 85 percent of tariff lines will be eliminated within the
first five years – 100 percent of tariff lines will be duty-free within 10 years.
Canadian tariff elimination
81.5 percent of non-agricultural tariff lines set at 0 percent on entry into force – transition periods of three,
five, 10 and 11 years on certain goods;
fish and seafood: duties on 77.2 percent of tariff lines will be eliminated within the first five years –
100 percent of tariff lines will be duty free within three years;
wood and forestry: duties on all tariff lines will be eliminated upon entry into force.
58
Industrial goods
South Korean tariff elimination
Upon the Agreement’s entry into force, 95.7 percent of tariff lines for industrial goods will be duty-free. A further
4.2 percent of tariff lines will become duty-free within five years, while the remaining 0.1 percent will be duty-free
within 10 years.
Products of interest to Canada that will receive immediate duty-free access include:
aerospace: turbo propellers, turbo-jet parts, ground-flying training equipment – current duties of up to
8 percent;
hides, skins, leathers: leather clothing, tanned or dressed fur skins – current duties range from 3 to
16 percent;
information communications technology: certain cameras, transmission apparatus parts, electric
conductors – current duties of up to 13 percent;
iron and steel: certain ferro-alloys, alloy powders – current duties of up to 8 percent;
nickel: unwrought nickel, nickel powders – current duties of up to 8 percent.
A majority of tariffs on the following products of interest to Canada will be eliminated upon the Agreement’s entry
into force; remaining tariffs will be eliminated within three or five years:
chemicals (94 percent of tariff lines immediately duty-free): ethylene glycol, germanium oxides, carbides,
catalysts – current duties of up to 8 percent;
aluminum (98.4 percent of tariff lines immediately duty-free): unwrought and unalloyed aluminum,
aluminum alloys – current duties of up to 8 percent;
mineral products (94.2 percent of tariff lines immediately duty-free): peat, mica powder, slag – current
duties of up to 8 percent;
pharmaceuticals (63 percent of tariff lines immediately duty-free): antibiotics, other medicines, anti-
tuberculosis medications – current duties of up to 8 percent;
plastics (91.5 percent of tariff lines immediately duty-free): ethylene polymers, polyamides, self-adhesive
flat-plastics – current duties of up to 8 percent.
59
A majority of tariffs on the following products of interest to Canada will be eliminated upon the Agreement’s entry
into force; remaining tariffs will be eliminated in 3, 5 or 10 years:
medical devices (88 percent of tariff lines immediately duty-free): diagnostic/laboratory reagents, medical
apparatus parts, thermometers – current duties of up to 50 percent;
prefabricated buildings (60 percent of tariff lines immediately duty-free) – current duties at 8 percent.
Canadian tariff elimination
100 percent of industrial tariff lines will be eliminated.
For example:
appliances: 65.2 percent of tariff lines immediately duty-free and all remaining tariffs eliminated within
three or five years – current duties up to 8 percent;
consumer electronics: 87.6 percent of tariff lines immediately duty-free and all remaining tariffs to be
phased out within three or five years – current duties of up to 14 percent;
ships: 30.8 percent of tariff lines immediately duty-free and all remaining tariffs to be phased out within 3,
5 or 11 years – current duties of up to 25 percent;
chemicals: 99.5 percent of tariff lines duty-free upon implementation and all remaining tariffs to be phased
out within three or five years – current duties of up to 15.5 percent;
aluminum: 78.2 percent of tariff lines to be duty-free upon implementation and all remaining tariffs to be
phased out within three or five years – current duties of up to 6.5 percent;
apparel: 5.7 percent of tariff lines to be duty-free upon implementation and all remaining tariffs to be
phased out within three years – current duties of up to 18 percent;
footwear: 34.8 percent of tariff lines to be duty-free upon implementation and all remaining tariffs to be
phased out within 5 or 11 years – current duties of up to 20 percent.
Automotive products
South Korean tariff elimination
Upon the Agreement’s entry into force, all existing tariffs will be eliminated. This includes:
all light vehicles – current duties of 8;
all automotive parts – current duties ranging from 3 to 8 percent.
