Australia-Korea FTA on the way
JoongAng Daily | March 21, 2011
Australia-Korea FTA on the way
Jim Lim, the newly appointed chairman of the Australian Chamber of Commerce in Korea, or AustChamKorea, expects the free trade agreement between Korea and Australia to be signed in the first half of this year. He notes that most of the text had been agreed, except in the areas of beef and automobiles. In a recent interview with the Korea JoongAng Daily, Lim, who is also the regional manager of Meat & Livestock Australia, said that “negotiations for the bilateral agreement are certainly heading in the right direction.”
Q. How would the Korea-U.S. FTA have an impact on the Korea-Australia FTA?
A. Australia is seeking the same terms as the U.S. in terms of beef. Korea and the U.S. have agreed to eliminate 40 percent tariffs on beef over 15 years. Approval, however, by the U.S. Congress is the tough part because there is one senator in the U.S. who wants beef tariffs to be zero from day one, which is a serious issue that probably cannot be resolved. Since Australia is seeking the same terms on beef as the U.S., once the Korea-U.S. FTA is approved, it will be much easier for the Korea-Australia FTA to get through. In the meantime, Australia and Korea have engaged in five rounds of FTA negotiations and four intercessional meetings since 2009. Most of the text of the FTA is agreed and detailed reviews are currently ongoing. It is encouraging to note that negotiations on trade in services, investment, financial services, telecommunications and the movement of natural persons are near completion.
What are some of the benefits the FTA will bring to both countries?
Any FTA’s immediate impact is a drop in tariffs, which means a drop in prices for consumers. The ultimate winners are the consumers as they’re paying less at the end of the day. Also, an FTA means more opportunities for businesses. You take away barriers to trade and it becomes easier to do business. Korea is Australia’s third-largest market for merchandise exports and was worth $20.33 billion last year. Korea exported more than $7 billion to Australia in the same period. Already, Australian exports help Korean consumers and businesses every day by providing safe, natural food products such as beef, dairy and grain. In addition, we supply iron ore and coal used to make Korean cars, ships, steel and industrial products, as well as crude petroleum and secondary and tertiary education services. Korea provides important products to Australian consumers and businesses including motor vehicles, refined petroleum products and telecoms and television equipment. As a result both countries will see growth in areas such as natural gas for heating and power generation, gains in some agricultural exports, such as beef and dairy, financial services for wealth management and pensions, green technology and industrial goods as well as the potential for more exports of Korean cars and trucks to Australia.
As a foreign chamber here, what are some obstacles in facilitating trade?
Generally speaking, there’s no major obstacle but when you get to the micro level, the daily operational level, cultural and labor are some of the issues. Labor costs are high in Korea, compared to other countries like China and India. Korea is a great investment bed for high-technology and services but for straight manufacturing, like putting a cup or chair together, it’s probably cheaper for foreign firms to build in China. Overall, it’s important that the Korean government continue to benchmark countries like Singapore, Hong Kong, Japan and China in terms of foreign investment in all areas, including the environment, tax issues and cultural issues. Benchmarking against other countries is important.
By Lee Eun-joo
