September 12, 2013

 

Australia, South Korea free trade agreement on its way to finalisation
 

 

The free-trade agreement (FTA) between Australia and South Korea can be struck soon under the incoming Coalition government.

 

Australia now had a strong chance to seal the deal, but producers wanted to see a ministerial visit to Seoul soon after Tony Abbott finalised his cabinet.

 

Meat and Livestock Australia's regional manager for Korea, Michael Finucan, said Australia -- which sent almost AUD650 million (US$601 million) of beef to Korea last year -- risked rapidly losing market share to the US if it didn't seize the opportunity.

 

Finucan said that the industry is optimistic that the new government is probably likely to find a way forward on the FTA and that it is a fairly high priority and added that the agreement is very close to being completed and there are only a couple of sticking points.

 

He said Korea had an FTA with the US that had already seen two tariff reductions. The tariff on US beef is now eight percentage points lower than the Australian imports.

 

The main cause for renewed optimism on the FTA is that the Coalition is not insisting on the exclusion of an investor state dispute resolution clause. This clause was also a deal-breaker for the previous government, but the Coalition has pledged to look at this issue on a case by case basis.

 

The beef industry as well as the Australian horticultural and dairy producers also stand to gain significantly from the FTA.

 

Korea has been active in clinching FTAs with the EU, the US and Chile, so these countries are now able to undercut Australian wine, vegetables, fruits and dairy products on South Korean supermarket shelves.

 

Korea wants some concessions on better access to the vehicle market in Australia, which has a 5% import tariff. Observers say it is perhaps easier for the Coalition to budge on this issue than it was for Labour and its union constituency.

 

The message from primary industries in Australia is that the Korean FTA is low-hanging fruit for the government and it could give the Coalition an easy win on trade before it turns to tackling the more sensitive FTAs with Japan and China.

 

Japan's Agriculture Minister, Yoshimasa Hayashi, expressed cautious optimism that the long-awaited FTA with Japan could be finalised after seven years of negotiations. He said he was looking forward to talking with his Australian counterpart once the ministry was sworn in.

 

Hayashi said he didn't see Japan's focus on the US-backed Trans-Pacific Partnership negotiations being any barrier to an FTA with Australia.

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