60
Canadian tariff elimination
Canadian tariffs will be eliminated on:
all light vehicles: tariffs to be eliminated within three or five years – current duties
of 6.1 percent;
all automotive parts: 69.8 percent of tariff lines to be duty free on implementation and all remaining tariffs
to be phased out within three or five years – tariffs ranging from 0 to 8.5 percent.
Overview of auto-related provisions
Tariff elimination: South Korea’s 8-percent tariff on vehicles will be eliminated immediately upon the
Agreement’s implementation while Canada’s lower, 6.1-percent tariff on imports of South Korean passenger
vehicles will be phased out in three annual cuts.
Rules of origin: The Canada-Korea Free Trade Agreement includes rules of origin for vehicles that provide
Canadian vehicle manufacturers with the ability to source inputs from the United States and still benefit from the
Agreement when exporting their vehicles to South Korea. Neither KORUS nor the EU-Korea FTA provides such
“cumulation”. The thresholds and methodologies for origin content will ensure that the rules of origin under the
Canada-Korean Free Trade Agreement can be met by all Canadian manufacturers without volume limits.
Accelerated dispute settlement: The specialized dispute settlement provisions in the Canada-Korea Free Trade
Agreement will ensure that any dispute related to motor vehicles will be dealt with as quickly as in KORUS and on
a faster timeline than in the EU-Korea FTA. Furthermore, the Canada-Korea Free Trade Agreement’s accelerated
dispute settlement procedures are permanent, whereas the equivalent KORUS provisions can expire after 10 years.
Transitional safeguards: The Canada-Korea Free Trade Agreement includes safeguard provisions equivalent to
those found in KORUS for motor vehicles and extends these provisions to all products, as was done in the EU-
Korea FTA. An unprecedented element of the provisions is the ability to introduce a safeguard measure and not
pay any compensation to the other Party for the first two years.
Internal taxes: The Canada-Korea Free Trade Agreement’s most-favoured-nation (MFN) provision ensures that
Canada benefits not only from existing KORUS provisions but also from any future improvements to the South
Korean internal taxation regime for motor vehicles and automotive parts made for any third party.
Emissions and fuel economy standards: The Canada-Korea Free Trade Agreement ensures that Canada will
benefit, now and in the future, from the best treatment that South Korea provides to any other trading partner.
61
Safety standards: The equivalency provisions in the Canada-Korea Free Trade Agreement will give Canadian
automakers preferential access to the South Korean market for cars built to key U.S. safety standards (as most
Canadian manufacturers currently are) or European Union safety standards (as is necessary to export vehicles to
the European Union and to many other markets) and will not be subject to any numerical limits. The equivalency
provisions for U.S. safety standards enshrines in the Agreement a modernized version of an existing South Korean
regulation known as Table 4 that could have otherwise been removed by South Korea at any time. Provisions on
new vehicle technologies and compliance testing procedures will also help to facilitate access to the South Korean
market.
Forestry and value-added wood products
South Korean tariff elimination
Current duties average 2.9 percent, with tariff peaks up to 10 percent:
upon entry into force, elimination of tariffs on more than 57 percent of tariff lines;
a further 13.1 percent of tariff lines will become duty-free within three years:
spruce lumber, other coniferous lumber, white wood/fir lumber, cedar lumber – current duties of
5 percent;
duties on the reminder of Canada’s exports will be eliminated within 10 years:
oriented strand board – current duties of 8 percent;
plywood – current duties of 8 to 10 percent;
particle board – current duties of 8 percent.
Canadian tariff elimination
Canada will remove all tariffs on forestry products upon implementation of the Agreement.
Fish and seafood products
South Korean tariff elimination
Nearly 70 percent of fish and seafood tariff lines will benefit from duty-free access within five years of the Canada-
Korea Free Trade Agreement’s entry into force.
Tariffs will be eliminated immediately on such products as:
lobster (frozen) – current duties of 20 percent;
Pacific and Atlantic salmon (fresh/chilled/smoked) – current duties of 20 percent.
62
Tariffs on the following product of interest to Canada will be eliminated within three years:
lobster (not frozen) – current duties of 20 percent.
Tariffs on the following products of interest to Canada will be eliminated within five years:
prepared/preserved salmon in airtight containers – current duties of 20 percent;
Bai top shell (sea snails) – current duties of 20 percent;
frozen sardines – current duties of 10 percent;
fish oil – current duties of 3 percent;
frozen Pandulus borealis shrimp – current duties of 20 percent.
