Let me just begin by saying we are not proceeding with Korea with undue haste. We've been working on this for over a year, I think. We've been having consultations with industry.
We are working closely with the automotive industry. The automotive industry, as you know, has been a happy recipient of hundreds of millions of dollars of taxpayer money in Canada. We've worked closely with them on environmental safeguards. We have brought the Canadian automotive industry to a position of competitive leadership in North America, and I think that's widely recognized now.
If you look at the Canada-Korea relationship, you have to observe that Korea is going to be manufacturing a substantial number of vehicles in the United States. Those vehicles will have duty-free access to Canada under NAFTA. Eighty-five percent of Canadian vehicles are actually sold in the U.S. So the amount of competitive threat that the automotive sector faces in Korea is not as dramatic as is being portrayed.
There is no doubt--and we've been working closely with the auto sector on this--that there are non-tariff barriers to trade in Korea that are difficult to deal with. We've been meeting with the industry and with the industry in the United States and the U.S. government to collaborate on how we, Canada and the U.S., can ensure that any free trade agreement that the U.S. or Canada might put in place would be fair and would have adequate protections for the auto sector as well as other sectors.
I should point out, though, that the automotive industry is basically saying “We don't like free trade because the Koreans are going to be unfair and we won't get into the Canadian market; therefore, we want to have some quantitative test put in place. We want there to be a certain level of import penetration in the Korean market before Canadian tariffs come down.”
The reality is that if you were to apply to Canada-U.S. trade that same test, the trade balance test that was referred to by Stanford in his article in the paper this morning, we'd be in serious bloody trouble. The Americans would want all the jobs back that we have brought into Canada, because we have a favourable balance with the Americans. To make that argument with respect to Korea but not want to apply it with other trading partners strikes me as logically inconsistent, but we're working with them and we think we can get through it.
The Canada-Korea potential free trade agreement does have the potential to offer substantial benefits to Canada. We've quantified them and modeled them. They're well in excess of $500 million, perhaps upwards into the range of $1.5 billion to $2 billion a year. So it's not that we're trying to get into a free trade agreement that is going to be harmful to Canada--quite the contrary.