Ottawa, ON - The Canadian Cattlemen’s Association (CCA) congratulates Prime Minister Stephen Harper and Korean President Park Geun-hye for today signing the final text of the Canada-Korea free trade agreement (CKFTA) in a special ceremony on Parliament Hill.
Signed during an official mission by President Park to Ottawa, the agreement between Canada and the Republic of Korea comes just three months after the text of the CKFTA was tabled in the Canadian Parliament.
Under the terms of the agreement, the 40 per cent Korean tariff on fresh and frozen beef will be fully eliminated in 15 equal annual steps and the 18 per cent tariff on offals will be fully eliminated in 11 equal annual steps.
The tariff has been the main impediment to accessing the Korean market since Korea lifted its BSE prohibition on Canada in early 2012, said CCA President Dave Solverson.
“For the past few years, Canada’s key beef competitor, the U.S. has enjoyed an increasing tariff advantage flowing from its free trade agreement with South Korea. Today’s formal signing of the text brings us an important step closer to restoring a competitive position for Canadian beef in the Korean market,” Solverson said.
The impact of the tariff disadvantage is clear. In 2002, Korea was a $40 million market for Canadian beef and its fourth largest export destination. In 2013, with a growing tariff disadvantage relative to U.S. beef, Canada exported $7.8 million. The CKFTA signals to Korean buyers that they can resume their relationship with Canadian beef and maintain a long-term competitive position.
“This is excellent news for Canadian beef producers,” said CCA Director of Government and International Relations, John Masswohl, who attended the formal signing ceremony in Ottawa. “The ability to get every piece of the animal to the highest value market is what maximizes prices at the farm gate. I particularly like that we will be getting an aggressive phase-out on offals that get more value in Korea than they do here in North America.”
The CCA thanks Prime Minister Harper, Agriculture and Agri-Food Canada Minister Gerry Ritz and International Trade Minister Ed Fast for their diligence on concluding this file and encourages swift passage of the CKFTA through the Canadian Parliament and the Korean Legislature.
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Background Fact Sheet South Korea
Canadian beef export stats to Korea:
• Prohibition from May 2003 to Feb 2012
• 2012 – 2,247 tonnes for $10 million, $4.47/kg
• 2013 – 1,166 tonnes for $7.8 million, $6.70/kg
• Jan-July 2014 – 807 tonnes for $7 million, $8.70/kg
Source: Statistics Canada
Tariff Elimination Schedule:
• 40 per cent tariff on fresh and frozen beef eliminated in 15 equal annual steps (2.6 per cent or 2.7 per cent reduction each year depending on rounding).
• Same as phase-out for U.S. beef.
• Transitional safeguard starting at 17,769 tonnes in year one and growing 3 per cent per year to reach 26,877 tonnes by year 15.
• 18 per cent tariff on offals eliminated in 11 equal annual steps (1.6 per cent or 1.7 per cent reduction each year depending on rounding).
• Faster than phase-out for U.S. beef which is being reduced at 1.2 per cent each year.
An example of a highly valued offal product in Korea is the abomasum (one of the stomach chambers of a ruminant animal). Abomasum is commonly used in Korean BBQ. Intestines and tendons are also valued products in Korea.
• 2 per cent to 8 per cent tariff on beef fats and tallow to be eliminated immediately on implementation.
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