On 5 December 2013, Australia and South Korea concluded negotiations for a Free Trade Agreement (FTA).
Trade with South Korea was valued at AU$31.9 billion in 2012, making Korea Australia’s fourth biggest two-way trading partner (following China, Japan and the United States) and third largest export market.
As a result of the FTA, tariffs will be eliminated on key Australian exports to Korea such as beef, wheat, dairy, wine, horticulture and seafood, resources, energy and manufactured goods. The FTA will also provide new market opportunities in other industries such as education, telecommunications and financial, accounting and legal services by offering new market opportunities.
Although the text of the FTA has not yet been released, a Fact Sheet1 released by Australia’s Department of Foreign Affairs and Trade confirms that the FTA includes an investor-state dispute settlement mechanism. The Fact Sheet states that the ‘Government has ensured the inclusion of appropriate carve-outs and safeguards in important areas such as public welfare, health and the environment. This will provide new protections for Australian investors in Korea as well as Korean investors in Australia, promoting investor confidence and certainty in both countries.’
The FTA will come into force following domestic approval processes in Australia and Korea. In Australia, the Agreement will go to the Cabinet and the Joint Standing Committee on Treaties for approval.
The Prime Minister, Tony Abbott and Andrew Robb have released a joint media release2.
In our earlier article we analysed investor state dispute settlement mechanisms in the Australia-Korea FTA3.
Herbert Smith Freehills opened its office in Seoul in April 2013 and is amongst the first wave of foreign firms to enter the Korean legal market. Lewis McDonald, partner in our Seoul office commented, ‘The conclusion of the Australia Korea FTA is great news for Korean and Australian businesses, given the significant trade flows and potential for future reciprocal business. It is also good news for us, given the significance of our Australian offering.’