As detailed in our previous HH CTT Update on 6 December 2013, the agreement was concluded by the Australian Minister for Trade and Investment, the Hon Andrew Robb and his counterpart in early December 2013.
Being our third largest export market and fourth largest trading partner, the benefits to Australian businesses are substantial. According to the Department of Foreign Affairs and Trade, at the time the agreement comes into force, 84 per cent of the value of Australia's exports to Korea will enter duty free. Once fully implemented, the current tariffs on 99.8 per cent of Australian exports will be eliminated.
As promised, the agreement includes a controversial Investor/State Dispute Resolution mechanism (which provides a foreign investor with the right to initiate dispute settlement proceedings against a foreign government). To alleviate the fears of those opposed to such clauses, the published text contains explicit safeguards to protect legitimate government regulation in areas such as public health and the environment. It is also restricted to breaches of an investment obligation provided for by the KAFTA or under an agreement with the other Party's government.
The rules of origin (ROO) clauses provide that a good will originate under the KAFTA if it is wholly obtained or produced entirely in the country or is produced entirely in Korea and/or Australia from specified materials under the ROO Chapter. Alternatively, goods manufactured in Korea and/or Australia using inputs from other countries will originate under the KAFTA if the product meets the specifications outlined in the ROO Chapter.
Reflecting the trade facilitation nature of the KAFTA, the agreement enables Australian and Korean exporters and manufacturers to self-certify the origin of the goods through completing a Certificate of Origin (COO). The one COO can apply to multiple importations of the goods specified.
Further details in relation to the KAFTA will be provided by us shortly. I will also be providing comments on the agreement in forthcoming seminars and CPD for the ECA, CBFCA and FBIA.
In the meantime, the full text of the agreement can be accessed at http://www.dfat.gov.au/fta/kafta/.