South Korea and Australia on Tuesday signed a free trade agreement that is expected to reinforce economic ties and help respective businesses find new opportunities.
The tearing-down of tariffs on automobiles, beef and other traded goods is expected to give Korea's gross domestic product a 0.14 per cent increase and boost customer welfare by $1.6 billion within 10 years of the FTA's effectuation, the Korean government said.
The signing was held between Korean Trade Minister Yoon Sang-jick and his counterpart Andrew Robb at the presidential office in Seoul, with President Park Geun-hye and Australian Prime Minister Tony Abbott's support. The pact now awaits the National Assembly's ratification and is expected to go into effect in 2015.
The Korea-Australia FTA is the first such deal for both the Park Geun-hye and Abbott governments. A deal with Canada was agreed in March but has not yet been signed. The Australia pact is the 11th FTA for Korea, which now has free trade ties with 48 economies.
"We believe signing the free trade agreement today offers an institutional template promoting economic cooperation and broadening the scope of our cooperation as well as taking our cooperation to a higher level," Park said during the bilateral summit held earlier in the day.
The Korea-Australia Free Trade Agreement is regarded as a pivotal pact for both countries. Korea is currently the third-largest export market and fourth-largest trading partner for Australia. Australia is the sixth-largest trading partner for Korea and the 10th-largest export market, with South Korea posting an $11.22 billion bilateral trade deficit in 2013.
Under the agreement, the two economies will eliminate import tariffs on most products within 10 years of the implementation of the deal.
Australia will immediately abolish its tariffs on 70 per cent of cars from Korea, while the rest will be removed within the following three years. Korea's car exports to Australia marked around $1.96 billion in 2013, taking over 20.5 per cent of South Korea's total exports to Australia.
Korea will gradually eliminate its tariffs of up to 72 per cent on beef imports from Australia.
"The FTA is expected to give balanced benefit for the two parties," said Assistant Trade Minister Woo Tae-hee.
During the bilateral summit held before the FTA signing ceremony, leaders of South Korea and Australia agreed to boost security cooperation to better protect the Asia-Pacific region from diverse military threats and to promote peace and stability to the Korean Peninsula. The two leaders also urged North Korea to abandon its nuclear weapons programs and comply with the United Nations Security Council resolutions, saying it was "essential for peace and stability in the region and beyond."
Abbott also welcomed Park's vision for promoting peace and cooperation in Northeast Asia and stressed the need for achieving peaceful unification and improving human rights conditions in the communist regime.
In a joint statement for a secure, peaceful and prosperous future between the two countries, leaders said they would review the existing bilateral-security frameworks and seek to strengthen defence-industry and procurement cooperation.
To expand investment, the two said they would cooperate to promote deregulation campaigns by exchanging experts and business delegations.
"By eliminating unnecessary corporate regulation, we will ensure businesses get the most out of our free trade agreement," the two said in a joint statement.