In previous HH CTT Updates, industry articles and
presentations I have discussed Australia's FTA agenda at
length. Of specific recent interest has been the promise from the
new Federal Government that it would complete its "North
Asian" FTA negotiations with China, Japan and Korea by October
By way of various media releases last evening, the Federal
Government has confirmed that negotiations for the Australian FTA
with Korea ("KFTA") have been completed,
subject to completion of the form of the KFTA and Parliamentary
approval by both nations. The commencement date is not clear
although media releases refer to benefits over 15 years up until
2030 which would suggest a commencement date in 2015.
Korea is a significant market being our third – largest
export market and fourth largest trading partner. The KFTA will
reportedly deliver benefits for Australian exporters of goods from
the elimination of tariffs, especially in some agricultural areas,
in resources and energy and in certain areas of manufactured
products. Services and investment also benefit including
significant gains for the Australian legal profession.
However, Korea is also a very developed manufacturing economy
and it has been widely recognised that sensitive Australian
manufacturing sectors such as motor vehicles, automotive parts,
steel products and textiles, clothing and footwear will also face
increased competition from Korean products. As readers would be
aware, we have worked extensively in these areas which are
currently under significant pressure and are subject to progressive
There are also some more subtle and interesting developments
from the KFTA. First, the benefits are being portrayed over a 15
year period which may suggest that there are only limited immediate
gains. Second, the KFTA is also being portrayed as a strategic move
to protect Australia's competitive position as our competitors
(US, the EU and ASEAN countries) already enjoy preferential access
to the Korean market. Third, the KFTA reportedly includes an
Investor/State Dispute Resolution mechanism (albeit with some
"carve outs" for sensitive areas). This would not have
happened under the former Federal Government and may point the way
to how this issue may be overcome in other proposed FTA.
Further, do not expect a totally comprehensive deal as the
former Federal Government would have required. There is a sense
that the current Federal Government is more inclined to strike a
pragmatic deal which delivers the best perceived outcomes at this
We await the details on the KFTA with interest, including the
specific words of the agreement, information on which goods and
services have been excluded from the agreement, the schedules of
tariff concessions and the details of the rules of origin and
certificate of origin regime which will apply.
As always we will keep you informed of developments
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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