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
Following entry into force of KAFTA, 84 per cent of Australia’s exports (by value) to Korea enter duty free. This will rise to 99.8 per cent on full implementation of the Agreement. As part of our commitments, Australia is removing its remaining tariffs on Korean goods, either on entry into force or over several years.
For agriculture, Korea eliminated tariffs 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 by 1 January 2028, 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 by 1 January 2033.
88 per cent of Australia’s manufactures, resources and energy exports enter Korea duty free following entry into force, with all remaining tariffs phased out by 1 January 2023.
- Tariffs on priority products including liquefied natural gas, titanium dioxide, unwrought aluminium, automotive parts such as engines and gearboxes, and sea salt, were eliminated on entry into force.
- Tariffs of up to 8 per cent on almost 90 per cent of Australian pharmaceutical products (including vitamins) were eliminated immediately, with the remainder to be phased out progressively by 1 January 2016.
For Australian services suppliers
KAFTA provides 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 are now able to: establish representative offices in Korea and advise on Australian and public international law. By 12 December 2016, they will be able to enter into cooperative agreements with local firms and, by 12 December 2019, establish joint ventures and hire local lawyers.
- Australian accountants are able to: establish offices in Korea to provide consultancy services on international and Australian accounting laws. By 12 December 2019, they will be able to work in, and invest in, Korean accounting firms.
- Telecommunications providers, will be able to own up to 100 per cent of the voting shares of a facilities-based telecommunications service supplier in Korea by 12 December 2016.
- Australian financial services providers are 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 improves 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 has raised the screening threshold for Korean investments in non sensitive sectors from $252 million to $1,094 million. Australia retains 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 guaranteed 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 ensures that Australian innovators and Australian creative industries enjoy high levels of protection in Korea broadly equivalent to protections provided in Australia.
- government procurement: KAFTA guarantees Australian suppliers access into the Korean government procurement market and ensures transparent and fair procurement processes.
- competition policy: KAFTA ensures that the trade and investment liberalisation achieved in the Agreement is not undermined by anti-competitive practices.
- electronic commerce: KAFTA supports business in harnessing the efficiencies of electronic commerce, while ensuring the protection of consumers engaging online.