Making FTAs work: The Canada-Korea example
Signing a Free Trade Agreement does not guarantee opportunities fall into place. The Canada-Korea partnership — designated “strategic” — requires innovation, not complacency.
Former Canadian Ambassador to the Republic of Korea and Japan
A year ago this month, amid much fanfare during the state visit to Ottawa by Korea’s President Park Geun-hye, Canadian and Korean governments signed the long-anticipated Canada Korea Free Trade Agreement (CKFTA), following eight years of on-off negotiations. It came into effect on Jan. 1 of this year.
Prime Minister Stephen Harper and President Park also announced the elevation of the Korea-Canada relationship to that of a “Strategic Partnership.” Not only did it register the expectation that the trade pact would open a major new chapter of growth in our economic ties, but that it would have a “halo effect” in stimulating a deepening of relations across the board.
Earlier this month, at an annual forum hosted by the Centre for International Governance Innovation (CIGI), 40 or so Koreans and Canadians met to take stock of the FTA’s early impact and to consider what the notion of Strategic Partnership should mean for the road ahead.
Among the several conclusions reached at the forum, one in particular stood out: that taking Korea-Canada relations to these ambitious new levels would depend primarily on energetic and proactive approaches by business and government, driven by innovative ideas and leadership.
While some observers might think that FTAs are “switch on and go” propositions, they are not. Governments need time to implement the changes. Businesses need time to evaluate and respond to the new opportunities. Adding to the CKFTA mix, international economic conditions this year have not been conducive to growth in global trade generally.
It is not surprising, therefore, that with some happy exceptions — such as in some Canadian agriculture and food products that have benefited from immediate tariff cuts — we have seen an overall drop in two-way trade since the FTA came into force, but less fall off in those areas benefiting from improved terms of access.
We need to be patient. It’s the longer term that counts, particularly in Asia where relationships and trust underpin business success.
The real danger is complacency: that governments and business will assume things will automatically now fall into place.
Governments need to be very active in the critical “launch” phase of the FTA. They need to inform and encourage businesses — large and small — to explore the new opportunities, to raise advocacy efforts in the market, to put in place complementary sectorial initiatives and agreements (for instance, negotiations on a Science and Technology Agreement have recently been concluded) and to pursue a full court press of high level economic and trade missions.
Some of this is now underway, but much more is necessary, sustained over an extended two-to-three year period. This is the approach that the United States and Australia have adopted following their FTAs with Korea. We cannot be left further behind.
In the end, however, the success of the CKFTA will depend on the energy, efforts, skill and commitment that businesses on both sides bring to bear in taking advantage of the business opportunities that have been created.
Building commitment, trust and chemistry
As with our Free Trade Agreement, we must not let complacency take charge of our efforts to implement the broader Strategic Partnership — arguably the tougher long-term task. We must not let a lack of ideas and innovation frustrate our realizing the extraordinary potential that this measure puts on offer.
What does this Strategic Partnership mean? A lot. It means that our governments have agreed that Korea and Canada should be in each other’s top tier of global partners.
To get there, however, we must achieve greater depth in our economic, political, and people-to-people ties. While we have done well over the past decades leading to this moment, the relationship has over the past few years plateaued in terms of intensity and growth. We now have a chance to move it forward again.
Korea’s rise to the status of a developed nation also opens rich new vistas for international cooperation with Canada. We share similarities in terms of global power, economic position, and a deep commitment to democratic governance. We both strive to promote a peaceful, prosperous and stable regional and international order.
Designating the Canada-Korea relationship as a Strategic Partnership is a statement of high ambition.
It means going beyond the largely transactional relationship of the present towards one where the issues of the day are subsumed in a broader strategic framework and where coordination and relationships are nurtured across the broad spectrum of shared interests.
If you look at what other countries, including our competitors, do with their strategic partnerships, you will see that they engage their leaders in these relationships. They build commitment, trust and, for the lack of a better word, a kind of intangible “chemistry” that sustains and drives forward movement and helps deal with the difficulties that inevitably arise, especially from more intense economic engagement.
The Canada-Korea Strategic Partnership will take time to build. A starting point would be to create innovative mechanisms appropriate to the new partnership that would bring more leading figures into the mix, build habits of interchange, cement relationships — mechanisms that over time would help create this “chemistry.”
A small bilateral business council led by a prominent business figure from each side and involving CEOs and senior executives would be one such innovation, especially timely as the FTA comes into force. A Ministerial Committee to oversee the governmental approach to the trade and economic relationship would also be very timely. Ideally the two should meet in parallel, and include a joint session.
Annual Foreign and Defense Minister (“2Plus2”) consultations (such as the Australians have with Korea) would complement the economic team and bring us into stronger partnership on foreign policy, defense and security matters, particularly at a time of increased concerns about the Asia Pacific. Finally, regular and well-prepared meetings on the margins of G20 summits (or separately) between the Korean President and the Canadian Prime Minister would top it off.
Another area where special effort is needed to kick-start this Partnership is that of enhanced advocacy and awareness building. Government inspired and led over a two-year period, such a program could involve all those with something to gain from a successful partnership. Efforts to promote opportunities under the CKFTA could be gradually expanded to emphasize the broader themes, commonalities, and potentials across the relationship, not neglecting the importance of cultural and historical connections that resonate with individuals on both sides.
Finally, we must not forget that young Canadians and Koreans hold the key to the future of this partnership. We already have significant numbers of Canadians teaching English in Korea, and Koreans studying in Canada. But more can be done, for example, through fostering further educational opportunities, expanded travel and working holiday programs, and building specific youth elements into every bilateral conference.
Innovative investments like these will pay off many-fold in the years ahead through associations that will last a lifetime and ensure that the Strategic Partnership moves from being an expression of ambition to an ongoing and dynamic reality.