Canada’s pending free-trade deal with South Korea is shaping up to be a tale of two provincial solitudes.
Ontario is worried the deal will unleash a flood of Korean-made automobiles and imperil the jobs of the province’s auto workers.
But Alberta says it “makes sense” for the province, on a number of fronts, including energy and agriculture.
“There’s a new balance of forces in the country and I wouldn’t overstate that it’s tipped to the West,” said Paul Evans, director of the Institute of Asian Research at the University of British Columbia.
“In general terms on trade agreements, on the aggressive courting of Asia markets … there’s a decidedly different attitude not just on this free trade agreement — a whole package of deals that are being negotiated — the Western Canadians, the Albertans, the energy people, B.C., Saskatchewan and Manitoba (are) generally very aggressive.”
Prime Minister Stephen Harper is expected to announce a trade deal with South Korea in Seoul on Tuesday.
Cal Dallas, Alberta’s minister of international and intergovernmental relations, told The Canadian Press he believes Alberta’s interests will be served by the agreement.
“We are comfortable and we are enthusiastic and looking forward to the culmination of an agreement,” said Dallas, who was briefed on the details of the agreement but would not divulge them.
“A lot of the work that we’ve been able to do on the trade side has been in the agricultural sector but it’s very clear now there’s huge opportunities for energy,” Dallas added.
He said that means “attracting inbound investments” and funding ways to “move energy into the South Korean market.”
Ontario Premier Kathleen Wynne reiterated her province’s ambivalence toward the deal again Monday, hours before the details were announced.
“We are of two minds. We are optimistic, and at the same time we are cautious on the auto sector,” Wynne said at Queen’s Park.
“We will be looking for the appropriate protections and framework around the auto sector.”
Wynne said she is supportive of opening up opportunities for Ontario and Canadian business.
“In terms of the agri-food sector, we are very optimistic about the opportunities that a Canada-Korea deal might provide,” she said.
“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.”
Ontario sources who were briefed on the trade deal say the province still has some serious concerns. They say the federal government has not managed to negotiate a deal that was at least as good as the one the U.S. struck with South Korea.
Canada has a 6.1 per cent tariff on car imports, but some fear that if it is removed, the market would be flooded with Korean-made brands such as Hyundai and Kia. The federal government maintains the tariff elimination will have a limited impact on Canadian production because it says 85 per cent of autos manufactured in Canada are for export.
Ontario had wanted the longest possible phase-out on tariffs and was hoping for seven years, but “the feds came up short even on the five years the U.S. got. That was a big disappointment,” said a source, who asked to remain anonymous because they were not authorized to go public with their comments.
Ontario also wanted a so-called snap-back clause that would allow it to re-impose tariffs if South Korea started imposing non-tariff barriers.
“The feds failed to negotiate a snap-back provision,” said the source.
Ontario feels there was some progress on safeguards to stop South Korea from dumping cars into the market, but is “seeking clarity” on that provision because “the feds fell well short.”
If these things are not negotiated in free-trade deal, Ontario wants a task force with Ottawa, the province and automakers that would report monthly on Korean auto imports, said a source.
Earlier Monday from Alberta, Dallas used Twitter to draw attention to an earlier Facebook post from the weekend titled, “Why a free trade agreement with South Korea makes sense.”
“With more than $615 million worth of exports to South Korea, a free trade agreement with South Korea is a natural fit for Alberta,” Dallas wrote.
“Discussions in the areas of tourism, education, energy, and value-added forest and agriculture products were particularly fruitful when I visited South Korea in 2012 and in the three international missions to the country by Alberta ministers since that time.”
Dallas said it was “critical” that Canada strike a deal soon with South Korea so that Alberta’s exports would be able to “preserve their competitive position in the Korean market” after the United States and Australia struck their own deals with the country recently.