Pork “tariff gap” expected as Korea trade talks stall

Canada is poised to lose any competitive advantage it may have in selling pork and other goods into Korea within 10 years, the country’s pork producer and meat processor groups warn.

In a release Wednesday, urging Ottawa to resume free trade talks with South Korea that began in 2005, the Canadian Pork Council, Canadian Meat Council and Canada Pork International say any further postponement will give the advantage to “all of our key competitors.”

Chile is now a “significant player” in Korea since signing a free trade deal there, while the European Union’s free trade deal with Korea is due to kick in July 1. A trade deal between Korea and the U.S. was finalized last month and now awaits approval from both countries’ legislatures.

Canada’s last round of negotiations with Korea, meanwhile, took place in March 2008 and talks have sat “interrupted” since then, the pork groups say.

While the federal department of foreign affairs and international trade in October last year described negotiations as “now well advanced,” it adds that remaining issues, such as Canada’s proposals for tariff elimination on all its commercially significant exports, will be “challenging.”

The government said it’s also working to address Canadian “stakeholder concerns” over Korea’s proposed non-tariff measures.

While Canada’s ongoing talks with the European Union toward an economic and trade agreement there will have “long-term potential” for Canadian pork, a free trade agreement (FTA) with South Korea “is the most crucial potential free trade agreement that can be completed for the Canadian pork sector,” CPC chairman Jurgen Preugschas said in Wednesday’s release.

Lack of progress on an FTA with Korea “is having a noticeable effect on our current market share,” said Preugschas, who farms at Mayerthorpe, Alta.

“Strategic alliances”

Canadian pork exports to Korea, worth $125 million in 2009, “are already suffering from the lack of FTA discussions as strategic alliances are being developed between Korean customers and suppliers from countries where FTAs are being finalized,” CPI president Edouard Asnong, a farmer from Pike River, Que., said in the same release.

One could thus assume that Canada’s current pork trade with Korea “would completely disappear,” he said.

Furthermore, CMC president Brian Read said, “if Canada is lagging behind the U.S. and the EU in the implementation of the tariff reduction schedules, the negative impact on Canadian exports will carry throughout the tariff reduction period.

“Canada will lose its status as a competitive supplier to South Korea for the next decade due to this tariff gap, so it is crucial to resume and finalize the FTA as soon as possible,” said Read, a vice-president at Edmonton-based XL Foods.

Given Korea’s population of 50 million people and the value of the pork sold there, such as chilled shoulder butts and bellies, the impact “is significant enough to have a major impact on Canadian hog prices and jobs in both the farming and processing sectors should Canada lose access to the Korean market,” Asnong said.

“Korea is not a market that can be replaced overnight,” he said, “and the Canadian pork industry’s long-time commitment to the Korean market will be impossible to maintain.”

“While negotiations are progressing, the government is focused on negotiating a high-quality agreement and is not working to an arbitrary deadline,” the federal foreign affairs and trade department said on its website last fall.

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