PM's Statement, Fact Sheet - FTA

8/13/2019 PM's Statement, Fact Sheet - FTA

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JOINT PRESS RELEASE

THE HON. TONY ABBOTT MP, PRIME MINISTERTHE HON. ANDREW ROBB AO MP, MINISTER FOR TRADE & INVESTMENT

AUSTRALIA CONCLUDES FTA NEGOTIATIONS

WITH THE REPUBLIC OF KOREA

Australia has concluded negotiations for a Free Trade Agreement (FTA) with the Republic of Korea, ourthird-largest goods export market and fourth-largest trading partner.

Building stronger trading relationships in Asia was a key election commitment and part of the Coalitions plan to build a strong, prosperous economy.

As a result of the Agreement, tariffs will be eliminated on Australias major exports to Korea and there will be significant new market openings in services and investment. The FTA translates to higher economicgrowth and more jobs for Australians.

As part of the FTA, tariffs of up to 300 per cent will be eliminated on key Australian agricultural exportssuch as beef, wheat, sugar, dairy, wine, horticulture and seafood, as well as resources, energy andmanufactured goods.

The FTA will also provide new market opportunities in Korea for Australian services in education,telecommunications and a range of professional services including financial, accounting and legal services.

The benefits of the FTA start flowing immediately and will be long-lasting. Independent modelling showsthe Agreement would be worth $5 billion between 2015 and 2030 and boost the economy by around $650million annually after 15 years.

Agricultural exports to Korea will be 73 per cent higher after 15 years as a result of the FTA and overallexports to Korea will be 25 per cent higher resulting in the creation of more than 1700 jobs.

Australian automotive suppliers would benefit from the immediate removal of tariffs as high as eight percent; the wine industry from tariffs of 15 per cent and Australian wheat growers, potato farmers and cherry,grape and mango producers would all stand to benefit.

The Agreement also opens up opportunities for creative collaboration between Australia and Korea with producers able to develop screen content for the international marketplace.

The FTA secures Australias position in a major market where competitors like the United States, EuropeanUnion and ASEAN countries are already benefitting from preferential access.


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Minister Robb and his Korean counterpart, Trade Minister Yoon, concluded negotiations earlier this week.The Agreement will be signed and come into operation following domestic approval processes in Australiaand Korea.

Bilateral trade between Australia and Korea reached $32 billion in 2012 and this agreement will help takethat to a new level.

Australia and Korea are natural partners and this FTA will bring our economies and societies even closerand underpin a strong relationship for years to come.

5 December 2013


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More information on Australias trade and investment relationship is available from DFAT www.dfat.gov.au/geo/rok/brief_index.html and Austrade www.austrade.gov.au/Republic-of-Korea-profile/default.aspxMore information on the Korea-Australia Free Trade A greement is available at DFATs FTA website www.dfat.gov.au/geo/rok/fta/.

AUSTRALIA AND KOREA FTA (KAFTA) KEY OUTCOMES

Korea is Asias fourth -largest economy with a population of 50 million people. It is Australias third -largestexport market and our fourth-largest trading partner. The Korea-Australia Free Trade Agreement (KAFTA)will benefit Australian exporters, importers, workers, consumers and investors by opening trade andinvestment markets between Australia and Korea. With one in five Australian jobs linked to trade, thisagreement will provide an important boost to Australias economy.

SECURING AUSTRALIAS COMPETITIVE POSITION IN KOREAThe FTA secures Australias competitive position in this major market where our competitors such as theUnited States, European Union and ASEAN countries are already enjoying preferential access.Independent modelling 1 shows the impact on Australia from the US and EUs FTAs with Korea would be

significant, reflecting Korean importers choice to source beef, sugar and dairy products from these markets.If we do not proceed with an FTA, our exports to Korea would be 5 per cent lower by the time the US andEUs agreements are fully implem ented (by 2030). Korean imports of Australian agricultural goods woulddecline by 29 per cent by 2030, with mining and manufacturing exports also declining, by one and seven percent.

BENEFITS OF KAFTAThe results of independent modelling show the FTA will be worth over $5 billion in additional income toAustralia between 2015 and 2030 and will result in an annual boost to the economy of around $653 millionafter 15 years of operation.

After 15 years of the FTAs operation by 2030 our exports to Korea would be 25 per cent higherthan they otherwise would have been.

By 2030, exports of agricultural goods to Korea would be 73 per cent higher than otherwise,contributing to a total 5 per cent increase in Australias total agricultural exports. Mining exports toKorea would be 17 per cent higher and manufacturing exports would be 53 per cent higher.

Increased exports under the FTA would create over 1,700 jobs on implementation.

AGRICULTUREThe FTA will make a difference at the farm gate. From mango exporters to macadamia and potato growers,Australian farmers will enjoy improved access to the Korean market. Tariffs of up to 300 per cent will beeliminated on key Australian agricultural exports including beef, wheat, sugar, dairy, wine, horticulture and

seafood. Australias beef exporters will be big winners from the FTA. Australia is the largest supplier of beef

to Korea but our major competitor, the US, is already benefiting from beef tariff cuts from its 2012FTA with Korea. In beef, the US currently has a 5.4 per cent advantage. The KAFTA will helpAustralian exports compete on a more level playing field and will enable Australian beef producersto capitalise further on Koreans growing taste for Australian beef.

