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Free trade deal with South Korea will help Australian beef producers Free trade deal with South Korea will help Australian beef producers
(about 2 hours later)
South Korean companies wishing to export cars, white goods and electronics to Australia will benefit from reduced trade barriers as part of a deal that will help Australian beef producers increase sales to the key Asian market.South Korean companies wishing to export cars, white goods and electronics to Australia will benefit from reduced trade barriers as part of a deal that will help Australian beef producers increase sales to the key Asian market.
On Monday, the Abbott government released the full text of the Korea-Australia Free Trade Agreement (Kafta), which runs to 1,800 pages and is yet to be signed. Labor and the Greens have raised concern about the inclusion of investor-state dispute settlement provisions, which allow companies in one country to sue the other nation for unfair treatment. On Monday the Abbott government released the full text of the Korea-Australia Free Trade Agreement (Kafta), which runs to 1,800 pages and is yet to be signed. Labor and the Greens have raised concern about the inclusion of investor-state dispute settlement provisions, which allow companies in one country to sue the other for unfair treatment.
The trade and investment minister, Andrew Robb, highlighted the benefits set to flow for Australian farmers, saying the deal would eliminate prohibitive tariffs on beef, sugar, dairy, wheat, wine, horticulture and seafood. Robb said the “world-class” agreement would increase links with Australia’s third largest export market.The trade and investment minister, Andrew Robb, highlighted the benefits set to flow for Australian farmers, saying the deal would eliminate prohibitive tariffs on beef, sugar, dairy, wheat, wine, horticulture and seafood. Robb said the “world-class” agreement would increase links with Australia’s third largest export market.
In return, Australia would cut tariffs for South Korean electronics, white goods, cars and steel imports.In return, Australia would cut tariffs for South Korean electronics, white goods, cars and steel imports.
The Australian Manufacturing Workers’ Union denounced the agreement as “a cars for cows deal”. The national president, Andrew Dettmer, told Sky News the automotive components industry needed as much time as possible to adapt after the decision of major carmakers to cease manufacturing in Australia.
Robb said 84% of Australia’s exports would enter South Korea duty free when the agreement came into force. When fully implemented, the agreement would see the elimination of South Korean tariffs on 99.8% of Australia’s exports by value.Robb said 84% of Australia’s exports would enter South Korea duty free when the agreement came into force. When fully implemented, the agreement would see the elimination of South Korean tariffs on 99.8% of Australia’s exports by value.
“It doesn’t really get any better than this in terms of its comprehensive nature,” he said.“It doesn’t really get any better than this in terms of its comprehensive nature,” he said.
Robb said South Korea’s 40% tariff on beef would be progressively phased out over 15 years, helping to reduce the disadvantage Australia suffered as a result of South Korea’s trade agreements with the US and European Union.Robb said South Korea’s 40% tariff on beef would be progressively phased out over 15 years, helping to reduce the disadvantage Australia suffered as a result of South Korea’s trade agreements with the US and European Union.
But he confirmed South Korea would have the ability to reimpose tariffs “in unusual circumstances”, such as a dramatic increase in beef exported from Australia to South Korea.But he confirmed South Korea would have the ability to reimpose tariffs “in unusual circumstances”, such as a dramatic increase in beef exported from Australia to South Korea.
“Our negotiators were comfortable that it represented a change that was not reflective of true market conditions. Something dramatic would have to happen. We’ve just seen a 1,000% increase in chilled beef into China and a 1,000% increase, I suspect, would trigger some of these actions,” Robb said.“Our negotiators were comfortable that it represented a change that was not reflective of true market conditions. Something dramatic would have to happen. We’ve just seen a 1,000% increase in chilled beef into China and a 1,000% increase, I suspect, would trigger some of these actions,” Robb said.
South Korean companies will gain greater rights to invest in Australia without scrutiny from the Foreign Investment Review Board. The threshold for screening in “non-sensitive sectors” will quadruple from $248m to nearly $1.1bn – although Australia will continue to be able to screen lower investments in sectors such as agriculture, media, telecommunications and defence.South Korean companies will gain greater rights to invest in Australia without scrutiny from the Foreign Investment Review Board. The threshold for screening in “non-sensitive sectors” will quadruple from $248m to nearly $1.1bn – although Australia will continue to be able to screen lower investments in sectors such as agriculture, media, telecommunications and defence.
