Australian exporters are set to benefit from the KAFTA from as early as 12 December 2014 following a last minute exchange of Diplomatic Notes between Australia and Korea and an agreement between the countries to shorten the commencement period to just 9 days.
Late on Wednesday 3 December 2014, Australia and Korea exchanged Diplomatic Notes confirming that all requirements have been observed and agreeing that KAFTA will commence on 12 December 2014.
What does this mean for exporters and importers?
The benefits for exporters and producers in Australia are two-fold: Firstly, many existing tariffs will be reduced or eliminated upon entry into force of the Agreement on 12 December 2014.
Secondly, exports which are subject to a ‘staggered’ tariff reduction will benefit from a reduction of the tariff upon entry into force on 12 December 2014 and then another reduction on 1 January 2015 which the first day of ‘Year 2’ under the KAFTA.
Who will benefit?
By agreeing to kick-start KAFTA before the end of 2014 Australia and Korea have ensured that exporters and importers will benefit from ‘Year 1’ and ‘Year 2’ tariff reductions in quick succession. Export to Korea of some products such as unwrought aluminium, titanium dioxide, crude petroleum, natural gas, cherries, some types of tuna and asparagus for example will be immediately ‘tariff free’. Australian beef, dairy, seafood, and some fruit and vegetable producers in particular will benefit from two stages of tariff reduction in quick succession.
What should you do?
Across the spectrum of imports, exports and service providers, we should be assessing export-readiness to take advantage of these reduced tariffs and improved market access.
This will include a review of:
- the form of COO required and your compliance;
- the way in which goods can be shipped without losing preferential status;
- reporting software to ensure it is up to date; and
- compliance with product labelling, safety standards and other certification and Phytosanitary requirements.
Information regarding the Agreement including 'Instructions and Guidelines' is available on the ACBPS website click here.
Details of the arrangements for claiming preference will also be available soon.