Australian Embassy
Republic of Korea
Embassy address: 11th Fl, Kyobo Building, 1 Jongno 1-Ga, Jongno-Gu, Seoul - Telephone: 02 2003 0100
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Korea and Australia Growing Together
Delivering Trade and Investment Opportunities for Korea
An FTA with Australia would deliver significant economic benefits for Korea. In 1996, KIEP estimated that a comprehensive FTA with Australia would add US$1.1 billion to the Korean economy each year and US$620 million to the Australian economy. The study found an FTA with Australia would be more than twice as beneficial as an FTA with Canada. Since 1996, Australia-Korea two-way trade has grown by 46 per cent, so gains should be even greater now.
Australia and Korea are strong, open, modern economies enjoying highly complementary trade. Korea is a significant supplier of high value added manufactures, while Australia is a reliable supplier of natural resources and services that are important for Korean industry. Korean exports to Australia exceeded US$3.4 billion in 2004.
Australia’s Economy
- The fourth largest economy and second highest per capita income in the East Asia/Oceania region
- Thirteenth largest in the world
- 15 years of growth, averaging 3.5 per cent per annum
- GDP of over US$500 billion
- Population: 20 million
Competitiveness in Australia
An FTA with Australia would allow Korean exporters to compete on an equal footing with exporters and investors from countries that have preferential access to Australian markets under existing FTAs. Korean exporters could also use an FTA with Australia to gain access to our growing FTA network, which already accounts for more than 20 per cent of total world imports.
Australia has negotiated FTAs with the United States, Thailand, Singapore and New Zealand, and has entered negotiations with China, ASEAN, Malaysia and the UAE. Australia and Japan have commenced an FTA study.
Improved Market Access
More than 70 per cent of Korean exports face tariffs in Australia. Cars and car parts face a 10 per cent tariff. Household goods face a 5 per cent tariff. Tariff concessions have been made on these and other items in Australia’s FTAs. In most cases, tariffs were eliminated. Tariff reductions would give Korean exporters a competitive advantage in Australia.
Australia's FTAs have improved access for FTA partners to its US$40 billion government procurement market. For example, Australia's FTA with the United States provided US suppliers with the same rights as Australian suppliers.
Trade with Australia Supports Jobs in Korea
Key Korean industries would save millions of dollars on essential resources imports from Australia under an FTA. The majority of Korea’s imports from Australia are raw materials, which are utilised for Korea’s export production and help create Korean jobs.
POSCO’s Australian Linkages
POSCO imported around $US1.5 billion of natural resources from Australia in 2004. An FTA would save around US$15 million on this import bill. POSCO employs 19,000 Koreans.
Greater Export Potential
There is scope for higher exports to Australia. Korean merchandise exports to the world grew by an annual average of 13 per cent between 2000 and 2004, while merchandise exports to Australia grew by an average of only 8 per cent over the same period.
Korea is a strong exporter of items such as ships and floating drilling platforms - but these do not feature strongly in Korean exports to Australia. An FTA could strengthen these exports by removing tariff barriers and lifting Korea’s profile.
Opportunities to Invest
Australia’s FTAs increase investment opportunities in Australia. An FTA would facilitate expansion of Korea’s growing investment in Australia. Under the Australia-US FTA, for example, US investors are exempt from government screening for investments up to A$800 million. The LNG, agriculture and service industries are examples of potential investment opportunities for Korea. Enhanced investment in those areas would improve Korea's food and energy security.
Macquarie Bank: Funding Korean Growth
Macquarie Bank has a large, diverse Korean presence. It has 260 Korean employees, providing high wage, high skill jobs. Macquarie is a long-term investor in Korea, primarily manages Korean funds and has never withdrawn an investment.
An FTA with Korea would boost Australia’s growing investment in Korea, with Macquarie Bank, ANZ Bank, CocaCola BHPBilliton, and Hamersley Iron all having an on-the-ground presence. An increased Australian presence would enhance Korea’s profile as a trade logistics and business hub.
Australia - Not a Threat
Australia’s agriculture exports do not threaten Korea’s agriculture sector. Almost 95 per cent of Australia's agricultural exports to Korea are not sensitive. Australia’s rice production is only 0.2 per cent of global production. Australia is a niche exporter of rice with a small Minimum Market Access entitlement in Korea set until 2014.
Three of Australia’s four largest agricultural exports to Korea have tariff rates of 3 per cent or less (wheat, sugar and cotton). Australian beef is not a threat to high-end Korean beef. Australia has successfully negotiated FTAs that cover sensitive sectors, including agriculture - with mutually beneficial outcomes. It is time for Korea and Australia to think seriously about an FTA.
