[EMBASSY VOICE]Time for a free trade agreement

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[EMBASSY VOICE]Time for a free trade agreement

Korea and Australia have a long history of working together to strengthen regional peace and prosperity in the Asia-Pacific region. Some 13 years ago Australia and Korea played a key collaborative role in launching the annual Asia-Pacific Economic Cooperation leaders meeting. Last year, our two countries worked together through our inclusive membership of the East Asia Summit to lay the foundation for an East Asian community. We have worked together in peacekeeping operations as far afield as Afghanistan and Iraq, and closer to home in East Timor.
The time is now ripe to match these political ties with a strategic economic commitment that will best position our two countries to face the trade and investment challenges of the new century.
Ever since Korea embarked on its miraculous economic transformation, our two countries have been close partners. Australia’s natural resources, coal, iron ore and aluminum, have been key to Korea’s remarkable economic success. Australia’s exports to Korea have grown seven-fold in the past 20 years, twice as strongly as Australia’s exports to the rest of the world. Australia is now also exporting more sophisticated products to Korea, such as the GM Daewoo Statesman, wine and environmentally friendly liquefied natural gas.
Korean exports to Australia have changed dramatically, too. Brands such as Samsung, Daewoo, Hyundai and Kia are now household names in Australia. In 2005, exports of LG plasma-screen televisions to Australia were equal to 60 per cent of sales to the United States ― all the more remarkable given that Australia’s population is only one-fifteenth that of the United States.
But in order to take the bilateral trade relationship to the next level and provide scope for further development, Australia believes our two countries should launch negotiations for a free trade agreement.
Such an agreement would reduce tariffs and provide greater certainty for exporters: More than 70 per cent of Korean exports to Australia face a tariff of some kind, including 10 percent on automobiles and 5 percent on electronics. Australia is negotiating a free trade agreement with China and is conducting a study of one with Japan. They both compete directly with Korea in autos and electronics. In fact, Korea is the only one of Australia’s top five export markets with whom we do not either have an FTA or are moving toward one.
For Korean consumers, a trade agreement would mean lower prices for Australian goods and a wider range of high-quality foods and lifestyle products. For Korean business, an agreement would deliver a lower cost base as a result of cheaper Australian raw materials and parts. Both sides would get improved access to services and investment markets, which are key areas of growth in modern, knowledge-based economies such as Australia and Korea. Some mutually beneficial synergies are already pointing the way on this, particularly in the information technology, communications and content areas.
Many in Korea harbor a fear that an FTA would harm its agricultural sector. Australia fully understands the social and cultural importance of agriculture in Korea and the sensitivity of this issue. But these fears are not well founded. Australian agriculture, put simply, does not present a serious threat to Korean agriculture. Australia is not a major rice producer, growing only 0.2 per cent of total world production. Most of Australia’s other broad-acre crops are not grown in Korea. Australia and Korea are also counter-seasonal. So when Australian apples and tomatoes arrive on the market they will not be competing with Korean products. And Australian beef competes against imports from the United States, New Zealand and Canada, not with Hanwoo beef, which attracts a premium from the Korean consumer.
As Australia and Korea enter into trade negotiations with their other major trading partners, it is logical that Australia and Korea also conclude an FTA that cements their positions in each other’s markets.
In short, a free trade agreement is the next step in a complementary economic relationship that is vital to Korea’s and Australia’s future prosperity.

* The writer is Australian Ambassador to Seoul

by Peter Rowe
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