Robb said Australia’s concessions to South Korea were “principally on the auto front”, with 75% of tariffs on cars imported from there to be axed when the agreement came into force.Robb said Australia’s concessions to South Korea were “principally on the auto front”, with 75% of tariffs on cars imported from there to be axed when the agreement came into force.
The tariff reductions for bigger cars would be spread over three years – in a sign of the “sensitivity” about the ability of Australian-based car manufacturers being able to compete.The tariff reductions for bigger cars would be spread over three years – in a sign of the “sensitivity” about the ability of Australian-based car manufacturers being able to compete.
The release of the text comes a week after Toyota announced it would follow Holden’s lead in ending Australian manufacturing in 2017. Ford is due to leave in 2016.The release of the text comes a week after Toyota announced it would follow Holden’s lead in ending Australian manufacturing in 2017. Ford is due to leave in 2016.
Robb said Australian tariffs on imported vehicle components would also be phased out over the next five years.Robb said Australian tariffs on imported vehicle components would also be phased out over the next five years.
When the agreement took effect, Australia would immediately remove tariff on Korean products such as rubber tyres and car jacks. The existing 5% tariff would be phased out in three instalments over three years for components including gearboxes, mufflers, rear axles and body parts. The 5% tariff would be phased out over five years for windscreens, petrol car engines, batteries and chassis.
The chief executive of the Federation of Automotive Products Manufacturers, Richard Reilly, said he was supportive of free trade agreements so long as they were “fair trade agreements”, not a one-way street like the previous deal with Thailand.
Reilly said South Korea’s willingness to remove tariffs on Australian automotive parts would provide options for some Australian businesses that were regrouping after the Holden and Toyota decisions and “looking for opportunities as best they can overseas”.
Amid debate about the struggling manufacturing industry, Robb said Australian companies could gain from the free trade agreement if focused on high-market, high-value-added, high-tech, knowledge-economy-based manufacturing.Amid debate about the struggling manufacturing industry, Robb said Australian companies could gain from the free trade agreement if focused on high-market, high-value-added, high-tech, knowledge-economy-based manufacturing.
He said Australia sold $130m worth of gearboxes to South Korea last year despite an 8% tariff that was set to be abolished under the deal. He said Australia had sold $130m worth of gearboxes to South Korea last year despite an 8% tariff that was set to be abolished under the deal. Australia would also cut tariffs on white goods and electronics imported from South Korea.
Australia would also cut tariffs on white goods and electronics imported from South Korea.
“It will put downward pressure on a lot of everyday whitegood items and electronics Australians are purchasing,” he said.“It will put downward pressure on a lot of everyday whitegood items and electronics Australians are purchasing,” he said.
Robb said some goods in the agricultural area were deemed by Korean negotiators to be “too sensitive” and the parties had made no progress on rice, walnuts and honey. He said the deal would pave the way for Australian services to expand into Korea, including in the legal, accounting, financial, engineering, telecommunications, education, environmental and film and television spheres. South Korean tariffs on Australian liquefied natural gas and unwrought aluminium would be eliminated.Robb said some goods in the agricultural area were deemed by Korean negotiators to be “too sensitive” and the parties had made no progress on rice, walnuts and honey. He said the deal would pave the way for Australian services to expand into Korea, including in the legal, accounting, financial, engineering, telecommunications, education, environmental and film and television spheres. South Korean tariffs on Australian liquefied natural gas and unwrought aluminium would be eliminated.
The Australian Industry Group’s chief executive, Innes Willox, said the agreement would allow Australian manufacturers to export 88% of goods to Korea tariff-free. But the corresponding abolition of Australian tariffs on Korean goods would result in a big rise in competition from Korean imports in the Australian market, including cars, auto parts, textiles, clothing and footwear.
The minister defended the inclusion of the investor-state dispute settlement provisions, saying the countries “wouldn’t have got a deal without it”.The minister defended the inclusion of the investor-state dispute settlement provisions, saying the countries “wouldn’t have got a deal without it”.
“There are important carve-outs which ensure that public policy decisions in regard to the environment, public health issues are not being covered by the ISDS,” Robb said.“There are important carve-outs which ensure that public policy decisions in regard to the environment, public health issues are not being covered by the ISDS,” Robb said.
