Good afternoon, Honourable Chairman Richardson and honourable committee members.
My remarks are based on working with the Canadian business community in Seoul since 1996 and being active during that time with the CCCK, the Canadian Chamber of Commerce in Korea. I was chair for six years. I am currently, and have been for the past three years, the vice-chair.
The CCCK serves as the voice of business for Canadians in Korea. We have some 200 members. We believe this FTA will be positive for Canadian businesses, the economy, and Canadian consumers. Canada, as you know, is a trading nation; 40% of our GDP comes from trade. Korean tariffs are double Canadian tariffs and apply to four times as many products--about 54%--so we think Canadian businesses stand to benefit substantially from the conclusion of an FTA. In addition, on some key products such as fisheries, Korean tariffs average 18%, whereas ours are 2%. So the Canadian Chamber of Commerce in Korea strongly supports this agreement.
With respect to services, services account for 60% of our Canadian GDP. Our service exports to Korea have doubled over the last 10 years based on 2004 data, so we think this is a very promising opportunity for us.
That having been said, the CCCK wrote to the Canadian government in 2000 to request beginning FTA negotiations. There have been 12 rounds of negotiations, and we feel it's time to get on with it. The previous speaker mentioned that the Korea-U.S. FTA is nearing ratification, so those tariffs I mentioned will be coming down for U.S. businesses, but not for Canadian ones, and this places Canadian companies at a substantial disadvantage.
We run the risk of trying to perfect something, and we should really just get on with it. There is an example from Ken Blanchard that talks about asking a child to say perfectly, “I want a glass of water”, before giving him something to drink. The end result is that he dies of dehydration. We need to say we'll use the WTO to get the best dispute resolution mechanisms that we can, and let's get on with concluding the deal. I should say that I believe Canada has some very experienced trade negotiators, and given 12 rounds, it's time.
I'd also like to speak to the issue of reciprocity. We have the opportunity to use this FTA to move the goalposts in the right direction and to be innovative at the same time. Korea and the U.S. have discussed removing many barriers to investment. Their discussions have encompassed removing all restrictions to facilities-based telco investments except for the dominant land line and dominant wireless facilities providers, which would be limited to 49%. In Canada our current position restricts direct ownership to 20%, whereas it is 49% in Korea. Therefore, if we looked at doing reciprocal agreements under which Korean companies could invest 49% directly here, we would probably see more direct investment in Canada in the telco sector. Based on our current state, that might be quite a good thing.
Further, we should use this opportunity to identify and remove hidden trade barriers. Every country has those. I just mentioned one in Canada, but in Korea we similarly have issues on testing of food products and with the BlackBerry, a Canadian icon, which can't be launched in its 3G mode, although it does exist in an older technology. These barriers can be dealt with through WTO mechanisms and through public pressure, so I do not think they constitute a good reason to delay in concluding an agreement.
I would also like to mention the aspect of having all the eggs in one basket. A Korea-Canada FTA will help to disperse the focus from being so continentally oriented. When we did the FTA with Chile, we saw trading increase threefold to fourfold in 10 years, and a similar FTA with Korea could have that result.
As the previous speaker mentioned, the relationships between Canada and Korea are very warm. I couldn't think of a better partner with which to conclude an FTA.
Services are very important for Canadians. We have thousands of Canadian teachers teaching English in Korea--8,000 or so, we think--and some of these Canadians stay and open businesses in Korea. They eventually come back as really global entrepreneurs. This is the new wave of entrepreneurs for Canada, because they won't hesitate to use a global service chain. They will have received an incredible education in one of the most competitive markets in the world.
In addition, tens of thousands of Koreans come to Canada to study English, some beginning from the age of six. They also go to universities. There are 15,000 Korean alumni of Canadian universities in Korea.
So in the services sector—in 2004, Canada's services revenue was $700 million—I believe we could see a lot of increase, and these are good, high-quality jobs that could be very important to us.
An FTA also needs to integrate related government policies, such as visa and immigration. Right now our education sector, for which those tens of thousands of Koreans come, benefits from the absence of visa requirements. You can come to Canada for six months if you're Korean--and it's the same for Canadians. The U.S. is considering a similar lifting of their restrictions, and that would be a disadvantage to us.
Finally, I'd like to speak on the importance of nurturing the relationship. I believe we all have a responsibility to educate Canadians on the importance of our officials travelling to Korea. This goes from ministers to members of the House. These trips are not jaunts, as you well know. They create a good element of the relationship, and we need that. Our competitors do that without hesitation.
Finally, we have little islands of Canadian content throughout Korea and Asia, whether it's alumni of Canadian universities, Canadian teachers, Canadian chambers, or Canadian culture. We need to look at having a budget to bring these together and multiply them so we can have more of a Canadian effect in Korea.
In summary, the Canadian Chamber of Commerce has been in favour of this agreement since 2000, when we first wrote to say that we recommended beginning negotiations. Twelve rounds of negotiations have been completed. We believe that we should conclude this agreement, and that there are huge advantages to Canadian businesses and Canadian jobs in doing so.
Thank you.