Canada-South Korea trade deal worries Ontario auto industry

Ontario is worried Korean-made automobiles will flood the country, putting thousands of jobs in Canada's auto sector at risk, under the terms of a yet-to-be-announced trade deal between Canada and South Korea.

A source familiar with the negotiations told CBC News that Ontario is "very concerned" about the length of the phase-out period for the 6.1 per cent tariff, to be announced on Tuesday. 

The province would like to see the longest phase-out possible, but is disappointed that the federal government has not managed to negotiate the seven- or even five-year phase-out period that the EU and U.S. were able to obtain.

Ontario is also disappointed that the federal government has not been able to negotiate a "snap-back" provision, as the U.S. did, which would allow Canada to reimpose tariffs if Korea puts up non-tariff barriers such as strict requirements on engine size, which are prejudicial to North American vehicles.

In light of this, Ontario will be asking the federal government to create a task force, including government and industry representatives that would monitor the deal.

Optimistic about agriculture sector

The task force would report publicly on the level of imports of Korean vehicles and would investigate and report publicly every quarter on any non-tariff barriers being put up.

"If any remedial action on the agreement is needed, we'll know," the source said.

The province is more optimistic about other parts of the deal around food processing and agriculture, Ontario Premier Kathleen Wynne said Monday. It will put Ontario back on an even playing field with the U.S. and EU.

"We are very supportive of opening up opportunities for Ontario and Canadian business," Wynne said in St. Albert, Ont.

"We do have reservations about the auto sector and our minister of economic development, trade and employment, Eric Hoskins, has been very clear with the federal government, and has been working on making sure that the appropriate protections are in place.  

"So we are of two minds. We are optimistic and at the same time we are cautious on the auto sector," she said, adding that she hadn't seen all of the details of the agreement.

South Korea is Canada’s third largest trading partner in Asia, after China and Japan, with two-way trade reaching nearly $10.1 billion in 2012, according to Foreign Affairs, Trade and Development Canada.

Canada’s exports to South Korea totalled $3.7 billion in 2012, with top exports including mineral fuels and oils, cereals, wood pulp, mineral ores and meat.

Canada’s imports from South Korea totalled $6.3 billion, with top imports including vehicles, electrical and electronic equipment, machinery, mineral fuels and oils, and iron and steel.