Canadian Prime Minister Stephen Harper.

The Canadian auto industry is livid over a new trade agreement with South Korea that will eliminate tariffs on cars imported from the small country.

Two years after the deal is implemented, imported KIAs and Hyundais will come down in price to reflect the elimination of the current 6.1 per cent tariff. The Asian markets have untapped potential as a destination for Canadian exports, largely due to their rapid increases in domestic consumption there. In 2013, Prime Minister Stephen Harper was in China finalizing a Foreign Investment and Protection Agreement in an attempt to take advantage of China's need for bitumen to produce power. Similarly, Harper hopes to capitalize on the Korean appetite for beef as the country opens their doors to Canadian beef for the first time since the mad cow crisis.

Canadian auto manufacturers are upset that KIA and Hyundai will have such a comparative advantage in the marketplace after eliminating a 6.1 per cent tariff, but realistically the writing has been on the wall all along. KIA has consistently improved its sales in Canada since entering the market 15 years ago, posing as a cheaper alternative to theWestern-made cars of the time. The comparative wage difference between Canada and South Korea allows the production of more goods for less cost than is possible here. The assertion that Ontario needs automobile manufacturing is generally made by automobile companies, sector employees, or autoworker union leaders. The claim is a troubling one given that the CEO of General Motors, Dan Akerson, called Canada, “the most expensive place to build a car in the world right now” less than 12 months ago.

Canada is uniquely situated from an economic perspective. The high standard of living has led to a comparatively high international cost of living. Two of Canada's most profitable industries, namely lumber and energy, are natural resources that get hauled over the border in raw form, refined in the U.S. and sold back to us for double the price. Canada has to play a different game than other countries when it comes to international economics. The high cost of labour in Canada means that, generally speaking, the more labour a company requires, the less globally competitive it'll be.

The Conservative Government has been singing its own praise at every turn since successfully navigating the financial crisis of 2008. Objective measures suggest that Canada fared far better than many in the international community, and it's thanks to decisions like this trade agreement. Despite living in a post-industrial, post-modern age, the cycle of globalization is still only accelerating. While the amount of people and goods travelling the world may have increased only incrementally over the last decade, the amount of digital information being shared has increased immeasurably. This rapid transfer of data is changing the way business is done, and Prime Minister Harper is ensuring that Canada will be ideally situated to capitalize on the investment opportunities of the future that will come as a result.
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