- On 2 December 2014, South Korea ratified the Korea-Australia Free Trade Agreement.
- Australia and South Korea are currently working to finalise the process for the FTA entering into force, to ensure that the first tariff cuts take effect in December 2014, with the second round of cuts to take place on 1 January 2015.
Following the conclusion of negotiations for a free trade agreement (FTA) between Australia and South Korea on 5 December 2013,1 and the public release of the legal texts of the FTA on 17 February 2014,2 both Australia and South Korea have been undertaking domestic approval processes with a view to ratifying the agreement.
In Australia, on 4 September 2014, the Joint Standing Committee on Treaties tabled a report in the Australian Parliament, recommending that Australia proceed with binding treaty action.3 Following this recommendation, the Government introduced implementing customs legislation into Parliament,4 which was passed by the Australian Parliament on 1 October 2014, and received royal assent on 21 October 2014.5
In South Korea, approval of the FTA was delayed in the National Assembly since the bill was submitted in mid-September, as the investigation into the Sewol ferry disaster delayed debate and approval of some 90 outstanding bills. However, on the evening of 2 December 2014, the National Assembly ratified the FTA. Australia and South Korea are currently working to finalise the process for the FTA entering into force, to ensure that the first tariff cuts take effect in December 2014, with the second round of cuts to take place on 1 January 2015.
The ratification of the FTA is of significant benefit to Australian exporters, many of which will have a trading advantage over their counterparts from other countries as a result of tariff reductions under the agreement. For example, the ratification of the FTA will result in a tariff differential between Australian and American beef exports to Korea being locked in at 5.4% over the next 15 years, instead of 8% if ratification had been delayed. It also gives rise to an advantage for Australian beef and other products over New Zealand products, as New Zealand’s FTA with South Korea is only expected to be ratified in 2015, such that Australia will be one tariff reduction ahead of New Zealand. Further, according to the recent report by the Korea Institute for Industrial Economics & Trade, experts have anticipated economic benefits worth US$538 million per year will flow from exports for five years, provided that the FTA is ratified before the Japan-Australia FTA.
The FTA between Australia and South Korea was the first of three FTAs that have been concluded by the Coalition government since coming to power in September 2012. We discuss the implications of the Korea-Australia FTA, as well as the Japan-Australia Economic Partnership and the China-Australia FTA in our previous articles.6