South Korea and Canada concluded a free-trade agreement Tuesday, wrapping up a negotiating process that began nine years ago and focused on barriers in the auto and agriculture sectors.
The South’s trade ministry said the FTA would be signed as early as June after legal reviews by both sides.
Talks between the two countries began in 2005 but suffered a five-year hiatus as Canada took South Korean restrictions on beef imports to a World Trade Organisation panel in 2009.
The trade ministry said South Korea’s auto industry would be the greatest beneficiary of the deal, which is the first FTA Canada has signed with an Asian country.
Canada is the world’s fifth-largest market for South Korean cars. Last year, South Korea shipped US$2.23 billion worth of vehicles to Canada and imported US$92 million worth of Canadian cars and parts.
South Korea agreed to completely remove its 8.0 per cent import tariff on Canadian cars and parts after the FTA takes effect.
Canada will reduce 6.1 per cent tariffs on South Korean cars and parts to four per cent within 24 months.
Canada will also remove most of its import tariffs on clothing and textile products, which now stand at a maximum of 18 per cent, within two years.
The two countries will completely remove tariffs on 97.5 per cent of products within 10 years from the day of implementation.
However, 19 per cent of farm products including rice, cheese and dry milk will be either exempt from the deal or receive a grace period of more than 10 years, higher than the deals South Korea has already forged with the United States and the European Union.
South Korea regards rice and beef as the most sensitive items.