| This paper examines the economic implications of a freer Canada-Korea trade relationship. The pursuance of freer trade, though not an assurance of greater economic growth, is becoming increasingly necessary in a more connected, globalized world. Bilateral trade agreements are one avenue for a small, open economy like Canada with a relatively high ratio of trade to GDP, to seek new markets and increase trading opportunities through lower trade barriers. Canada has a number of bilateral free trade arrangements, with varying degrees of openness, with a number of countries. However, Canadian trade is still dominated by the US. South Korea, well known for its protective trade policy, presents an intriguing opportunity for a freer trade relationship, given its recent experience of trade liberalization and reform on the heels of the East Asian crisis in 1997 and the presence of significant tariff peaks in industries in which Canada has a relative comparative advantage. Recent papers on potential US-Korean free trade provide a useful point of reference for examining a similar type of relationship between Canada and Korea. It is determined that trade will likely increase with both positive and negative overall welfare effects due to both trade creation and trade diversion, but overall this free trade arrangement would be beneficial for Canada. |
