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
Australian Agriculture - Food for Thought
Many Koreans believe that a free trade agreement with Australia would decimate the Korean agricultural sector. This is simply not true.
Rice - A Korean Tradition
Australia is not a major rice producer. Australia produces only 0.2 per cent of the world's rice and accounts for only 3 per cent of global trade. It focuses on niche markets.
Under the Minimum Market Access arrangement, Australia has been allocated an annual quota of 9,040 tonnes of rice from 2005 (less than one full shipload). The MMA arrangement will remain in place until 2014.
Beef - Already an Open Market
The single largest agricultural import from Australia is beef.
The Korean beef market is deregulated and clean, safe Australian beef competes for market share with other imported beef.
Even though imported beef faces a 40 per cent tariff it is much cheaper than hanwoo. But Koreans still buy hanwoo. This would not change under an FTA.
Australian beef gives Korean consumers a choice and lowers the cost of living while maintaining Korean’s beef eating traditions.
There is plenty of room in the Korean market for both Australian and Korean beef.
Agriculture - Not that Sensitive
Less than 20 per cent of imports from Australia are agricultural goods and 95 per cent of Australia’s agricultural exports to Korea are non-sensitive.
After beef, items such as wheat, sugar and cotton dominate. Korea does not produce these items, they already attract very low tariffs and are not sensitive.
In fact, these goods are imported by Korean companies for the manufacture of food and textiles. This creates jobs for Koreans and generates economic activitiy. Australian wheat, for example, is preferred by Korea's largest noodle manufacturers.
Korea's food processing industry, utilising these imports, is worth more than US$40 billion annually. There are more than 8,000 food, livestock, dairy and beverage manufacturing plants in Korea.
The 5 per cent of sensitive items among Australian agricultural exports include dairy products and fresh fruit and vegetables. But these sensitivities should not be overblown.
Among dairy products, Australia is most competitive on cheese, which is imported mostly in bulk form for processing by local dairy manufacturers. Australian cheese will not threaten the Korean dairy industry, where 79 per cent of production is for fresh milk.
Australia is in the southern hemisphere and is counter-seasonal to Korea. Under an FTA, Australian fruit and vegetables would complement, rather than compete with, Korean products. Korean consumers would be able to purchase cheaper fruit and vegetables during those counter-seasonal periods.
An FTA Makes Sense
A Korea-Australia FTA would bring enormous benefits to both economies and unfounded concerns about agriculture should not dominate the discussion.
In 1996, the Korean Institute for International Economic Policy (KIEP) estimated that a comprehensive FTA would be worth US$1.1 billion annually to Korea and US$620 million to Australia. KIEP estimated the welfare gains to Korea to be more than twice those of an FTA with Canada.
Australian agricultural exports are not the threat many in Korea believe them to be. Korea relies on imports for 60-70 per cent of its agricultural needs and Australia simply wants to be able to compete for a bigger share of those imports.
Australia has successfully negotiated FTAs that cover sensitive sectors, including agriculture. We would like to do so with Korea, as well.
Australian Agriculture - Food for Thought
Many Koreans believe that a free trade agreement with Australia would decimate the Korean agricultural sector. This is simply not true.
Rice - A Korean Tradition
Australia is not a major rice producer. Australia produces only 0.2 per cent of the world's rice and accounts for only 3 per cent of global trade. It focuses on niche markets.
Under the Minimum Market Access arrangement, Australia has been allocated an annual quota of 9,040 tonnes of rice from 2005 (less than one full shipload). The MMA arrangement will remain in place until 2014.
Beef - Already an Open Market
The single largest agricultural import from Australia is beef.
The Korean beef market is deregulated and clean, safe Australian beef competes for market share with other imported beef.
Even though imported beef faces a 40 per cent tariff it is much cheaper than hanwoo. But Koreans still buy hanwoo. This would not change under an FTA.
Australian beef gives Korean consumers a choice and lowers the cost of living while maintaining Korean’s beef eating traditions.
There is plenty of room in the Korean market for both Australian and Korean beef.
Agriculture - Not that Sensitive
Less than 20 per cent of imports from Australia are agricultural goods and 95 per cent of Australia’s agricultural exports to Korea are non-sensitive.
After beef, items such as wheat, sugar and cotton dominate. Korea does not produce these items, they already attract very low tariffs and are not sensitive.
In fact, these goods are imported by Korean companies for the manufacture of food and textiles. This creates jobs for Koreans and generates economic activitiy. Australian wheat, for example, is preferred by Korea's largest noodle manufacturers.
Korea's food processing industry, utilising these imports, is worth more than US$40 billion annually. There are more than 8,000 food, livestock, dairy and beverage manufacturing plants in Korea.
The 5 per cent of sensitive items among Australian agricultural exports include dairy products and fresh fruit and vegetables. But these sensitivities should not be overblown.
Among dairy products, Australia is most competitive on cheese, which is imported mostly in bulk form for processing by local dairy manufacturers. Australian cheese will not threaten the Korean dairy industry, where 79 per cent of production is for fresh milk.
Australia is in the southern hemisphere and is counter-seasonal to Korea. Under an FTA, Australian fruit and vegetables would complement, rather than compete with, Korean products. Korean consumers would be able to purchase cheaper fruit and vegetables during those counter-seasonal periods.
An FTA Makes Sense
A Korea-Australia FTA would bring enormous benefits to both economies and unfounded concerns about agriculture should not dominate the discussion.
In 1996, the Korean Institute for International Economic Policy (KIEP) estimated that a comprehensive FTA would be worth US$1.1 billion annually to Korea and US$620 million to Australia. KIEP estimated the welfare gains to Korea to be more than twice those of an FTA with Canada.
Australian agricultural exports are not the threat many in Korea believe them to be. Korea relies on imports for 60-70 per cent of its agricultural needs and Australia simply wants to be able to compete for a bigger share of those imports.
Australia has successfully negotiated FTAs that cover sensitive sectors, including agriculture. We would like to do so with Korea, as well.