Economy & Business

Korea and Australia formally signs a FTA

Less than a month after the announcement of completion of Korea-Canada, Korea on April 8, 2014, announced a formal signage of Korea-Australia FTA (“KAFTA”). The full text of the agreement can be found at Australian Department of Foreign Affairs and Trade website.

What are the implications of this deal, which was already announced last December to had been agreed on principle?

I think the message is clear from the Korean government (“GOK”) – they want free trade agreements and they want it fast. And it is probably not a secret any more that the GOK wants to sign Trans Pacific Partnership (“TPP”) Agreement, or at least sign as many bilateral FTAs so as not to lose any grounds vis-a-vis the competitors in the TPP circle, Japan in particular. This is nothing new.

For the Australian government, KAFTA delivers what Australia-Japan FTA failed to deliver, full market access for Australian agricultural products, which was signed just a day before KAFTA was signed. Unlike KAFTA, Australia-Japan FTA drew a slew of criticism inside (in particular by the Australian agricultural sector) and outside (in particular by the US beef industry) of Australia, as Japan’s market access commitment was quite literally “half”-hearted (Prime Minister T. Abbott is reported of having stated that the agreement halved the existing tariff on certain agricultural products). So it may be that Australian Prime Minister Tony Abbott wanted to bring home the old trick of: “I have a good news and a bad news.”

For us Canadians, it means that now the race is on and we need to get Kor-Can FTA up and running fast (including the legal scrub), so as not to lose the competitive edge to the Australian competitors, especially for beef and pork producers who are already lagging behind the US counterparts by two years. Also, there is going to be a need for a strategic thinking as to what needs to be done regarding Canada-Japan EPA, as Japan appears to have drawn a line in the sand, a line that cannot be crossed, i.e., limited market access to the sensitive agricultural sectors.

Categories: Economy & Business

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