Canada and free trade

Canada and South Korea open talks for potential free-trade agreement
Fri Nov 19, 7:34 PM ET ALEXANDER PANETTA

SANTIAGO, Chile (CP) - Canada hopes to nail down a free-trade treaty with South Korea that could offer major inroads into the booming Asian market, Prime Minister Paul Martin said Friday.

The federal government announced it has launched exploratory talks with its potential free-trade partner after a meeting between Prime Minister Paul Martin and South Korean President Roh Moo-hyun. "The president and I agreed on this," Martin said while attending the Asia-Pacific summit.

Ottawa will take its first step toward a possible deal by consulting the provinces, business leaders and non-governmental organizations over the coming months. The federal government would then compare notes with its Korean counterparts in about six months, and would hope to start working towards a deal next spring, said International Trade Minister Jim Peterson. "Officials will sit down and hammer out an agreement next spring," Peterson said.

Canada and other western countries are eager to capitalize on the drastic economic growth in Asia and for ways to consolidate their presence in the rising market. With the Asian economy also becoming increasingly intertwined, such a treaty would also bolster ties with the emerging superpower that is China, Peterson said. "The economies over there are becoming increasingly interlinked," he said. "So a foothold in one country can lead to connections - in terms of trade and investment - in many others. This is the new way we're looking at trade."

South Korea is already the eighth-largest importer of Canadian goods and services, although Canada runs a substantial trade deficit. Of the $7 billion in two-way trade in 2003, $5.1 billion was drawn from Korean exports and $1.9 billion flew the other way. The Asian country has undergone a dizzying rate of economic growth since its 1953 split from the North following the Korean War. Four decades ago, its gross domestic product per capita ranked in the same league as the poorer countries of Africa and Asia. It now stands at 18 times more than its northern rival and - at $17,800 US - compares with the lower tier of European nations.

The country of 49 million residents has more than once posted annual growth exceeding six per cent since it was hit with the Asia-wide recession in 1998. Canada's GDP per capita stood at $29,800 US in 2003.

Canada already has free-trade deals with the United States, Mexico, Chile, Israel and Costa Rica. It also is exploring a larger continental deal with all the Americas and with the European Union.