Canadian tariff elimination
In total, 77.2 percent of tariff lines will be duty free upon implementation and all remaining tariffs will be phased
out within three years.
Agricultural and agri-food products
South Korean tariff elimination
The Canada-Korea Free Trade Agreement will allow for the progressive elimination of tariffs on 86.8 percent of
agricultural tariff lines.
Products of interest to Canada that will receive immediate duty-free access include:
grains and special crops:
wheat, including durum wheat – current duties of up to 3 percent;
rye – current duties of up to 108.7 percent;
oats – current duties of up to 554.8 percent;
canary seed – current duty of 3 percent.
oilseeds and oilseed products:
canola – current duties of 10 percent;
soybeans for soy sauce and soy-cake – current duty of up to 487 percent, or 956 Won/kg;
mustard seed – current duty of 3 percent.
meat and animal products:
beef fats and tallow – current duties of up to 8 percent;
pig fats and lard oils – current duties of 3 percent;
bovine and swine genetics – current duties of up to 18 percent;
63
pure-bred swine – current duties of up to 18 percent;
raw furskins, including mink – current duties of 3 percent.
animal feeds:
pet food – current duties of 5 percent;
certain forage products, such as hay and alfalfa bale – current duties of up to 18 percent.
processed products and alcoholic beverages:
frozen french fries – current duty of 18 percent;
prepared mustard and mustard flour – current duties of 8 percent;
maple syrup and maple sugar – current duties of 8 percent;
rye whisky – current duty of 20 percent;
ice wine – current duty of 15 percent;
certain baked goods – current duties of 8 percent;
golden roasted flaxseed – current duty of 45 percent.
other products, such as beet pulp (current duty of 5 percent) and linseed (current duty of 3 percent).
Tariffs on the following products of interest to Canada will be eliminated within three and five years of the
Agreement’s entry into force:
refined canola oil – current duties of 5 percent;
chick peas, lentils and broad beans – current duties of 27 percent;
wheat flour – current duties of 4.2 percent;
processed products, which include sugar confectionery products (current duties of 8 percent), most baked
goods (current duty of 8 percent), active and inactive yeasts (current duty of 8 percent), and cranberry and
blueberry juice (current duty of 50 percent).
In addition, tariffs will gradually be eliminated on the following Canadian products of interest:
beef and pork:
fresh/chilled/frozen beef cuts and some processed beef (current duties of up to 72 percent) – duties
to be eliminated over 15 years;
fresh/chilled/frozen pork and (current duties of up to 25 percent) – duties will be eliminated over 5
to 13 years;
fresh/chilled/frozen beef cuts and some processed beef products, as well as certain
fresh/chilled/frozen pork products, will be subject to transitional safeguard volumes;
beef and pork offal (current duty of 18 percent) – duties will be eliminated over 11 years.
pulses:
dried peas for human consumption and kidney beans (duties of up to 27 percent) – duties to be
eliminated over 10 years;
64
mung/urd beans (tariffs of up to 607.5 percent) – duty to be eliminated over 11 years;
adzuki beans (duties of up to 420.8 percent) – duty-free within specific agricultural safeguard volumes,
and unlimited after 15 years.
oils and oilseeds:
crude canola oil (current duty of 5 percent) – duties will be eliminated over seven years;
identity-preserved soybeans for human consumption (duties of up to 487 percent or 956 Won/kg) –
permanent duty-free in-quota access for an initial volume of 5,000 tonnes, increasing to 17,000 tonnes
by year 10 of the Agreement.
processed grains and animal feeds:
transitional tariff rate quotas (TRQs) for the following products:
certain fodder (duties up to 100.5 percent) – duty-free within quota volume of 20,000 tonnes,
increasing to 55,000 tonnes by year 8 and year 9, and unlimited by year 10;
supplementary animal feeds (duties up to 50.6 percent) – duty-free quota volume of 500 tonnes,
growing to 1,000 by year 9 and unlimited thereafter;
un-roasted malt (duties of up to 269 percent) – duty-free within quota volume of 13,000 tonnes
growing to 25,000 tonnes by year 11; unlimited thereafter;
un-hulled and naked barley (duties of up to 324 percent or 326 Won/kg) – duty-free within quota
volume of 2,500 tonnes with no growth; unlimited by year 15.
other products:
natural honey (duties of up to 243 percent or 1,864 Won/kg) – permanent duty-free in-quota access
secured for an initial 100 tonnes growing to 200 tonnes by year 21;
frozen blueberries or cranberries (duty of 30 percent) – duties to be eliminated over seven years;
sweetened and unsweetened dried cranberries (duty of 45 percent) – duties to be eliminated over
10 years;
miscellaneous food preparations (duty of 8 percent) – duties to be eliminated over seven years.
