Submission No 3 Inquiry into Australia's trade and investment relationship with Japan and the Republic of Korea Organisation: North East Asia Branch Department of Foreign Affairs and Trade Joint Standing Committee on Foreign Affairs, Defence and Trade Inquiry by the Joint Standing Committee on Foreign Affairs, Defence and Trade into Australia's Trade and Investment Relationship with the Republic of Korea Submission by the Department of Foreign Affairs and Trade, and the Australian Trade Commission July 2011 Contents Abbreviations ............................................................................................................... iii Overview ........................................................................................................................ 1 Chapter One: Trade and Investment Relationship with Korea ...................................... 3 1.1 Australia’s goods trade with Korea ................................................................. 3 1.2 Australia’s services trade with Korea .............................................................. 6 1.3 Emerging trends .............................................................................................. 9 Chapter Two: Trade Barriers in Korea ........................................................................ 11 2.1 Tariff barriers ................................................................................................ 11 2.2 Non-Tariff barriers ........................................................................................ 11 2.2.1 Tariff-rate quotas ................................................................................... 11 2.2.2 Rice ........................................................................................................ 12 2.2.3 Special agricultural safeguards .............................................................. 12 2.2.4 Flexible tariffs and adjustment duties .................................................... 12 2.2.5 Subsidies ................................................................................................ 12 2.3 Barriers to trade in services and investment .................................................. 13 2.3.1 Accounting and taxation services .......................................................... 13 2.3.2 Agricultural services .............................................................................. 13 2.3.3 Architectural services ............................................................................. 13 2.3.4 Education ............................................................................................... 13 2.3.5 Energy .................................................................................................... 14 2.3.6 Financial services ................................................................................... 14 2.3.7 Legal services ......................................................................................... 14 2.3.8 News services ......................................................................................... 15 2.3.9 Telecommunications and broadcasting .................................................. 15 Chapter Three: Other Issues ......................................................................................... 16 3.1 Korea’s investment regime ............................................................................ 16 3.2 Intellectual property ...................................................................................... 17 3.3 Anti-dumping ................................................................................................ 18 3.4 Quarantine ..................................................................................................... 18 Chapter Four: Impact of Korea’s Other FTAs on Bilateral Trade and Investment ..... 19 4.1 Korea’s other FTAs ....................................................................................... 19 i 4.2 Impact of Korea’s other FTAs on commodity trade ..................................... 20 4.2.1 Beef ........................................................................................................ 20 4.2.2 Sugar ...................................................................................................... 20 4.2.3 Wheat ..................................................................................................... 20 4.2.4 Dairy ...................................................................................................... 20 4.2.5 Malt and malting barley ......................................................................... 20 4.2.6 Wine ....................................................................................................... 21 4.2.7 Horticulture ............................................................................................ 21 4.3 Impact of other FTAs on services trade and investment ............................... 22 Chapter Five: Opportunities for Deepening Commercial Links .................................. 23 5.1 Resources ...................................................................................................... 23 5.2 Clean technology ........................................................................................... 24 5.3 Agribusiness .................................................................................................. 24 5.4 Automotive .................................................................................................... 24 5.5 Services ......................................................................................................... 24 5.6 Creative industries ......................................................................................... 25 Chapter Six: The Role of Government in Ensuring Opportunities are Identified, Developed and Utilised ................................................................................................ 26 6.1 Bilateral engagement on trade and policy issues .......................................... 26 6.2 Austrade’s role and priorities ........................................................................ 27 6.3 EFIC’s role and priorities .............................................................................. 28 6.4 Free Trade Agreement negotiations .............................................................. 29 6.5 Cooperation in regional and international organisations ............................... 30 6.5.1 World Trade Organization ..................................................................... 30 6.5.2 Asia Pacific Economic Cooperation ...................................................... 30 6.5.3 East Asia Summit ................................................................................... 31 6.5.4 Group of Twenty (G20) ................................................................................. 31 Appendix: Australia’s top 50 merchandise exports and imports with Korea, 2010 .... 33 ii Abbreviations ACTA Anti-Counterfeiting Trade Agreement APEC Asia Pacific Economic Cooperation ASEAN Association of South East Asian Nations BSE Bovine Spongiform Encephalopathy CEPEA Comprehensive Economic Partnership in East Asia CPA Certified Public Accountant Act CSQ Country Specific Quotas CTA Certified Tax Accountant Act EAFTA East Asia Free Trade Agreement EAS East Asia Summit ECA Export Credit Agency EFIC Export Finance and Insurance Corporation EFTA European Free Trade Association ETM Elaborately Transformed Manufactures FAO Food and Agriculture Organization of the United Nations FDI Foreign Direct Investment FIRB Foreign Investment Review Board FTA Free Trade Agreement G20 Group of Twenty GATS General Agreement on Trade in Services GATT General Agreement on Tariffs and Trade IP Intellectual Property KEPCO Korea Electric Power Corporation KEXIM Korea Export-Import Bank KOGAS Korea Gas Corporation KORES Korea Resources Corporation KOREU Korea-EU FTA KORUS Korea-US FTA KOTRA Korea Trade-Investment Promotion Agency KT Korea Telecom K-Sure Korea Trade Insurance Corporation MFN Most Favoured Nation OECD Organisation for Economic Cooperation and Development POSCO Pohang Steel Corporation ROK Republic of Korea TPP Trans-Pacific Partnership STM Simply Transformed Manufactures TRIPS Trade-related Aspects of Intellectual Property Rights WHO World Health Organization WTO World Trade Organization iii Inquiry by the Joint Standing Committee on Foreign Affairs, Defence and Trade into Australia’s Trade and Investment Relationship with Japan and the Republic of Korea Submission by the Department of Foreign Affairs and Trade and the Australian Trade Commission _________________________________________________________________ On 21 April 2011 the Minister for Trade, The Honourable Dr Craig Emerson MP, asked the Committee to inquire into and report on Australia’s trade and investment relationship with Japan and the Republic of Korea. The following submission is made by the Department of Foreign Affairs and Trade (DFAT) and the Australian Trade Commission (Austrade). The submission provides an overview of Australia’s trade and investment relationship with the Republic of Korea. It accompanies a submission, also made by DFAT and Austrade, on Australia’s trade and investment relationship with Japan. Both submissions address the inquiry's terms of reference: The Trade Sub-Committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade will inquire and report on Australia’s trade and investment relations with Japan and