Korea ready to talk turkey after FTA hurdle removed
The Australian, Canberra
Korea ready to talk turkey after FTA hurdle removed
By Rowan Callick
1 November 2013
The free trade agreement between Australia and South Korea is now "exceedingly close" after a sticking point was removed by the Abbott government, Seoul’s lead negotiator said yesterday.
Young-Moo Kim, director-general for FTA negotiation of the Ministry of Trade, Industry and Energy, said the deal would have been completed by now if the former Labor government had agreed to an international arbitration clause.
The Abbott government has said it will deal with the issue, known as an investor state dispute settlement clause, on a case-by-case basis.
"The new government is taking a different approach," Mr Kim said, "so the hurdle is being removed".
Tony Abbott has also said he wishes to conclude the South Korea, Japan and China FTAs within a year — with the former furthest advanced.
Mr Kim said as a result, he expects that a final round of negotiations will take place "in the very near future" and that this will be sufficient to wrap up a deal with Australia’s third-biggest export market and South Korea’s sixth or seventh—biggest trading partner overall.
The Prime Minister and President Park Geun-hye had "very positive" talks on the FTA on the sidelines of the recent APEC summit in Bali and at the ensuing East Asia Summit in Brunei.
"The leaders have a better understanding now, and we shall resume negotiations very soon," Mr Kim said.
Foreign Minister Julie Bishop visited Korea two weeks ago, and Trade and Investment Minister Andrew Robb is due to arrive shortly to prepare the ground for what most observers expect to be the conclusion of the FTA.
John Walker, executive chairman of Macquarie Group of South Korea, Australia’s most prominent company in the country, and chairman of the Australia-Korea Business Council, said : "I think the new Australian government has made all the difference. It has an actual willingness to get on with it, with an understanding of the real importance of the FTA.
"Both sides are feeling much more comfortable now they are willing to sort out ISDS.
"We know that the Koreans are focused on extending their trade options, but they are also talking with China and a lot of others, so it’s really up to us to put it on the table and get it done."
He said that an FTA "will make a really big difference, especially to beef and wine producers, who are up against competitors who will start to enjoy zero tariffs. But mostly, it will make a difference to the changed sentiments it will bring to both countries."
Australian goods are suffering in Korean shops because profit margins have shrunk in comparison with competing lines from Europe and the US, which already have FTAs with Korea.
Ms Bishop said she found the Koreans interested in gaining more access to Australian liquefied natural gas and agribusiness.
She said : "The FTA is eminently doable in a short period. We need the broadest possible relationship with Korea."
The Gillard government decided it would not even consider negotiating any agreement that included an ISDS clause, apparently because tobacco giant Philip Morris is taking Canberra to arbitration under a Hong Kong investment treaty over the plain packaging of cigarettes.
Trade experts have said that such concerns can be accommodated by carving out areas such as public health from the remit of arbitration.
Ms Bishop said : "ISDS is quite a high priority for (the Koreans) . . . they see that as essential. I think we can accommodate their concerns while maintaining our public health standards. We have to be more pragmatic."
Rowan Callick is visiting South Korea as a guest of the Korea Trade-Investment Promotion Agency