For all agricultural products, Canada will have continued access to any of South Korea’s existing
import quotas.
South Korea excluded selected agricultural products (3.1 percent of Canada’s agricultural exports) from
tariff elimination, including most dairy products, poultry and poultry products, ginseng and its products,
rice and rice products, refined sugar and most tobacco products.
Canadian tariff elimination
Upon the Canada-Korea Free Trade Agreement’s entry into force, Canada will provide South Korea with
immediate duty-free access on 50.7 percent of agricultural tariff lines. A further 36.3 percent of duties on
agricultural tariff lines will be eliminated over five years.
65
Of Canadian agricultural tariff lines, 13 percent will be excluded from duty elimination, including all those that
apply to over-quota supply-managed products (i.e. dairy, poultry and eggs). As well, no tariff rate quotas for
supply-managed goods were increased.
Services, investment and related matters
Cross-border trade in services
Canada obtained 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, such as professional services (e.g. foreign legal consultancy services, commercial
education and training, and research and development), environmental services, business services and
services incidental to manufacturing, mining and wholesale trade. This outcome is commensurate with
KORUS and the EU-Korea FTA.
The cross-border trade in services and investment chapters include a “negative list approach” for listing
reservations. Under this approach, a market is fully open unless otherwise listed in a reservation and it
provides service suppliers from each market with increased transparency and predictability of domestic
regulatory regimes.
An equally important outcome was the binding of future autonomous liberalization by way of a “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 Canada-Korea Free Trade Agreement.
The services chapter includes a most-favoured nation (MFN) clause. This MFN provision will ensure that
any additional benefits granted by South Korea to its future free trade agreement partners will also be
extended to Canada.
Canada’s services obligations in the Canada-Korea Free Trade Agreement are substantively similar to its
NAFTA obligations and are equivalent to Canada’s most recently concluded free trade agreements (e.g.
Peru, Colombia and Panama), and include a non-binding mutual recognition agreement framework that
provides common standards or criteria for the licensing or certification of suppliers of professional
services.
As with all of Canada’s free trade agreements, the Canada-Korea Free Trade Agreement retains the right of
governments to regulate and maintain sovereign control over the development of natural resources.
Services provided in the exercise of government authority, including health, public education and other
social services sectors and activities, are also excluded from coverage.
Exclusions taken by Canada provide for continued preferential treatment to be given to Aboriginal peoples
and minority groups.
Financial services
The financial services provisions of the Canada-Korea Free Trade Agreement will help protect existing
investments and encourage further competition in the financial sector.
66
Canadian financial service providers that have investments in South Korea will benefit from enhanced
investment protection and access in the South Korean market on par with the best treatment
provided to any other foreign companies.
The Agreement ensures that Canadian financial service providers and investors will benefit from any
additional trade commitments that South Korea makes in the future.
The Agreement also includes new commitments to facilitate cross-border trade, including in the areas of
portfolio management services, data processing operations and transfers of information that facilitate
efficient capital allocation by Canadian financial institutions in the region.
The Agreement recognizes the critical role that banks, insurance companies and other financial
institutions play in the economy by including special provisions on financial services.
The Canada-Korea Free Trade Agreement includes special dispute settlement rules for financial
services and a prudential carve out that safeguards the right of governments to take prudential
measures aimed at protecting the stability and integrity of the financial system.
The Agreement will also encourage financial sector officials in Canada and South Korea to
communicate with one another in order to prevent or resolve unnecessary barriers to entry into the
financial services sector.
Telecommunications
The telecommunications chapter will enhance regulatory certainty for Canadian telecommunications
service suppliers by including disciplines to ensure that South Korea’s regulators act impartially, objectively
and in a transparent fashion.
