by David Lindsay, President and CEO
It’s been almost a year ago since I last wrote about Canada’s trade agenda and the forest products industry. With the recent signing of the Free Trade deal with Korea, it is timely to return to this topic.
Korea is an interesting market for Canada. It is a modern industrial economy with 50 million citizens. There is much potential to increase trade with our Korean partners in a whole host of products and the Forest Products Association of Canada issued a media release in support of the government’s free trade agreement.
Canada is a trading nation and the forest products industry is a major exporter. Of course, the United States has been and continues to be our largest trading partner. However, the story of forest product exports from Canada is a changing one. Where we once depended on the United States for 80 percent of our business, that figure is down closer to 60 percent. Our trade with China has grown exponentially over the past decade to the point where forest products are now Canada’s largest export to China.
Canadian forest product companies export to 180 countries around the world and the Pacific Rim holds much potential for not only forest products, but Canada’s entire resource economy. That is why FPAC continues to support the government’s engagement in the Trans Pacific Partnership.
China, Japan and Korea are already important markets for the forest products sector and we are looking to do more. While our trade with Korea is less than half as great as that with Japan it is our fourth largest market by country.
The opportunity for expansion in Korea is very exciting. Currently, according to government statistics, total forest product imports into Korea are in excess of 6 billion dollars. Canada is only capturing about 8 percent of that market today.
The Korean free trade deal will, over time, eliminate tariffs on our products and create several technical and scientific committees to make sure our products are not discriminated against by what are sometimes referred to as non-tariff barriers.
Of course the signing of a trade deal in and of itself does not create more trade. Companies need to take advantage of the market opportunities created. Working with governments, trade commissions and embassy staff we should be able to explore new customers in this lucrative market as well as expand sales to existing customers.
I was interested to read a report from the Asia Pacific Foundation of Canada where they found that while 67 percent of Canadians support free trade deals generally, only 41 percent support a free trade deal with Korea. The APFC article in the Globe and Mail suggested a number of reasons for that difference.
First, they suggest that Canadians are concerned with political rights and democracy in Korea. The article goes on to explain that South Korea has a very democratic political system and Canadians might be confusing South Korea with North Korea.
The second explanation given by the Asia Pacific Foundation for this difference in polling numbers is that Canadians are concerned about being undercut by Korea’s lower standard of living and perceived weaker environmental and labour laws. Again the article goes on to point out that this perception is based on misinformation. Korea has a comparable standard of living to Europe and they are a modern economy with “strong” environmental and labour standards.
Finally, and this might be a very diplomatic way of saying it, the Asia Pacific Foundation reports “cultural distance plays a role in shaping opinions about South Korea.” They report that some survey respondents were concerned about the Canadian way of life being threatened by ‘foreign influences’.
I found the conclusion to the article very compelling. They wrote “The government cannot persuade Canadians on the deal with economic arguments alone. They do not need to sell the public on free trade. They need to sell the public on South Korea.”
The Forest Products Association of Canada supports free and open trade. The free trade deal with Korea is just one more, in what we hope will be a series of free trade arrangements for enhanced economic opportunity for Canada in the Pacific Rim and around the world.