Korea

The Korea-Australia Free Trade Agreement (KAFTA) is expected to rapidly 'level the playing field' for Australian exporters to Korea, Australia's third largest export market. KAFTA was crucial for Australian exporters that compete against US and EU exports that enjoyed lower tariffs under their own FTAs.

Under KAFTA tariffs on 84 per cent of Australian exports to Korea upon entry into force and 99.8 per cent of Australian exports will be duty free on full implementation.

Although entered into force on 12 December 2014, the second stage of KAFTA commenced on 1 January 2015, advancing tariff reductions.

Services exporters are also expected to benefit from the agreement with the relaxation of restrictions relating to certain professional services offered by Australians in Korea.

For detailed FTA information, please visit: http://dfat.gov.au/trade/agreements/kafta/Pages/korea-australia-fta.aspx

Date in force

  • The KAFTA entered into force on 12 December 2014.

Direct benefits

From implementation 84 per cent of Australian exports to Korea will be duty free. This figure rises to 99.8 per cent on full implementation.

The major beneficiaries include:

  • beef,
  • dairy,
  • sugar,
  • cherries,
  • oranges,
  • wheat,
  • wine and
  • manufactured goods.

Service providers will have greater access to the Korean market. This will particular benefit the:

  • legal,
  • accounting,
  • telecommunications,
  • education and
  • financial sectors.

Below you will find a way to look up the tariffs associated with a SELECTION of popular Australian exports. PLEASE NOTE: this is not a tariff calculator OR an exhaustive list. We recommend obtaining professional advice for products not listed here.

Indirect benefits

Australian traders and investors together with their families will have up to 2 years guaranteed right to stay in Korea.

The establishment of a working group to help cooperation and mutual recognition between professional bodies in Australia and Korea.

Subject to certain restrictions, equal access to Korean Government procurement.

  • Generally, service providers are to be accorded treatment no less favourable than Korea accords its own service providers and there is no requirement for a Korean representative office before services can be provided.
  • Australian legal offices are now able to open in Korea, advising on international and Australian law; joint venture firms will be able to be formed by 2019;
  • Australian financial service providers are able to provide financial services, except certain prohibited services, in Korea without establishing a full commercial presence in Korea before doing so;
  • Australian accountants may now provide Australian or international specific tax advice;
  • Education providers have greater access to the Korean market;
  • Mutual recognition of qualifications is an ongoing objective;
  • Guaranteed entry and stay in Korea for Australian professionals, including spouse and dependents for varying periods depending on their role and activities in Korea; and
  • Subject to certain product exclusions and thresholds, equal treatment in respect of Korean Government procurement.

Certificate of Origin

In order to enjoy the tariff concessions provided for in KAFTA, goods must be of Korean or Australian origin as determined under the rules of origin set out in the agreement

In addition to satisfying the rules of origin , there are certification requirements. To claim preferential treatment a certificate of origin must be held in respect of the import. A certificate of origin can be produced by the exporter, producer or an authorised body. The one certificate of origin can include multiple goods and can be used for multiple exports over a two year period.

Doing business with Korea

There are many things to consider before embarking upon an export journey. Doing business in Korea presents some unique challenges, but there are a number of key areas to consider before doing any international business.

The areas to consider are:

Business activities and risks

  • Location
  • Legal Structure
  • Direct tax
  • Funding
  • Repatriation of profits
  • Transfer pricing
  • Withholding tax
  • Indirect tax
  • Staffing

For a full checklist that will put you on the right path to doing business in Korea, click HERE.

Want to know more? Visit the Export Council of Australia’s website.