Free Trade with South Korea

[Big Guy]

It looks like a free trade agreement with South Korea is a done deal. The initial assessment is that the auto industry in Canada is going to take a big hit but the agriculture segment will gain greatly. The time lines of ratification will make this an election issue.

In totality, is a free trade agreement with South Korea a good thing or a bad thing for Canada?

[Wilber]

The railways will be too busy carrying oil to transport agricultural products.

[Bryan]

Overall, very good for the country as a whole. That it could drive a stake into the CAW is just a nice bonus.

[Shady]

I think it's a good thing as well. It won't be long until companies like Hyundia are building cars in Canada, because it's much more cost effective than having to ship them across the globe to sell here.

[Wilber]

Actually, if the Koreans no longer have to pay the 6.1% tariff on vehicles not manufactured in North America, there will be less incentive to build them here. But if that screws Canadian auto workers, Bryan thinks it 's peachy.

Edited March 10, 2014 by Wilber

[On Guard for Thee]

I think it's a good thing as well. It won't be long until companies like Hyundia are building cars in Canada, because it's much more cost effective than having to ship them across the globe to sell here.

They don't, they build them in the US and then bring them up here tarrif free under nafta.

[Michael Hardner]

I'm still wondering when the well-paying jobs are going to appear, though.

[Boges]

Are South Korean products not already widely available in Canada?

[waldo]

cue requisite Harper Conservative union bashing commentary

That it could drive a stake into the CAW is just a nice bonus.

[Topaz]

All the S. Korean cars in Canada are made in the USA and if they don't build them here in Canada, the autos will still have tariffs on them from the USA.

[Wilber]

All the S. Korean cars in Canada are made in the USA and if they don't build them here in Canada, the autos will still have tariffs on them from the USA.

No because they are built under NAFTA.

[Accountability Now]

No because they are built under NAFTA.

To be claimed under Nafta they need to have 50-60% regional content. Is it safe to assume that Hyundai is using that much regional content? Content is based on net cost or in transaction value....I'm assuming the net cost method might work here.

[Wilber]

To be claimed under Nafta they need to have 50-60% regional content. Is it safe to assume that Hyundai is using that much regional content? Content is based on net cost or in transaction value....I'm assuming the net cost method might work here.

Probably as much as the Japanese and European NA built vehicles that qualify.

[August1991]

It looks like a free trade agreement with South Korea is a done deal. The initial assessment is that the auto industry in Canada is going to take a big hit but the agriculture segment will gain greatly.

And what of consumers?

What if consumers can buy cheaper Korean cars?

Big Guy, you seem to think that the purpose of life is production - and not consumption.

Well, since this thread is about Korean trade, let me go astray. I can understand how, based on a North Korean perspective - I can imagine why all politicians (south/north/democrat/dictatorial) care more about production than consumption.

Edited March 11, 2014 by August1991

[Boges]

Domestic automakers have to compete. I'm sick of hearing these well funded unions bitch all the time.

At this point people only really buy domestic because of brand loyalty anyway. Imports are seen to be of better quality anyway. (I buy a GM car BTW)

Perhaps this will allow the Big 3 to make more money abroad, and that's a good thing.

[Wilber]

There is no consumption without production. The unemployed and working poor don't buy very much.

[Wilber]

Perhaps this will allow the Big 3 to make more money abroad, and that's a good thing.

When you consider that Korea now puts a 8% tariff on imported vehicles, China up to 22% and Japan all sorts of bureaucratic obstacles in the way of imports, one would hope so.

It's not just North America. Japan and Korea sell very few vehicles to each other.

[Topaz]

Ford rep. said tonight on CTV, that S.Korea has ONLY small cars and small roads and Ford is into more medium and large cars , so there isn't really as business for them in S.Korea.

[Smallc]

Ford makes small cars, just not in canada

[Wilber]

Ford is the third largest car maker in Europe by sales. They build tons of small cars. The Chevrolet Cruze is built in ten different countries around the world.

Edited March 11, 2014 by Wilber

[August1991]

There is no consumption without production. The unemployed and working poor don't buy very much.

Wilber, the purpose of life is not production - it is consumption. We don't prepare a meal as a goal in itself - we do it so that we can eat. You don't see many people preparing food in the kitchen and throwing it down the garbage chute.

When you put the emphasis on production instead of consumption, you lose sight of the true purpose. And as is often the case in many affairs, that is a dangerous route of logic to take.

[August1991]

When you consider that Korea now puts a 8% tariff on imported vehicles, China up to 22% and Japan all sorts of bureaucratic obstacles in the way of imports, one would hope so.

It's not just North America. Japan and Korea sell very few vehicles to each other.

So what?

If my neighbour decides to force his family to only eat vegetables from his own garden, should I do the same in my family? Moreover, if he decides to sell me some of his tomatoes at a good price, should I refuse his offer on the grounds that he forces his family to only eat vegetables from his own garden.

[madmax]

Overall, very good for the country as a whole. That it could drive a stake into the CAW is just a nice bonus.

Will likely affect future investment from Toyota and Honda.... Why build here to beat the tarrif that SK had to pay, when you can do as they do and ship the vehicles in.

[madmax]

I think it's a good thing as well. It won't be long until companies like Hyundia are building cars in Canada, because it's much more cost effective than having to ship them across the globe to sell here.

Hmm, I think you need to figure out HOW a taffif works. The purpose of a Tarrif is to attract investment INTO your country, and that is why companies like Toyota, Honda, Suzuki brought operations here. To avoid the tarrifs. Hyundai, preferred to pay the tarrif instead going for the huge capital investment required to start an NA plant.

What this deal does it makes it more attractive to build in SK and ship products here.

THere is Little chance of lower pricing as hyundai already has a price advantage over their competition.

Economics 101...

[madmax]

Actually, if the Koreans no longer have to pay the 6.1% tariff on vehicles not manufactured in North America, there will be less incentive to build them here. But if that screws Canadian auto workers, Bryan thinks it 's peachy.

LMAO, it affects all autoworkers, but Bryan probably doesn't know that many autoworkers are temp agency workers , fulltime, much like in other countries... so yeah, it will affect those employees as well, and my guess this may also have had an impact on Chrysler choosing to stall investment in Canada, as it would likely have another risk to market share with lower foreign imports from SK. Its a tough business to be in.

Bryan probably also doesn't care about all the spinoff production, support and consumption of the local economy. But taht doesn't surprise me.

Also, for ag.. I expect some gains but just as many losses as more food production is moved to asia...

Seems we can't even compete with operations full of mexican labour , they still move offshore ... not sure if SK would gain from this however... don't know enough, lol... just cars and electronics