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Trying to forge a pan-Pacific free-trade area

Mr. Harper is aiming to strike trade accords, particularly with emerging markets, in order to boost the Canadian economy and reduce its traditional reliance on the U.S., which takes up three-quarters of Canadian exports. Ottawa is currently negotiating with Japan and India, and is part of the U.S.-led Trans-Pacific Partnership, which is trying to forge a pan-Pacific free-trade area.

Autos and agricultural products–particularly beef–were the stickiest issues in the almost nine years it took to conclude the deal with Seoul. The Asian nation struck deals with the U.S. and the European Union over the last three years, leaving Canada to play catch-up.

The provincial government in Ontario, the hub of car-manufacturing in Canada, had sought to have the 6.1% tariff currently imposed on Korean car imports to be lowered over as long a period of time as possible. At the minimum, it wanted a seven year phase-out period like Ottawa gave the European Union.

But the phase-in period with South Korea is only three years, even shorter than the five years under Seoul’s deal with the U.S.. Domestic car makers, notably the units of Detroit’s big auto manufacturers, have long worried about the potential hit from the entry of cheap Korean cars into Canada. But Ottawa argues that the impact is minimal, citing a 2012 study conducted for the trade ministry.

Ontario also failed to get a provision included in the deal that would allow Canada to re-impose the tariff in the event Seoul introduced non-tariff barriers. That is a feature in the U.S.-South Korea deal which Seoul refused to extend to Canada.

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