Free trade is seen as a positive change in the markets of countries. With benefits such as, comparative advantage where countries are producing good at which they are most efficient at, with less opportunity cost and a market at equilibrium. The reduction of Tariff barriers leads to trade creation, increase exports, economies of scale, etc…
However, recently the free trade agreement between Canada and South Korea in the automotive industry isn’t seen as beneficial for all stakeholders. This agreement would eliminate the 6.1 per cent tariff on Korean imported cars, but at the same time it wouldn’t help Canada’s automotive industry break into Korea. Leading to greater problems for Canada as this deal would be a job killer for the Canadian auto industry and widen our trade deficit. Similar free trade deals have been made in the past between South Korea, the US and the EU. As history shows us they have all resulted in an abundance of South Korean cars in these markets. This leads to thousands of jobs being lost and with the trade deficit with Korea already at $3 billion in 2012, $ 2.7 billion in 2013. This is only going to get worse and it could have a huge negative impact on Canada’s unemployment rate.