Canada and Korea: Partners in Prosperity and Security

As published in Policy Magazine

Canadian business leaders participating in this week’s Team Canada Trade Mission to South Korea have an opportunity to bolster an increasingly important international partnership. In addition to being located on opposite sides of a shared ocean, Canada and Korea have much in common. As two middle powers and stable democracies that respect the rules-based international order, our countries share strong economic and cultural ties that stretch back to the 19^th century.

Both Canada and Korea are champions and beneficiaries of free trade – 68 percent of Canada’s GDP and 97 percent of Korea’s are tied to trade. It is not surprising, then, that both of our countries have extensive free trade networks each covering more than 50 nations.

Our two countries place high value on education – ranking among the top performers within the Organisation for Economic Cooperation and Development (OECD) – and we both benefit from teaching exchanges.

And perhaps most importantly, Canadian and Korean industries are world-leading and often complementary. Together, we can help each other overcome shared challenges including climate change, the energy transition and economic security.

In a changing world, both countries can benefit from strengthening the relationship even further.

Building on a strong foundation

A decade ago, Canada and Korea signed Canada’s first free trade agreement in the Indo-Pacific, marking the beginning of a policy shift toward the region and an expansion of the Canada-Korea economic relationship. Our private sectors began working more closely together to better compete in an increasingly competitive and dangerous global environment.

Both countries understand the importance of close ties. Canada’s Indo-Pacific strategy, released in 2022, recognizes Korea as “a strong democratic partner with which we share bilateral and global strategic interests.”

Korea’s Indo-Pacific Strategy, released just a few months later, seeks “increased cooperation on climate change response, economic security through stabilized supply chains, and a rules-based order based on our respective Indo-Pacific strategies.”

The elevation of our ties to a Comprehensive and Strategic Partnership in 2022 has resulted in increased interactions between both countries. For example, new high-level meetings between Foreign Affairs, Industry and Defence ministers provide important opportunities to explore and advance further government collaboration. In addition, the partnership is resulting in closer private sector ties.

That increased cooperation is evident in a number of areas, most notably in the production of electric vehicles. Canadian and Korean companies are leveraging their respective strengths to better compete globally in the EV market. For example:

• POSCO Chemical and GM Canada are building a plant in Quebec to make cathodes.
• Korea’s LG Electronics and Canada’s Magna recently entered into a joint venture to create LG Magna e-Powertrain to capitalize on the growing global shift toward vehicle electrification.
• With assistance from the Canadian and Ontario governments, LG Energy Solutions is working with Stellantisto build Canada’s first large-scale lithium-ion battery production plant in Windsor, Ontario.
• SOLUS Advanced Materials is building a battery foil plant in Quebec.

Beyond EVs, our countries are working closely in other aspects of the energy transition. Korea’s KOGAS is one of five major investors in LNG Canada, the largest private sector investment project in Canadian history. When it begins commercial operations next year, the new export facility in Kitimat, B.C. will allow significant quantities of low-methane intensity LNG to be sent to the Indo-Pacific region, to the benefit of Korean energy security and the country’s goals to decarbonize its heavy-emitting industries. LNG Canada will also have the lowest carbon intensity of any large-scale LNG export facility operating in the world today.

Other forms of Canadian energy are important as well. AltaGas provides 13 percent of Korea’s liquefied petroleum gas imports. In the future, Canada could also become a major supplier of hydrogen and ammonia to Korea.

Other sectors are working closer together in engineering and aerospace, including Montreal-headquartered CAE, which first entered the Korean market in 1985 and now trains more than 4,000 pilots per year at a facility near Seoul’s Gimpo International Airport.

The increasingly shared economic relationship between our countries led the Business Council of Canada and the Federation of Korean Industries, through the long-established Canada-Korea Forum, to create a strategic partnership with annual CEO dialogues, the second of which is taking place in Seoul this week.

More opportunities for closer cooperation

While the future looks bright for Canada-Korea relations, there is more we can do together to achieve our full potential.

The strategic nature of the Canada-Korea relationship has profound implications for our economic ties and expectations as partners. Korea is highly dependent on imports of food, fuel, fertilizer, and other products to sustain its economy and continue to build its world-leading technology and manufacturing sectors. In recent visits and in speaking with government and private sector representatives, it is clear that supply chain security is of upmost importance to Korea. Canada is viewed as an ideal partner, but we must also ensure that we deliver. That means bolstering trade-enabling infrastructure to get our goods to market and speeding up the permitting and approvals process for major projects.

While Canada aims to be a more active player in the Indo-Pacific, Korea aims to be a “global pivotal state,” further enhancing its significant international presence. Canada, by virtue of its role in the G7 and other multilateral institutions, can help elevate Korea on the global stage. For example, as host of next year’s G7 summit, Canada could invite Korea to participate.

For its part, Korea is exceptionally well-connected with the broader Indo-Pacific region and can help Canada make strategic inroads, particularly in Southeast Asian markets key to Canada’s economic diversification.

Finally, our countries can work together to further strengthen our defence ties. We have a shared interest in deterring North Korean aggression, as well and ensuring peace and security in both the Indo-Pacific region and in the Arctic. Korea is home to a fast-growing and advanced defence sector, while several leading Canadian companies are internationally recognized for their defence capabilities. As we have witnessed in other sectors, there is room for Canadian-Korean partnerships across this expanding sector.

Strengthening the North Pacific

The Canada-Korea relationship has implications beyond our two countries. We are close partners and allies of both the United States and Japan and all four of us have a major stake in the North Pacific region. While there have been recent initiatives to enhance trilateral ties among the U.S., Japan and Korea following the Camp David Trilateral Leaders’ Summit, it makes good sense to consider other ways in which all four countries can work together.

Canada advanced the concept of North Pacific cooperation in its Indo-Pacific Strategy. Korea did the same. While it may be difficult for Canada to insert itself into the Trilateral Leaders’ process, we must ensure that Canada is not left out of any related regional cooperation mechanisms, including in the private sector.

Recommendations

Strong international ties don’t happen by accident. They must be nurtured and respected. There are some practical steps Canada and Korea can take to ensure our countries continue to benefit from growing collaboration.

• Canada should invite Korea to attend next year’s G7 Summit. Doing so would benefit both countries – Korea would have a voice at this important gathering of world leaders, while Canada would have a close, likeminded partner at the table.
• Korea should work to ensure Canada is included in any future North Pacific collaboration with the U.S. and Japan. A stronger North Pacific benefits all four countries.
• Canada must invest in the infrastructure necessary to get our food, fuel and other goods to market. We have a willing customer in Korea.
• Through mechanisms such as the Canada-Korea Forum, the private sector and civil society should continue to strengthen business and personal ties between our two countries.

Conclusion

Korea and Canada have a relationship based on a strong historical legacy, significant people-to-people and cultural ties, and common approaches to global issues. Korea represents one of Canada’s largest economic relationships in the critical Indo-Pacific region. While our ties continue to grow stronger, we should not become complacent. Our governments and our private sectors must invest in the relationship to ensure that each country’s strategic interests can be supported, with a goal of greater prosperity and security for both countries.