This Snapshot was published as an information pamphlet before KAFTA entered into force and has not been updated.
Australia and Korea have one of the strongest and most complementary trading relationships in the Asia-Pacific region. The Korea-Australia Free Trade Agreement (KAFTA) reduces trade and investment barriers, making it easier for Australians to do business with Korea – our 4th largest trading partner.
KAFTA is a world-class, comprehensive agreement that substantially liberalises Australia’s trade with Korea - our fourth-largest trading partner. The Agreement helps level the playing field for Australian exporters competing with those from the US, the EU, Chile and the Association of South East Asian Nations (ASEAN), who benefit from existing trade deals with Korea.
“The Korea-Australia Free Trade Agreement is unambiguously good news for the Australian economy”
Jennifer Westacott - Chief Executive, Business Council of Australia
Korea is Asia’s fourth-largest economy with a population of 50 million people.
Australia and Korea are natural economic, political and strategic partners with common values and interests. Korea is Australia’s third-largest export market and fourth-largest overall trading partner, with total two-way trade exceeding $30 billion in 2012-13.
KAFTA will strengthen and expand opportunities for Australian companies doing business with Korea. Bilateral investment between Australia and Korea has grown and diversified, with the stock of Korean investment in Australia growing 25-fold to $12 billion between 2001 and 2012.
How will KAFTA help Australian companies compete in Asia?
KAFTA is Australia’s first Free Trade Agreement (FTA) to be concluded with a major trading partner in North Asia. FTAs with Japan and China are under negotiation. Together these three economies represent over 50 per cent of Australia’s exports. The opening up of Asia’s major markets is essential if Australian businesses are to successfully compete with the world in the years ahead.
What will KAFTA do for Australian businesses?
KAFTA secures Australia’s competitive position in the Korean market, where some competitors already enjoy preferential access.
On entry into force of KAFTA, 83 per cent of Australia’s goods exports (by value 2015) will enter Korea duty free. The proportion of trade being made duty-free (or covered by preferential tariff quotas) by the FTA is rising each year as tariffs are cut further, and will reach 99.7 per cent coverage on full implementation of the Agreement.
KAFTA provides new market access for suppliers of legal, accounting and telecommunications services and guarantees open access across a broad range of other services sectors, including financial services and education.
Under KAFTA, Korea will have access to the higher Foreign Investment Review Board screening threshold. This is expected to help diversify and grow investment from Korea into Australia.
KAFTA will also lower the cost of Korean products and inputs for Australian businesses as Australia removes tariffs on Korean goods.
How do FTAs benefit Australia?
Free trade agreements provide a framework for Australia's commercial relationship with trading partners, increase trade and investment opportunities, bring money into the Australian economy and help create jobs. Australia pursues high-quality, comprehensive trade agreements when they offer net benefits to Australia, are World Trade Organization-consistent and support the global trade system.
Australia is already benefiting from FTAs with New Zealand, Singapore, Thailand, US, Chile, ASEAN (with New Zealand) and Malaysia. These FTAs are helping Australians access new markets and expand trade in existing markets.
“KAFTA is particularly important to those exporters who haven’t been competing on a level playing field in Korea. It is a huge breakthrough - the value of which should not be underestimated.”
Ian Murray AM - Executive Chairman, Export Council of Australia
KAFTA at a glance - benefits of KAFTA
- 99.7 per cent of Australia’s goods exports (by value) to Korea will enter duty-free on full implementation of the Agreement
- KAFTA will enable Australia’s agriculture exporters to compete in this highly protected, lucrative market
- KAFTA opens new markets in Korea for Australian law firms, accountants and telecommunications providers. It guarantees access in a wide range of other sectors including education and financial services
- KAFTA will give greater protection and certainty to Australian investors, including the ability to directly enforce investment obligations through an Investor-State Dispute Settlement mechanism
- Korea will guarantee access for Australian traders and investors (and their families) to stay in Korea for up to two years
- KAFTA contains an Audio-visual Co-production Annex which will deliver new opportunities for the Australian film and television industry
- KAFTA establishes a Professional Services Working Group to facilitate cooperation and mutual recognition between professional bodies in both countries
Information and contacts
For more information on KAFTA: www.dfat.gov.au/trade/agreements/kafta/
Department of Foreign Affairs and Trade
RG Casey Building, John McEwen Crescent,
Barton ACT 0221
Phone (02) 6261 1111
Austrade: Information for new and existing exporters www.austrade.gov.au | 13 28 78