Trade Compliance

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CKFTA Projected to Have Somewhat Positive Impact on Canada in Future

Posted January 18, 2015

In the first detailed analysis of the Canada-Korea Free Trade Agreement (CKFTA) which took effect at the beginning of this year, the C.D. Howe Institute concludes the deal will likely result in comparably small wins and losses for both sides in different trade sectors, but overall limited economic gains for both countries.
Canada-S. Korea Flags
Canada is projected to get an additional $3.1-billion in GDP in contrast to $2.3-billion for South Korea. According to the research, the deal is also forecast to generate about $2.1 billion in additional Canadian household income over the next 20 years. Even so, the boost to Canada’s economy in real terms amounts to a statistically negligible 0.05 percent.  

In terms of the deal’s structural impacts, using a trade analysis model that captures linkages across economic sectors as well as the impact of trade measures, the report determines that “the CKFTA tends to reinforce existing patterns of comparative advantage between Canada and Korea: for Canada, the agricultural sector gains and, for Korea, the industrial sector gains.”

While the Institute’s briefing at this early stage may not have disclosed anything that wasn’t already anticipated, authors Dan Ciuriak, Jingliang Xiao and Ali Dadkhah stress that careful ongoing monitoring is needed to verify the extent to which Canadian producers do in fact benefit from the improved access to the Korean market that the CKFTA promises.