Delivering Trade and Investment Opportunities for Korea
An FTA with Australia would deliver significant economic benefits for Korea. In 1996, KIEP estimated that a comprehensive FTA with Australia would add US$1.1 billion to the Korean economy each year and US$620 million to the Australian economy. The study found an FTA with Australia would be more than twice as beneficial as an FTA with Canada. Since 1996, Australia-Korea two-way trade has grown by 46 per cent, so gains should be even greater now.
Australia and Korea are strong, open, modern economies enjoying highly complementary trade. Korea is a significant supplier of high value added manufactures, while Australia is a reliable supplier of natural resources and services that are important for Korean industry. Korean exports to Australia exceeded US$3.4 billion in 2004.
Australia’s Economy
- The fourth largest economy and second highest per capita income in the East Asia/Oceania region
- Thirteenth largest in the world
- 15 years of growth, averaging 3.5 per cent per annum
- GDP of over US$500 billion
- Population: 20 million
Competitiveness in Australia
An FTA with Australia would allow Korean exporters to compete on an equal footing with exporters and investors from countries that have preferential access to Australian markets under existing FTAs. Korean exporters could also use an FTA with Australia to gain access to our growing FTA network, which already accounts for more than 20 per cent of total world imports.
Australia has negotiated FTAs with the United States, Thailand, Singapore and New Zealand, and has entered negotiations with China, ASEAN, Malaysia and the UAE. Australia and Japan have commenced an FTA study.
Improved Market Access
More than 70 per cent of Korean exports face tariffs in Australia. Cars and car parts face a 10 per cent tariff. Household goods face a 5 per cent tariff. Tariff concessions have been made on these and other items in Australia’s FTAs. In most cases, tariffs were eliminated. Tariff reductions would give Korean exporters a competitive advantage in Australia.
Australia's FTAs have improved access for FTA partners to its US$40 billion government procurement market. For example, Australia's FTA with the United States provided US suppliers with the same rights as Australian suppliers.
Trade with Australia Supports Jobs in Korea
Key Korean industries would save millions of dollars on essential resources imports from Australia under an FTA. The majority of Korea’s imports from Australia are raw materials, which are utilised for Korea’s export production and help create Korean jobs.
POSCO’s Australian Linkages
POSCO imported around $US1.5 billion of natural resources from Australia in 2004. An FTA would save around US$15 million on this import bill. POSCO employs 19,000 Koreans.
Greater Export Potential
There is scope for higher exports to Australia. Korean merchandise exports to the world grew by an annual average of 13 per cent between 2000 and 2004, while merchandise exports to Australia grew by an average of only 8 per cent over the same period.
Korea is a strong exporter of items such as ships and floating drilling platforms - but these do not feature strongly in Korean exports to Australia. An FTA could strengthen these exports by removing tariff barriers and lifting Korea’s profile.
Opportunities to Invest
Australia’s FTAs increase investment opportunities in Australia. An FTA would facilitate expansion of Korea’s growing investment in Australia. Under the Australia-US FTA, for example, US investors are exempt from government screening for investments up to A$800 million. The LNG, agriculture and service industries are examples of potential investment opportunities for Korea. Enhanced investment in those areas would improve Korea's food and energy security.
Macquarie Bank: Funding Korean Growth
Macquarie Bank has a large, diverse Korean presence. It has 260 Korean employees, providing high wage, high skill jobs. Macquarie is a long-term investor in Korea, primarily manages Korean funds and has never withdrawn an investment.
An FTA with Korea would boost Australia’s growing investment in Korea, with Macquarie Bank, ANZ Bank, CocaCola BHPBilliton, and Hamersley Iron all having an on-the-ground presence. An increased Australian presence would enhance Korea’s profile as a trade logistics and business hub.
Australia - Not a Threat
Australia’s agriculture exports do not threaten Korea’s agriculture sector. Almost 95 per cent of Australia's agricultural exports to Korea are not sensitive. Australia’s rice production is only 0.2 per cent of global production. Australia is a niche exporter of rice with a small Minimum Market Access entitlement in Korea set until 2014.
Three of Australia’s four largest agricultural exports to Korea have tariff rates of 3 per cent or less (wheat, sugar and cotton). Australian beef is not a threat to high-end Korean beef. Australia has successfully negotiated FTAs that cover sensitive sectors, including agriculture - with mutually beneficial outcomes. It is time for Korea and Australia to think seriously about an FTA.