Korea-Australia FTA
With a bilateral free trade agreement (FTA) between Korea and Australia virtually settled, the export of local manufactured cars has gathered momentum. On the contrary, black clouds are expected to hang over stock breeding farmhouses.
The Korean Trade Ministry said in a press release on December 5, “Korean Trade Minister Yoon Sang-jick and his Australian counterpart Andrew Robb confirmed that negotiations for the Korea-Australia FTA have virtually been concluded at the meeting in Bali, Indonesia on December 4.”
The Korea-Australia FTA is the first bilateral free trade agreement that the Park Geun-hye administration concluded, with Australia registered as Korea’s 11th FTA partner.
With the FTA conclusion as a momentum, the Korean government is planning to accelerate the process of joining the Trans-Pacific Partnership (TPP). “We are expecting to sooner or later conclude another FTA with Canada that is a member country of the TPP,” said Minister Yoon.
Yoon went on to say, “Australia has agreed to remove its tariffs on most of the products within five years, while we agreed to remove tariffs on 92.4 percent of Australian products within eight years.”
The most notable part of the FTA is that it immediately removes tariffs on gasoline–powered cars, the first case in Korea’s FTA history. More specifically, the two sides agreed upon immediately removing 5 percent tariffs on 20 types of small and medium-sized (1000cc to 3,000cc) gasoline-powered vehicles from Korea, which currently account for 76.6 percent of Korea’s automobile exports to Australia in terms of value. Australia’s import tariffs on all other types of gasoline-powered vehicles from Korea will be removed within three years.
Assistant Trade Minister Woo Tae-hee explained that such an agreement marked a concession from Australia, noting that import tariffs on automobiles are usually removed within three to five years under most other free trade agreements.
“In case of beef and dairy products, the country was able to better protect the local market with better terms than those of the Korea-US FTA,” Woo added.
Reflecting on Korean stock breeding farmhouses’ sensitive reactions toward the liberalization of the food market, the agreement exempted Korea from opening its markets for a number of what they called “very sensitive items,” which include rice, powdered milk, potatoes, and oysters.
The agreement allows Korea to gradually remove its import tariffs on 509 “sensitive items,” including beef, within 10 to 15 years following the enactment of the FTA, instead of eight years for most industrial products.
Currently, Australian beef accounts for 56.9 percent of South Korea’s total beef imports, according to the ministry.
The negotiations for the Korea-Australia FTA were resumed last month after a 41-month break since May 2010, when the talks came to a deadlock largely owing to Australia’s opposition to the so-called investor-state dispute (ISD) settlement system.