By Margaret Bux
clock 4 min

Australia’s competitiveness in the Korean export market is set to increase along with cost benefits to Australian consumers with the implementation of the Korea-Australia Free Trade Agreement (KAFTA).

On 8 April 2014, Australia’s Minister for Trade and Investment Andrew Robb and his South Korean counterpart, the Minister for Trade, Industry and Energy, Yoon Sang-jick, formally signed the KAFTA in Seoul.

The Office of Best Practice Regulation (OBPR) assessed the agreement as likely to have a measurable impact on substantial sectors within the economy. Over the past decade Korea’seconomic importance to Australia has expanded significantly to become Australia’s third-largest export market, fourth-largest trading partner and a growing investment partner. Korea is a particularly significant market for Australia’s agricultural exports, including raw sugar, beef, grains, dairy, wine, seafood and horticulture. Korea is also a significant export destination for Australia’s resources.

However, Australian exporters currently face various tariff and non-tariff barriers and restrictions to trade with Korea, which reduces Australia’s competitiveness with other countries who do not face these barriers. In the absence of measures to address these barriers, Australia’s competitive position would be expected to decline over time.

KAFTA is expected to deliver significant market access improvement and significant tariff liberalisation for Australia’s exports to Korea. KAFTA will see Korea’s tariffs set at zero on 84 per cent of its imports (by value) from Australia immediately upon entry into force with most other tariffs phased out quickly. Tariffs will remain in place for a small number of Korea’s most sensitive products however these account for only a very small amount of Australia’s exports to Korea.

Korea will also benefit from tariff reduction or elimination on the goods it exports to Australia. The removal of these tariffs will benefit consumers through lower costs, but the impacts on domestic manufacturing will be mixed. Those industries that use parts produced in Korea will benefit from lower input costs, but those industries that compete with products produced in

Korea will face additional pressure. The latter category of industries may include the automotive industry and steel producers. Other manufacturing sectors, such as the plastics, chemicals, textiles, clothing and footwear industries may also face increased competition. To mitigate these impacts, tariffs on some of Australia’s most sensitive products will be phased out over periods of up to eight years.

In aggregate, KAFTA will result in an estimated saving of around $96,000 in average annual compliance costs for some Australian exporters. Overall, it is estimated that Australian exports to Korea will be 25 per cent higher after 15 years of KAFTA’s entry into force than if Australia did not enter an FTA with Korea. The removal of tariffs on Korean imports into Australia will reduce tariff revenue; however these effects are expected to be offset over time by the increased economic activity. Tariff reductions in the automotive and consumer products industries are expected to result in lower costs for Australian consumers.


We’re Australia’s Leading global logistics provider.

Established in 1917, Clarke Global Logistics is a reputable Australian Customs Broker and Freight Forwarder; offering a totally integrated trade service both locally and globally.


Start moving in the
right direction.

Speak to us today to see how we can improve your business logistics, freight and customs related issues.

Get our insights straight to your inbox.

Get our insights straight to your inbox.

Back to top