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Preliminary Assessment of the Economic Impacts of a Canada-Korea Free Trade Agreement Dan Ciuriak and Shenjie Chen Executive Summary This document analyzes the possible economic impacts of a free trade agreement between Canada and Korea, negotiations for which were launched on July 15, 2005. The economic impacts of tariff elimination are assessed based on simulations using a computable general equilibrium (CGE) model known as the Global Trade Analysis Project (GTAP) and version 6 of its database. Five alternative scenarios are simulated based on a range of assumptions concerning the supply-side response of the economy to expanded trade with Korea, including a central scenario incorporating the assump- tions best suited for Canada and Korea respectively. The impact of non-tariff elements of a CKFTA, including impacts on bilat- eral investment flows and services trade, are taken into account only qualitatively. The main findings are as follows: o Assuming full elimination of tariffs for industrial and agri- cultural products, Canada’s total merchandise exports to Korea in the central scenario would increase by 56 percent. Based on the level of Canadian exports to Korea in 2005 of $2.8 billion1, this would represent an export gain of about $1.6 billion. The authors are with the Office of the Chief Economist, Foreign Af- fairs and International Trade Canada. 1 All monetary figures are in Canadian dollars unless otherwise noted. 187 o Canada’s merchandise imports from Korea would increase by 19 percent. Based on the 2005 figure of $5.4 billion, this would represent an import increase of about $1 billion. o The value of Canada’s gross domestic product