Business experts in Korea have reflected on nearly two years since Australia signed a Free Trade Agreement with the Asian nation in 2014.
The FTA, one of three under the Abbott Government, will gradually eliminate numerous tariffs on some of the most important products being traded between the two countries. Some tariffs were eliminated instantly when the agreement came into effect in December 2014.
The strong performers
Unsurprisingly, Australian beef exports to Korea have continued to grow since 2008, according to data provided by the Korean International Trade Association.
In the first six months of 2016, 122,000 tonnes of beef had been sent to Korea.
“We think there is more potential for Australian beef because the Korean customers perception of the US is not that good because of Mad Cow Disease,” KITA researcher Hyun Jung Je told SBS.
Australia only needs to send another 68,000 tonnes of beef to Korea to surpass exports for the whole of 2015.
KITA statistics also show imports of liquefied natural gas from Australia have jumped from 618,000 tonnes in 2014 to 965,000 tonnes in the first six months of this year.
The volume of LNG being sent to Korea has tripled in 2015 and again in 2016, according to the Australian government.
Worth only $16,000 in 2014 before the Korea-Australia FTA was signed, the value of Australian Brussels sprouts has also skyrocketed to just under one million dollars over the last 18 months. The FTA cut the tariff on the vegetable in half.
“In certain categories, Korean customers like the Korean products, like ginseng,” KITA’s Hyun Jung Je said.
“But Australia is a clean country so I think that’s why there’s an interest in the Australian products.”
Korean car exports healthy
With the import tariff on Korean cars removed from January, the popularity of Korean cars continues to grow in the Australian market.
KITA data shows over 40,000 Korean SUVs from companies like Hyundai and Kia have been sent to Australia in the first six months of the year. It’s almost as many cars as all of 2015.
“SUVs are doing very well this year and [export volume] increased by 31 per cent,” KITA researcher Hyesun Jung said.
Aussies see opportunities for alcohol, cosmetics and human services
Australian businessmen Ross Gregory is a realist.
“Korea’s no longer a competitive manufacturer; half their goods are being manufactured in India and China and South America,” he told SBS in Seoul.
“They’re very uncompetitive in services … but I don’t think there’s any reticence to accept foreign ideas and technology at all.”
The chairman of alcohol importer Indulge Co and a partner in a Seoul gastro taphouse, he wants to see the Australian beer renaissance extend to “pockets of hipsterville” in Korea.
“Craft beer is a concept that’s very new to Korea,” he said.
“Koreans travel a lot more so they’re very open to new ideas and products. I just think sometimes it gets bogged down at the regulatory level; the tier-two, tier-three bureaucrats who the write detailed rules that inhibit some of the idea exchanges.”
Data from the Australian Bureau of Statistics shows the value of wine has increased by over 60 per cent over the last 18 months.
“We had an FTA with Chile ten years ago, it was our first partner for an FTA,” KITA researcher Hyun Jung He said.
“Ever since then, the Chilean wine is really popular in Korea.”
But she said Australia could become more dominant.
“The Australian companies should be more aggressive in marketing their products in the Korean markets so Korean customers know we can purchase Australian products in the market.”
The two-way trade of services is relatively minor between the two countries, valued at approximately $2.5 billion.
But the KAFTA is trying to induce more human capital and services from Korea to Australia.
While the trade deals opens up the Korean market for Australian legal and financial firms, business researchers at KITA hope Korean startups and human services companies will look to expand to Australia.
“Korean companies are now trying to penetrate the Australian market but Australia is a huge country so there will be a lot of logistical cost,” Hyesun Jung said.
“There is potential but it’s going to take years.”
*Myles Morgan travelled to the Korea as part of the 2016 Australia-Korea Journalist Exchange Program. He was assisted by the Walkley Foundation, the Australian Government and the Korea Press Foundation.
