Outcomes at a Glance
The Korea-Australia Free Trade Agreement (KAFTA) is a world-class, comprehensive Agreement that substantially liberalises our trade with a major market. KAFTA gives Australian exporters significantly improved market access in goods and services and substantially improves investment protections.
For Australian goods exporters
On entry into force of KAFTA, 84 per cent of Australia’s exports (by value) to Korea will enter duty free, rising to 99.8 per cent on full implementation of the Agreement. As part of our commitments, Australia will remove its remaining tariffs on Korean goods on entry into force or over several years.
For agriculture, Korea will eliminate tariffs immediately on entry into force for raw sugar, wheat, wine, and some horticulture. Tariffs of up to 550 per cent on most other agricultural products will be eliminated within short time frames. Other key outcomes on agriculture include:
- beef: Korea will eliminate its 40 per cent tariff on beef progressively over 15 years, which will help to level the playing field for Australian beef exporters.
- dairy: duty free quotas for cheese, butter and infant formula and high tariffs will be eliminated on many dairy products between three and 20 years.
88 per cent of Australia’s manufactures, resources and energy exports will enter Korea duty free on entry into force of KAFTA, with all remaining tariffs phased out within ten years.
- Tariffs on priority products including liquefied natural gas, titanium dioxide, unwrought aluminium, automotive parts such as engines and gearboxes, and sea salt, will be immediately eliminated on entry into force.
- Tariffs of 8 per cent on Australian pharmaceutical products (including vitamins) will be eliminated either immediately or within three years of entry into force.
For Australian services suppliers
KAFTA will provide Australian services exporters with the best treatment Korea has agreed with any trading partner, on par with its agreements with the United States and Europe. Key outcomes include:
- Australian law firms will be able to: establish representative offices in Korea and advise on Australian and public international law; within two years, enter into cooperative agreements with local firms; and, within five years, establish joint ventures and hire local lawyers.
- Australian accountants will be able to: establish offices in Korea to provide consultancy services on international and Australian accounting laws; and within five years will be able to work in, and invest in, Korean accounting firms.
- Telecommunications providers, within two years, will be able to own up to 100 per cent of the voting shares of a facilities-based telecommunications service supplier in Korea.
- Australian financial services providers will be able to supply specified financial services on a “cross-border” basis, including investment advice and portfolio management services for investment funds, as well as a range of insurance and insurance-related services.
- Education, Engineering and Other Professional Services will benefit from Korea’s commitments to guarantee existing market access for Australian providers and work towards improving mutual recognition of qualifications.
For Australian investors
KAFTA will improve opportunities and protections for Australian investors and investments in Korea and will help attract direct investment from Korea into Australia.
- Korea will further open its economy to Australian investors through the progressive reduction of market access barriers in key sectors including: telecommunications; legal services; and accounting and tax agency services.
- Australia will raise the screening threshold for Korean investments in non sensitive sectors from $248 million to $1,078 million. Australia will retain the ability to screen investments in sensitive sectors at lower levels.
- The Agreement provides enhanced protections and certainty for Australian investors with provisions to ensure non-discrimination, and protection and security for investments and the ability of investors to directly enforce investment obligations through an investor-State dispute settlement (ISDS) mechanism.
Helping Australian businesses
KAFTA contains commitments in a number of other areas which represent opportunities and advantages for Australian businesses, including:
- movement of natural persons: KAFTA will guarantee access for Australian and Korean skilled service suppliers, investors and business visitors to enter and stay in the territory of the other Party.
- intellectual property: KAFTA will ensure that Australian innovators and Australian creative industries enjoy high levels of protection in Korea broadly equivalent to protections provided in Australia.
- government procurement: KAFTA will guarantee Australian suppliers access into the Korean government procurement market and ensure transparent and fair procurement processes.
- competition policy: KAFTA will ensure that the trade and investment liberalisation achieved in the Agreement is not undermined by anti-competitive practices.
- electronic commerce: KAFTA will support business in harnessing the efficiencies of electronic commerce, while ensuring the protection of consumers engaging online.