|Australian Queensland’s Trade and Investment commissioner for Korea Woo Sang-min (third from right) poses with Australian Ambassador Bill Paterson (fourth from right) and other participants to celebrate the beginning of sales of Australian mangoes in Korea at an event in Seoul on Thursday. (QTI)|
When the Trade Ministry announced Thursday that it had agreed on the free trade pact with Australia, the primary concern was the consequential impact on Korea’s agricultural and livestock industries.
Despite the series of preventive measures, the domestic market will inevitably be affected by the trade pact, which will further lower the cost of Australian beef and dairy products.
Still, Korea has more to gain from the deal, not only in its bilateral relations with the Oceanic state but also in the global multilateral trade forum, according to trade officials.
As of the end of last year, Australia was Korea’s seventh-largest trading state, and Korea was Australia’s fourth-largest partner, as well as the third-largest car exporter.
But Korea’s trade balance to Australia has been in the red, recording some $13.709 billion in deficit last year, due to the huge amount of agro-livestock imports, according to the Korea International Trade Association.
This is why the ministry underlined the exceptional regulations to be applied to “sensitive items” such as rice, fruit, dairy products, beef and other kinds of meat.
“Considering the special characteristic of the agro-livestock market, we secured a variety of protective measures,” said Woo Tae-hee, the ministry’s chief FTA negotiator.
For example, the tariff for Australian beef will be abolished gradually over 10-15 years after the bilateral FTA takes effect and will be subject to the Agricultural Safeguard monitoring system, he explained.
Australia, on the other hand, will immediately abolish the tariff of Korea’s gasoline-operated cars.
The general tariffs on other key export items, such as electronic home appliances and industrial machines, will also be lifted within three years, the official said.
“The Korea-Australia FTA is to be a highly beneficial trade pact for Korea, as it visibly eliminates trade burden for our export items while keeping a barrier against imported agro-livestock goods,” Woo said.
The Ministry of Agriculture, Food and Rural Affairs also admits that this new FTA is more “conservative” than the dispute Korea-U.S. or Korea-EU trade pacts, meaning that it is more strongly protective of the agro-livestock market.
“Supplementary protection will have to be introduced before the FTA takes effect, but so far, we expect relatively slight damages on local industries,” said Kim Duk-ho, the ministry’s international cooperation director.
Besides its conspicuous effect on bilateral trade, the FTA will also strengthen the two countries’ diplomatic ties and consequentially boost Korea’s chances of securing natural resources from Australia.
“Australia will be one of the key natural resource suppliers and Korea has already made several investments of considerable sums,” said Trade Minister Yoon Sang-jick.
The ministry said it also hopes that an amiable trade relationship with Australia may help with Korea’s potential plan of joining the Trans-Pacific Partnership.
Since Korea “expressed interest” in the multilateral Asia-Pacific trade bloc late last month, Australia has been one of the conventional member states that actively welcomed Korea to join the round.
“Though we still face preliminary talks with each of the member states before making the final decision, it is encouraging (that Australia is positive toward Korea’s membership),” said Woo.
By Bae Hyun-jung