MISSISSAUGA, Ontario—The governments of Canada and South Korea have signed a free trade agreement, which if ratified by the countries' respective parliaments will phase out import duties on rubber products in both countries over five years, the Tire and Rubber Association of Canada said.
If the ratification process is confirmed, TRAC said it is expected the agreement will become effective Jan. 1, 2016.
Canada imported $171 million of tires and other rubber products from South Korea in 2013, including car and truck tires valued at $105 million. By contrast, Canada's exports of rubber goods to South Korea were valued at $53 million, TRAC said, almost none of which were car or truck tires.
If ratified, the agreement will phase in duty reductions according to various schedules. Imports of car and truck tires from South Korea are charged a duty of 7 percent, TRAC said, which would be phased out over the first five years of the agreement.
Car and truck tires exported from Canada to South Korea face an 8-percent import duty, which also would be phased out over the same 5 year period.
There are many other rubber commodities under HS code 40 from South Korea that face no import duty into Canada, TRAC said, but these same products exported from Canada to South Korea have varying levels of duty up to 8 percent net.
Most of these will be eliminated immediately upon implementation of the agreement, TRAC said, while others will be phased out in three to five years.
Details of the trade agreement and the schedule of proposed duty phase outs by individual commodity can be found here.
South Korea's Hankook Tire Co. Ltd., Kumho Tire Co. Inc. and Nexen Tire Corp. have sales subsidiaries in Canada—Hankook Tire Canada Corp. in Brampton, Ontario; Kumho Tire Canada in Mississauga, Ontario; and Nexen Tire Corp. in Markham, Ontario. All three companies are associate members of TRAC.