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S. Korea clears way for free-trade talks as Canadian beef ban lifted

South Korea is lifting its ban on Canadian beef, eliminating a key impediment to long-stalled free trade talks between the two countries.

The Harper government walked away from talks with South Korea in 2008, frustrated over its shunning of Canadian beef after a mad-cow disease outbreak and facing stiff opposition from North American auto makers.

Speaking earlier this week, Trade Minister Ed Fast said a breakthrough on the beef issue "provides us a stronger basis" to revisit the negotiations.

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"It removes another barrier for us to be able to say: 'this is really a good deal for all Canadians in the long term,'" Mr. Fast said in an interview.

Appointed last June, Mr. Fast vowed to bring a "fresh pair of eyes" to the discussions.

Prime Minister Stephen Harper also hinted about a resumption of trade talks. In a statement, he said the South Korean move helps "create a favourable climate which will lead to a deeper trade relationship with South Korea – a priority market for Canada."

The Harper government has made free trade – particularly with Asian countries – a key policy priority and a way to create jobs in a slow global economy. It's exploring talks with Japan and wants to join the Trans-Pacific Partnership negotiations, which include the U.S., Malaysia, Vietnam, Australia, New Zealand and Chile.

Other issues still stand in the way of a South Korean free trade deal, including the continuing resistance of the Detroit Three automakers. Also opposed are Honda Motor Corp. and Toyota Motor Corp., both of which assemble cars in Canada.

A lot has changed since 2008. Both Europe and the United States have done free-trade deals with South Korea, leaving Canada badly disadvantaged in a key export market for pork, beef and canola. The U.S. deal in particular, which goes into effect next month, will eventually price some Canadian products right out of the South Korean market.

Meat processors warn that more than 60,000 Canadian jobs and $330-million worth of exports could be put at risk. Canola exports could also be hit hard.

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"We're out of time," said Barry Sutton, vice-president of international sales at Maple Leaf Foods Inc. "We'll be affected severely as soon as the [U.S.–South Korea]deal goes through."

The beef industry applauded the reopening of the market and called on Ottawa to immediately reopen free-trade talks with South Korea.

"We should move forward swiftly with the free-trade agreement negotiations," said Scott Entz, president of the Canadian Meat Council.

Before the recession hit in 2008, bilateral trade between the two countries was worth roughly $10-billion a year. Canada's major exports to South Korea are oil, wood pulp, nickel, machinery and aluminum. Before the beef ban, South Korea was the industry's fourth largest export market.

Under the deal reached with South Korea, Canada will able to resume selling beef from animals aged 30 months or less for the first time in eight years.

So far, the auto industry shows no sign of budging. Mark Nantais, president of the Canadian Vehicle Manufacturers' Association, said until South Korea offers "measurable and meaningful" free trade in cars, Canada shouldn't do a deal.

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He pointed out that South Korea exports roughly 120,000 vehicles to Canada a year, while just 1,500 go the other way due to steep tariffs and a range of non-tariff barriers. Canada imposes a 6.1-per-cent tariff on imported South Korean vehicles.

Even a deal on autos similar to what the U.S. got wouldn't be good enough for his members – Ford, General Motors and Chrysler, Mr. Nantais insisted.

The auto industry has some powerful allies in cabinet, including Finance Minister Jim Flaherty, whose riding in Whitby-Oshawa is home to GM Canada.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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