The chapter will ensure that Canadian enterprises have preferential access to South Korean
telecommunications networks and services for the supply of their products and services, beyond South
Korea’s existing GATS commitments.
Canadian-owned telecommunications service suppliers in South Korea will benefit from investment
provisions that are equivalent to those available to U.S. suppliers under KORUS.
Temporary entry for business persons
South Korea’s commitments are the most ambitious the country has ever negotiated in a free trade
agreement, going well beyond what was negotiated in KORUS and the EU-Korea FTA.
South Korea’s commitments are in line with those of Canada and include reciprocal coverage (i.e. the
same coverage applies to both Canada and South Korea) of intra-corporate transferees, business
visitors, traders and investors.
The Agreement includes broad coverage for contract service suppliers (i.e. professionals employed by
a Canadian company), including those in the science, engineering and IT fields, and coverage of key
sectors of interest to Canada for independent professionals (i.e. self-employed professionals contacted
directly by a South Korean or South Korean company), including architects, engineers, management
consultants and veterinarians.
Through the Canada-Korea Free Trade Agreement, these professionals will not need to obtain a
labour market opinion/or economic needs test.
67
Spouses of traders and investors, intra-corporate transferees, contract service suppliers and independent
professionals are also covered by the Agreement.
Investment
The Agreement’s investment chapter ensures that Canadian investors will benefit from a more transparent
and predictable environment, and sets out the respective rights and obligations with respect to the
treatment of Canadian investors in South Korea and South Korean investors in Canada.
Among other things, the investment chapter provides for protection against discriminatory treatment,
including at the pre-establishment stage of an investment (e.g. when an investment is undergoing the
permit and approval process), which will assist Canadian investors in accessing the South Korean market.
The chapter also provides for protection from expropriation without prompt and adequate compensation.
The Canada-Korea Free Trade Agreement’s investment chapter will benefit Canadian investors across a
wide range of sectors, as South Korea has committed to providing non-discriminatory treatment, subject
to South Korean laws.
The services and investment chapters include a “negative list approach,” under which a market is fully
open unless otherwise listed in a reservation. This approach will offer investors from each market more
transparent and predictable domestic regulatory regimes.
The Agreement grants investors access to international arbitration to resolve disputes through the
investor-state dispute settlement provisions. International arbitration is recognized as providing an
impartial, objective means for foreign investors to resolve disputes with host countries.
The Agreement’s dispute settlement provisions ensure greater protections for investors against
discriminatory and arbitrary practices. Canadian investors see this element of our investment agreements as
one of the most important, because it provides them with even more assurance that their investments will
be treated fairly.
The Agreement’s investment rules put Canadian investors on the same footing as their U.S. competitors
under KORUS.
As in all of Canada’s free trade agreements, the Canada-Korea Free Trade Agreement maintains Canada‘s
ability to review certain foreign investments pursuant to the Investment Canada Act.
Competition policy
The Canada-Korea Free Trade Agreement includes commitments to ensure that:
the parties maintain measures to proscribe anticompetitive business conduct;
these measures are in accordance with the principles of fairness, transparency and non-discrimination;
ongoing cooperation by the parties on the barring of anticompetitive business conduct; and
competition policy provisions, owing to the domestic nature of competition enforcement, are not subject
to any form of international dispute settlement.
68
Monopolies and state enterprises
Canada and South Korea have agreed to promote fair competition and prevent market distortion by state
entities.
To this end, the Agreement’s monopolies and state enterprises chapter establishes rules disciplining the
behaviour of monopolies and state enterprises to ensure that they operate in a non-discriminatory manner
and in accordance with commercial considerations.
Monopolies and state enterprises with public service obligations will continue to have flexibility to serve
public interests.
The parties maintain their ability to designate or maintain an entity as a monopoly or state enterprise.
Government procurement
The Canada-Korea Free Trade Agreement’s government procurement chapter builds on existing
commitments in the World Trade Organization Agreement on Government Procurement (GPA). Canada
and South Korea are among the 15 parties to the GPA and recently expanded their respective
commitments in the revised GPA. The revised GPA is expected to enter into force, for those parties (such
as Canada) that have ratified it, in April 2014. The provisions of the revised GPA will enter into force
between Canada and South Korea once South Korea ratifies the GPA.
