Korean Auto Makers to Benefit From Canada FTA
kpopluv, Sept. 23, 2014, 7:29 a.m.
Korean automakers stand to be the key beneficiaries of the free trade agreement between Korea and Canada signed on Monday. The two sides agreed to abolish tariffs on 99 percent of their traded goods within the next 10 years, which includes Canada's 6.1-percent tariff on Korean cars, which is to go within two years.
Cars were Korea's No. 1 export to Canada last year, accounting for 43 percent of total shipments. A Hyundai spokesman said, "When tariffs are abolished, Korean carmakers will gain a bigger share of the Canadian market thanks to greater cost competitiveness."
The average Korean car exported to Canada costs US$16,800, and that should drop by around $1,025 once tariffs are abolished. Tariffs on car parts and tires will also be abolished within three to five years.
Park Cheon-il at the Korea International Trade Association said, "We also expect Korean home appliances like washing machines and refrigerators to get more competitive against Chinese and Japanese products."
The eight-percent tariff on Korean washing machines will be scrapped immediately after the FTA goes into effect, while the eight-percent tariff on refrigerators will be scrapped within three years.
But rising imports of Canadian agricultural products are expected to impact Korean farmers. Korea imported 43,398 tons of Canadian pork last year, second only after U.S. beef, and will start importing Canadian beef in 2030. The government will allocate W2.1 trillion (US$1=W1,043) over the next 10 years to help farmers cope.