Korea FTA deadline looms

James Nason, 14/11/2014

The next six weeks is shaping as a critical period for Australia’s beef export trade to South Korea as it awaits formal ratification of a Free Trade Agreement with the market.

If the South Korean parliament ratifies the Korea Australia Free Trade Agreement (KAFTA) by December 31, tariffs on Australian beef will track at 5.3pc above tariffs on United States beef in the market until 2026 when the US reaches a 0pc tariff situation.

MLA global marketing manager Michael Edmonds addresses the MLA AGM in Sydney.

MLA global marketing manager Michael Edmonds addresses the MLA AGM in Sydney.

The US secured an FTA with Korea in 2012, meaning it will enjoy a tariff advantage to Australia until both countries finally move to a 0pc level.

Should the ratification process be delayed and drift into next year, Australian beef will remain at a perpetual 8pc disadvantage to the US in Korea for at least the next 13 years.

Reports from South Korea this week suggest the deal may struggle to pass the Korean legislature before the end of this year.

The Korea Herald reported on Tuesday that conflicting industrial and agrarian interests in the South Korean parliament could push the final ratification of the Korea-Australia free trade pact to sometime next year.

The report said South Korean lawmakers are struggling to pass the deal in Seoul’s National Assembly, with KAFTA expected to pose widely different consequences to farmers and big conglomerates such as the Hyundai Motor Co. and steelmaker POSCO.

The deal offers benefits to South Korean exporters, by immediately eliminating the 5pc tariff Australia currently imposes on South Korean sedans sold in Australia, and dropping other tariffs on industrial goods from Korea over a three year period.

However South Korea’s activity farm lobby is voicing resistance to the deal, saying it will pose significant risks to South Korean farmers by allowing cheaper Australian agriculture imports to become even cheaper with tariff cuts.

Livestock and dairy farmers reportedly conducted a 15-day hunger strike in front of the national legislature in Seoul before ending their protest on Nov. 6 on the condition that lawmakers would consider their requests to increase public subsidies to them if KAFTA is ratified.

Meat & Livestock Australia marketing general manager Michael Edmonds told yesterday’s MLA producer forum that the industry was facing a tight deadline and there was a risk the deal will not receive approval before the end of the year.

“Not withstanding that, Korea is still looking like a very competitive market for us, a very attractive market for us, and I guess the positive behind this is that given we do have an FTA, if not signed off at the end of this year, it will be signed off early next year, we would have been a lot worse off if we didn’t have one.”


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  1. Liam O'Dea, 14/11/2014

    Wake up Australia!
    KAFTA is about Intellectual Property Rights, Foreign invest controls , and ISDS. If you can’t understand that, don’t support something you don’t know about.
    Tariffs on cars and cattle are just the side show.
    There’s even an opt out clause so that Korea can abandon the Tarrif reductions on beef in some circumstances.
    Have we learnt nothing from the AUSFTA disaster!

  2. Grant Piper, 14/11/2014

    what? I thought from all the fanfare and piblicity months ago that the deal was done! Oh, hang on, I forgot that the western world, politicians and media all run on rumour and PR announcement hyperbole, rather than facts and actually getting anything done. Forgive my sarcasm.

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