Korea-Australia Free Trade Agreement (KAFTA)
The Korea-Australia Free Trade Agreement creates significant opportunities for Queensland companies – from farmers to service providers and manufacturers.
Overview of KAFTA
Korea-Australia Free Trade Agreement
August 26, 2016 | pdf, 0.4 MiB
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, which is 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.
When KAFTA took effect in December 2014, 84% of Australia’s goods exports (by value) entered the country duty-free. By full implementation, tariffs on 99.8% of Australia’s exports (by value) to Korea will be eliminated.
Services account for approximately 80% of Australia’s economy, yet make up only 7% of the total value of two-way trade with Korea.
See the factsheet for the Korea-Australia Free Trade Agreement – August 26, 2016 [pdf, 0.4 MiB] for more information on the prospective benefits of the Agreement.
Note: This publication was produced prior to the current government.
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, and assist them to compete in wider Asian markets. 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.
The opening up of Asia’s major markets is essential if Australian businesses are to successfully compete with the world in the years ahead.
Key benefits of KAFTA
- Secure Australia’s competitive position in the Korean market, where some competitors already enjoy preferential access.
- Allow 99.8% of Australia’s goods exports (by value) to Korea will enter duty-free on full implementation of the Agreement.
- Enable Australia’s agriculture exporters to compete in this highly protected, lucrative market.
- Provide 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.
- Give greater protection and certainty to Australian investors, including the ability to directly enforce investment obligations through an Investor-State Dispute
- Provide a guarantee of access for Australian traders and investors (and their families) to stay in Korea for up to two years.
- Provide Korea higher access to Foreign Investment Review Board screening threshold. This is expected to help diversify and grow investment from Korea into Australia.
- Contain an Audio-visual Co-production Annex which will deliver new opportunities for the Australian film and television industry.
- Establish a Professional Services Working Group to facilitate cooperation and mutual recognition between professional bodies in both countries.
- Lower the cost of Korean products and inputs for Australian businesses as Australia removes tariffs on Korean goods.