Stephen Harper heads to South Korea to ink long-awaited free-trade pact
Prime Minister's critics say deal could be bad for Canadian auto workers
Prime Minister Stephen Harper departed Sunday for South Korea, widely expected to complete another long round of free-trade negotiations that his critics were denouncing as secretive and potentially bad for Canadian workers.
It wasn't known whether Harper planned to sign the final text of a free-trade deal with South Korea — a laborious, decade-long, on-again, off-again process — or was simply going to announce an agreement-in-principle in a staged photo-op.
That's essentially what occurred last fall when Harper jetted off to Brussels on short notice to mark the end of four years of rocky negotiations with the European Union.
The fanfare of that announcement was not accompanied by a final text, something Harper and the Europeans said would take at least another year and a half.
The Conservatives have the least transparent trade policy probably in the developed world. They are closed, they are secretive and they don't involve a lot of stakeholders; they don't involve the opposition.- NDP trade critic Don Davies
Harper said on his 24 Seven webcast that this would be Canada's first trade deal in the Asia-Pacific region.
"It adds, obviously, to the important deals we have in the Americas and in Europe now. And it's really given the Canadian economy as good, if not better, free-trade access than virtually every major developed economy," he said.
Harper added that South Korea is "a relatively open economy, a relatively, very progressive economy and advanced democracy, and it has trade linkages all through Asia itself." He said it's "probably the best gateway you can get into long-term trade agreement access into the Asia-Pacific region."
'It's details that matter'
NDP trade critic Don Davies said growing trade with South Korea and Asia in general is a good thing. But he was skeptical that the week's coming ceremonies would amount to much more of a repeat of Brussels.
"Are they going to go just to shake hands, have a photo-op and sign an agreement-in-principle without the actual details or text to be released?"
Davies again assailed the government for a total lack of transparency, and questioned whether the deal would be able to protect jobs in Canada's auto sector.
"In trade deals, it's details that matter," he said.
"The Conservatives have the least transparent trade policy probably in the developed world. They are closed, they are secretive and they don't involve a lot of stakeholders; they don't involve the opposition."
The deal would mark progress toward expanding trade with Asia, a major economic priority of the Harper government. Coming on the heels of the Canada-EU pact, it would allow Prime Minister Stephen Harper to trumpet his first significant free-trade deal in Asia, and give impetus to other negotiations, particularly with Japan.
"It's a very long time coming," said Yuen Pau Woo, president of the Asia Pacific Foundation of Canada.
"We are well behind our competitors, and closing with Korea will show that Canada is serious about developing stronger trade ties with Asia, and could well accelerate the pace of our negotiations with other countries."
A key irritant is the auto sector. Canada has a 6.1 per cent tariff on car imports.
Critics fear that if it is removed, the Canadian market would be flooded with Korean-made brands such as Hyundai and Kia.
Woo said the government would likely compensate the auto sector in the short term.
"The U.S. has a free-trade agreement with Korea. It has a much larger auto sector than we do. They are the same companies," he said.
"This is a deal that can be done in Canada, notwithstanding the challenges."
'Zero export growth'
Ontario's economic development minister, Eric Hoskins, has said Korea out-exports Canada 50 to one in autos and he hasn't been assured by Ottawa that Canada's automakers won't be even more disadvantaged once tariffs are removed.
"This deal is likely to further cement Canada's global role as a natural resource supplier, to the detriment of higher value-added sectors, such as the auto industry," said Scott Sinclair, senior research fellow with Canadian Centre for Policy Alternatives.
"Just as concerning as the trade imbalance, is the make-up of our trade with Korea."
He said Canada's sells mostly unprocessed, low value-added, carbon-intensive resources to Korea such as coal, copper and aluminum while importing mostly high-tech, manufactured goods such as autos, electronics and appliances.
"The sudden breakthrough in the talks appears to be driven more by political rather than trade policy factors," said Sinclair.
Canada's already large trade deficit with Korea actually increased last year to almost $4 billion, he said.
Stuart Trew, a trade expert with the Council of Canadians, said he expects any deal will only widen Canada's trade deficit with Korea.
"If things go the same way as they did for the U.S. in the U.S.-Korea FTA, Canada can expect zero export growth and an increased trade deficit," said Trew.
"Considering how similar U.S. and Canadian exports are, I think it's the most likely situation."