Thursday, 04 April 2013 15:57

Aussies push for Korean FTA

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AUSTRALIAN BEEF farmers are pushing the Gillard Government to restart free trade agreement talks with South Korea. Industry leaders visited Seoul this month seeking to resume talks with the South Koreans.


The National Farmers Union says Australian beef producers stand to miss out on A$1.4 billion in exports to Korea unless a FTA is in place soon. It says the threat to other exports like wheat (A$350 million) and dairy (A$100 million) is also high.

FTA talks between Australia and South Korea stalled after the Australian cabinet banned even starting talks which require settling any type of investor-state dispute (allowing companies unhappy with their treatment in another country to seek arbitration in an agreed third jurisdiction).

This ban was imposed because the cabinet was so upset that tobacco corporation Philip Morris was taking the Government to an international tribunal to seek compensation for the new plain packaging rules for cigarettes – via an investment treaty with Hong Kong.

NFF president Jock Laurie says Australian farmers are losing out without an FTA with South Korea, unlike major competitors including the US. “We are effectively handing over more and more of our hard-earned market share each year to farmers in the USA and other regions.”

Meat and Livestock Australia’s manager of international markets and trade services Andrew McCallum says FTA negotiations with South Korea have stalled due primarily to an issue totally unrelated to beef.  “MLA is providing support to industry and government as they work to secure a swift conclusion to the free trade agreement with Korea.”

Under the current arrangements, Australia’s A$645 million annual beef trade with Korea is subject to a 40% tariff. But under the Korea-US deal US beef attracts only a 34.6% tariff.  And this tariff differential is set to widen year by year till 2026, when US beef exports to Korea will be tariff free. Long term this could cause farmers to lose most of their trade with Korea. 

He says modelling by the Centre for International Economics indicates that by 2026 – the year US beef imports to Korea become tariff free – Australia will be losing A$182m sales annually. Australian beef exporters may lose A$1.4 billion.

“Around the world, nations are looking to promote trade, particularly with lucrative markets in Asia, to overcome the economic downturn that resulted from the global financial crisis and to put in place a framework of trade agreements in the wake of the languishing WTO Doha negotiations,” says Laurie.

“We have heard much talk about the opportunity ahead for Australian agriculture in the Asian century, and now is the time to act on this. Korea is Asia’s fourth largest economy and our third largest export market and Australia and Korea already enjoy an A$30 billion two way trade.”

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