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Title: The Canada-Korea Free Trade Agreement: Impact on Canada
Authors: Lagah, Anisha
Issue Date: Sep-2015
Citation: Lagah, Anisha. (2015). Prime Minister Harper’s statement following the 2012 takeover of Nexen by CNOOC that “going forward, the Minister will find the acquisition of control of a Canadian oil-sands business by a foreign state-owned enterprise to be of net benefit, only in an exceptional circumstance” represented a major shift in the Canadian government’s attitude towards foreign direct investment into the energy sector by state owned enterprises. While the policy announcement was intended to clarify application of the Investment Canada Act (ICA), it has done the opposite. By adding the term “exceptional net benefits” when reviewing state owned enterprise’s bids for control of Canadian oil sands companies, the Canadian government has unfairly targeted Asian SOEs and confused the use of the net benefits test when assessing foreign investments. The resulting policy has had a negative effect on the development of the oil sands and on investor sentiment towards Canadian energy projects. Evidence suggests that the policy change has had negative consequences on investment activity including: increasing investment costs for acquirers, increasing costs of capital and decreasing available capital for junior oil and gas companies, and creating uncertainty in the minds of foreign investors leading to them questioning Canada as a place for future investment. ( Unpublished master's thesis). University of Calgary, Calgary, AB.
Abstract: In March 2014, after years of negotiations, Canada and the Republic of Korea finally concluded negotiations for a preferential trade agreement. On January 1, 2015, the Canada-Korea Free Trade Agreement (CKFTA) became effective. The CKFTA signifies a landmark agreement. The agreement represents Canada’s most recently effective free trade agreement (FTA) and its first FTA with a country from the Asia- Pacific. As such, the CKFTA has the potential to open access for future Canadian trade agreements with other countries from the Asia-Pacific region. The CKFTA also represents a movement of Canada towards reaching trade agreements with large emerging economies. Prior to the CKFTA, Canada had accomplished little since the North American Free Trade Agreement (NAFTA) to increase trade with large emerging economies. With the signing of the CKFTA, Canada now has an agreement that is bigger and broader in scope than that of even NAFTA. For Canada, the importance of the CKFTA lies in how it impacts Canadian consumers and producers. This capstone report looks to address this concern. To do so, the following report provides a comparison of Canada and the Republic of Korea, dissects the provisions of the CKFTA, and determines the likely effects of the CKFTA agreement. The report looks closely at the impact on what are considered some of Canada’s most sensitive sectors – namely the agriculture and agri-foods, the fish and seafood, and the automobile sectors. The report also illustrates the effect on welfare of eliminating tariffs in both a small and large country case. Finally, the report provides a quick comparison of the CKFTA to the US-Korea FTA and the Australia-Korea FTA. Overall, this report finds that the CKFTA has a small but positive impact on Canada. Though a small positive impact is not outwardly significant, the cost to Canada of not entering into the CKFTA would have been too high to not push the agreement forward. These costs would have risen in the form of lost trade opportunity, lost market growth and access, and a loss in trade competitiveness. Canada would likely have fallen well behind competitor nations like the European Union, the United States and Australia, all of whom had concluded FTAs with the Republic of Korea before Canada.
Appears in Collections:Master of Public Policy Capstone Projects

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