News

Australia hoping for rapid FTA resolution with Korea

James Nason, 08/11/2011

Delays in the ratification of a Free Trade Agreement between the United States and South Korea are stalling Australian efforts to reach a similar accord.

However the Cattle Council of Australia is hopeful of rapid progress once the US FTA is passed.
South Korea is Australia’s third largest export market for beef, worth an estimated $750 million annually.

Australia is also the largest exporter of beef to the market, accounting for 49 percent of beef shipments to South Korea from January to August this year, compared to 38pc from the US and 12pc from New Zealand .

However that status is set to come under increasing pressure from the US after it moved significantly closer to formalising a Free Trade Agreement with South Korea last month.

The US and South Korea have concluded negotiations on an FTA that will see the 40pc tariff currently applied to US beef in the market gradually reduce to zero over 15 years.

The US Congress ratified the FTA in early October, and all that remains for the FTA to come into effect from January next year is a similar ratification of the agreement by the Korean National Assembly.

That process has taken longer than expected, with political unease and public demonstrations breaking out in opposition to the deal.

Political opponents of the governing Grand National Party have led protests against the US FTA, with the main point of contention surrounding clauses that allow international arbitrators to settle disputes between American investors and the Korean Government.

Opponents are concerned the agreement could infringe on the country’s legal independence, however, the Government has described the system as “a global standard” which is part of earlier South Korean trade pacts.

The Korean Herald has reported this morning that the ruling GNP, which holds a solid majority, appears no longer willing to tolerate delays and has resolved to vote on the agreement this Thursday.

Like the US, Australian industry officials have been working to negotiate a similar accord with the South Korean Government for the past five years.

An Australian FTA with Korea will not be ratified until the US FTA passes through the Korean National Assembly.

Cattle Council of Australia executive director David Inall visited South Korea two weeks ago as part of ongoing discussions surrounding the proposed Australian FTA.

He said that once the US FTA was ratified by the South Korean National Assembly, it was hoped an Australian FTA would follow soon after.

“It is imperative that the Korean – US FTA (KORUS) is approved by the Korean parliament as soon as possible, we are hoping this may occur this week. We must understand that there is significant opposition within South Korea to an FTA with the United States and our FTA was always going to follow that of the US.

"Hence, I would hope that a deal with Australia is weeks away rather than months,” Mr Inall said.

The Cattle Council of Australia says that progressing an FTA with South Korea remains a top priority to secure at least import parity, for Australian beef compared to US beef in the market.

“The Australian Government has partnered well with industry organisations like Cattle Council in a dedicated, concerted approach to reach a satisfactory deal on beef.

"As multilateral trade reform through the World Trade Organisation stumbles, bilateral agreements such as this are becoming increasingly prominent and critically important for Australia given our reliance on trade.” Mr Inall said.

* Beef Central apologises for technical issues that caused earlier versions of this story this morning to appear with editing errors. The problem has now been fixed.

 

 

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