Through the Agreement, Canadian suppliers will benefit from additional access to procurement by South
Korean central government agencies for contracts valued above 100 million won ($100,000).
The Agreement will put Canadian suppliers on an equal footing with U.S. competitors. It also puts
Canadian companies in a more advantageous position than competitors from other WTO GPA parties,
such as Japan and the European Union, which face higher thresholds.
Access to government procurement opportunities complements gains that Canada has made in other areas
of the Agreement, including tariff reduction and investor protection. Where tariffs have been reduced,
Canadian products are more competitive in the local South Korean market and can be more competitively
priced for sale to South Korean government agencies.
In addition to non-discriminatory treatment, Canadian suppliers will have access to all the information
necessary to submit a bid as well as a right to challenge procurement decisions if the rules have not been
followed.
In terms of the Canadian market, South Korea will have access to Canadian central government
procurement opportunities for contracts valued above $100,000. South Korea will have access to the same
Canadian central government entities as those listed in the WTO GPA.
Although the Agreement does not cover provincial, territorial or municipal government procurement,
Canada and South Korea will have commitments in relation to sub-national procurement once the revised
WTO GPA comes into force.
In 2012, the overall South Korean government procurement market was estimated to be worth $105
billion annually.
69
Intellectual property
Through the Canada-Korea Free Trade Agreement’s intellectual property (IP) provisions, Canadian copyright,
patent and trademark owners have assurance that their rights will be respected fully in the South Korean
marketplace.
The Canada-Korea Free Trade Agreement’s robust enforcement provisions will ensure that Canadian IP rights-
holders can do business with confidence in the South Korean market.
Copyright
reflects Canada’s regime as updated by the 2012 Copyright Modernization Act, which brought Canada into
compliance with the World Intellectual Property Organization’s two Internet treaties;
reiterates existing aspects of Canada’s regime, including the protection of technological protection
measures (technology designed to protect copyrighted material), protection of rights management
information, and special measures against copyright infringers on the Internet (no change to Canada’s
notice and notice regime, which defines the responsibility of Internet service providers in respect of
copyrighted material on their networks).
Trademarks
reflects existing aspects of Canada’s trademarks regime, including those pertaining to trademark
registration, application and cancellation as well as to well-known trademarks.
Enforcement
includes provisions on civil and criminal remedies and border measures in line with Canada’s existing
regime and Bill C-8, the Combating Counterfeit Products Act.
Patents
in line with Canada’s current regime, including criteria regarding patentability and exclusions from
patentability;
no new commitments in the area of pharmaceutical patents.
Public health concerns
recognizes the importance of the WTO Declaration on Trade-Related Aspects of Intellectual Property
Rights (TRIPS Agreement) and public health.
Geographic indications
the Canada-Korea Free Trade Agreement includes provisions on the protection of geographical indications.
more specifically, the Canada-Korea Free Trade Agreement commits South Korea to protect the terms
“Canadian whisky” and “Canadian rye whisky” as geographical indications. It also obliges Canada to
protect the terms Goryeo Hongsam, Goryeo Baeksam, Goryeo Susam and Icheon Ssal, including their translations,
respectively, “Korean red ginseng,” “Korean white ginseng,” “Korean fresh ginseng” and “Icheon rice” as
geographical indications.
70
Other
increases opportunities for cooperation in the field of intellectual property and establishes a committee to
oversee such cooperation as well as to provide a forum for discussion and consultations.
Dispute settlement and institutional provisions
Dispute settlement
The dispute settlement chapter builds on lessons learned from past experience by establishing a dispute
settlement process that is faster and more efficient than the dispute resolution process in the WTO and
many other trade agreements.
The Canada-Korea Free Trade Agreement provides for efficient, three-person dispute settlement panels,
with panellists appointed through an ad-hoc appointment process rather than a process based on a
standing roster of candidate panellists.
An ad-hoc appointment approach is beneficial because it broadens the range of potential adjudicators,
prevents situations where a dispute cannot go forward expeditiously because the roster has expired
and a new one has not yet been appointed, and, for the parties in dispute, reduces administrative
burdens related to the need to maintain the roster.
