Since 2015, the Canada-Korea Free Trade Agreement (CKFTA) has helped Canadian businesses access the South Korean market by streamlining export processes and reducing tariffs on a wide range of goods and services. 

As of January 1, 2024, 99% of Canadian exports benefit from duty-free access into Korea. By 2032, it is anticipated that 99.75% of tariffs will be eliminated on Canadian goods entering the Korean market. Free trade agreements (FTAs) are signed between two or more countries to simplify trade, minimize barriers and reduce costs associated with exporting internationally. While CKFTA was Canada’s first FTA with Asia, Canada participates in 15 different FTAs with countries around the world. 

Demand for ‘Brand Canada’

With CKFTA in place, Canadian exporters have preferential access to one of the most favourable markets in Asia.  Korean consumers view ‘Brand Canada’ very positively, associating Canadian exports with trust and cleanliness. Whether it’s outdoor wear, sports gear or fresh foods, Canadian products are in demand in the South Korean market.

For most Canadian exporters, CKFTA makes selling in Korea very similar to selling within Canada. Business owners won’t have to navigate complicated regulations or account for costly tariff rates. As well, Korea has been identified as a key market to help Canadian businesses grow in the wider Asia-Pacific region, making CKFTA a valuable stepping stone for businesses wanting to grow their customer base. 

To put it into perspective, a Canadian business exporting alcohol to South Korea in 2015 would have had to pay tariffs ranging from 19% – 30%. In 2024, that same Canadian exporter will not pay any tariffs at all. 

As another example, before CKFTA was signed, tariffs on Canadian processed foods averaged at 30% but peaked at 754%. Today, almost all tariffs associated with processed foods have been eliminated under CKFTA.  

Big Benefits for B.C. Businesses

CKFTA is particularly good news for businesses, as British Columbia, and South Korea are key trade partners, exchanging billions of dollars worth of goods and services each year. South Korea is B.C.’s fourth largest trade partner for exported goods, with over $2.1 billion in annual goods exported in 2020, especially in many of B.C.’s key sectors, like fish and seafood, and agri-foods like ice wine and berries. 

CKFTA offers major improvements for service providers too. In 2021, B.C. exported $450 million in service exports to South Korea, including professional services like IT clean energy and transportation and tourism. Usually, jobs in these areas are highly skilled and paid well, creating excellent business opportunities for B.C. service providers. 

CKFTA also makes it easier for Canadians to travel to Korea or relocate for business. CKFTA streamlines access to South Korea with temporary-entry provisions for service providers and their families so they can focus on business growth and development. 

Temporary-entry provisions — policies included in CKFTA help professionals travel or relocate internationally — streamline access to South Korea for service providers and their spouses, so they can focus on other areas of their business. As well, Canadian service providers no longer need to complete economic needs tests, which previously limited international businesses from participating in the Korean market if a domestic business was able to do the same job. 

How to Know if CKFTA is Right for your Business

While CKFTA has made trade simpler and less costly, there are still a few things to consider when determining whether South Korea is the right target market for your business: 

  • Understanding Local Tastes: All markets have different interests, tastes and trends. It’s important to analyze whether your product or service aligns with the wants and needs of the Korean market. It can be helpful to engage a local partner to help answer regional or cultural questions. 
  • Knowledge of the Korean Domestic Market: South Korea has a thriving domestic industry. While, under CKFTA, Canadian businesses are treated with practically the same privileges as domestic businesses, it’s important to assess whether your business offers something unique, and where it fits into the broader Korean business landscape. 
  • Managing Logistics: Though CKFTA simplifies many elements of the exporting process, it’s still important to assess whether your business is prepared to work through the logistics of trade in Asia. This might include transportation and storage of goods, marketing, or creating a business network overseas. 

When planning your export to Korea, you can use tools like the Canada Tariff Finder to confirm which, if any, tariffs apply to your product or services. 

Begin your South Korea Export Journey

Ready to begin exporting to South Korea? Need guidance to understand exactly how CKFTA can make big impacts for your business? We’re here to help. 

Connect with an Export Advisor today to learn more about the resources available to help you grow your business in South Korea.