On 4 September 2014, the Australian Joint Standing Committee on Treaties (Committee) submitted its report and recommendation on the adoption of the Korea-Australia Free Trade Agreement (KAFTA) as Australian law.
The majority of the Committee supported the adoption of KAFTA as Australian law, and recommended that binding treaty action be taken by the Australian Government. The Committee was satisfied that the implementation of KAFTA would provide substantial economic benefit to Australian businesses, industry and the broader community. In particular, the report states that:
“KAFTA is expected to be worth $5 billion in additional income to Australia between 2015 and 2030 and to provide an annual boost to the Australian economy of approximately $650 million after 15 years of operation. In its first year of operation, it is expected to create 1,700 jobs. 84 per cent of Australia’s current exports (by value) will enter Korea duty free. In addition to substantial tariff reductions, KAFTA is expected to significantly increase market access and improve Australia’s competitive advantage for a range of Australian exporters.”
KAFTA aims to facilitate increased bilateral investment between both countries by, among other things, increasing the monetary threshold before which Korean investments (in non-sensitive sectors) are reviewed by Australia’s Foreign Investments Review Board (FIRB). KAFTA also provides an investor-state dispute settlement (ISDS) framework. ISDS provisions generally provide protections against political risks such as expropriation of investment assets or profits and discrimination as between cross-border and national investors.
The Senate Standing Committee on Foreign Affairs, Defence and Trade is reviewing KAFTA and is expected to table its report by 4 October 2014.