The conclusion of Free Trade Agreement negotiations with the Republic of Korea

Speech, E&OE, (check against delivery)

Parliament House, Canberra

12 December 2013

By leave – I am pleased to report to the House that the recent successful conclusion of the free trade agreement between Australia and the Republic of Korea will both restore our country's competitive position and open a raft of new growth opportunities for our country. Korea represents both our third largest goods export market and our fourth largest trading partner. I had the privilege of substantially concluding negotiations last week with my Korean counterpart, trade minister Yun, on the sidelines of the successful World Trade Organisation ministerial conference in Bali.

Negotiations on the agreement commenced back in 2009, and as a government we were fully aware of the imperative of finalising them as soon as possible. Every day of delay was another day Australia was at a competitive disadvantage against the likes of the United States, the European Union and ASEAN countries. These major competitors are all enjoying preferential market access on account of the free trade agreements they already have secured with Korea. The playing field will be levelled through the finalisation of this free trade agreement.

I can assure the House that this is a world-class agreement: it is both comprehensive and of a very high quality. It will result in the elimination of over 99 per cent of the tariffs that our exporters currently face across key areas, including agriculture, resources, energy and manufactured goods. We have also negotiated significant new market openings in services and investment in areas such as financial, accounting and legal services as well as telecommunications, education, audiovisual production, engineering, health, aged care and environmental services.

This is a very strong and liberating agreement for agriculture. For instance: tariffs of 304 per cent will be eliminated on chipping potatoes; the 40 per cent tariff on beef will be eliminated over 15 years, not 18 years, because we pushed for the same deal as the United States enjoy; the 22½ per cent tariff on lamb and sheep meat will go; the tariff on dairy products ranging from 36 per cent to 176 per cent will be eliminated; the three per cent tariff on sugar, in a market currently worth nearly $500 million to Australia, will be eliminated as soon as the FTA comes into effect; tariffs on wheat, seafood items, wine, chocolate, beer, a range of horticulture, pharmaceuticals, canned fruit – and the list goes on – will all go; and tariffs of up to eight per cent on a range of resources products – including crude petroleum, natural gas and coal – will also be eliminated over time.

This is a very good agreement also for our manufacturers. While acknowledging the challenges faced by our car manufacturers, the FTA will result in the elimination of Korea's eight per cent tariff on our automotive parts and accessories.

Korea is Australia's third largest market for automotive components exports. It is our largest export market for gearboxes ($122 million last year) and second largest for car engines ($50 million, again, last year).

Independent modelling shows both the opportunities for our country of finalising this free trade agreement and also the costs associated if we had not. It shows that agricultural exports to Korea will be 73 per cent higher after 15 years and manufacturing by 53 per cent as a result of this free trade agreement; and overall exports will be 25 per cent higher. It will provide an annual boost to our economy in the order of $650 million. Without this agreement, agricultural exports alone to Korea would have declined by 29 per cent by 2030 and overall exports would be five per cent lower.

The conclusion of negotiations has been warmly welcomed by a broad cross section of Australian industry. Some examples include:

The National Farmers Federation, Queensland Cattle Producers, the Business Council of Australia, the Cattle Council of Australia, Grain Growers, CPA Australia, ACCI, AiG, the Australian Food and Grocery Council, the Winemakers Federation of Australia, Queensland Sugar, Canegrowers, AusVeg, the Minerals Council of Australia, Australian Services Roundtable and the Law Council of Australia. This list goes on.

This agreement will include an investor-state dispute settlement provision. ISDS provisions are certainly nothing new. In fact, they are already contained in four free trade agreements that we currently have with other countries and 21 other investment agreements that Australia is a party to. The previous government, for instance, included such provisions in two free trade agreements that it signed. They are designed to create confidence for investors, both Australian and Korean. Importantly, the provisions also provide key safeguards which preserve Australia's ability to govern in the public interest in areas such as public health and the environment.

I acknowledge the constructive work of my predecessor Craig Emerson. Unfortunately for Australia, this ISDS became a major stumbling block with Korea under the previous government on account of pressure exerted by elements of the union movement, which is ideologically opposed to free trade. This government has placed strong priority on backing our nation's strengths, the things we do as well as any and better than most.

Pursuing an ambitious free trade and investment agenda gives these strengths – agriculture, mining and resources, education, health, tourism and events management and the services that have developed around them, including high-level manufacturing – the best possible chance to thrive and grow. It is also an emphatic signal to the world that Australia is indeed open for business.

Media enquiries

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