New study shows Australia must pursue Korean FTA

AMID APEC leaders converging on Sydney this week, a new study reveals Australian agricultural and food exports to Korea could be slashed – in real terms, down 12.4% ($162 million) by 2030 – should Korea and the United States (US) ratify their Free Trade Agreement (FTA), the National Farmers’ Federation (NFF) warned today. The NFF is calling on the Australian Government to ‘fast track’ our own FTA with Korea. The study commissioned by the NFF, undertaken by the Centre for International Economics (CIE), has highlighted the risks to Australian farmers should the Korea-US FTA be ratified – and reinforced the need for Australia to secure our own bilateral agreement with Korea. “The CIE’s study starkly highlights a broad trade policy dilemma,” NFF President David Crombie said. “While Australia, and the world, would be infinitely better off with a successful multilateral trade deal from the Doha round, countries are pushing on with bilateral deals. “Australia risks being left behind unless we do likewise in Korea. Particularly with the looming US Presidential election putting a dampener on Doha, the pursuit of bilateral trade agreements is a necessary short-term focus, with an eye to the longer-term need to bolster the world’s commitment to an open multilateral trading system.” According to the CIE analysis, liberalisation of trade between the US and Korea would see Australian agriculture and our food exports lose their commercial advantages in Korea, particularly for beef, dairy, wine and horticulture. The analysis indicates that Australian agriculture and food exports to Korea could plummet by 12.4% in 2030 – flowing on to reduced accumulated agricultural and food output of nearly $800 million over the 23-year period from 2007 to 2030, in net present value terms. However, the study also found that the competitive position of Australia’s agriculture and food sector could be bolstered should an Australia-Korea FTA, with equivalent terms to the US deal, be finalised. According to the CIE, a completed agreement would increase Australian agriculture and food exports to Korea by 53.3% by 2030 ($696 million), even if the US deal is ratified. “Our farmers are extremely keen to ensure that Australia formalises an FTA with Korea, particularly beef and dairy producers for whom Korea represents their third and 10th largest export markets, respectively,” Mr Crombie said. The CIE economic modeling utilises an up-to-date underlying database, drawing on current trade flows and applied tariffs. The model also takes into account the substitutability of various products and the fact that third markets may take up some of the Australian export reductions generated by the Korea-US FTA. The CIE study, ‘Impact of KORUS on Australian agriculture… and what an Australian-Korea FTA could mean’, is available online at: http://www.nff.org.au/policy/trade.html[KORUS Report]. [ENDS]