The Canada-Korea Free Trade Agreement also provides for even more accelerated timelines for
disputes involving perishable goods and motor vehicles.
The dispute settlement provisions allow for hearings that are accessible to the public and permits
panels to consider submissions by non-governmental persons.
Institutional provisions
The Agreement’s preamble sets out a number of aspirational (non-binding) statements for the Canada-
Korea Free Trade Agreement, including those related to environmental protection and conservation,
workers’ rights and cultural diversity.
The “Extent of Obligations” provision recognizes that each party is responsible for ensuring the
observance of obligations and commitments in the Agreement at all levels of government.
Includes a provision on the relationship between Canada-Korea Free Trade Agreement obligations and
certain multilateral environmental agreements (MEAs). This ensures that Canada will be able to fulfill its
MEA obligations without facing trade challenges.
The Agreement includes provisions on cultural cooperation to promote cultural exchanges and joint
initiatives, such as audiovisual co-production.
Transparency provisions ensure that each party has access to information, such as that pertaining to laws
or regulations, that can affect the operation of the Agreement.
The Agreement provides for a joint commission that oversees and facilitates the implementation and
application of the Agreement and supervises the work of the Agreement’s various committees, working
groups and other bodies.
Committees, working groups, and other bodies under the joint commission pertain to:
71
goods (committee on trade in goods, sub-committee on trade in motor vehicles and automotive parts,
sub-committee on trade in forest products, rules of origin and customs committee, committee on
sanitary and phytosanitary measures);
standards-related measures (committee on standards-related measures, technical working group on
standards-related measures related to building products);
trade remedies (committee on trade remedies);
financial services (financial services committee);
temporary entry for business persons (contact points are identified);
government procurement (committee on government procurement);
intellectual property (committee on intellectual property);
outward processing zones (committee on outward processing zones on the Korean Peninsula);
environment (contact point[s] are identified, environmental affairs council); and
labour (national points of contact, ministerial council).
The scope of committee and working group mandates is generally limited to issues falling within the
scope of the applicable chapter.
The Canada-Korea Free Trade Agreement includes amendment provisions that allow parties to agree to
revise and update the Agreement.
The Canada-Korea Free Trade Agreement’s termination and withdrawal provisions allow either party to
terminate or withdraw from the Agreement with six months’ notice.
Exceptions
A broad, general exception for measures related to cultural industries is included to maintain Canada’s
flexibility to protect and promote cultural industries through its policies and programs.
A taxation article to ensure protection for existing taxation measures, as well as broad exceptions to ensure
the ability of governments to implement efficient tax policies that are consistent with their overall social
and economic objectives.
A general exception in line with those included in Canada’s previous free trade agreements is included for
certain measures, including those necessary to protect human, animal, or plant life or health, or relating to
the conservation of exhaustible natural resources.
An exception is included for measures taken to protect national security.
Environment and Labour
Environment
Ambitious environmental obligations consistent with Canada’s other agreements, including commitments
to:
maintain high levels of environmental protection, effectively enforce environmental laws, not waive or
derogate from such laws to promote trade or investment;
72
ensure transparency and public participation in the making of such laws, if any; and
reaffirm commitments to multilateral environmental agreements Canada and South Korea have
ratified.
A framework for cooperation in areas of mutual interest.
A dispute resolution process to address any questions regarding compliance, including review by an
independent panel of experts whose recommendations will be made publicly available.
Labour
Provisions of the labour chapter are similar to, and in some cases surpass, those found in Canada’s recent
labour cooperation agreements, such as those with Peru, Colombia, Jordan, Panama and Honduras.
An ambitious level of obligations ensures that national labour laws and policies in Canada and South
Korea respect international labour standards, including in regard to the International Labour
Organization’s 1998 Declaration on Fundamental Principles and Rights at Work.
A non-derogation clause prevents either party from derogating from its labour laws in order to encourage
trade or investment.
The following institutional structures are set up to implement and monitor compliance with the established
commitments in this area:
either party can request labour consultations with the other party regarding any obligation found in
the chapter; and
a mechanism through which members of the public can raise concerns about labour issues related to
the chapter.
An enforceable dispute settlement mechanism, which may result in financial penalties in cases of non-
compliance, to help ensure that all labour obligations are respected.