Australian cheese producers will gain duty- free access to Koreas growing middle class market.Australian cheese exports currently face Korean tariffs of up to 36 per cent.

1 Performed by the Centre for In ternational Economics


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Australian sparkling, red and white wines are currently subject to a tariff of 15 per cent but wine

from the US, EU and Chile enter duty free. The FTA will provide a boost to the wine industry,whose exports to Korea have been steadily decreasing since 2007. With this deal, Australian wineshave the best chance to take advantage of a growing market.

Korea is already Austra lias biggest export market for sugar and exporters will enjoy immediateelimination of Korean tariffs on commencement of the agreement.

Other key beneficiaries of the FTA include Australian wheat growers, potato farmers and cherry,table grape and mango producers.

SERVICES

The FTA will provide significant new market openings for Australian service suppliers, particularly ineducation, telecommunications, financial, accounting and legal services. This agreement represents some ofthe best services outcomes Australia has secured in any FTA.

For example, the agreement will allow Australian law firms access to Koreas legal consultingservices market by permitting Australian firms to establish representative offices in Korea andAustralian lawyers to advise on Australian and public international law. Within two years, Australianlaw firms will be permitted to enter into cooperative agreements with local law firms and within fiveyears to establish joint ventures and hire local lawyers.

An Audiovisual Co-production Agreement will deliver new commercial opportunities for ourcreative industries with an audio-visual co-production agreement facilitating film and televisioncollaboration.

RESOURCES AND ENERGY

Resource commodities and simply-transformed manufactures accounted for three-quarters of the value ofAustralias merchandise exports to Korea in 2012 (approximately $18 billion). While many Australianmineral and energy exports to Korea enter duty free, Korea applies tariffs of up to eight per cent on a rangeof priority resource products. Under KAFTA, Korea will eliminate tariffs for all resources products over time(10 years).

Some of the resources products that will benefit from KAFTA include crude petroleum, natural gas,unwrought aluminium, gold, propane, ammonia, sea salt, unwrought lead, cobalt mattes and articles andtitanium dioxide.

MANUFACTURED PRODUCTS

Korea applies tariffs of up to 13 per cent on a range of manufactured products. Under KAFTA, Korea willeliminate tariffs for all manufactured products (not including energy and mineral resources or forestry

products) within seven years.

Some of the manufactured products that will benefit from KAFTA include pharmaceuticals, includingvitamins; motor vehicle parts such as gear boxes; engines; floating structures (tanks, coffer-dams, landingstages, buoys and beacons); and electrical switchboards.


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INVESTMENT AND INVESTOR-STATE DISPUTE SETTLEMENT

KAFTA provides improved access and protection for Australian investors and investments in Korea.Australian investors are already active in Koreas financial and infrastructure sectors, among others.Australia is open for business and welcomes further Korean investment. Korean investment has helped buildAustralias economic capacity in key in dustries. For example:

Korea Zincs investment in Townsville helps us to export zinc to the world.

Korean cutting edge technology is being used to construct the multi-billion dollar Prelude floatingLNG processing plant.

The FTA includes an investor-state dispute settlement mechanism. The Government has ensured theinclusion of appropriate carve-outs and safeguards in important areas such as public welfare, health and theenvironment. This will provide new protections for Australian investors in Korea as well as Korean investors

in Australia, promoting investor confidence and certainty in both countries.

SENSITIVE SECTORS

Some sectors may face increased competition from imports of Korean products and services, such as motorvehicles, automotive parts, steel products and textiles, clothing and footwear. This will be in line with the

progressive liberalisation already underway in the Australia economy.

SNAPSHOT OF THE AUSTRALIA-KOREA TRADE RELATIONSHIP

Total two-way trade reached $31.9 billion in 2012 more than five per cent of Australia's total internationaltrade. In 2012, Australian exports to Korea were valued at $21.6 billion, accounting for over seven per centof all Australian exports. Total goods exports were valued at $19.8 billion. Korea is Australias largestmarket for sugar ($496 million). Total services exports were valued at $1.8 billion, comprising mostlyeducation-related travel services ($754 million) and recreational travel services ($664 million).

Australia imported $10.3 billion of total goods and services from Korea in 2012. Of this, goods importsaccounted for $9.9 billion. Services imports were valued at $455 million, including transport services of$218 million.

Coal, $5.4b,27.3%

Iron ore, $5.4b,27.3%

Crudepetroleum,$1.4b, 7.1%

Beef, $646m,3.3%

LNG, $591m,3.0%

Sugar, $496m,

2.5%

Other, $5.9b,29.6%

Australia's major goods exports to Korea 2012

Based on ABS catalogue 5368.0 and partner country data.

Refinedpetroleum,

$2.7b, 27.3%

Passengermotor vehicles,

$2.0b, 20.2%Excavatingmachinery,

$1.2b, 12.1%

Telephones,$234m, 2.4%

Monitors andprojectors,

$217m, 2.2%

Other, $3.5b,35.8%

Australia's major goods imports to Korea 2012

Based on ABS catalogue 5368.0.


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GROWING BILATERAL INVESTMENT

Bilateral investment between Australia and Korea is modest, but has grown significantly over the past

decade. At the end of 2012, total Korean investment in Australia was $12.0 billion, up from $637 million in2002. Over the same period, Australian investment in Korea increased more than three-fold, from $3.0 billion in 2002 to $10.4 billion in 2012.

Documents

PM's Statement, Fact Sheet - FTA