The Greens said they would not support any free trade agreement in parliament that included investor-state dispute settlement provisions, saying MPs were handing powers “to shady international arbitration courts”.The Greens said they would not support any free trade agreement in parliament that included investor-state dispute settlement provisions, saying MPs were handing powers “to shady international arbitration courts”.
The Greens senator Peter Whish-Wilson expressed concern that carve-outs from similar measures elsewhere had not prevented governments from “being sued by corporations for simply making legislation in the name of their community”.The Greens senator Peter Whish-Wilson expressed concern that carve-outs from similar measures elsewhere had not prevented governments from “being sued by corporations for simply making legislation in the name of their community”.
“This free trade deal is designed to supercharge coal and gas exports to Korea by multinational corporations at the expense of local industries and local communities, and with the inclusion of the controversial ISDS clauses, the government has put the profits of the powerful corporations ahead of people,” Whish-Wilson said in a statement. “This free trade deal is designed to supercharge coal and gas exports to Korea by multinational corporations at the expense of local industries and local communities, and with the inclusion of the controversial ISDS clauses, the government has put the profits of the powerful corporations ahead of people,” Whish-Wilson said.
Labor’s Senate leader and trade spokeswoman, Penny Wong, repeated her concerns over the inclusion of an investor-state dispute settlement mechanism. Wong said Labor supported boosting trade with South Korea and had launched negotiations for the agreement, but would carefully scrutinise the text to consider the effect on Australian jobs.Labor’s Senate leader and trade spokeswoman, Penny Wong, repeated her concerns over the inclusion of an investor-state dispute settlement mechanism. Wong said Labor supported boosting trade with South Korea and had launched negotiations for the agreement, but would carefully scrutinise the text to consider the effect on Australian jobs.
Wong said the outcome of any trade negotiation needed to be examined to ensure that it was in Australia’s national interest, particularly in light of the challenges facing the manufacturing industry.Wong said the outcome of any trade negotiation needed to be examined to ensure that it was in Australia’s national interest, particularly in light of the challenges facing the manufacturing industry.
“The trade agreement must provide genuine opportunities for Australian businesses to increase exports to South Korea in important sectors like agriculture, manufacturing and services,” she said.“The trade agreement must provide genuine opportunities for Australian businesses to increase exports to South Korea in important sectors like agriculture, manufacturing and services,” she said.
She said the government had “listened to Labor and dropped its earlier refusal to release the text of the agreement before signing the deal”.She said the government had “listened to Labor and dropped its earlier refusal to release the text of the agreement before signing the deal”.
Chapter 18 - dealing with the environment says each party recognises the right of the other “to establish its own levels of environmental protection” but also that “it is inappropriate to use environmental laws, regulations or policies for trade protectionist purposes”. Chapter 18 – dealing with the environment says each party recognises the right of the other “to establish its own levels of environmental protection” but also that “it is inappropriate to use environmental laws, regulations or policies for trade protectionist purposes”.
The parties will consult each other regarding negotiations on trade-related environmental issues of mutual interest. Each party may request consultations with the other regarding issues arising under the environmental chapter of the agreement, but “neither party shall have recourse to dispute settlement under this agreement for any matter arising under this chapter”.The parties will consult each other regarding negotiations on trade-related environmental issues of mutual interest. Each party may request consultations with the other regarding issues arising under the environmental chapter of the agreement, but “neither party shall have recourse to dispute settlement under this agreement for any matter arising under this chapter”.
Australia and South Korea concluded negotiations in December and are planning to sign the document in the first half of this year. The text of the agreement and a national interest analysis will then be presented to the federal parliament for 20 sitting days with scrutiny from the joint standing committee on treaties.Australia and South Korea concluded negotiations in December and are planning to sign the document in the first half of this year. The text of the agreement and a national interest analysis will then be presented to the federal parliament for 20 sitting days with scrutiny from the joint standing committee on treaties.
Parliament will need to pass amendments to legislation in line with the agreement, while South Korea will have to seek approval from its national assembly.Parliament will need to pass amendments to legislation in line with the agreement, while South Korea will have to seek approval from its national assembly.